Tribunal confirms short-term gains as business income, reduces expenses disallowance, dismisses additional ground.

The Tribunal upheld the assessment order, confirming the treatment of short-term capital gains as business income due to the systematic trading approach of the assessee. The disallowance of expenses was reduced to 15%, and an additional ground regarding income from house property was dismissed as already addressed by the CIT(A). The appeal of the assessee was ultimately dismissed, with the Tribunal supporting the decisions of the CIT(A) and the assessing officer on all grounds.

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Issues Involved:
1. Validity of the assessment order.
2. Scrutiny selection under CASS.
3. Treatment of short-term capital gains as business income.
4. Disallowance of expenses.
5. Additional ground regarding income from house property.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:
The assessee contended that the assessment order dated 15/12/2010 was served on 10/01/2011, suggesting it was ante-dated and thus barred by limitation. However, the Tribunal found no evidence supporting this claim and dismissed the ground, stating, "there is no basis for the assessee to raise this ground and hence, the same is dismissed."

2. Scrutiny Selection under CASS:
The assessee argued that the scrutiny selection under CASS was not clear whether it was for a specific issue or general, questioning the validity of the order u/s 143(3). The Tribunal dismissed this ground, noting, "the AO has power under jurisdiction to scrutinize the entire case of the assessee," and therefore, the order was valid.

3. Treatment of Short-term Capital Gains as Business Income:
The AO treated the short-term capital gains of Rs. 48,75,642/- as business income based on frequent and high-volume transactions, holding periods being short, and the intention to earn profits rather than dividends. The CIT(A) upheld this view, referencing the jurisdictional High Court's guidelines in P.V.S. Raju Vs. Addl. CIT (340 ITR 75). The Tribunal agreed, noting, "the intention of the assessee is only to make the profit by buying and selling the shares in a systematic manner," and upheld the assessment at 30% tax rate.

4. Disallowance of Expenses:
The AO disallowed 30% of expenses under 'conveyance & travelling' and 'vehicle maintenance' due to self-made vouchers. The CIT(A) reduced this to 15%, referencing judicial rulings that support a 15% disallowance in such cases. The Tribunal upheld this decision, stating, "we find no infirmity in the order of CIT(A) and therefore, the same is hereby upheld."

5. Additional Ground Regarding Income from House Property:
The CIT(A) had already remitted this issue back to the AO for verification to ensure no double addition of income from house property. The Tribunal dismissed this additional ground, noting, "the additional ground raised by the assessee is rejected in view of the fact that the CIT(A) has already adjudicated the same by remitting the same to the file of the AO."

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the decisions of the CIT(A) and the AO on all grounds. The judgment emphasized the systematic approach of the assessee in trading shares, the validity of the assessment process, and the reasonableness of expense disallowances. The decision was pronounced in the open court on 6th December, 2019.

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