TaxTMI 
TaxTMI 
2014 (5) TMI 1060
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....t of the Revenue. The learned Asstt. CIT had passed the order after only appreciating the complete facts and making adequate inquiry. Therefore, there is no justification of initiation of the proceedings under s. 263 by the learned CIT. 6. That there is no material on the basis of which it could be said that the short-term capital gain be treated as business income. 7. That the appellant be allowed to add, alter, amend, modify or withdraw any of the ground(s) of appeal before or at the time of hearing of this appeal. 8. That the appellant prays for justice." 2. From the above grounds, it is gathered that only grievance of the assessee relates to the initiation of proceedings under s. 263 of the IT Act, 1961 (hereinafter referred to as 'the Act' in short) by the learned CIT. 3. Fact of the case, in brief, are that the assessee filed the return of income on 24th Jan., 2011 declaring total income of Rs. 17,09,980. Later on, case was selected scrutiny. The AO during the coarse of assessment proceedings, noticed that the assessee had shown income of Rs. 27,42,135 from short-term capital gain under s. 111A of the Act and claimed set off of brought forward short-term capit....
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....nsaction tax of Rs. 99,627 which the assessee did not claim as the tax payment for the reason that he earned capital gain on the sale of investment in shares. The assessee has valued his investment at cost only. (vi) The CBDT in Circular No. 4 of 2007, dt. 15th June, 2007 [(2007) 210 CTR (St) 29] has clearly stated that it is possible for a taxpayer to have two portfolios i.e. an investment portfolio comprising of securities which are to be treated as capital assets and trading portfolios comprising of stock and trade which are to be treated as trading assets. Where the assessee has two portfolios, the AO may have income under the both the heads i.e. capital gain as well as business income." It was further submitted that the AO had examined complete details and also made enquiry while completing the assessment under s. 143(3) of the Act. Therefore, order of the AO was not erroneous or prejudicial to the interest of the Revenue and there was no justification for initiation of the proceedings under s. 263 of the Act. Reliance was placed on the decision of the Tribunal, Chandigarh Bench in the case of Vesta Investments & Trading Co. (P.) Ltd. v. CIT [1999] 70 ITD 200. 4. The learn....
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....wing expenses : (i) application loss Rs. 1,293 (ii) brokerage Rs. 57,200 (iii) demand charges Rs. 9,989 (iv) interest to bank Rs. 45,735 (v) security transaction tax Rs. 94,646 (vi) bank certificates Rs. 3,389 Total expenses of Rs. 2,12,252 Total net profit of Rs. 27,42,137 Thus, in view of the above, the assessee's submission at para 1.5 of letter dt. 12th Dec., 2013 is not found correct. The assessee had claimed expenses for running business in share dealing, however, while computing total income, the net profits in shares disclosed under short-term capital gain. (vi) The assessee had made transactions of single scrips in number of times as can be seen, it from the share transaction sheets of broker namely, KIFS. The assessee had entered into number of transactions of 'Infotech' in the financial year under consideration and had earned profit of Rs. 1,01,783 on purchase and sale of 32,835 shares. No closing balance of this share is shown. Therefore, it can be said that the assessee had been carrying on trading of shares regularly, continuously and at very high frequency and his intension was never to keep ....
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....closed as short-term capital gain by the assessee falls in the business income and to pass assessment order afresh. Reliance was placed on the following case laws : 1. Schenectady Back India Ltd. v. Dy. CIT [2004] 91 ITD 23 (Mum.) (Tm.). 2. Smt. Taradevi Aggarwal v. CIT [1973] 88 ITR 323 (SC). Being aggrieved, the assessee is in appeal. 6. Learned counsel for the assessee reiterated the submissions made before the learned CIT and further submitted that the assessment order was neither erroneous nor prejudicial to the interest of the Revenue and the learned CIT had not given any basis and had also not recorded any finding to the effect that the order of the AO was erroneous or it was prejudicial to the interest of the Revenue. It was contended that the AO fully examined the books of account along with the details including contract notes for share transactions and after proper verification, the returned income of Rs. 17,09,980 declared by the assessee was accepted. It was pointed out that none of the issue raised by the learned CIT in the notice dt. 28th Aug., 2012 under s. 263 of the Act suggests that the order of the AO was erroneous and prejudicial to the interest of the Reve....
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.... CIT directed the AO to re-examine whether share profits of Rs. 27,42,135 disclosed by the assessee as short-term capital gain fell under the head 'Business income'. According to the learned CIT, the assessee sold the shares in number of transactions within less than 30 days holding. Therefore, it was in the nature of business transaction. On the contrary, the claim of the assessee is that the AO examined all these facts during the course of assessment proceedings under s. 143(3) of the Act and after detailed examination of the books of account and contract notes etc., the returned income was accepted. So, it cannot be said that the assessee did not maintain proper records and the AO had not considered the claim on the basis of books of account and had not made proper enquiry. In the present case, the assessee was maintaining two portfolio of shares one as 'investment' and another as 'stock-in-trade'.' The profit earned on the investment was shown under the head 'capital gain' and the profit from the trading activity was shown under the head 'Business income'. The AO in the body of the assessment order dt. 6th Sept., 2012 passed under s. ....
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....He is also empowered to cancel the assessment and direct to frame a fresh assessment. He is empowered to take recourse to any of the three courses indicated in s. 263 of the Act. But the learned CIT does not have unfettered and unchequred discretion to revise an order, he is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well as in s. 263 of the Act. An order can be treated as 'erroneous' if it is passed in utter ignorance or in violation of any law; or passed without taking into consideration all the relevant facts or by taking into consideration the irrelevant facts. The word 'prejudice' is contemplated under s. 263 of the Act is the prejudice to the income-tax administration as a whole. The revision has to be done for the purpose of setting right distortions and prejudices caused to the Revenue in the above context. The fundamental principles which emerge from the several cases regarding the powers of the CIT under s. 263 of the Act may be summarized as under : "(....