Share transaction income cannot be reclassified arbitrarily; reassessment must follow CBDT Circular No. 6/2016 conditions.

Where share transactions are duly reflected in the books of account, the head of income should not be recharacterised arbitrarily in the absence of contrary evidence. The Tribunal noted that the Revenue must first examine the conditions under CBDT Circular No. 6/2016 before disturbing the assessee's treatment of share sale income. The matter was therefore remanded to the Assessing Officer for fresh adjudication after giving the assessee a reasonable opportunity of being heard, with only statistical relief granted and no final decision on merits.

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Issues: Whether the income from sale of shares was to be assessed under the chosen head reflected in the books of account or could be recharacterised by the Revenue, and whether the matter required remand for fresh adjudication in the light of CBDT Circular No. 6/2016.

Analysis: The assessee's claim regarding the treatment of share transactions in the books of account was held to be significant. It was observed that the Revenue cannot arbitrarily change the head of income without contrary evidence, and that the Board Circular requires the authorities to examine the applicable conditions before disturbing the assessee's treatment. The matter was therefore sent back to the Assessing Officer for reconsideration after giving the assessee a reasonable opportunity of being heard.

Conclusion: The issue was remanded to the Assessing Officer for fresh adjudication in accordance with the Circular, and the assessee obtained relief by way of statistical allowance.

Final Conclusion: The dispute was not finally resolved on merits and was restored for reconsideration by the assessing authority, with the assessee succeeding only to the extent of statistical relief.

Ratio Decidendi: Where share transactions are duly reflected in the books of account, the head of income should not be changed arbitrarily in the absence of contrary evidence, and the matter must be examined in accordance with the governing CBDT circular.

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