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On the basis of above details, the AO issued show cause notice to the assessee to explain why the trading in shares should not be assessed under the head "income from business and profession" as income from speculation business in respect of intraday transactions in shares and as income from business in respect of trading in shares on delivery basis, as the assessee has done trading in shares daily and in very high volumes. In response, the assessee submitted that he has invested in shares with intention of growth and investment on the advice of brokers. The Assessing Officer did not accept the reply submitted by the assessee observing as under :

6. On the other hand, the ld. DR relied on the order of the lower authorities and submitted that the ld. CIT(A) has done reasoned order which does not require any interference. The assessee has done huge transactions in shares and has also done intraday transactions. It is clear from the finding of the Assessing Officer on the tables noted at para No. 3 of the assessment order that the intention of the assessee was not to invest in shares, but to earn profit from sale of shares. The assessee has not received any dividend during the year.

7. After hearing both the parties and perusing the materials available on record and the orders of the authorities below, we find that during the year, the assessee has purchased and sold the shares of Rs.22.03 crores and odd and Rs.24.12 crores and odd respectively. Some of the shares of Axis Bank were purchased in the previous year, out of which some were sold and balance has been shown as on 31.03.2009. On examination of the tables reproduced above, we observe that the assessee has made purchase of shares 57 times and sale of shares 59 times. There are several instances when the assessee has purchased the shares and sold them either the same day or after a few days. In most of the cases, the assessee has done intraday transactions.