TaxTMI 
TaxTMI 
2017 (3) TMI 184
X X X X Extracts X X X X
X X X X Extracts X X X X
....Revenue's appeal in ITA No.2101/Kol/2013. 3. Only issue raised by the Revenue in this appeal is that ld CIT(A) erred in holding the income from transactions in shares as capital gain without appreciating the fact that the assessee is in business of share trading. 4. The assessee in the year under consideration has shown following sources of income : S. No. Sources of Income Amount 1. Long Term Capital Gain 61,78,630/- 2. Short Term Capital Gain 90,62,028/- 3. Dividend income 5,28,122/- 4. Readymade garments business 2,45,814/- The Assessing Officer, during the course of assessment proceedings observed that the income under the head "capital gain" is actually a business income of the assessee on account of the following reasons : 1. The assessee has shown in the tax audit report the nature of business as export of ready-made garments and textiles and investment in shares. 2. The substantial part of the fund was invested in the activities of purchase and sale of shares whereas negligible fund was deployed in the business of ready-made garments. 3. The turnover from the activities of purch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the income from transactions in shares were capital gains without appreciating the fact that the assessee is engaged in frequent purchase and sale of shares being the principal business activities of the assessee with the motive behind the transactions being to earn profit." 6. Ld DR for the Revenue before us vehemently supported the order of AO whereas the ld AR before us filed a paper book comprising of pages from 1 to 149. The ld AR before us submitted that the assessee has been maintaining its shares activities under the head investment which has been accepted by the Revenue in the earlier years. The ld AR before us relied on order of ld. CIT(A). 7. We have heard rival contentions of both the parties and perused the materials available on record. We find from the aforesaid discussion and submission that the AO has treated LTCG/STCG as "business income" of assessee considering the volume and frequency of the transactions in a systematic and organized manner. As per the AO numerous transactions of buying and selling of shares were carried out by assessee and which constitute business activity. It was also observed that many transactions were completed within a short sp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stand in this regard in subsequent years; c) In all other cases, the nature of transaction (i.e whether the same is in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT." From the plain reading of clause (a) of the said Notification, we find that it has been instructed that if the assessee is irrespective of the period of holding treat the transaction for sale-purchase of the share as stock-in-trade then the Department shall not dispute on this matter. Accordingly, in this case, assessee has been treating the income arising from the sale-purchase of the share as STCG/LTCG, therefore, AO cannot dispute the same as "business income". In this connection, we also rely in the judgment of Hon'ble Bombay High Court in the case of Commissioner of Income Tax vs. Gopal Purohit (2010) 228 CTR 0582 : (2010) 34 DTR 0052 : (2011) 336 ITR 0287 : (2010) 188 TAXMAN 0140 where it was held as under : "The Tribunal has entered a pure finding of fact that the assessee was engaged in two different types of transactions. The first set of transactions involved investment in shares. The second set of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces are identical, no substantial question of law arises." In view of the above, we find that magnitude of the transactions do not alter the nature of the transactions. Therefore, magnitude of transactions carried out by the assessee in our view should not be very material in coming to the conclusion that income in question is income from "business". Though the res judicata is not applicable but the principal of consistency will definitely apply and on that basis the claim of the assessee should be held proper. In view of above we are inclined not to interfere with the order of Ld. CIT(A) and ground raised by Revenue is dismissed. 7. In the result, Revenue's appeal is dismissed. Coming to assessee's appeal in ITA No.1326/Kol/2013. 8. In this appeal various grounds raised out of which ground no.4 was not pressed and, therefore, same is dismissed as not pressed. Ground No.5 is of general nature and does not require separate adjudication. The only issue raised by assessee in this appeal in ground No. 1 to 3 are that that Ld. CIT(A) erred in confirming the order of AO by sustaining the addition of Rs.89,02,420/- as unexplained cash credit u/s 68 of the Act. 9. The asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 0.5% on the total amount credited in the account. In view of above the AO sought clarification from the assessee on the aforesaid amount shown in the name of sundry creditors. The assessee replied that all the necessary details such as copies of the ledger, PAN, Trade license, stock registers, bills, books of accounts, bank statements along with the export details were duly submitted. The assessee further submitted that no cash was received from SPK and requested the AO for cross examination before taking any adverse inference. The statement of the Director of the company was also recorded at the time of assessment proceedings where it was claimed that all are genuine creditors but expressed inability to produce them in person as it does not have any dealing with them now. However the AO disregarded the contention of the assessee and treated the aforesaid amount of sundry creditors as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. 10. Aggrieved assessee preferred an appeal before ld CIT(A) who confirmed the order of the AO by observing as under:- "4. I have considered the finding of the AO in his assessment order ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r that the Ld. CIT(A) erred in dismissing Appeal Ground Nos 1-9 without passing a speaking order and without considering various objections raised by the Appellant. 2) For that the Ld. CIT(A) simply relied upon the Inspector's report, completely ignoring the facts already on record w.r.t. creditworthiness/identity of the trade parties. 3) For that, alternatively, since the Appellant was a trader/Exporter hence even if purchase form few trade creditors are doubted, the same might have been purchased from others." 11. The ld AR before us filed a paper book comprising of pages from 1 to 149 and submitted that the books of accounts, bills, vouchers and stock details were duly furnished before the AO at the time of assessment. No adverse inference was drawn by the AO. The ld AR further submitted that the sales shown by the assessee has been duly accepted by the AO and without purchase sales cannot be completed. The ld AR drew our attention on pages 1 and 2 of the paper book where the details with the creators were placed. Our attention was also further drawn to the stock summery which is placed on pages 25 to 32 of the paper book. The necessary details such as trade....
X X X X Extracts X X X X
X X X X Extracts X X X X
....we sustain it for the reasons given by them. But the said finding does not automatically go to establish that the goods in question had not been purchased by the assessee during the year under consideration. The goods in question having been purchased and the profit arising therefrom having been accepted by the AO, it appears difficult for us to visualize as to how the debits made by the assessee with regard to the said purchases and the simultaneous credits to the sellers' account could simultaneously be held by him to be cash credits. The credits in the accounts of the said parties are admittedly on account of the purchases. These purchases are not bogus, though the names of the persons, from whom the purchases have been made, are bogus. The absence of proof regarding the existence of the parties cannot, in our opinion, be confused with the question of genuineness of the purchases. If the goods purchased had been accepted by the Department, it would not, in our opinion, be possible for the Department to turn round and say that the debits appearing on account of these purchases in the name of parties were cash credits. But the lower authorities do not challenge the correctness of ....