Narendra Kumar K. Mehta, Kolkata v. CIT, Kol - XIX, Kolkata, Kolkata

ITA 858/KOL/2010 | 2005-2006
Pronouncement Date: 16-07-2010

Appeal Details

RSA Number 85823514 RSA 2010
Bench Kolkata
Appeal Number ITA 858/KOL/2010
Duration Of Justice 2 month(s) 16 day(s)
Appellant Narendra Kumar K. Mehta, Kolkata
Respondent CIT, Kol - XIX, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 16-07-2010
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 16-07-2010
Assessment Year 2005-2006
Appeal Filed On 30-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA () . . . . . . . . !' !' !' !' . . . . . . . . #$ #$ #$ #$ % [BEFORE HONBLE SRI D. K. TYAGI JM & HONBLE SRI K. K. GUPTA AM] '& '& '& '& / ITA NO. 858 /KOL/2010 '() *+ '() *+ '() *+ '() *+/ // / ASSESSMENT YEAR : 2005-06 NARENDRA KUMAR K. MEHTA -VS- COMMISSIONER OF IN COME-TAX (PA NO.ADVPM 7944 D) KOLKATA-XIX KOLKATA. (-. / APPELLANT ) (/-./ RESPONDENT ) FOR THE APPELLANT : / SRI R. SALARPURIA FOR THE RESPONDENT: / SHRI B. N. VERMA 0 / ORDER PER D. K. TYAGI JM ( . . . . . . . . ) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT KOLKATA DATED 25.03.2010 FOR THE ASSESSMENT Y EAR 2005-06 PASSED U/S. 263 OF THE I. T. ACT. 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETU RN OF INCOME ON 8.12.2005 DECLARING TOTAL INCOME OF RS.1 07 39 490/-. THE CAS E WAS SELECTED FOR SCRUTINY AND NOTICES U/S. 143(2) AND 142(1) OF THE I. T. ACT WER E ISSUED AND SERVED ON THE ASSESSEE. FINALLY THE ASSESSMENT WAS COMPLETED AT A TOTAL IN COME OF RS.1 08 43 460/-. HOWEVER LD. CIT INITIATED PROCEEDING U/S. 263 BY OBSERVING AS UNDER : ON EXAMINATION OF THE RECORDS IT IS NOTED THAT MO ST OF SHORT TERM INVESTMENT WAS MADE DURING THE PREVIOUS YEAR AND THE GAINS THEREOF TAX AS SHORT TERM CAPITAL GAINS WAS MADE BY WAY OF FREQUENT TRANSACTIONS IN RESPECT OF PURCHASE AND SALE OF SHARES DURING THE RELEVANT PREVIOUS YEAR WITH AN INTENTION OF SEL LING THEM AT A PROFIT AND THAT THE ENTIRE TRANSACTIONS IN RESPECT OF SHORT TERM CAPITA L GAIN SHOULD HAVE BEEN TREATED AS DEALING IN SHARES WHEREFROM YOU DERIVED BUSINESS IN COME. THE ASSESSING OFFICER MADE AN ERRONEOUS ASSESSMENT IN SO FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF REVENUE. IN RESPONSE TO THIS THE ASSESSEE GAVE A DETAILED R EPLY THE CONTENTS OF WHICH WERE GIVEN BY THE LD. CIT IN HIS 263 ORDER. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS THE LD. CIT FOUND THE ORDER OF THE AO ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF REVENUE. WHILE DOING SO THE LD. CIT HAS OBSERVED AS UNDER : 2 IN THE INSTANT CASE THE AO PASSED A COMPLETELY STE REO TYPED/ROUTINE ORDER WITHOUT EXAMINING THE NATURE OF SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE IN COMPLETE DISREGARD OF EXISTING CIRCULAR OF THE BOARD ON THE CONCERNED ISSUE AS WELL AS JUDICIAL PRONOUNCEMENTS IN VIEW OF WHICH THE TRANSACTIONS I N QUESTION AND THE INCOME ARISING THEREFROM HAD TO BE ASSESSED AS BUSINESS INCOME AND NOT CAPITAL GAINS. EVEN IF THE DETAILS WERE PRODUCED BEFORE THE AO BY THE ASSESSEE THE SAME WERE NOT EXAMINED FROM THE LEGAL AND FACTUAL PERSPECTIVES WHICH WERE REQU IRED IN THE MATTER. THERE WAS NON- APPLICATION OF MIND AND THE ISSUE UNDER CONSIDERATI ON WAS NOT EXAMINED IN ACCORDANCE WITH THE EXISTING INSTRUCTIONS LEGAL POSITION AND DUE APPRECIATION OF FACTS OF THE CASE. XXX XXX THE AO ON APPRECIATION OF THE FACTS AND LEGAL POSIT ION AFTER COMPLETION OF REGULAR ASSESSMENT REQUESTED THE CIT TO REVOKE REVERSIONARY POWER AS THE ORDER IN QUESTION WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF RE VENUE. THE ASSESSEES CONTENTION THAT IN EARLIER ASSESSMEN T YEARS THE DEPARTMENT HAD CONSISTENTLY TREATED THE SAID INCOME AS SHORT TERM/ LONG TERM CAPITAL GAINS IS NOT RELEVANT AS THE PRINCIPLE OF RESJUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. THE HONBLE RAJASTHAN HIGH COURT HELD IN HE CASE OF CI T VS. FOSS ELECTRONIC (2003) 263 ITR 125 (RAJ) THAT BY MISTAKE OF THE OFFICER OF THE DEPARTMENT IF A WRONG ORDER HAS NOT BEEN CHALLENGED THAT DOES NOT GIVE ANY RIGHT OR CON FER ANY LEGAL AUTHORITY IN FAVOUR OF THE ASSESEE THAT IN SUBSEQUENT YEARS ALSO THAT MIST AKE SHOULD PERPETUATE. THAT MISTAKE SHOULD BE RECTIFIED AS EARLY AS POSSIBLE. IN VIEW OF THE ABOVE DISCUSSION THE ASSESSMENT ORD ER DATED 23.11.2007 IS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. THE SAME IS SET ASIDE ON THE SPECIFIC ISSUE DISCUSSED ABOVE. THE AO IS DIRECTED TO REDO THE ASSESSMENT AFRESH ON THE CONCERNED ISSUE IN THE LIGHT OF THE ABOVE DISCUSSI ON INCLUDING DECISION IN THE CASE OF RAJA BAHADUR VISHESHWARA SINGH VS. CIT (1961) 41 IT R 685 (SC) AND CBDTS CIRCULAR NO. 4 OF 2007 AND GRANT ANOTHER OPPORTUNIT Y TO THE ASSESSEE BEFORE COMPLETING THE ASSESSMENT. AGGRIEVED BY THIS ORDER NOW THE ASSESSEE IS IN APP EAL BEFORE US. 3. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE AO HAS ACCEPTED THE CONTENTION OF THE ASSESSEE AFTER TAKING INTO CO NSIDERATION THE SUBMISSIONS MADE BEFORE HIM AS IS EVIDENT FROM THE QUERY RAISED BY T HE AO DURING THE ASSESSMENT PROCEEDINGS AND REPLY THEREOF BY THE ASSESSEE. HE A LSO PLACED RELIANCE ON THE COPIES OF THE ORDER SHEET ACCORDING TO WHICH THE ASSESSMENT P ROCEEDINGS TOOK ONE AND HALF YEARS THEREFORE IT CANNOT BE SAID THAT THE AO HAS PASSED THE ASSESSMENT ORDER WITHOUT MAKING PROPER ENQUIRY. HE FURTHER SUBMITTED THAT SINCE AO HAS TAKEN A POSSIBLE VIEW OF THE FACTS OF THIS CASE THE PROCEEDINGS U/S. 263 CANNOT BE INVOKED. THE ASSESSEE ALSO PLACED RELIANCE ON THE ORDER OF THE AO FOR THE AY 2006-07 WHEREIN THE AO INITIATED 148 PROCEEDINGS AGAINST THE ASSESSEE ON THE SAME ISSUE AND AFTER CONSIDERING THE 3 SUBMISSIONS OF THE ASSESSEE DROPPED THE 148 PROCE EDINGS BY HOLDING THAT NO ESCAPEMENT OF INCOME HAS BEEN DETECTED. HE ALSO PL ACED RELIANCE ON THE ORDER OF THE TRIBUNAL FOR AY 2004-05 WHEREIN ORDER PASSED BY THE LD. CIT U/S. 263 ON THE SAME ISSUE WAS SET ASIDE. BY CONCLUDING HIS SUBMISSIONS HE PLACED RELIANCE ON THE SUBMISSIONS MADE BEFORE THE LD. CIT DURING 263 PROC EEDINGS. 4. ON THE OTHER HAND THE LD. DR SUBMITTED THAT IT IS CLEAR FROM THE ASSESSMENT ORDER AND ALSO FROM THE COPIES OF THE ORDER SHEET T HAT AO HAS NOT MENTIONED ANYTHING ABOUT THE ENQUIRIES MADE BY HIM IN RESPECT OF SHORT TERM CAPITAL GAIN AND THEREFORE THE LD. CIT HAS RIGHTLY INVOKED THE PROVISIONS U/S. 263 OF THE ACT AND THEREFORE THE ORDER PASSED BY THE LD. CIT MAY KINDLY BE UPHELD. 5. AFTER HEARING THE RIVAL SUBMISSIONS PERUSING TH E MATERIAL AVAILABLE ON RECORD AND THE PAPER BOOK FILED BY THE ASSESSEE WE FIND THAT IN THIS CASE THE AO THOUGH ASKED FOR DETAILS IN RESPECT OF SHORT TERM CAPITAL GAIN ON T RANSFER OF SHARES AND ASSESSEE ALSO FILED DETAILS IN THIS RESPECT BUT THE AO HAS ACCEPTED THE CLAIM OF THE ASSESSEE WITHOUT MAKING ANY FURTHER ENQUIRY. IT IS EVIDENT FROM THE COPIES OF THE ORDER SHEET GOING INTO FIVE PAGES WHEREIN THERE IS NO MENTION OF ANY ENQUIRY BE ING CONDUCTED BY THE AO OR EVEN ANY DISCUSSION BEING MADE WITH THE AUTHORIZED REPRE SENTATIVE OF THE ASSESSEE. SIMILARLY WE FIND THAT IN THE ASSESSMENT ORDER ITS ELF THERE IS NO MENTION OF ANY ENQUIRY BEING MADE OR ANY DISCUSSION IN RESPECT OF THE SHOR T TERM CAPITAL GAIN ON TRANSFER OF SHARES. WE FURTHER FIND THAT THE AO HIMSELF HAS WR ITTEN TO THE LD. CIT TO INITIATE THE PROCEEDING U/S. 263 AS HE HIMSELF FOUND HIS ORDER E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW OF THIS WE FIND NO M ERIT IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US THAT THE AO FOR THE AY 2006-07 HAS DROPPED THE REASSESSMENT PROCEEDINGS ON THE SAME ISSUE BY HOLDI NG THAT THERE WAS NO ESCAPEMENT OF INCOME AS THE PRINCIPLE OF RES JUDICATA DOES NOT AP PLY IN THE INCOME TAX PROCEEDINGS. SIMILARLY WE FIND THAT THE TRIBUNAL WHILE SETTING ASIDE THE ORDER OF THE LD. CIT FOR AY 2004-05 HAS OBSERVED AS UNDER : 13. AGAINST THIS THE LD. COUNSEL APPEARING ON BEHA LF OF THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE HAS BEEN DEALT WITH BY THE AO AND T HE SAME IS RECORDED IN THE ORDER SHEET DATED 24.08.2006 WHICH IS PLACED AT PAGE 33 OF THE PAPER BOOK READS AS UNDER : 4 MR. ROHIT SHUKLA FCA APPEARED WITH BOOKS OF ACCOU NTS. THEY ARE CHECKED W.R.T. FINAL A/CS SUBMITTED ALONG WITH THE RETURN BANK STATEMENTS AND OTHER RELEVANT SUPPORTINGS. THE A/R PRODUCED CONTRACT NO TES AND D.P. STATEMENTS IN RELATION TO SHORT TERM CAPITAL GAIN. SOME OF THE C ONTRACT NOTES ARE KEPT IN RECORD ON RANDOM BASIS AFTER VERIFICATION WITH TH E STATEMENT OF S.T.C. CO. ATTACHED WITH THE RETURN OF INCOME. THE A/R PRODUC ED THE RELEVANT. . 14. KEEPING IN VIEW OF THE ABOVE RECORDING OF THE FACT THAT ALL THE RELEVANT DOCUMENTS WERE PRODUCED BEFORE THE AO WE ARE OF TH E CONSIDERED VIEW THAT THE PROVISIONS OF SECTION 263 IS NOT APPLICABLE TO THE PRESENT ISSUE. IT IS CLEAR FROM THE ABOVE THAT DURING THE ASSESSME NT YEAR 2004-05 THE AO ACCEPTED THE CLAIM OF THE ASSESSEE AFTER MAKING N ECESSARY VERIFICATIONS WHILE IN THE ASSESSMENT YEAR UNDER APPEAL NO SUCH VERIFICATION H AS BEEN DONE. ON SIMILAR FACTS THE COORDINATE BENCH OF THE TRIBU NAL IN ITA NO. 1261/KOL/2007 BRITANNIA INDUSTRIES LTD. VS. ACIT O RDER DATED 31.12.2009 FOLLOWING THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CA SE OF GEE VEE ENTERPRISES VS. ADD. CIT 99 ITR 375 THE HONBLE GAUHATI HIGH COURT IN THE CASE OF TARAJAN TEA CO. PVT. LTD. VS. CIT 205 ITR 45 AND CHENNAI SPECIAL BENCH I N THE CASE OF RAJALAKSHMI MILLS LTD. VS. ITO 121 ITD 343 HAS HELD AS UNDER : THE AO FAILED TO CONDUCT THE ENQUIRY AND ACCEPTED THE CAPITAL GAIN AS DISCLOSED BY THE ASSESEE. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES SUPRA HO NBLE GAUHATI HIGH COURT IN THE CASE OF TARAJAN TEA CO. LTD. SUPRA AND SPECIAL BEN CH OF ITAT CHENNAIIN THE CASE OF RAJALAKSHMI MILLS LTD. (SUPRA) HOLD THAT THE ASSESS MENT ORDER WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW OF THE ABOVE THE ORDER PASSED BY THE LD. C IT U/S. 263 OF THE I. T. ACT HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS HEREBY UPHELD. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.7.10 SD/- SD/- . . . . . . . . #$ #$ #$ #$ % . . . . . . . . (K. K. GUPTA) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( (% % % %) )) ) DATED : 16 TH JULY 2010 12 '(34 '5 JD.(SR.P.S.) 5 0 6 /''7 87*9- COPY OF THE ORDER FORWARDED TO: 1. -. /APPELLANT - SRI NARENDRA KUMAR K. MEHTA C/O SAL ARPURIA JAJODIA & CO. CHARTERED ACCOUNTANTS 7 C. R. AVENUE KOLK ATA-72. 2 /-. / CIT KOL=XIX KOLKATA .. 3. '0(/ THE CIT KOLKATA 4. '0( ()/ THE CIT(A) KOLKATA 5. @' /'( / DR KOLKATA BENCHES KOLKATA 7 /'/ TRUE COPY 0(A/ BY ORDER B '4 / DEPUTY REGISTRAR .