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TMI Blog2016 (5) TMI 1543X X X X Extracts X X X X X X X X Extracts X X X X ..... ad. As these three appeals are involving similar issue and part of the same group, they have been heard together and are being disposed of by this common order for the sake of convenience. 2. First we take up IT(SS)A No.56/Ahd/2010 for Asst. Year 2007- 08. 3. Briefly stated facts of the case as culled out from the assessment records are that assessee is an individual engaged in the business of share trading. A search and seizure action u/s 132 of the Act was conducted in the group cases of Shri Atul Shah on 7.2.2008 and post search case was centralized with Central Circle. Notice u/s 153A of the Act was issued on 1.8.2008 and duly served on assessee on 2.8.2008. In response to this notice return of income was filed on 30th September, 2008 declaring total income at Rs. 65,21,290/- and further revised return was filed on 23.1.2009 declaring total income at Rs. 2,88,37,110/-. Notice u/s 143(2) of the Act was issued on 29.1.2009 and served on the assessee on 2.2.2009 followed by notice u/s 142(1) of the Act along with questionnaire was served on 10.2.2009 to furnish certain details/documents. During the course of assessment proceedings ld. Assessing Officer observed that assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concessional rate of tax as short term capital gain merely because he is acting in a dual capacity of both the investor & businessman. Therefore, from the above discussion it becomes clear that the AO has considered the entire aspect of treatment of shares held as investment as stock on faulty premises and incorrect presumption. The AO has taken a very narrow and myopic outlook while reaching the conclusion that the short term capital gain shown by the appellant is business income. Various premises on which this inference .has been proved to be incorrect and erroneous. When the basic foundations on which these premises have been drawn do not survive the entire addition, stands crumbled. It is clear that the administrative circular issued by CBDT is binding upon the Department. The AO has without examining the circumstances and without issuing a show cause notice chosen to completely disregard the said circular which is binding upon hi,. No reason whatsoever has been assigned while reaching the conclusion except what has been stated in para 2 of the Assessment Order. From the on going discussion made, on the basis of which such conclusion has been reached have been found to be inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unnatural. The decisions eked by the appellant in this regard are relevant. The intention of the appellant to hold these shares as an investor was also discernible from the details filed in the return filed originally on 7/11/2007, the dividend income earned, etc. Thus on a holistic consideration, the action of the AO in treating the disclosed short, term capital gains as business income, in the facts of the appellant, cannot be upheld. The ground of appeal is, therefore, allowed." 4. Aggrieved, Revenue is now in appeal before us. 5. Ld. DR supported the order of ld. Assessing Officer. 6. Ld. AR relying on the order of ld. CIT(A) submitted that- (1) The assessee is in the business of investment in shares as well as trading thereof. The aforesaid fact has also been accepted by the AO in column 10 of the assessment order. A search took place at the business as well as the residential premises of the appellant on 07-02-2008. (2) The assessee had originally filed the return of income u/s 139(1) for the year under appeal on 07-11-2007 declaring the total income of Rs. 1,17,56,060/-. Subsequent to the filing of the return of income, a search took place on 07-02-2008. It may be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is the subject matter of appeal. 7. Ld. AR further submitted that subsequent to the filing of original return assessee realized that lesser claim of interest expenses was made in the audited account and subsequently when return was filed u/s 153A of the Act the actual expenditure was claimed by way of deduction. 8. Ld. AR further submitted that the intention of the assessee was to earn short term capital gain at the time of purchase of shares of SGL PP and, therefore, ld. CIT(A) has rightly held it to be short term capital gain. 9. We have heard the rival contentions and perused the material on record. The only issue raised in this appeal by Revenue is against the order of ld. CIT(A) in directing the ld. Assessing Officer to treat the income from share trading transaction of Rs. 78,93,389/- as short term capital gain as against treating the same as business income. From going through the assessment order, we observe that ld. Assessing Officer while framing assessment u/s 153A r.w.s 143(3) of the Act did not accept the claim of short term capital gain at Rs. 78,93,389/- and assessed the income at business income and there was no other addition or disallowance and returned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to hold them as investment and to earn capital gain (short term/ long term) therefrom. These are very relevant in this case because assessee's main business is of share trading and short term capital gain of Rs. 78.93 lacs has been earned which becomes further relevant because the total net profit in the audited profit and loss account is shown at 1.09 crores which is inclusive of the short term capital gain of Rs. 78.93 lacs which means that substantial turnover is of business but the substantial profit portion is coming from short term capital gain. 13. We further observe that ld. AR referred in his submissions that assessee first filed his return of income on 7.11.2007 declaring total income at Rs. 1,17,56,060/- thereafter post search which took place on 7.2.2008, return of income in response to notice u/s 153A of the Act was filed on 30.09.2008 declaring total income at Rs. 65,21,290/- which was further revised on 23.1.2009 declaring total income at Rs. 2,88,37,110/-. As per ld. AR the basic reason for these repetitive modifications in the income declared was that the interest expenditure/income was not booked by the assessee correctly in the books of account and so much so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case in directing to treat the income from share trading transactions of Rs. 1,40,01,808 /- as capital gain as against treating the same as Business income 16. From going through the grounds of appeal, we find that facts and circumstances of this case are similar to those discussed above in IT(SS)A No.56/Ahd/2010, for Asst. Year 2007-08 and the assessee is also part of the Atul B. Shah group wherein search action was carried out on 7.2.2008. In both these appeals ld. Assessing Officer has treated the short term capital gain discussed by the assessee as business income without placing necessary information in the assessment order to support his observations that the assessee did not have her own funds but has borrowed funds from outsiders by paying substantial interest and he also did not verify that separate demat account has been maintained by the assessee for investing in shares to earn longterm/shortterm capital gains. In these circumstances we observe it would be just and proper to set aside the issue to the file of Assessing Officer to frame de novo assessment. This appeal is allowed for statistical purposes. 17. Now we take up IT(SS)A No.58/Ahd/2010 for Asst. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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