AI Drafter 
TaxTMI 
TaxTMI 
2013 (10) TMI 977
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.... from other sources, had filed the return of income for the year under consideration declaring a net income of Rs.1,10,70,840/- comprising of Rs.19,87,127/- from STCG before 01.10.2004, Rs.56,49,475/- from STCG after 01.10.2004 and Rs.28,61,567/- from LTCG before 01.10.2004. The original return of income filed on 08.08.2005 declaring total income of Rs.1,10,70,840/- ( comprising of Rs.19,87,127 from STCG before 01.10.2004, Rs.56,49,475/- from STCG after 01.10.2004 and Rs.28,61,567 from LTCG before 01.10.2004) was accepted vide intimation u/s 143(1). The assessment was reopened by issuing notice u/s 148 dt. 02.06.2010. The income was reassessed vide order u/s 143(3) r.w.s. 147 dt. 30.11.2011 at Rs.1,10,70,840/-. Subsequent to the acceptance, assessment and reassessment of income the Ld.CIT sought to revise the said order of reassessment issuing notice u/s 263 dt. 30.08.2012. Order u/s 263 dt. 23.11.2012 was passed by the CIT directing the AO to amend the following reassessed income by taxing the capital gains as business income and made additions to the reassessed income as under: Particulars Amount Short Term Capital Gains before 01.10.2004 to be treated as business income....
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....rejudicial to the interests of the Revenue. 4.1 For the purposes of examining the validity of the order of the Ld.CIT(A), it is important to see the reasons stated by the Ld.CIT(A) for his action u/s 263 of the Income Tax Act, which reads as under: "5. I have carefully considered the relevant facts and provisions of law with regard to the issues involved. I have also carefully considered the arguments put forth by the Learned Counsels for the assessee. 5.1 During the period relevant to A.Y. 2007-08 the assessee claimed long term capital gain of Rs.3.82 cores as exempt u/s 10(38) and short term capital gain of Rs.1.97 crores, taxable @ 10% u/s 111A. The claim of the assessee was that she had made investment for long term appreciation and earning dividend and that no shares were traded by her as stock-in-trade. The Assessing Officer, however, did not find any merit in this claim of the assessee and held that the assessee was engaged in the business of trading of shares and the whole of long term capital gain and short term capital gain declared by the assessee was treated as business income of the assessee. The Assessing Officer arrived at the above conclusion on the basi....
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....e Ld.CIT(A), however did not uphold the findings of the Assessing Officer by relying on the decisions of the Hon'ble ITAT, Mumbai, in the case of Gopal Purohit 122 TTJ 433 and based his decision on the following: (a) The assessee was showing share investment in the balance sheet in earlier years also and assessee's claim was accepted in earlier years. (b) The assessee had no organized business activity of trading in shares. (c) Major long term capital gain was in respect of only shares of 9 companies. (d) Most of the transactions were delivery based. (e) There was no borrowing. (f) There was huge dividend income. (g) Magnitude of transaction was not of much relevance. (h) Scrips of assessee were not held as stock-in-trade. 5.4 The decision of Ld.CIT(A) was not accepted by the Department and a Second Appeal was preferred to the ITAT, as the decision of CIT (A) did not consider the relevant facts peculiar to the case of the assessee and the correct position of Law as applicable to the facts of the assessee and in particular on the following grounds: (a) The Ld.CIT(A) did not appreciate that the case of the assessee was clearly distinguishable on facts fr....
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....urable ITAT Pune held that even when Assessing Officer followed the line as per decision of CIT(A) in another year, the CIT was justified to invoke revision u/s 263 if the view held by CIT(A), in another assessment year was not acceptable to the department and an appeal was preferred to ITAT. In this decision, the Hon'ble Tribunal observed as under: "The fact that order of CIT(A) was subject-matter of further appeal before the Tribunal was very much available before the CIT and therefore, the CIT being representative of the Revenue was bound to consider the error committed by the Assessing Officer without being influenced by the order of CIT(A)." b) In the following judicial pronouncements it was held that when proceedings initiated u/s 147 were dropped the CIT could invoke revision u/s 263: 1. P.K. Fabrics Vs. ACIT (ITAT, Asr) 67 ITD 326 2. Exports India Vs. CIT (Del) 246 ITR 1 3. New Jagat Textile Mills P. Ltd. Vs CIT (Guj) 282 ITR 399 c) In the following judicial pronouncements it was further held that CIT was justified in invoking provisions of section 263 even on debatable issues: 1. JehanNuma Palace Hotel (P) Ltd. Vs. CIT (ITAT, Indore) 70 ITD 552 2. D....
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....ble as income from business or as income from house property." g) Hon'ble Gujarat High Court in the case of CIT v. M.M. Khambhatwala [1992] 198 ITR 144 (Guj) held as under: "Powers can be exercised even if the issue is debatable. Revisional power under section 263 is not comparable with the power of rectification of mistake under section 154." In view of the above and facts and issues involved in the case of the assessee. I hold that there were no merits in the arguments put forth by the assessee and the provisions of section 263 were clearly applicable in the case of the assessee to ensure proper assessment in accordance with provisions of law." The reasons stated by the Ld.CIT(A), in crux, indicates that the reopening and the consequent action of the Ld.CIT(A) u/s 263 is mainly based on the facts emerged in the assessment proceedings for the year 2007-08 in which it has been found by the AO that the assessee was dealing in purchase and sale of shares with profit motive and income therefrom was assessable as business income which is separately contested by the department before the ITAT against the relief given by the Ld.CIT(A) against the order of the AO. The perusal ....