TMI Blog2011 (4) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent to the change in the scheme of tax by the Finance Act 2005. On these facts - income to be treated as cpaital gains Reassessment snder Section 147 - Earlier there was only a processing under section 143(1) and no assessment under section 143(3) was done - The reopening was done within 4 years - The A.O. has recorded a reason that assessee was offering the incomes as a trader in earlier years under the head Business whereas in this year offered as short term capital gains - Hence the opinion that there is a reason to believe that income escaped assessment at the time of initiation of proceedings under section 147 - Thus the order of the CIT(A) on this issue is upheld and assessee’s ground on reopening of the issue under section 147 is therefore dismissed. - ITA No. 3719/Mum/2009, ITA Nos. 4084, 5318 & 5319/Mum/2009 - - - Dated:- 13-4-2011 - Shri N.V. Vasudevan, Shri B. Ramakotaiah, JJ. Assessee by: Shri Ramesh Babu Rao Revenue by: Shri Jitendra Yadav O R D E R Per B. Ramakotaiah, A.M. These are appeals by the Revenue for assessment years 2005-06, 2006- 07 2007-08 and cross appeal by the assessee for A.Y. 2005-06. In assessee s appeal as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urities transaction tax and all the transactions are through a recognised Stock Exchange. Assessee submitted that there is no deliberate attempt to deprive the Revenue of any tax on account of concessional rate because all his share holding as on 01-04-2004 was sold off by May itself and only few transactions were there which were also sold off on 30.09.2004 by which time the tax on short term capital gains was reduced to 10%. It was his submission that the incomes earned upto 30.09.2004 was offered @ 30% as short term capital gains and it does not make any difference whether the income upto that date was treated as business income or short term capital gains. With reference to the subsequent purchases it was his submission that he was an investor and was dealing only as an investor and there is nothing wrong in claiming benefit provided by the Union budget 2004-05. With reference to the tax structure and short term capital gains it was his submission that assessee has not pledged any shares with any financial institutions, nor borrowed any funds, taken delivery of all shares in demat account and he is an informed investor but not a trader. The A.O., however, did not accept and rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 dated 16.06.2007 it was stated that the investor can have two portfolios, one for the purpose for investment and the other for the purpose of trading. Further, as per the decision of the Hon'ble ITAT, Mumbai in the case of Bombay Gymkhana Ltd. 115 TTJ 639 (Mum), 2008 wherein it was held that the A.O. cannot take a different view contrary to the books of account merely on the basis of magnitude and number of transactions, without brining any evidence. It was also held that the entries in the books are not conclusive but there shoaled be firm basis to take the view different from the books of account. It is also pertinent to mention here that the actual capital employed by the appellant was approximately Rs.4 crores and the sales made were to the tune of Rs.24 crores. Hence the ratio between turnover and capital cannot be considered as high as regular trader would have done much more turnover with the capital of Rs.4 crores. It is also important to note that accounting year 2004-05 pertains to book period in share market as and when the desired appreciation in the value of shares was achieved the investor would sell the share resulting in frequent shuffling. Keeping in view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is purchasing in block of a particular share in large volume. As analysed in A.Y. 2005-06 by the A.O. there are 54 scrips which are purchased and sold during the year which resulted in sales of more than Rs.24 crores. The A.O. analysed one particular share of Dhampur Sugar and concluded that there were purchases on 54 occasions and sale on 25 occasions. As seen from the details assessee has entered into market in this particular scrip on 03.12.2004, went on buying upto 1,00,000 shares upto 24.12.2004. Then on 28.12.2004 he sold 40,000 shares and on 29.12.2004 he sold 60,000 shares. Later on he again purchased another one lakh shares on 30.12.2004 which was disposed off on 06/07 January 2005. As indicated there are only sale on three instances and purchase on four instances. In our considered view, this reason can be a deciding factor to hold as a trader. Considering the fact that assessee is not a broker or sub-broker and also not having any office establishment and also on the fact that all the shares as available on 01.04.2005 were sold mostly by the end of May and few shares at the end of September, assessee has intended to be an investor subsequent to the change in the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X
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