BINOD KUMAR JHANWAR,MUMBAI vs. ACIT 13(3), MUMBAI

“Whether on facts and circumstances of the case, the Hon CIT was justified in discriminating the income from sale of shares based on the holding period of such shares for the purpose of assessing the income for shares held for 1 day to less than 6 months and Short term Capital gain in respect of shares held for period exceeding six months but less than one year.

Whether on facts and circumstances of the case the Hon CIT and Ld. AO was justified in presuming the sale and purchase of shares as business motive as against the investment motive declared and recorded by the assessee in its books of accounts consistently and completely ignoring the fact that the assessee consistently recorded the shares as ‘Investments’ in his Balance Sheet and Not as ‘Stock in trade’. 3. Whether on facts and circumstances of the case the Hon CIT and Ld. AO was justified in presuming the holding period and frequency of purchase and sale of shares as concluding factors for assessing the income from sale and purchase of shares as business income instead of Capital Gains. 4. The Hon CIT and Ld. AO erred in ignoring the vital fact that the “Sale and purchase of by the assessee”is investment motive or business motive solely depends on the declaration by the assessee and its treatment in the books of accounts at the time 3 Assessment Year: 2007-2008 of filing return and consistency of recording such transactions in the past. 5. The Hon CIT and Ld. AO erred in considering the frequency of transactions in shares and shorter holding period as conclusive factors to decide whether shares are purchased under Investment strategy or Business Strategy without taking cognizance of other vital factors. 6. To take a macro view of the investment philosophy about ‘hedging against sharp erosion’ in the value of Investments for Investments in high risk assets as compared to investment in low risk assets. 7. To revisit the factors considered as determining factors for treating as business activity or investment activity under the pronounced decisions of Honorable Judiciary in the past, particularly in the light of completely changed economic dynamics of investments in high risk instruments.”

This case was fixed for hearing on 29/11/2017. On the said date when the case was called for hearing, neither the assessee appeared in person nor his authorized representative appeared on his behalf nor any application for adjournment was received. We notice that on the last date of hearing also the case was adjourned due to none appearance of the assessee. Accordingly, fresh notice was sent through registered post and despite that the assessee failed to appear in person or through his representative. From the conduct of the appellant/assessee we are satisfied that the assessee is not interested in pursuing its appeal. Hence, we decided to dispose of the case on the basis of material on record after hearing the departmental representative (DR).

At the outset, the Ld. DR submitted that there is an inordinate delay of 1754 days in filing the present appeal and the affidavit filed by the assessee does not disclose any reasonable cause, which prevented the assessee to file the appeal within the limitation period. The Ld. DR accordingly submitted that the request for condonation of delay may be declined and the appeal of the assessee may be dismissed as not maintainable being time barred.

We have perused the material on record including the affidavit filed by the assessee. The contents of affidavit reveal that the assessee was advised by the legal consultant to file the present appeal after expiry of limitation period. The appellant/ assessee has raised the plea that the present appeal could not be filed before expiry of limitation period because of a bona fide belief that since the CIT (Appeals) order has not resulted into enhancement of the assessed tax liability, there is no challenge the impugned order. We notice that there is a delay of 1754 days in filing the present appeal. Sub-section 5 of section 253 of the Act provides that the Tribunal may admit appeal or permit filing of memorandum of cross- objection of respondent after expiry of relevant period of limitation referred to in sub-section 3 and 4 section 253, if the Tribunal is satisfied that there was sufficient cause for not presenting it within that period. So, the sufficient cause is the condition precedent for exercising the discretion by the court for condoning the delay. Therefore, when the mandatory provision is not complied with and the delay is not properly explained, the Tribunal cannot condone the delay. In the present case the assessee has prayed for condonation of delay mainly on the ground that appeal was not filed within the limitation period under the impression that no appeal was required to be filed against the order of the Ld. CIT(A). Later on, when he was advised by his tax consultant the appeal was filed. In our considered opinion the plea taken by the assessee is not sufficient to condone the inordinate delay of more than 4 years as the reason stated in the affidavit is not sufficient to conclude that the assessee had been prevented by sufficient cause from filing the present appeal within the limitation period.

Under these circumstances, we are of the considered view that the reasons mentioned in the application are not sufficient to condone the inordinate delay of 1754 days in filing the present appeal. Hence, the application for conation of delay is dismissed being devoid of merit.

Since, we have dismissed the application for condonation of delay, the present appeal is not maintainable being barred by the law of limitation, we dismiss the present appeal as not maintainable being barred by law of limitation. In the result, appeal filed by the assessee for the assessment year 2007- 08 is dismissed.