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TMI Blog2017 (3) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax (Appeals) [CIT (A)l has erred in upholding that the assessee is a trader in shares, thereby rejecting the assessee's claim that he is an investor in shares. 2. Without prejudice to above, the CIT (A) has erred in directing the AO to re-compute the value of the opening stock as on 01/04/2003 at cost or market price whichever is lower. The opening stock in a particular year is always the closing stock of the previous year and cannot be re-computed. The Act also provides only for the closing stock to be valued at cost or market price whichever is lower. The CIT(A) has further erred in not appreciating that the department has accepted the assessee to be an investor in shares for the past several years and for all subsequent years. The direction as given by the CIT (A) as regards re-valuing opening stock is incorrect and may therefore be cancelled. In the alternative the difference in value of closing stock as on 31/3/2003 and opening stock as on 1/4/2003 may be directed to be allowed as a loss or profit as the case may be." 3. The brief facts of the case are that during the course of assessment proceedings u/s 143(3) r.w.s. 147 of the Act, the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order adjudicating various disputes raised by the assessee , in the first round of litigation. Before the ld. CIT(A) , the assessee filed written submissions , where in it was contended that no borrowed funds were used for purchase of shares which are held as investment . The copies of Balance Sheet for assessment year 2001-01 to 2004-05 were enclosed. It was submitted that for assessment year 2000-01 , assessment was re-opened by the AO to treat the assessee as an investor in shares. It was submitted that for the assessment year 2000-01, the assessee in his return claimed business loss of Rs. 1,59,212/- . The AO invoked provisions of Section 147 of the 1961 Act and held the assessee to be an investor vide orders dated 30-11-2005 passed by the AO u/s 143(3) r.w.s. 147 of 1961 Act. It was submitted that learned CIT(A) vide orders dated 22.09.2006 held the assessee to be a trader in shares for the assessment year 2000-01, as was originally claimed by the assessee in the return of income filed with the Revenue. It was submitted that for assessment year 2001-02, the assessee had claimed a business loss on trading of shares of Rs. 2,80,792/- . It was submitted that aforesaid trading l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2004-05, assessee was accepted to be an investor in shares by Revenue and not as trader in shares. It was submitted that these assessments were accepted u/s 143(1) of 1961 Act. The assessee submitted details of number of purchase and sale transactions in shares for the period from assessment year 2002-03 to 2004-05 , as detailed hereunder : S.No. Asst. Year No. of Purchase Transactions No. of Sales Transactions Remarks i. 2002-03 86 110 Treated as investor by the assessee as well as Department except for A.Y. 2004-05, where the assessee has treated himself as investor, whereas the Department has treated him as a trader ii. 2003-04 271 215 iii. 2004-05 102 188 The complete analysis of working of short term capital and long term capital gains were submitted before the AO and it was submitted that the assessee has held individual scrips for more than 30 days except for shares mentioned in page 66 to 69, wherein the shares were held for less than a month and disposed off immediately after purchasing mostly under speculation. It was submitted that F&O and speculative transactions are declared as business income and not income from capital gains. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A) vide appellate orders dated 07-04-2016 passed by learned CIT(A) in second round of litigation. 5. Aggrieved by the appellate order dated 07-04-2016 passed by the ld. CIT(A), the assessee filed appeal before the tribunal. 6. The ld. Counsel for the assessee submitted that this is second round of litigation and in the first round of litigation the matter was set aside by the tribunal to the file of ld. CIT(A) for de novo determination/adjudication of the issue on merits. The assessee has filed all the facts by way of written submission before learned CIT(A) and our attention was drawn to the appellate order of learned CIT(A) .It was submitted that for assessment year 2005-06, no scrutiny assessment was carried out by Revenue u/s 143(3) r.w.s. 143(2) of 1961 Act . It was submitted that during the impugned assessment year, the assessment was reopened treating the assessee as trader. It was submitted that investment in shares was made out of owned funds and no borrowed funds were used for making investments in shares. There were 188 sales transactions and 102 purchase transactions undertaken by assessee during the impugned assessment year. The assessee relied on CBDT circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears u/s 143(2) r.w.s. 143(3) of 1961 Act. The ld. DR contended that learned CIT(A) has rightly directed A.O. to adopt value of closing stock on the basis of cost or market price, whichever is less . 8. The learned counsel for the assessee submitted in rejoinder that Revenue is blowing hot and cold as different treatment were given by AO and CIT(A) for different years ,while assessee is an investor.. It was submitted that CBDT circular no 6/2016 dated 29-02-2016 is guidance and need to be applied retrospectively. 9. We have considered rival contentions and also perused the material available on record. We have observed that the assessee has undertaken transactions in purchase and sale of shares. The assessee is consistently dealing in shares till assessment year 2001-02 as trader and joined employment with Indusind Bank on 30-05-2010. The assessee has declared itself as investor since 30-05-2010, which stand of the assessee being investor in shares was finally accepted by Revenue either by the AO or by learned CIT(A) while adjudicating first appeal for all these years , except for the impugned assessment year wherein AO and learned CIT(A) have held assessee to be a trader in shar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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