TaxTMI 
TaxTMI 
2017 (5) TMI 419
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....g other grounds: 1. The order passed by the learned CIT u/s.263 of the Act is illegal, bad in law, ultra vires and contrary to the provisions of law and facts of the case and without appreciating the facts of the case in their proper perspective. 2. On the facts and circumstances of the case and in law, the learned CIT erred in holding that the assessment order passed by the Assessing Officer under section 143(3) r.w.s.153A dated 29/12/2010 for the Assessment Year 2005-06 is erroneous in so far as it is prejudicial to the interest of revenue and thereby setting aside the assessment order passed by the Assessing Officer under section 143(3) r. w.s.153A. 3. On the facts and circumstances of the case and in law, the learned CIT erred in directing the Assessing Officer to re-verify the details and sources from which the Appellant had made the investment in immovable properties without appreciating that in response to the enquiry, the Appellant had filed complete details of immovable properties including sources for making such investments and the same were duly reflected in the Balance Sheets filed with the Assessing Officer. 4. On the facts and circumstances of the case and in law....
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....d seizure action u/s 132 of the 1961 Act was carried on by the Revenue on 05-03-2009 in the case of Jai Corp Group, its employees and close associates. The Jai Corp Group has extended its operation to realty sector. The group is partner along with RIL in two major upcoming SEZ namely Navi Mumbai Special Economic Zone(NMSEZ) and Mumbai Special Economic Zone(MSEZ). The assessee is Chairman of both NMSEZ and MSEZ. It was observed by ld. CIT from the records of assessment proceedings u/s 143(3) of the 1961 Act that the assessee had shown advances and deposits amounting to Rs. 16,05,41,233/- in the Balance Sheet as on 31-03-2005 as per schedule F which includes "stamp duty of Rs. 40,80,500/-" . The learned CIT submitted that as per balance sheet the stamp duty charges were shown of Rs. 40,48,500/- whereas the receipts of the stamp duty submitted were of Rs. 32,65,500/- and the difference between the two establishes that there were certain properties other than those disclosed by the assessee. The ld. CIT observed that certain property which were purchased by the assessee had not been disclosed to the Revenue. The source of investment in these properties of aggregate value of Rs. 7,54,0....
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.... of Income Tax. Central Circle 39, Mumbai giving the required details, which read as under:- "Shri Anand Jain (assesse) had acquired 20 flats at Central Garden Complex, Swadeshi Mill Compound, Chunabhatti, Kurla. Mumbai from Surela Investments & Trading P Ltd. As per the details given in the attached statement. The said flats were acquired during the financial year 2004-05 for a total consideration of Rs. 7,54,02,860/-. The consideration was paid as under. Rs. Upto A.Y. 2005-06 4,56,00,000 A.Y. 2006-07 1,15,00,000 A.Y. 2007-08 1,00,00,000 A.Y. 2008-09 83,02,860 Total 7,54,02,860 Since the accounting in respect of the above flats was on cash basis, the assesse had accounted for all the payments made against them and the same was reflected as advances in the respective years. Accordingly, as on 31.03.2005, the amount of Rs. 4,56,00,000/- was shown under the head "Advances and Deposits". In respect of these flats, during the assessment year 31/3/2005, the assesse had made payment of stamp duty amounting to Rs. 34,48,500 and registration charges of Rs. 6,00,000 aggregating to Rs. 40,48,500/-. The said amount of Rs. 40,48,500 has been reflected under t....
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....et with your requirements." The assessee had also filed premises-wise details of purchase consideration, stamp duty & registration fees. The assessee had also filed Balance Sheet and the relevant details of advances and deposits for the year ending 31/3/2005 to 31/3/2009. A copy of the said letter submitted by the assessee together with all the supporting evidences are enclosed for the kind perusal of your honour. During the course of the scrutiny assessment proceedings, the assessee had also filed a letter from Surela Investments and Trading Pvt Ltd handing over the possession of the various premises at Central Garden Complex to the assessee. Thus, your honour's contention that the immovable properties acquired by the assessee have not been reflected in the Balance Sheet is without any basis. The Assessing Officer had verified the details filed by the assessee in respect of immovable properties and all the relevant supporting evidences filed with him before passing the assessment order u/s.143(3) r.w.s. 153A. It may further be stated that in respect of these premises, the Assessing Officer had recomputed the annual letting value u/s. 23(1)(a) for assessment year 2009-10 i.e....
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....ways utilized its own surplus funds or family funds accumulated over a period of time and has not resorted to borrowing for the purpose of investments. This is borne out by the details fifed with you during the course of the assessment proceedings. 3. The assessee does not have administration set up and has not engaged or employed any person for investment in shares or securities and the same is being carried out by the assessee himself which goes to prove that the investment in shares is not an organized activity. 4. During the period under consideration, the assessee had also made investment in the units of various mutual funds. The assessee has received dividend on the said mutual fund units. The investment in the mutual funds can, by any stretch of imagination, be considered only as investment and not as business assets more particularly, since the units of mutual fund cannot be traded on the market at all, the units can only be repurchased by the mutual funds concerned and cannot be sold to any other person. 5. During the period under consideration the assessee has earned capital gain both by way of long term and by way of short term. The period of holding shares ranges ....
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....huge. Moreover, the volume and the frequency should be considered vis-a-vis the availability of the funds and the size of the balance sheet of the assessee. 10. Moreover, every investment is a capital asset within the meaning of section 2(14) of the Act. Thus the profit arising on transfer of such investments being capital assets is necessarily to be taxed under the head "capital gain". The assessee has been showing the income airing on transfer of shares/securities under the head capital gain either short term or long term depending on the period of holding. The department, following the statutory provisions, has accepted the heads of income under which the income was offered i.e. capital gain in the earlier years and even in these years in earlier assessment proceedings as stated above. The shares have been purchased and sold through recognized stock exchange and securities transaction tax has been paid wherever applicable. The assessee has also received dividend for all the years under consideration and as already stated above, no amount has been borrowed. 11. For the aforesaid propositions, the assessee relies on the decision of Bombay High Court in the case of Gopal Purohi....
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....cation in taxing the income on sale of shares as business income. It is only after due consideration that the Assessing Officer has chosen to tax the surplus on sale of shares as income under the head "capital gain". The Assessing Officer has applied his mind while dealing with the issues under consideration. Thus, it cannot be said that no application of mind has been made by the Assessing Officer on the issue while passing the assessment order u/s. 143(3) r.w.s. 153A. In view of this, the order passed u/s. 143(3) r.w.s. 153A is neither erroneous nor prejudicial to the interests of the revenue in so far as this issue is concerned. It may also be noted here that the assessee had, inter alia, relied on the decision of Bombay High Court in the case of Gopal Purohit v JCIT (228 ITR 582) which was held in favour of the assessee. The Special Leave Petition filed by the Revenue against the said order of the Bombay High Court has been dismissed by the Hon'ble Supreme Court vide its order dated 15th Nov. 2010. The assessee had also relied on the Mumbai ITAT decision in case of DCIT v SMK Shares & Stock Broking. The Assessing Officer has considered the facts of the case and the decisio....
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....sing Officer while passing the Assessment order. The assessee also relies on the decision of Supreme Court in the case of CIT v. G.M. Mittal Stainless Steel Pvt. Ltd. (263 ITR page 255) wherein it was held as under: "Held, affirming the decision of the High Court, that the Commissioner had not recorded his reasons for coming to the conclusion that the Assessing Officer was erroneous in deciding that power subsidy was a capital receipt. Given the fact that the decision of the jurisdictional High Court was operative at the material time, the Assessing Officer could not be said to be wrong. The fact that the Supreme Court had subsequently held in Sahney Steel and Press Works' case [1997] 228 ITR 253, that power subsidy was revenue in nature would not justify the Commissioner's treating the decision of the Assessing Officer as erroneous. The power of the Commissioner under section 263 had to be exercised on the basis of the material that was available to him when he exercised the power. At that time, there was no dispute that the issue whether power subsidy could be treated as a capital receipt had been concluded against the Revenue. The satisfaction of the Commissioner was, ....
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....after considering the facts of the case. The order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue. The claim has been accepted by the Assessing Officer in accordance with law. Moreover, an order cannot be termed as erroneous unless it is not in accordance with the law. If an Assessing Officer acting in accordance with the law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the Assessing Officer should have taken a different view than what he has taken. The error should be an error in applying the relevant law or facts. Just by resorting a different method a larger tax could have been levied, cannot be the sole consideration to attract section 263, as prejudicial to the interest of the Revenue, unless the said method is the only mode legally applicable." The ld. CIT after considering the replies of the assessee directed the A.O. to verify the source from where the assessee had made investments in the properties and whether the said income was offered for taxation in the relevant assessment years as well as to verify the genuineness of the claim of the asses....
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.... submitted that the afore-said assessment order dated 29- 12-2010 passed by the AO u/s 143(3) r.w.s. 153A of the 1961 Act did not mention that any incriminating material was found during the course of search . Thus, it was submitted that no additions could have been made in the assessment order dated 29-12-2010 passed by the AO u/s 143(3) r.w.s. 153A of the 1961 Act in the absence of any incriminating material as the assessment for the assessment year 2005-06 was an unabated assessment keeping in view provisions of Section 153A of the 1961 Act as date of search was 05-03-2009 , the original assessment having being framed by the AO for assessment year 2005-06 u/s 143(3) of the 1961 Act vide assessment orders dated 19-12-2007, which is placed in paper book at page 21-22. The ld. counsel relied upon the decision of Hon'ble Bombay High Court in the case of All Cargo Global Logistics, 374 ITR 645 (Bom) and decision of Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla, 380 ITR 573 (Del) . It was submitted that what could not be achieved directly cannot be achieved indirectly as no incriminating material were found during the course of search and hence it was submitted that invo....
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....ing SEZ namely Navi Mumbai Special Economic Zone(NMSEZ) and Mumbai Special Economic Zone (MSEZ). The assessee is Chairman of both NMSEZ and MSEZ. We have observed that ld. CIT observed from the records CIT observed from the records of assessment proceedings u/s 143 (3) of the 1961 Act that the assessee had shown advances and deposits amounting to Rs. 16,05,41,233/- in the Balance Sheet as on 31-03-2005 as per schedule F which includes "stamp duty of Rs. 40,80,500/-" . The learned CIT observed that as per balance sheet the stamp duty charges were shown of Rs. 40,48,500/- whereas the receipts of the stamp duty submitted were of Rs. 32,65,500/- and the difference between the two in the opinion establishes that there were certain properties other than those disclosed by the assessee. The Id. CIT observed that certain properties which were purchased by the assessee had not been disclosed to the Revenue. The source of investment in these properties of aggregate value of Rs. 7,54,02,860/- remained unexplained, were the observation of the learned CIT. It was also observed by learned CIT that the A.O. has not obtained details of the remaining amount of stamp duty of Rs. 7,73,000/-. The thir....
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....hat it is not brought on record by Revenue before us whether any incriminating material was found during the course of search u 1 s 132 of the 1961 Act and we have observed that while framing assessment order dated 29-12-2010 u/s 143(3) r.w.s 153A of the 1961 Act no additions have been made by the AO based on any incriminating material found during the course of search. In any case, we have observed that the AO has made proper enquiries in proceedings u/s 143(3) r.w.s. 153 A of the Act with respect to all the three issues which were invoked by the CIT in proceedings u/s 263 of the 1961 Act and the AO had arrived at a conclusions on all the three issues after enquiries, which are plausible view both on facts and on law. It is not a case where no enquiries have been made by AO or an inadequate enquiry were made by the AO. In case of differential in stamp duty of Rs. 7,73,000/- as pointed out by learned CIT, the assessee duly explained that the value reflected as stamp duty in Balance Sheet comprised of stamp duty of Rs. 34,48,500/- and registration charges of Rs. 6,00,000/- and there is no difference in the value as reflected in Balance Sheet in the replies filed by the assessee befo....