Income Tax Appellate Tribunal - Chandigarh
Ito, Ward, Parwanoo vs M/S Preethi Himachal & Company, ... on 1 April, 2024
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ,च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, "B" CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND
SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA Nos.639&640/CHANDI/2022
नधा रण वष / Assessment Year : 2017-18
ITO, Ward- Parwanoo बनाम M/s Preethi Himachal &
Company
Plot No.35F, Sector-2, Nalagarh Ropar Road, Near
Parwanoo. Zakat Khana Dhang Nichi
Plassi, Nalagarh, Himachal
Pradesh-173030.
थायी लेखा सं./PAN NO: AAIFP0748C
अपीलाथ /Appellant यथ /Respondent
नधा रती क! ओर से/Assessee by : Shri Amar Pratap Singh, Adv. And
Shri Ankit Awal, Advocate
राज व क! ओर से/ Revenue by : Smt. Kusum Bansal, CIT, DR
सन
ु वाई क! तार&ख/Date of Hearing : 15.02.2024
उदघोषणा क! तार&ख/Date of Pronouncement : 01.04.2024
आदे श/ORDER
Per Sanjay Garg, Judicial Member:
The ca p ti oned ap pea ls ha s b een pr efer red by the r evenue a g ai nst the s epa ra te o rd ers d ated 0 1.0 8.2 022 & 02 .08 .2 022 of the Nati onal Fa celess Ap p eal Centre [hereinafter referred to as the 'CIT(A)'] pa ssed u/ s 25 0 o f the I nco me Ta x Act (he reinaf te r r efer red to as the 'Act ') r espectiv el y .
ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 2 of 11
2. I n thi s ca se, ea rlier the a sses sment w as fr am ed u/s 14 3( 3) o f the Act b y t he Asse s sing Of ficer vide o rder da ted 17 .12 .2 019 , w hereb y , the ad di ti o n of Rs. 40,93 ,17 ,17 6/ - wa s ma de by tr eati ng the i ncom e ea rned by the asses see on pur cha se and s al e of sha res a s busin ess i nco me a s ag a inst the cla i m of the asses see b eing cap ita l g ains. Ther eaf ter , the a ss essme nt wa s r eop ened o n the sa me i ssue u/s 147 r .w. s 14 8 o f the Ac t and vi de o r der da ted 31. 03 .20 22 pa ssed u/ s 1 43 (3) r .w.s. 14 7 of the Ac t a nd a n a dd iti on of Rs.7, 03 ,60 ,23 3/ - w as m ad e. The asse ss ee pr eferr ed a ppea ls ag a inst bo th the o r der s o f the Ass es sing Of ficer i.e. the o rd er da ted 1 7.1 2.2 019 pa ssed u/s 1 43( 3) of the Act a nd al so a g ai nst the o rd er da ted 31. 03. 20 22 pa ssed u/s 14 3( 3) r .w .s. 147 o f the Ac t. The l d. CI T( A) vi de sep ar ate o rd er d ated 01 . 08 .20 22 acc ep te d the a pp ea l o f the as ses see a g ai nst the a ss essm e nt or der d a ted 17 .12 .2 01 9 pa ss ed u/s 14 3( 3) o f the Act and d eleted t he im pug ned a d di tio ns. The ld . CI T(A) vide a no ther o rd er da ted 0 2.0 8.2 022 al so a ccept ed the a pp eal o f the a sses see ag a inst a ssessm ent o rd er d ated 31.03 .20 22 p as se d u/s 143 (3) r.w.s . 14 7 o f the Act by ho ld ing tha t the r eo pe ni ng o f the a sse ssmen t w as ba d i n la w. Being a g g ri eved b y the a fo r esai d bo th ord ers o f the CI T(A) , the revenue ha s p ref err ed the cap tio ned a ppea ls . I TA No .63 9/Cha ndi /2 022 fil ed b y the r eve nue is a g ai nst the o rde r da ted 0 1. 0 8. 202 2 in rel ati on to the o rig ina l a ssess ment f ra med u/ s 14 3(3 ) o f the Act, w herea s, I TA No .6 40/ Cha nd i/ 202 2 is i n re sp ect o f the o rd er da ted ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 3 of 11 02 .08 .2 022 in r el a ti o n to the s ub s eque nt a s se ssment o rd er da ted 31 .03 .20 22 pa ssed u/s 14 3( 3) r.w.s. 1 47 o f the Act.
We fir st ta ke up t he r eve nue's a ppe al I TA No. 639 /Cha ndi /20 22 . 3. I TA No.639/C handi /2022 - The b ri ef fa cts as
fur nished b y the a ss ess ee a r e tha t " M/ s Pr eet hi Him acha l & Co mp any ("Respo nd ent as sess ee") , ear li er enga g ed in pr o ductio n fo r d istri buti on a nd sa le of k itche n a ppl ia nces, enter e d into a slump sa le a gr eement in FY 20 11 -1 2, tra nsf err ing its busi ness o n sl ump sa le ba sis to Pr eeti Kitchen Ap pli anc es P ri vate Li mited. The p urcha se pr ice fo r suc h slump sa l e wa s ag r eed a t Rs. 184 ,5 9,0 0, 0 00/ - , w ith Rs.16 1, 51, 62, 500 /- r eceived in FY 20 11- 1 2 a nd the r emai ning amount w as k ept i n escro w and recei ved i n FY 20 12 -1 3. The sai d am ount wa s i nvested in sec uri ties (shar es/m ut ual funds/ bo nds) a nd the asse ssee tre ate d thes e i nve stme nts as cap ita l a ssets i n i ts bo o ks o f acco unts a nd ac cor di ng ly , trea ted the inco me fr o m the sa l e of investme nt a s lo ng - term o r short- term cap ital g a ins, as the ca se ma y be, i n its r et urn o f i nco me o ver t he y ea rs. Fo r AY 20 12 -1 3, AY 201 3- 14 a nd AY 201 6- 17 , scr utin y a sses sment s o rd ers we re pa ss e d u/ s 143 (3 ) o f the Act with no a dver se find ing o n tr eatm ent of investm e nts. Ho wever, in AY 2 01 7 - 18, the a sse sse e sol d cer tai n i nvestme nts co mpr ised of those a cqui red i n the y ear a nd the ba l ance r epre sented ho ld ing s f ro m p revi ous yea r (s) and inco me fr o m such sal e was o ff ered to tax und er c ap ita l g ai ns.
ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 4 of 11 Ho wever , the Ass essing Of ficer vi de o rd er d ate d 17 .12 .20 19 in the a sse ssme nt p ro cee di ng s disp ute d the sa m e a nd held tha t the a sse sse e w as invo lve d in r epetiti ve a nd vol umi nous sa le/ pur cha se tra nsac ti o ns o f secur iti es which had be en ma de so lel y a nd ex clusi vely with i ntentio n of r esa le at pr o fit. That t he tr ansa ctio ns were ver y la rg e in qua nti ty a nd a sses see had tak en lo an for pur cha sing o f securi ties a nd ha s pa id inter est on such lo a ns. Theref or e, such tra nsa ctio ns w ere to be tr eated a s sto ck- in- tra de as ag a inst ca pita l a ssets a nd a c cor di ng ly the i nco me shoul d be tax ed und er the head o f 'p ro fi ts a nd g a ins from busi ne ss a nd pr o fessi on'. Acc o r di ng ly , a n a dd iti on of Rs. 40,93 ,17 ,17 6/ - wa s ma de b y t he As ses sing Of fic er to the to tal income o f the a ss ess ee.
4. Ho wever , in fi rst a ppea l, the ld . CI T(A) vi de impug ned o rd er da ted 0 1 .08 .20 22 de ci ded t he is sue in fa vo ur of the a s sess ee on mer its, hol di ng that vo lum e/fr eq uency /co ntinuity , r egul a rity of the tra nsa ctio ns, ho ld ing per io d of secur iti es, i nte nti on of a sses see an d trea tment to se c ur ities i n Boo ks o f Account sho uld be cum ula tivel y assesse d to de ter mine t he na t ure o f the tra nsa ctio ns. H e o b serv ed that in the i nstan t ca s e, vo lum e, scal e and number of tra nsac ti o ns wa s q uite sm al l. Fur ther, the a v era g e ho ld ing per io d o f such s ecur iti es w as 60 da y s ( STCG w itho ut ST T), 2 1 5 d ay s (STCG with STT) a nd 11 41 da y s(L TC G wi tho ut ST T), whi ch wa s no t r efle cti ve o f the so le inte nt i on to resa le a t a pr of it, i n the earl iest ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 5 of 11 o pp or tunity . Tha t no ne o f the tr a nsacti o ns wer e ca rr ied out on intra -d ay b asi s a nd ther e wa s no der iva tive tra nsa ctio ns. He, ther efo r e, held tha t the a sses see ha d co rr ectly tr eated such tra nsa c tio ns as c ap ita l a ssets. The r eleva nt pa rt of the o r der o f the CI T(A) is rep ro duced as und er:
" 30 . W i th r eg ar d to th e mer i ts of th e ad d i ti on al e viden c e, th e d ate wis e an d tr an sac tio n wi se d e ta il s o f sal e of sh ar e s an d mu tu al f u nd u n its f u rn i sh ed by the ap p el l an t vid e Ann exu r e s- 1 , 2 an d 3 to th e p e ti ti on f or adm i ssion of add i ti on al e v id en ce d ated 1 3. 0 7. 2 02 2 h ave b een car ef u l ly and th or ou g h ly e xa m ined . T h e sa id An nex ur es-1 , 2 , and 3 c on tain ed the d ate wi se an d tr an sac tio n wi se de ta il s of sal e of sh ar e s an d mu tu al f u nd u ni ts, th e inc ome f rom wh i ch h as be en ad m i tted in th e r e tu r n of in co me u nd er th e h ead s S T C G ( wi thou t S T T ) , ST CG ( wi th ST T ) an d L T CG ( wi th ou t ST T ) r esp ec tivel y . T he CB DT In str uc ti on N o. 18 2 7 d ated 3 1. 08 . 19 8 9, C B DT C ir cu lar N o.4 / 2 00 7 d ated 1 5. 0 6. 2 00 7 and c a se l a ws r e lev an t to th e d ispu ted issue of wh e th er th e tr an sa c tio n s of p u r ch ase/ sale of sh ar e s/ mu tu al f un d u n its c ar r ie d ou t b y an ap p el lan t ar e in th e n atur e of b u sin e ss ac tiv ity or inv e stm e n t ac ti v i ty v iz d eci sion of H on'bl e B om b ay H ig h C ou r t in the c a se of Ra m il ab en D J a in V s. AC IT [ 2 01 8 ] 9 7 ta x m an n. c o m 2 1 7 ( B omb ay) , de c i sio n of H on 'b le MP Hig h C ou r t in th e c ase of D r . R ajeev C h ou dh ar y V s. A C IT [2 0 19 ] 11 1 tax m ann . co m 4 38 ( Madh y a P r ade sh ) an d d e c is ion of H on 'b le IT AT , H yd er ab ad in t he ca se of P .Ra m ak r ishn a V s. Ad dl C IT [ 2 01 7 ] 88 tax m an n .c o m 348 (H y der ab ad- T r ib ) wer e c ar ef ul l y exam in e d f or iden tif y in g var iou s p ar am e te r s/ te sts l aid do wn th er e i n f or de cidin g th e i ssu e in d i sp u te. T h e p ar ame ter s/ te s ts so l a id d o wn ar e th e vol u me of tr an sac tion s, the f r eq u en cy of tr a ns ac ti on s, th e co n tin u i ty and r e g ul ar ity of th e tr an sac ti on s, th e h ol d in g p er io d of th e sec u r itie s, th e i n ten ti on of th e ap p el l an t a t th e ti me of p u r ch ase an d th e tr e atm en t g ive n in th e b ook s of acc ou n t. N o sin g le p ar am e ter / te s t is d e ter m in a ti ve of th e n a tu r e of th e tr an sac tion s an d on e ne ed s to con sid er th e cu mu l a ti ve ef f ec t of th e sa id m ul tip l e p ar a me ter s. T he ou tc o m e of the ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 6 of 11 an al y sis of the tr an sac ti on s of th e ap p el l an t on th e b asi s of th e said p ar a m e ter s/ te s ts i s sum m ar ize d in th e tabl e f ur n ishe d be lo w:
P ar ti cu l ar s ST C G ST C G LTCG
( wi th ou t ( wi th ( wi th ou t
ST T ) ST T ) ST T )
N o. of tr an sac ti o n s d u r in g th e y e a r 30 10 06
N o. of day s on wh ich sal e s we r e 20 04 05
m ade
N o. of d ay s on wh ic h p ur c h ase s 14 05 05
we r e m ade
N o. of sc r ip s/ mu tu al f u n d sc he me s, 04 03 05
wh i ch we r e sub je c t m at ter of sale
Ave r ag e h ol d in g p er iod ( N o. of d ay s) 60 2 15 1 1 41
3 1. As c an b e seen f r om th e ta bl e ab ove, th e v ol u me of tr an sac tion s of sal e of sh ar e s/ mu tu al f u nd u n its b y th e ap pe ll an t du r ing the y e ar i s q u ite sm al l a s th e to tal n o. of tr an sac tion s i s 4 6 and th e n o. of tr an sac ti on s in re sp ec t of ST C G ( wi th ou t S TT ) , ST C G ( wi th ST T ) and L T C G (wi th ou t ST T ) is 3 0, 1 0 a n d 6 r es pe c ti vel y . It is ev iden t f rom the n um be r of tr an sac ti on s d u r in g th e y ear th a t th e sa id ac tiv i ty is n o t c ar r ied ou t o n a l ar g e sc al e by th e a p pe ll an t. F ur the r , it c an be seen th at th e ap p el l an t ef f ected th e s al e s of sh ar e s/ mu tu al f un d u ni ts on l y on 2 0 d ay s, 4 d a y s an d 5 d ay s du r ing th e y ear in r esp ec t o f th e thr e e c ateg or ie s of C ap ital G a in in c ome ad m i tted i n th e r e tu r n of inc o me r esp ec ti vel y . S i m i lar f ac tu al p o si ti on i s o b se r ved in r espe c t of p u r ch ase of sh ar e s/ mu tu al f un d u ni ts du r ing th e y ear . T his c l e ar l y sh o ws th a t the sa id ac ti v ity is n o t c ar r ied ou t f req uen tly , c on ti n uou sl y an d r e g ul ar ly th r ou g h ou t th e ye ar b y th e ap p ell an t. It is al so seen th a t the ap p el l an t d eal t in l im ited nu mb er o f sc r ip s/ mu tu al f u n d sch e me s d ur in g th e y ear i. e 4 , 3 and 5 scr ip s/ mu tu al f u nd sc hem e s in respec t of the thr ee c ate g or ie s of C ap ita l G ain in c o me ad m i tted in th e r e tu r n of in co me r e spe c ti vel y . Fu r ther , i t is n o ti ced th a t th e a ver ag e ho ld ing p er io d of shar e s/ mu tu al f u nd u n i ts, b ef or e th ey we r e so ld , a mou n ted to 60 d ay s an d 2 15 d ay s in r e sp ec t of the tr an s ac ti on s c on sider ed f or c omp u ta ti on of ST C G ( wi tho u t S T T ) an d ST C G ( wi t h ST T ) r esp ec tive l y in the r e tur n of in co me . T h e sa id a ver a g e h ol din g p er io d i s n o t ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 7 of 11 r ef l ec tive of an y in ten tio n of the ap p el l an t a t th e time of p u r ch ase to r e sel l th e m at a p r of it at th e e ar l ie st op p or tu n ity . In r esp ec t of the tr a ns ac ti on s c on s id er ed f or c omp u ta tio n un d e r L T C G ( wi th ou t ST T ) , th e ave r ag e ho ld ing p er iod sta nd s a t 1 1 41 d ay s. M or e over , i t i s se en t ha t no ne of th e tr an sac ti o n s c ar r ied ou t b y th e app el l an t du r ing the y ear ( exc ep t o ne sol i ta r y tr a n sac ti on ) ar e i n tr a-d ay tr an sac tion s. It is al so p er tin en t to ob ser ve th a t the ap pe ll an t h a s n o t de al t wi th an y der iv a ti ve tr an sac tio n s ( F& O ) d ur in g the y ear .
3 2. T h u s, it i s ev i den t f r om th e an aly si s of th e tr an sac tio n s of p ur c ha se an d sale of shar e s an d mu tu al f un d u n i ts c ar r ied o u t b y th e ap p el l an t d u r ing the y e ar th a t the vol u me of su ch tr an sac ti on s i s in sig n if ic an t, th e f r eq uen c y of suc h tr a n sac ti on s is q ui te lo w an d th e h old ing p er iod of th e sh ar e s/u n its p r ior to the sa le i s l ar g e e nou g h . T he tr an sac tion s c ar r ied o u t b y th e ap p el l an t do n o t in cl u de any de r iv a tive tr an sac tio n s. Mor e ove r , i t is an u n d i sp u ted f ac t th a t the ap p el l an t h a s tr e ate d th e sh ar e s/ mu t ual f u n d u ni ts p ur c h a sed b y it as "i nv e stm en ts" in i ts bo ok s of acc ou n t. O n ap pl y ing th e te s ts l a id d o wn in In s tr u c tion N o. 1 82 7 , C ir cu l ar N o.4 / 20 0 7 and th e ca se l a ws c i te d sup r a, th e ab ove men ti on ed f acts cl ear l y an d str on g ly e stab l i sh th a t the ap p el l an t i s h old ing the shar e s/ mu tu al f un d un i ts a s ' in ve stm en t' an d n o t b uy in g th em wi th the in te n tion of sel l ing th e m at a pr of it at the e ar l ie st op po r tu n i ty .
3 3. As r e g ar d s th e ob se r v ati on b y th e AO th a t th e ap p el l an t h as ta ke n a l o an f o r th e p ur p ose of p u r ch asin g the sh ar e s/ mu tu al f un d u n its and p ai d in ter e st o n su c h l oan s, i t is p er tin en t to sta te th a t th e s ai d ob ser v a tion i s f ac tu al l y inc or r ec t s in c e th e loan of Rs. 3 0 cr or es, in r espe c t of wh ic h th e ap p el l an t inc u r r ed in ter e st exp en d i tu r e of Rs. 4 8, 8 2, 1 92 / -, wa s ta k en f or th e p u r po se of p u rc ha se of b on ds wh ic h ar e h el d b y th e ap p el lan t a s in ve s tm e n t at the en d of th e p r ev i ou s ye ar an d n o p ar t of th e sa i d b on ds we r e sol d b y th e ap p el l an t du r in g th e ye ar . F u r th er, i t i s p er tin en t to sta t e th a t th e o b ser vati on of th e A O th at the ap pe ll an t h a s no t car r ied on an y o ther bu sin e ss d u r in g the y ear an d al l th e ac ti v i ti e s of th e ap p el l an t ar e f oc used to war d s th e p u r c h ase an d s al e of sh ar e s an d mu tu al f u nd u ni ts c an no t b e u sed a s an ind ic a tor of the in ten tio n of th e ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 8 of 11 ap pe ll an t to pu r c h a se an d sell the sh ar e s an d mu t u al f u n d u ni ts a s a sy ste m ati c bu sin e ss ac ti vi ty .
3 4. In th e g r ou n d s of ap p e al an d th e wr i tten su b m i ssion s, th e ap p el l an t h as al so c on te sted th e v ie w a do p te d b y the AO in th e a sse ssmen t o r der on th e g r ou n d th a t th e sa me i s inc on si sten t wi t h th e a sse s sme n t o r der s p a sse d f or the ear l ie r a sse ssme n t y e ar s 2 0 12 -1 3 , 20 1 3- 1 4 an d 2 01 6 -1 7 in th e ap p el l an t' s o wn c a se. T h e app el l an t co n tend e d th a t the r eve nu e ac ce p ted th e sta n d of th e ap p el l an t th at th e inc o me f rom p u r ch ase a n d s al e of shar es/ mu tu al f u nd un i ts i s ta x ab le un d er th e he ad C ap i tal G ain s in the ass essmen t or d er s p a sse d f or th e s aid thr ee a sse ss men t y e ar s an d th a t th e ac ti on of th e A O in seek ing to ch an g e th e sa id ac ce p ted p osi ti on f o r th e in sta n t a sse s smen t ye ar i s ag a in s t the p r inc ipl e of con si stenc y . T he ap pel l an t c on ten ded th at the a sse ss men t m a d e b y v iol a ti o n of th e p r in c ip l e of c ons isten cy i s no t su sta i n ab l e in l a w. In su p p or t of th i s c on ten ti on , the ap p el lan t p l aced r el i an ce on th e d e ci sion of th e Ho n'b l e Su p r eme C our t i n th e ca se of Radh a S o am i S atsa ng V s C IT (1 9 9 2) 1 93 IT R 3 2 1 ( S C ), wh er ei n i t wa s h el d th at th ou g h the do c tr in e of r es ju d ic a ta d oe s n o t ap p l y to Inc o me T ax p r oc eedin g s, i t wo u l d no t be ap pr o p r i a te to all o w th e p o si ti o n to b e ch a ng ed in a su b se q ue n t y e ar , wh er e a f un d am e n tal a sp ec t p er me a tin g thr ou g h d if f er en t a sse ss men t y e ar s h as b een f ou n d as a f ac t on e way or the o ther an d p ar ti e s h av e all o we d th a t po siti on to b e su sta i n ed b y n o t ch all en g ing th e o r d er f or th e sa id y ear s. 3 5. In thi s r eg ar d, i t i s n o tic ed on p er u sal of the a sse ss men t or d er s p assed u/ s 14 3 ( 3) f or asse ssm en t ye ar s 2 01 2 -1 3 , 2 0 13 -1 4 and 2 01 6 -1 7 o n 2 7 .0 2 .2 0 15 , 17 . 02 . 20 1 6 and 24 . 12 .2 0 1 8 in th e ap p el l an t' s o wn c a se th at th e inc o me d ecl ar ed u n der t he h ead C ap i ta l G a in s in r e sp ec t of th e p r of its an d g ai n s d er ived f r om th e tr an sac t io n s of p u r ch ase/ sal e o f sh ar e s/ mu tu al f un d u n its h a s be en acc ep ted b y th e AO in th e sa id asse ssmen t or d er s. O n p er u sal of th e f in anc ial sta te men ts of th e app el l an t f or the p r eviou s y e ar s r el evan t to th e sa id a sse ssm en t y e ars, i t is n o tic ed th at ther e i s n o ch ang e in th e f ac ts of th e c a se f r om th e sa id y e ar s to the p r ev iou s y e ar r ele v an t to th e in stan t a sse ss men t y e ar . A s ther e i s no c h an g e in the f ac ts an d the stan d of th e ap p ell an t th a t th e in co me f r om the p u r ch ase/ sal e of sh ar e s/ mu tu al f un d u n i ts i s ch ar g eabl e to ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 9 of 11 ta x u n de r th e h ead C ap i ta l Ga in s h as be en ac ce p t ed in the sc r u ti ny a sse s smen ts m ad e f or the ear l ier asse ssmen t y ear s, th e ac ti on of th e A O in se ek in g to c h an g e th e sa id acc ep ted p o si ti o n in th e as se ssme n t f or the in stan t a sse ss men t y e ar i s ag ain st th e p r i n cip le of c onsiste n cy an d su ch an ac ti on h a s b een di sa p p r oved b y th e H on' bl e S up r eme C ou r t in th e c a se of Radh a S o a m i S a tsa ng ( Su p r a). 3 6. In v ie w of th e af or e said d i sc u ss io n, it is h el d th a t th e tr an sac tion s of pu r ch a se/ sale of sh ar e s an d mu tu al f und u ni ts by the ap p ell an t du r in g th e ye ar c on sti tu te inv e stm e n t ac tiv i ty a n d the sa m e can n o t b e c on str u ed as a b u sin e ss ac tiv i ty . A cc or din g l y, i t i s he ld th a t th e inc o me ad m i tted b y th e app el l an t un de r th e h e ad s S h or t T er m C ap ital G a in s an d L ong T er m C a p ita l G a in s in r e sp ec t of su ch tr an sa c tion s i s in ac co r d an c e wi th th e p r ov i sion s of th e Ac t an d th e ac ti on of th e AO in a sse ssin g th e inc o me d er ived f r om th e sa id tr an sac tio n s u nd er th e h e a d P r of its and G a in s of th e B u sine ss i s f ac tu all y an d leg al l y u nsu stai n abl e. C on seq u en tl y , th e J u r i sd ic ti on a l AO i s d ir e c te d to del e te the add i ti on of Rs.4 0, 1 3, 8 8, 0 95 / - m ade in th e a sse s sme n t o r der on ac c o un t of r e -c har ac t er iz ati on and r e- co mp u ta ti on of the in co m e un d er th e h e ad P r of its and G ain s of Bu sin e ss in s te ad of In co me f r om C ap i ta l G a in s. T h ese g r ou nd s of app eal ar e ac c or d in g ly al l o we d . "
5. After hea ri ng the ld . Repr esenta tives o f the pa rt ie s, we do no t fi nd a n y i nfi rmity in the a bo v e o bs er vati on o f the CI T( A). The a ss esse e in the ea r li er yea r s i. e. i n A. Y 20 12 - 13 , 2 01 3- 14 & 2 016 -1 7 has be en tr ea te d a s i nve stor even in scruti ny ass e ssme nt ca rr ied out u/s 1 43( 3) of the Act. There i s no c ha ng e o f cir cumsta nces d ur ing the y ea r und er co nsid era tio n. The l d. CI T(A) has t ho r oug hl y a nal y zed the tra nsa ctio ns m a d e by the a s ses see d uri ng the y ear a nd ha d co me to the c onclusi on tha t the a sse sse e, under t hes e cir cumsta nces, i s to be tr eated as i nvesto r i n sha res a nd ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 10 of 11 no t a s tra der . We do no t fi nd a ny mer it i n the a pp eal o f the r evenue a nd the sa me i s a ccor ding ly dismi ssed.
6. I TA No. 640/C ha ndi/2022 - This a pp eal ha s bee n pr efer red by the r evenue a ga inst the acti on of the CI T(A) in ho ld ing the reo pening o f the asse s sment a s ba d in l aw . A per usa l o f the i m pug ned or der o f the As ses sing O ffi cer as wel l as o f the CI T( A) w o uld revea l that in t he ear li er a sses sment car ri ed out u/s 14 3(3 ) of the Act, fo r the y ea r und er consi der ati o n, the Ass e ssing Off icer ha s tr eate d the incom e fr om pur cha s es a nd s a les of sha res as b usine ss incom e of the a sses see. I n this ca se, the a s s essme nt w as r eop ened po i nt ing out so me co mputa tio na l err o r whi le co mputi ng the i nco me o f the assess ee fr o m transa ctio ns in pur cha ses a nd sal es of s ha res as b usi ness i nco me. Ho wever , as o bser ved a bo ve, t he ld. CI T( A) has d eleted the a ddi tio n vid e o rd er da ted 0 1.0 8.2 02 2 ma de by the Ass essi ng Off icer .
7. I n vi ew o f our ab ove o bser va ti o n, we ha ve up held the o rd er of the CIT(A) on this issue whil e a dj udica ting I TA No. 639 /Cha ndi /20 22 . The l d. CI T(A) though he ld the r eop ening of t he as ses sm e nt as ba d in l aw on o ther g ro und s, but al so hel d tha t si nce the a dd itio ns ma de by the As ses si ng Of ficer tr eati ng the i nco me o f the asse ss ee as busi ness inco me had b een d eleted, the r efo re, the co nseq ue ntia l ord er pa ssed to r ectif y the co mp uta tio na l er ro r i n r ela tion to b usine ss i ncom e o f the a sses see w as ITA Nos.639&640/CHANDI/2022 Assessment Year : 2017-18 M/s Preethi Himachal & Company Page 11 of 11 a lso not susta ina bl e a s the s a me beco mes infruct uo us. Therefo r e, the l d. CI T(A) rig htly all ow ed the a pp eal o f the a sses see. We d o not find a ny i nfi rmi ty in the o r der o f the CI T( A) i n thi s appe al al so .
8. I n the r es ult, b oth t he a pp ea l s of the rev enue are her eby d ismi sse d.
O rd e r pr o no u nced i n the Ope n C ou rt o n Ap r il 1 , 20 2 4.
S d/ - S d/ -
( VIKRAM SINGH YADAV) ( SANJAY GARG)
लेखा सद य/ Accountant Member या यक सद य/ Judicial Member
Dated: 01.04.2024.
RS
आदे शक! त,ल-पअ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु/त/ CIT
4. -वभागीय त न2ध, आयकरअपील&यआ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड फाईल/ Guard File आदे शानुसार/ By order, सहायकपंजीकार/ Assistant Registrar