TaxTMI 
TaxTMI 
2014 (1) TMI 1499
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.... year under consideration was filed by him on 18-10-2006 declaring total income of Rs. 54,80,739/-. In the said return, profit from sale of shares amounting to Rs. 36,51,898/- was shown by the assessee under the head "short term capital gains. In the assessment completed u/s 143(3) of the Income Tax Act, 1961 (the Act) vide an order dtd. 17-10-2008, the short term capital gain as declared by the assessee was accepted by the A.O. Thereafter, on the basis of proposal sent by the successor A.O., the ld. CIT was of the view that the profit from sale of shares was required to be treated as business income in the facts and circumstances of the assessee's case and the treatment given by the A.O. to the said profit as short term capital gain had re....
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....ther economic activity, much less share trading activity. It was stated that the main object of the assessee is to invest his savings and capital in shares and securities and other financial instruments on a fairly long term basis to get better returns and the assessee has been doing such investments for many years. It was stated that in the assessee's case there are on an average just 8-10 purchases/sale transactions in a month and in fact in few months there was no single sale/purchase instance. However due to change in market scenario sometime he has to offload the investments to minimize the risk of values getting eroded considerably or the realize investment opportunities when the target is surpassed. Further in order to distribute the....
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.... for share purchases or that the assessee had no time in organizing his affairs were having their own implications, individually and jointly on the ultimate decision on the issue but the same remained un-verified by the A.O. In this regard, he relied on the decision of Hon'ble Bombay High Court in the case of CIT vs. Gopal Purohit 34 DTR 53 wherein it was held that one has to have a holistic and over all view, considering so many factors associated with the share trading activity, to come to the conclusion whether it is an investment or a business venture. He held that the assessment order passed by the A.O. u/s 143(3) of the Act, however, was lacking on this account and accordingly he set aside the said order treating the same as erroneous....
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.... show that all the relevant details and documents required by the A.O. were duly furnished by the assessee in order to substantiate the treatment given to profit arising from sale of shares as short term capital gain. He contended that on the basis of thes details and documents furnished by the assessee, the treatment given by him to the profit arising from shares as short term capital gain was accepted by the A.O. and although there is no discussion made on this issue specifically in the assessment order, there was no case of accepting the claim of the assessee as short term capital gain by the A.O. without making proper and adequate enquiry as alleged by the ld. CIT. He invited our attention to the copy of notice issued by the ld. CIT u/s....
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....fficient enquiry giving jurisdiction to the ld. CIT to revise the same u/s 263 of the Act. 7. We have considered the rival submissions and also perused the relevant material available on record. It is a settled position of law that the order passed by the A.O. u/s 143(3) of the Act without making proper and adequate enquiry, as required in the facts of the given case, is one which is erroneous and prejudicial to the interest of the Revenue and the ld. CIT has the power to revise the same u/s 263 of the Act. The moot question, however, is whether it can be said in the facts and circumstances of the present case that the treatment given by the assessee to the profits arising from sale of shares as short term capital gain was accepted by th....
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....urchases. In our opinion, the said details were sufficient to ascertain the number of transactions, frequency of transaction, the period of holding, the volume of transactions etc. for the purpose of deciding whether the treatment given by the assessee to the profit arising from purchase and sale of shares was business income or short term capital gain. As a matter of fact, in his notice issued u/s 263 of the Act on 23rd September, 2010 (copy placed at page 61 & 62 of the paper book) a prima facie conclusion was reached by the ld. CIT himself on the basis of the said details furnished by the assessee during the course of assessment proceedings that the profit from sale of shares was liable to be treated as the business income of the assesse....