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TMI Blog2010 (1) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 on a total income of Rs.3,12,42,622/- as against the returned income of Rs.3,11,92,622/-. In the said order short term capital loss of Rs.84,71,72,226/- was allowed to be carried forward. On perusal of the records, the learned CIT observed that the assessee in the said return of income has declared short term capital gain on account of sale of shares and units of mutual fund of Rs.3,89,30,516/- against which brought forward capital loss of earlier years was adjusted to the tune of Rs.3.89 cores and the balance of Rs.84.71 crores was allowed to be carried forward. The ld. CIT observed that the assessee had filed details as per Annexure-2 of his letter dated 5/12/2006 which consist of his Demat Account running into more than 50 pages with each page containing nearly 14 transactions of purchase and sale of shares/securities. He observed that the assessee is engaged in share trading and has a high volume, frequency and consistency of transaction. The assessee had dealt in nearly 60 scrips consisting of 134 transactions (approx.) with purchase of Rs.31.78 crores (approx.) and sale of about Rs.35.62 crores resulting in a gain of Rs.3.84 crores. These activities are incidental to the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in stating that this issue was not under consideration at all in the earlier years. As regards, the increase in total number of transaction and the borrowings, it was submitted that this itself cannot conclude that the assessee is a trader and not an investor. It was submitted that the motive for original purchase and sale, treatment of shares and profit and loss on their sale in the account of the assessee, source of funds, manner and acquisition of shares and infrastructure employed by the assessee are to be considered as a benchmark for determining the nature of transaction of the assessee. As regards the treatment of shares in the books of the assessee is concerned, it was submitted that the same was shown as investment and not as stock-in-trade and the assessee has not claimed any expenses under section 30-43A and the assessee has lent more funds than it had borrowed for which the assessee has earned interest income of Rs.95,55,017/-. 5. However, the Ld. CIT was not satisfied with the arguments advanced by the assessee. He observed that although copies of balance sheet and other details furnished by the assessee have been kept on record, no verification of any kind seems to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for various details from the assessee. He submitted that the assessee has complied with the queries raised by the Assessing Officer from time to time and the Assessing Officer after proper application of mind has passed the order. Referring to the decision of the Hon'ble Bombay High Court in the case of CIT vs. Gabriel (I) Ltd., reported in 203 ITR 108, he submitted that the Hon'ble jurisdictional High Court in the said case has held that the CIT cannot revise the order merely because he disagree with the conclusion arrived at by the Assessing Officer. 8. As regards the allegation of the CIT that no proper enquiry was made, he referred to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd., and submitted that the Hon'ble Court in the said decision has held that the Assessing Officer while passing the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. One has to see from the record as to whether there was application of mind before allowing the claim made by the assessee. It was held in the said decision that there is a distinction between "lack of enquiry" and "inadequate enquiry". If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue stands covered in favour of the assessee by the decision of the Tribunal in assessee's own case for the A.Ys. 2002-03 and 2003-04, in the case of the wife of the assessee for the A.Y. 2002-03 and the decision of the Hon'ble High Court in the case of the wife of the assessee. 11. The learned DR, on the other hand, strongly relied on the order of the CIT. Referring to the decision of the Hon'ble Supreme Court in the case of CIT vs. H. Holck Larsen, he submitted that the question whether the transactions of sale and purchase of shares were trading transactions or were in the nature of investment is a mixed question of law and facts. He submitted that the facts of every year have to be gone through by the Assessing Officer and the principles of res judicata do not apply to incometax proceedings. However, in the impugned assessment year there is non application of mind by the Assessing Officer and he has passed a stereotypic order. Referring to a number of decisions, he submitted that incorrect assumption of facts and incorrect assumption of law will make an order erroneous as well as prejudicial to the interest of the revenue. Referring to the reply of the assessee to the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the Assessing Officer while framing the assessment order passed u/s. 143(3) of the Act had called for various details as per his letter dated 24th August, 2006. There is also no dispute to the fact that the assessee has replied to various queries raised by the Assessing Officer from time to time. There is also no dispute to the fact that the assessee vide his letter dated 8th December, 2006 addressed to the Assessing Officer had submitted before the Assessing Officer that he is an investor in shares and securities and has been doing investment activities since 1989 onwards consistently. It was stated in the said letter that action u/s. 263 has been made by the CIT-4, Mumbai for the A.Y. 2002-03 and A.Y. 2003-04 and the ITAT has quashed the orders u/s. 263 of CIT-4, Mumbai for the A.Y. 2002-03 and the appeal against the order u/s. 263 for the A.Y. 2003-04 is pending before the Tribunal. It was further stated in the said letter that the facts and circumstances of the case in the impugned assessment year are exactly similar to the A.Y. 2002-03 and earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is prejudicial to the interests of the Revenue". It is not an arbitrary or under chartered power, it can be exercised only on fulfilment of the requirements laid down in subsection (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity. (see Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) at page 10). From the aforesaid definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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