DCIT CEN CIR 7(3), MUMBAI v. PRVAINCHANDRA N. KAMDAR, MUMBAI

ITA 5481/MUM/2015 | 2006-2007
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 548119914 RSA 2015
Assessee PAN AADPK0725D
Bench Mumbai
Appeal Number ITA 5481/MUM/2015
Duration Of Justice 9 month(s) 28 day(s)
Appellant DCIT CEN CIR 7(3), MUMBAI
Respondent PRVAINCHANDRA N. KAMDAR, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 30-09-2016
Assessment Year 2006-2007
Appeal Filed On 02-12-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH JUDICIAL MEMBER ITA NO S . 5481 TO 5483 & 5487 /MUM/20 15 : (A.Y S : 2006 - 07 TO 2008 - 09 & 2012 - 13 ) DCIT CENTRAL CIRCLE - 7(3) MUMBAI ( APPELLANT ) VS. SHRI PRAVINCHANDRA N. KAMDAR 316 LOHA BHAVAN P.DMELLO ROAD CARNAC BUNDER MUMBAI - 9 PAN : AADPK0725D (RESPONDENT) ASSESSEE BY : SHRI PARESH SHAPARIA REVENUE BY : SHRI B.C.S. NAIK DATE OF HEARING : 19/07 /2016 DATE OF PRONOUNCEMENT : 30 / 09 /2016 O R D E R PER G.S. PANNU AM : THESE ARE A BUNCH OF FOUR APPEALS BY THE REVENUE RELATING TO A SINGLE ASSESSEE FOR ASSESSMENT YEARS 2006 - 07 2007 - 08 2008 - 09 AND 2012 - 13. IN ALL THE APPEALS THE ISSUES RAISED BY T HE REVENUE ARE SIMILAR THEREFORE THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. FIRST WE MAY TAKE UP THE APPEAL OF REVENUE FOR ASSESSMENT YEAR 2006 - 07 WHICH IS DIRECTED AGA INST THE ORDER OF CIT(A) - 49 MUMBAI DATED 07.09.2015 WHICH IN TURN HAS ARISEN FROM ORDER DATED 30.03.2014 2 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 PASSED BY THE ASSESSING OFFICER MUMBAI UNDER SECTION 153A R.W.S 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 3. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE AO TO ASSESS THE INCOME FROM PURCHASE & SALE OF SHARES UNDER THE HEAD INCOME FROM SHORT TERM CAPITAL GAIN AND LO NG TERM CAPITAL GAIN AND NOT BUSINESS INCOME AS THE ASSESSMENT HAD BEEN FINALIZED AND NOT ABATED ON ACCOUNT OF THE SEARCH AND RELYING ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP HAS BEEN FILED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE AO TO ASSESS THE INCOME FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD INCOME FROM SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AND NOT BUSINESS INCOME RELYING ON THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE OF A.Y 2007 - 08 WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR A.Y 2007 - 08 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL U/S 260 HAS BEEN FILED IN THE HIGH COURT AND THE SAME IS PENDING. 4. BRIEFLY PUT THE RELEVANT FACTS ARE THAT ASSESSEE INDIVI DUAL IS CONNECTED TO ONE K. AMISHKUMAR TRADING PVT. LTD. GROUP WHICH WAS COVERED UNDER A SEARCH AND SEIZURE ACTION CARRIED OUT BY THE DEPARTMENT U/S 132(1) OF THE ACT ON 24.11.2011 IN THE BHARTI SHIPYARD GROUP OF CASES. AS A CONSEQUENCE ASSESSEE WAS IS SUED A NOTICE U/S 153A(1) OF THE ACT AND IN RESPONSE ASSESSEE FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.56 52 422/ - WHICH WAS THE SAME AS 3 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 DECLARED BY HIM IN THE RETURN FILED U/S 139 OF THE ACT ON 20.10.2006. THE RETURN OF INCOME SO FILED BY T HE ASSESSEE WAS SUBJECT TO SCRUTINY ASSESSMENT BY THE ASSESSING OFFICER U/S 153A R.W.S. 143(3) OF THE ACT WHEREBY THE TOTAL INCOME HAS BEEN ASSESSED AT RS.60 99 811/ - . THE ASSESSEE CARRIED THE ASSESSMENT IN APPEAL BEFORE THE CIT(A) WHO HAS ALLOWED CERTAI N RELIEFS AND REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF CIT(A) ON THE ABOVE STATED GROUNDS OF APPEAL. 5. INSOFAR AS THE AFORESAID GROUNDS ARE CONCERNED THE PERTINENT FACTS ARE THAT ASSESSEE HAD DECLARED PROFIT ON SALE AND PURCHASE OF SHARES AS SHORT TERM CAPITAL GAIN RS.50 37 333/ - AND LONG TERM CAPITAL GAIN RS.2 18 682/ - WHICH HAS SINCE BEEN TREATED BY THE ASSESSING OFFICER AS AN INCOME LIABLE TO BE TAXED AS B USINESS INCOME. THIS STAND OF THE ASSESSING OFFICER HAS SINCE BEEN NEGATED BY TH E CIT(A) WHICH IS BEING ASSAILED BY THE REVENUE BEFORE US. 6. THE ASSESSING OFFICER HAS TREATED THE INCOME FROM SALE AND PURCHASE OF SHARES AS B USINESS INCOME ON THE GROUND THAT THE ASSESSEE HAS ACTED AS A TRADER IN THE COURSE OF SUCH ACTIVITY AND THERE FORE ACCORDING TO THE ASSESSING OFFICER SUCH INCOME WAS LIABLE TO BE ASSESSED AS B USINESS INCOME. THE CIT(A) NOTICED THAT IN THE ASSESSMENT FINALISED U/S 143(3) OF THE ACT DATED 14.11.2008 IN PURSUANCE TO THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT ON 20.10.2006 THE LONG TERM AS WELL AS SHORT TERM CAPITAL GAINS EARNED ON THE SALE OF SHARES HAS BEEN ACCEPTED AS SUCH. THE CIT(A) FURTHER NOTICED THAT AS ON THE DATE OF SEARCH I.E. 24.11.2011 THE ASSESSMENT FOR THE INSTANT ASSESSMENT YEAR OF 2006 - 07 W AS NOT PENDING AND THEREFORE THE SAME DOES NOT 4 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 ABATE IN TERMS OF THE SECOND PROVISO TO SEC. 153A(1) OF THE ACT. FOR THIS REASON ASSESSING OFFICER HELD THAT FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTIC S LTD. V. DCIT 137 ITD 287 (MUM - SB) THE ASSESSING OFFICER WAS REQUIRED TO ASSESS THE INCOME IN THE ASSESSMENT U/S 153A(1) R.W.S 143(3) OF THE ACT BASED ONLY ON THE INCRIMINATING MATERIAL REVEALED IN THE COURSE OF SEARCH. AS PER THE CIT(A) THE ADDITIONS MADE TO THE TOTAL INCOME BY TREATING THE INCOME EARNED ON CAPITAL GAINS AS B USINESS INCOME WAS NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND THEREFORE THE SAME COULD NOT HAVE BEEN ADDED BY THE ASSESSING OFFICER IN THE ASSESSMENT FINALISED U/S 153A(1) R.W.S. 143(3) OF THE ACT. NOTABLY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) HAS SINCE BEEN AFFIRMED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE REPORTED AT CCI LTD. V JCIT 250 CTR 291 . IT IS ALSO NOTICED THAT CIT(A) WAS CONSCIOUS OF THE DECISION OF TRIBUNAL IN THE CASE OF A SSESSEE FOR ASSESSMENT YEAR 2007 - 08 VIDE ITA NO. 627/MUM/2011 DATED 27.5.2014 WHEREIN THE INCOME OF ASSESSEE FROM SALE AND PURCHASE OF SHARES HAS BEEN HELD TO BE ASSESSABLE AS CAPITAL GAINS. 7. BEFORE US THE ONLY POINT MADE BY THE LD. DR WHICH IS ALSO M ANIFESTED IN THE GROUNDS OF APPEAL IS THAT THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND FURTHER THAT THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AS SESSMENT YEAR 2007 - 08 RELIED UPON BY CIT(A) HAS ALSO NOT BEEN ACCEPTED BY THE DEPARTMENT AND AN APPEAL AGAINST IT HAS BEEN FILED IN THE HON'BLE HIGH COURT. 5 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 8. HAVING REGARD TO THE POINT RAISED BY REVENUE WE FIND NO REASON TO INTERFERE WITH THE CONCLUSION OF CIT(A). WE HAVE PERUSED THE ASSESSMENT ORDER AND FIND THAT THERE IS NO REFERENCE MADE TO ANY MATERIAL OR EVIDENCE FOUND IN THE SEARCH WHICH HAS A BEARING ON THE ISSUE IN ORDER TO TREAT THE CAPITAL GAINS DECLARED BY THE ASSESSEE TO BE ASSESSED AS B USI NESS INCOME. THEREFORE THE CIT(A) HAS CORRECTLY APPLIED THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) WHICH HAS FURTHER BEEN APPROVED BY THE HON'BLE BOMBAY HIGH COURT. THUS INSOFAR AS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2006 - 07 IS CONCERNED SAME IS WITHOUT ANY MERIT S AND IS ACCORDINGLY DISMISSED. 9. WE MAY NOW TAKE UP THE APPEAL OF REVENUE FOR ASSESSMENT YEAR 2007 - 08 WHICH IS DIRECTED AGAINST THE ORDER OF CIT(A) - 49 MUMBAI DATED 07.09.2015 WHICH IN TURN HAS ARISEN FROM ORDER DATED 30.03.2014 PASSED BY THE ASSESSING OFFICER MUMBAI UNDER SECTION 153A R.W.S 143(3) OF THE ACT. 10. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - ' 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE AO TO ASSESS THE INCOME FROM PURCHASE & SALE OF SHARES UNDER THE HEAD INCOME FROM SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AND NOT BUSINESS INCOME AS THE ASSESSMENT HAD BEEN FINALIZED AND NOT ABATED ON ACCOUNT OF THE SEARCH AND RELYING ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO 6 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 GLOBAL LOGISTICS LTD. HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP HAS BEEN FILED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE AO TO ASSESS THE INCOME FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD INCOME FROM SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AND NOT BUSINESS INCOME RELYING ON THE DECISION OF THE ITAT IN THE ASSESSEE'S OWN CASE OF A.Y. 2007 - 08 WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE ITAT IN THE ASSESSEE'S OWN CASE FOR A.Y. 2007 - 08 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL U/S 260 HAS BEEN FILED IN THE HIGH COURT AND THE SAME IS PENDING.' 11. THE GROUNDS RAISED BY REVENUE IN THE PRESENT APPEAL ARE SIMILAR TO THOSE RAISED IN ASSESSMENT YEAR 2006 - 07. THE RELEVANT FACTS IN ASSESSMENT YEAR 2007 - 08 ARE THAT A RETURN WAS FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 153A(1) OF THE ACT DECLARING INCOME AT RS.2 06 73 550/ - WHICH WAS SAME AS THE INCOME DECLARED IN THE RETURN OF INCOME ORIGINALLY FILED U/S 139(1) OF THE ACT DATED 25.10.20 07. IN THE ENSUING ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT THE ASSESSING OFFICER TREATED THE SHORT TERM CAPITAL GAIN OF RS.48 98 969/ - AND LONG TERM CAPITAL GAIN OF RS.10 36 681/ - AS BUSINESS INCOME. CIT(A) HAS SINCE DISAGREED WITH THE ASSESSING OF FICER AND HELD THAT THE PROFIT RECEIVED FROM SALE OF SHARES IS LIABLE TO BE ASSESSED AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN DEPENDING UPON THE PERIOD OF HOLDING OF SHARES. IN COMING TO SUCH A CONCLUSION CIT(A) HAS ADOPTED THE SAME REASONIN G AS HE DID FOR ASSESSMENT YEAR 2006 - 07 WHICH WE HAVE ALREADY DEALT WITH IN THE EARLIER PARAS. 12. AT THE TIME OF HEARING BOTH PARTIES ADVANCED SIMILAR ARGUMENTS WHICH HAVE BEEN CONSIDERED BY US IN THE APPEAL FOR ASSESSMENT YEAR 7 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 2006 - 07. THE LEARNED RE PRESENTATIVE FOR THE RESPONDENT - ASSESSEE POINTED OUT THAT ORIGINALLY IN THE ASSESSMENT FINALISED U/S 143(3) OF THE ACT THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE WAS TREATED AS BUSINESS INCOME BY THE ASSESSING OFFICER WHEREAS THE LONG TERM CAPIT AL GAIN DECLARED BY THE ASSESSEE WAS ASSESSED AS SUCH. THE TRIBUNAL IN ITS ORDER DATED 27.5.2014 (SUPRA) UPHELD THE STAND OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO TREAT THE INCOME FROM SALE OF SHARES AS CAPITAL GAINS AND NOT BUSINESS INCOME. THE LEARNED REPRESENTATIVE POINTED OUT THAT IN THE IMPUGNED ASSESSMENT FINALISED U/S 153A(1) R.W.S. 143(3) OF THE ACT THE ASSESSING OFFICER NOT ONLY TREATED THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOME BUT ALSO LONG TERM CAPITAL GAIN AS BUSINESS INCOM E . IT WAS POINTED OUT THAT THERE WAS NO JUSTIFICATION FOR SUCH DEPARTURE AS THE SEARCH DID NOT REVEAL ANY INCRIMINATING MATERIAL ON THIS ASPECT. 13. HAVING REGARD TO THE RIVAL SUBMISSIONS WE FIND THAT THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 IS ALSO LIABLE TO BE DECIDED IN THE SAME MANNER AS FOR ASSESSMENT YEAR 2006 - 07 WHICH HAS BEEN DEALT WITH BY US IN THE EARLIER PARAS. NOTABLY THE FINDING OF CIT(A) IS THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2007 - 08 WAS ALSO NOT PENDING ON THE DATE OF SEA RCH I.E. 24.11.2011. TH IS CIT(A)S FINDING HAS NOT BEEN NEGATED BY THE REVENUE BEFORE US AND UNDER THESE CIRCUMSTANCES IN OUR VIEW CIT(A) MADE NO MISTAKE IN APPLYING THE RATIO OF DECISION OF THE SPECIAL BENCH OF TRIBUNAL IN THE CASE OF ALL CARGO GLOBA L LOGISTICS LTD. (SUPRA) IN HOLDING THAT THE INSTANT ADDITION WAS UNSUSTAINABLE AS THERE WAS NO INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH IN CONNECTION WITH SUCH ADDITION. 8 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 14. IN VIEW OF OUR DECISION IN THE APPEAL FOR ASSESSMENT YEAR 2006 - 07 HEREIN ALSO THE ORDER OF CIT(A) IS AFFIRMED AND REVENUE FAILS IN ITS APPEAL. 15. IN THE OTHER TWO APPEALS WHICH RELATE TO ASSESSMENT YEAR 2008 - 09 AND 2012 - 13 SIMILARLY WORDED GROUND OF APPEAL HAS BEEN RAISED WHICH READS AS UNDER : - 1. ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE A O TO ASSESS THE INCOME FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD INCOME FROM SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AND NOT BUSINESS INCOME RELYING ON THE D ECISION OF THE ITAT IN THE ASSESSEE'S OWN CASE OF A.Y. 2007 - 08 WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE ITAT IN THE ASSESSEE'S OWN CASE FOR A.Y. 2007 - 08 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL U/S 260 HAS BEEN FILED IN THE HIGH COU RT AND THE SAME IS PENDING. 16. IN THESE TWO YEARS ALSO THE SOLITARY DISPUTE RELATES TO THE TREATMENT OF INCOME FROM SALE AND PURCHASE OF SHARES. THE ASSESSEE HAS DECLARED SUCH INCOME AS SHORT TERM/LONG TERM CAPITAL GAIN WHEREAS THE SAME HAS BEEN ASSES SED AS BUSINESS INCOME BY THE ASSESSING OFFICER. THE CIT(A) HAS ALLOWED THE CLAIM OF ASSESSEE BASED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08 (SUPRA). SINCE THE SAID DECISION OF THE TRIBUNAL CONTINUES TO HOLD THE FIELD AND HAS NOT BEEN ALTERED BY ANY HIGHER AUTHORITY WE FIND NO REASON TO INTERFERE WITH THE DECISION OF CIT(A). THUS THE APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2008 - 09 AND 2012 - 13 ARE ALSO DISMISSED. 9 SHRI PRAVINCHANDRA N. KAMDAR ITA NOS. 5481 TO 5483 & 5487/MUM/2015 17. RESULTANTLY ALL THE APPEALS OF THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H SEPTEMBER 2016. SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI DATE : 3 0 T H SEPTEMBER 2016 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R I BENCH MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T MUMBAI