SARAH FAISAL HAWA,MUMBAI vs. ASST CIT 21(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “ C”, MUMBAI BEFORE SH. P.K. BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 589/Mum/2017 (Assessment Year- 2005-06) ITA No. 590/Mum/2017 (Assessment Year- 2006-07) ITA No. 591/Mum/2017 (Assessment Year- 2008-09) ITA No. 592/Mum/2017 (Assessment Year- 2009-10)

Smt. Sarah Faisal Hawa ACIT-21(3), 6th Floor, Piramal Chambers, 24, Central Court, Motalibai Street, Vs. Agripada 2, Mumbai -400011 Parel, Mumbai-40012 PAN: AAIPH0012P (Appellant) (Respondent)

Assessee represented by : Sh. K. Gopal/Jitendra Singh (AR) Revenue represented by : Sh. Rajat Mittal (DR) Date of hearing : 08.08.2017 Date of order : 11.09.2017 Order under section 254(1) of Income-tax Act PER BENCH;

Act are directed against the consolidated order of ld. CIT(A)-33, Mumbai

dated 02.11.2016 for Assessment Year (AY) 2005-06, 2006-07, 2008-09 &

2009-10. The ld. CIT(A) decided the appeal of assessee for AY2005-06,

2006-07, 2008-09 & 2009-10 by a consolidated order, the assessee has

raised some common grounds of appeal. Thus, all the appeals were heard

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together and are decided by common order to avoid the conflicting

decision.

No. 589/Mum/2017. The assessee has raised the following grounds of

appeal:

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under the head 'Business income' is not at all justified and the same may be deleted. ii. Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to allow the benefit available to the Appellant under section 45(2) of the Act while treating the 'Long Term Capital Gain' as 'Business Income' of the Appellant. Without Hence, the Appellant prays that the benefit of provisions of section 45(2) may be granted to the Appellant. 4. Addition on account of gifts treating the same as unexplained cash credit under section 68 of the Act unjustified – 21,50,000/- i. The ld. CIT(A) erred in upholding the action of the Ld. A.O. in treating the gifts as unexplained cash credit under section 68 of the Act without appreciating that the Appellant has furnished relevant details to discharge the primary onus cast upon her to prove the identity, capacity and genuineness of gifts. Hence, gift received amounting to Rs.21,50,000/- as unexplained cash credit under section 68 of the Act is unjustified and the same may be deleted. 5. Addition on account low withdrawals unjustified- Rs.1,50,000 /- i. The Ld. CIT(A) erred in confirming the action of Ld. A.O. in making addition of Rs.1,50,000/- on account of low withdrawals without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.1,50,000/- on account of low withdrawal is unjustified and the same may be deleted.

relevant AY on 08.08.2005 declaring total income at Rs. 1,10,70,840/-. In

the return of income, the assessee claimed Short Term Capital Gain

(STCG) of Rs.56,49,475/- and Long Term Capital Gain of Rs. 28,61,567/.

The assessee claimed LTCG exemption u/s 10(38) of Rs. 35,75,885/-. The

return was processed u/s 143(1) and was accepted. The Assessing Officer

(AO) while making scrutiny of assessment for AY 2007-08 observed that

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assessee is engaged in the business of venture of trading in shares and treated the STCG and LTCG as “Business Income”. After treating the

STCG and LTCG as Business Income for AY 2007-08, the assessment for AY 2005-06, 2006-07,2008-09 &2009-10 was re-opened under section 147 of the Act. The notice u/s 148 was issued to the assessee. The assessee

contested the re-opening proceeding. The AO passed the assessment order u/s 143(3) r.w.s. 147 of the Act and accepted the return of income of Rs.1,10,70,840/-, without any variation. Subsequently, proceeding u/s 263 was initiated by Principle Commissioner of Income-tax (PCIT) on the

ground that order passed by AO u/s 143(3) r.w.s. 147 was erroneous and prejudicial to the interest of Revenue. While doing so the ld. PCIT held that fact for the AY 2005-06 was similar to the facts of AY 2007-08

wherein the activity of assessee of trading in shares was held business activity and accordingly LTCG and STCG was brought to tax as “Business Income” vide order dated 12.11.2012 passed u/s 263 of the Act. The

assessee filed appeal against the order dated 12.11.2012 passed u/s. 263 before the Tribunal. The assessee simultaneous filed appeal against the similar treatment for AY 2006-07, 2008-09 and 2009-10. Before the

Tribunal. The Tribunal restored all the appeals of the assessee by composite order, vide order dated 25.09.2013 in ITA No.(s) 1963- 1970/M/2013 to the file of AO with the following direction:

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"Therefore we are of the considered opinion that the Ld. CIT(A)'s action u/s.263 is justified as the action of the AO in dropping the proceedings initiated uls.147 accepting the returned income during the year under consideration is erroneous and prejudicial to the interest of Revenue. No doubt that the Id. CIT(A) is competent and empowered u/s263 to pass such orders enhancing or modifying the assessment, however, considering the fact that the AO has made due enquiry during the assessment completed during the A. Y:2007-08. While passing the order u/s.263, the Ld. CIT(A) instead of deciding the issues on merit giving a direction to the AO for making the impugned additions, he ought to have referred the matter to the file of the AO for making a fresh assessment so that the AO could have made a due enquiry in the fresh assessment on the basis of the assessment order passed in the year 2007-08. In view of that matter, the order of the Id. CIT(A) to the extent that the Re- assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue is upheld and the order to the extent of the direction given by him to make impugned additions is set aside. Accordingly, we direct the AO to make a fresh assessment u/s. 143(3) read with section 263 on the impugned additional disallowances made/enhanced by the Ld. CIT(A) keeping in view of the scope of reassessment proceedings and after giving reasonable opportunity of being heard to the assessee."

assessment order u/s 143(3) r.w.s. 254 of the Act on 31.03.2015. The AO

while treated the LTCG and STCG as “Business Income”. The AO made

the addition of Rs. 21,50,000/- u/s 68 and further addition of Rs. 1,50,000/-

on account of low withdrawal. On further appeal before the ld. CIT(A), the

treatment of STCG and LTCG as “Business Income” . The addition u/s 68

and addition on account of law withdrawal was confirmed. Thus, further

aggrieved by the order of ld. CIT(A), the assessee has filed the present

appeal before the Tribunal.

ld. Departmental Representative (DR) for the Revenue and perused the

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material available on record. Ground No.1 is general in nature and need no specific adjudication. Hence, dismissed. 6. Ground No. 2 & 3 relates to treating the STCG and LTCG as “Business Income”. The ld. AR of the assessee argued that the AO made the re- opening on the basis of STCG and LTCG treating them as “Business Income” in AY 2007-08. However, after hearing the assessee, the AO allowed the LTCG and STCG in the order passed u/s 143(3) r.w.s. 147 dated 30.11.2011. The ld. PCIT revised the assessment on 12.11.2011 on the basis of observations of facts for AY 2007-08 wherein the capital gain of the assessee was treated as “Business Income”. It was further argued that for AY 2007-08, the AO treated the STCG and LTCG as “Business Income” in assessment order dated 22.12.2009 passed under section 143(3). However, on appeal before the ld. CIT(A), the action of AO was reversed vide order dated 14/052010 in CIT(A)-29/RG/-17/180/09-10. Thus, the assessee was allowed capital gain. 7. It was argued that against the order of CIT(A) dated 14/05/201 the Revenue filed appeal before the Tribunal vide ITA No. 5883/Mum/2010. The assessee also filed Cross Objection therein. The appeal of the Revenue was dismissed by the Tribunal on 06.02.2015. The Tribunal confirmed the order of ld. CIT(A). It was further argued that the assessment was revised on the basis of treatment of capital gain as “Business Income” on the basis

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of observation of the AO for AY 2007-08, wherein the action of AO was

reversed by ld. CIT(A) and which was affirmed by the Tribunal. Thus, the

income earned by assessee on account of capital gain should be treated as

STCG and LTCG as the case may be and not as “Business Income”. On

the similar facts, the assessee was allowed the Capital Gain for AY 2004-

05 in the assessment order passed u/s 143(3) of the Act. And again for AY

2014-15 in the assessment order was passed u/s 143(3) on 22.11.2016,

copy of which is placed on record. On the other hand, the ld. DR for the

Revenue supported the order of authorities below. It was argued that facts

of each year have to be considered separately as the principal of resjudicata

is not applicable in the income tax proceedings. 8. We have considered the rival submission of the parties and have gone

through the orders of authorities below. Undisputedly, the assessment was

revised by ld. PCIT on the basis of facts for AY 2007-08 vide his order

dated 12.11.2011. The treatment of capital gain as Business Income for

AY 2007-08 has been set-aside by ld. CIT(A). The order of ld. CIT(A) has

been affirmed by the Co-ordinate Bench of Tribunal vide order dated

06.02.2015 in ITA No. 5884/Mum/2010 for AY 2007-09. The Tribunal

passed the following order: 5. We have considered rival contentions, gone through the orders of lower authorities and deliberated on the judicial pronouncements cited by ld. A.R. and ld. D.R. as well as discussed by lower authorities in their respective

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orders. From the record we found that since many years the shares are being purchased by assessee with the intention to invest and have been consistently held and shown as investments in the books of account and the position that such shares represented Investments was always accepted by department in all previous assessment years up to and including A .Y. 2006-07. Shares at the year and were always valued "at cost" and not "at cost or market value, whichever is lower" as per AS-2 of ICAI as applicable to stock in trade. We also found that profit on sale of shares so held has always been offered and taxed as capital gains in all previous years and the said offering has been accepted in earlier assessment years including and up to AY 2006-07 by speaking order and there was no change of circumstances for the year as compared to earlier assessment years. With regard to period of holding of shares, we found that long Term shares were held for 14 to 24 months and short term shares were held for a fairly longer period before the same were sold. Substantial dividend income of Rs.12,85,694/- on shares was earned during the said assessment year on entire shares investment. It is also evident from record that investment was always made by assessee out of after tax surplus generated. Contention of A.O. that the assessee had borrowed funds was found false by ld. CIT(A). It is also not in dispute that both sale and purchase transactions took place through account payee crossed cheque only and there was no running account with the broker as is in the case of businessmen. Furthermore It has always been the intention of the assessee to earn dividend income from such investments in shares and the same is reflected in the dividend income of Rs, 12,85,694/- and intention was duly supported by Books of accounts and balance sheet produced before the A.O. It is also not in dispute that the assessee has invested the surplus funds not just in shares but also in tax free bonds like an investor. A trader will not invest in tax free bonds and continue to hold the same for tax free interest income and many cases for 24 months. From the record we found that the shares were held for at least 14 months in case of Long Term Capital Gains and fairly long period for Short Term Capital Gains. A trader would not hold shares for such a long time but would sell the shares within 8

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a very short time of less than a month. In comparison to the immediately preceding previous year i.e. A.Y.2006-07, the short term capital gains of the assessee has reduced whereas there has been an increase in the investment made and dividend income earned

Assessment Year S.T.C.G. Investment Dividend 2007-08 1,97,65,876 11,63,45,872 12,85,694 2006-07 2,07,36,968 7,26,74,939 7,35,848 It is also not in dispute that in A.Y. 2006-07 the Ld. ACITI7(3) in his order has accepted the short term capital gains as short term capital gains only. We also found that the delivery of shares was always taken and the same were always held in a DEMAT Account. Furthermore purchase and sale of shares have been liable to Securities Transaction Tax. 6. The detail findings recorded by the ld. CIT(A) with regard to the capital gain earned by the assessee amounting to Rs. 1.97 crores as short term capital gain and Rs. 3.82 crores as long term capital gain are as per the material available on record. The ld. D.R. has not brought on record any positive material to controvert the findings recorded by the ld. CIT(A). Accordingly, we do not find any reason to interfere with the order of ld. CIT(A) so far as the he directed the A.O. to treat the capital gain offered by the assessee as long term and short term capital gain.

on the basis of which ld. PCIT revised the assessment passed under section

143(3) rws 147 order for directing the AO to treat the Capital Gain as

Business income. Further, the AO allowed Capital Gain for AY 2014-15in

assessment order passed under section 143(3) dated 26.11.2016. Thus,

respectfully following the decision of the coordinate bench of the Tribunal

and the principle of consistency the Ground No. 2 & 3 are allowed.

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proceeding u/s 263, the assessee has not been able to discharge her onus to prove the genuineness of the gift. The assessee also not been able to discharge her onus to establish the genuineness of transaction in setting- aside the proceeding before the AO. 12. We have noted that the AO instead of identifying the discrepancy in the confirmation of gifts concluded that assessee has not been able to discharge her onus. The assessee filed copy of confirmations, copy of ITR returns and the details of transaction through banking channels. We have noted that the assesses has discharged her primary onus to prove the identity, capacity and genuinity of transaction. Considering the facts that the assessee has discharged its primary onus lie upon her. The AO has not disputed the identity of the person or the capacity of the donor. The AO has not brought any material on record. Thus, this ground of appeal is allowed. 13. Ground No.5 relates to addition of Rs. 1,50,000/- on account of low withdrawal. The ld. AR of the assessee not argued in support of this ground of appeal. However, the ld. AR of the assessee submits that he left this issue on the discretion of the Tribunal. On the other hand, the ld. DR for the Revenue submits that the assessee has not argued anything. Thus, this ground of appeal may be dismissed.

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through the orders of authorities below. We have noted that during the

seta-side proceedings the AO observed that during proceedings under

section 263 the assessee was asked to furnish the details of withdrawal by

assessee and her family members and that no details was furnished by

assessee. The AO observed that no details were filed by assessee. On the

basis of proceeding before the PCIT u/s 263 of the Act. The AO added Rs.

1,50,000/- in the total income of assessee. We have seen that the addition

is made by AO without giving any specific opportunity during the se-aside

proceedings, before making the addition. the contention of the assessee

throughout the proceedings before PCIT was that the assessee was not the

head of the family and the aggregate expenditure of the family was

commensurate with the life style of the family. The AO made ad-hock

additions without any evidence. The AO has not made any inquiry nor

brought any material or record. Considering the peculiarity of the facts the

addition of Rs.1,50,000/- is deleted. 15. In the result, appeal of the assessee is allowed.

ITA No. 590/Mum/2017 AY 2006-07 16. The assessee has raised the following grounds of appeal: 1. The Ld. Commissioner of Income-tax (Appeals)-33, Mumbai [hereinafter referred to as "Ld. CIT(A)"] erred in passing the order dated 02.11.2016 upholding the order passed by Ld. A. O. dated 31.03.2015 under section

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143(3) r.w.s. 254 of the Income Tax Act, 1961 ['of the Act' for short] determining total income of the Appellant at Rs 4,95,70,750/- as against returned income of Rs.2,13,99,470/- without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the order dated 02.11.2016 passed by Ld. CIT(A) is bad in law and the same may be quashed. 2. Treating 'Short Term Capital Gain' as 'Business Income' unjustified - Rs.2,07,36,968/- i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in treating the 'Short Term Capital Gain' as 'Business Income' without appreciating the fact that the Appellant is an investor in the shares and mutual funds and also has shown the same as investments in her Balance Sheet. Hence, the addition of Rs.2,07,36,968/- made under the head 'Business income' is not at all justified and the same may be deleted. ii. Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to allow the benefit available to the Appellant under section 45(2) of the Act while treating the 'Short Term Capital Gain' as 'Business Income' of the Appellant. Without Hence, the Appellant prays that the benefit of provisions of section 45(2) may be granted to the Appellant. 3. Treating 'Long Term Capital Gain' as 'Business Income' unjustified - Rs.2,78,91,619/- i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in treating the 'Long Term Capital Gain' as 'Business Income' without appreciating the fact that the Appellant is an investor in the shares and also has shown the same as investments in her Balance Sheet. Hence, the addition of Rs.2,78,91,619/- made under the head 'Business income' is not at all justified and the same may be deleted. ii. Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to allow the benefit available to the Appellant under section 45(2) of the Act while treating the 'Long Term Capital Gain' as 'Business Income' of the Appellant. Without Hence, the Appellant prays that the benefit of provisions of section 45(2) may be granted to the Appellant. 4. Denying the benefit of set off of short term capital gain against short term capital gain unjustified- Rs. 1,29,665/- 1. The Ld. CIT(A) further erred in confirming the action of the Ld. A.O. in denying the benefit of set off of short term capital loss amounting to 13

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Rs.1,29,665/ - against the short term capital gain earned during the year without appreciating the fact that the Appellant has furnished all relevant evidence to prove the genuineness of loss suffered by the Appellant in the share transactions. Hence, disallowance of short term capital loss against the short term capital gain is unjustified and the same may be deleted 5. Addition on account low withdrawals unjustified- Rs.1,50,000/- i. The Ld. CIT(A) erred in confirming the action of Ld. A.O. in making addition of Rs.1,50,000/- on account of low withdrawals without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.1,50,000/- on account of low withdrawal is unjustified and the same may be deleted.

dismissed. Ground No.2 & 3 relates to treatment of STCG and LTCG as

Business Income. This ground of appeal is identical to the ground no.2 of

ITA No. 589/Mum/2017 which we have allowed in para 9 & 10 above in

appeal for AY 2005-06. Considering the similarity of the fact and

following the principle of consistency, this ground of appeal is allowed in

favour of assessee.

Loss (STCL) against LTCG. of Rs. 1,29,665/-. The ld. AR of the assessee

argued that the assessee is an Investor and is entitled for setting off of loss

on STCL against STCG in accordance with section 74 of the Act. On the

other hand, the ld. DR for the Revenue supported the order of authorities

below.

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through the orders of the authorities below. The ld. CIT(A) upheld the

denial of STCL against STCG holding that during the appellate proceeding

neither oral argument were made nor any written submissions were filed.

Considering the facts that we have allowed the appeal of the assessee and

allowed the gain on sale of share as STCG or LTCG as the case may be

instead of Business Income. Thus, the AO is directed to verify the loss and

set off of the claim in accordance with law. Thus, this ground of appeal is

allowed for statistical purpose.

ground of appeal is identical to the ground no. 5 of appeal for AY 2005-06.

We have already allowed the similar ground of appeal in AY 2005-06.

Thus, this ground of appeal is also similar observations.

ITA No. 591/Mum/2017 AY-2008-09

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i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in treating the 'Short Term Capital Gain' as 'Business Income' without appreciating the fact that the Appellant is an investor in the shares and mutual funds and also has shown the same as investments in her Balance Sheet. Hence, the addition of Rs.2,45,79,767/- made under the head 'Business income' is not at all justified and the same may be deleted. ii. Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to allow the benefit available to the Appellant under section 45(2) of the Act while treating the 'Short Term Capital Gain' as 'Business Income' of the Appellant. Without Hence, the Appellant prays that the benefit of provisions of section 45(2) may be granted to the Appellant. 3. Treating 'Long Term Capital Gain' as 'Business Income' unjustified - Rs.7,40,19,132/- i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in treating the 'Long Term Capital Gain' as 'Business Income' without appreciating the fact that the Appellant is an investor in the shares and also has shown the same as investments in her Balance Sheet. Hence, the addition of Rs.7,40,19,132/- made under the head 'Business income' is not at all justified and the same may be deleted. ii Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to allow the benefit available to the Appellant under section 45(2) of the Act while treating the 'Long Term Capital Gain' as 'Business Income' of the Appellant. Without Hence, the Appellant prays that the benefit of provisions of section 45(2) may be granted to the Appellant. 4. Addition on account of dividend stripping under section 94(7) of the Act unjustified- Rs.20,799/- i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in making addition of Rs.20,799/- invoking the provisions of section 94(7) of the Act without appreciating the fact and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.20,799/- under section 94(7) is unjustified and the same may be deleted. 5. Addition under section 68 of the Act treating the advance received from friend as unexplained cash credits unjustified - Rs.40,00,000/- i. The Ld. CIT(A) erred in upholding the action of Ld. A.O. in making addition of Rs.40,00,000/- under section 68 of the Act being advance received

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from friend for purchase of shares as unexplained cash credit of the Appellant. The Appellant, therefore, prays that the addition of Rs.40,00,000/-is unjustified and the same may be deleted. ii. The Ld. CIT(A) failed to appreciate that the Appellant has furnished relevant evidence to prove the identity, capacity and genuineness of advance received. Hence, the primary onus cast upon the Appellant stands discharged. The Appellant, therefore, prays that addition of Rs.40,00,000/- under section 68 of the Act is without any basis and the same may be deleted. 6. Addition on account low withdrawals unjustified- Rs.1,75,000/. i. The Ld. CIT(A) erred in confirming the action of Ld. A.O. in making addition of Rs.1,75,000/- on account of low withdrawals without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.1,75,000/- on account of low withdrawal is unjustified and the same may be deleted.

dismissed.

Income of the assessee. This ground of appeal is similar to the ground of

appeal no. 2 & 3 of ITA No. 589/Mum/201. We have already allowed the

similar ground of appeal in favour of assessee for AY 2005-06 and for AY

2006-07. Hence, following the principle of consistency both the grounds of

appeal are allowed in favour of assessee.

of the Act. The ld. AR of the assessee argued that the ld. CIT (A) erred in

upholding the action of AO in making the addition of Rs. 20,799/- by

invoking the provisions of section 94(7) of the Act. It was argued that the

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disallowance was made by AO without verifying the facts. On the other hand, the ld. DR for the Revenue supported the order of authorities below. 25. We have considered the rival submission of the parties and have gone through the orders of authorities below. During the assessment proceeding, the AO observed that the assessee received dividend during the year under

consideration. The assessee was asked to explain whether the provision of section 94(7) of the Act is applicable and any loss to the extent of income to be ignored. The assessee filed its reply and submitted the details of dividend which is liable for disallowance u/s 94(7) of the Act in respect of

M/s Hemadri Chemicals and M/s Kamala Dials for Rs. 5,620/- and 15,179/- respectively. The AO on the basis of observation of ld PCT during the proceeding u/s 263 of the Act made the disallowance of Rs.

15,179/- being the dividend on share in respect of M/s Kamala Dials. The AO also disallowed dividend of Rs. 5,620/- on share of M/s Hemadri Chemicals. The ld. CIT(A) observed that during the proceeding u/s 263 of

the Act, the ld. PCIT has analyzed the stripping and confirmed the disallowance. We have seen that the AO disallowed the dividend without verifying the fact. The AO made the addition only on the observation of ld

PCIT. Before us, the ld. AR of the assessee has placed on record the copy of statement showing the record and date of scripts (page No. 47-49) Considering the fact that the assessee has provided the specific details of

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shares of M/s Kamala Dials and M/s Hemadri Chemicals before the AO. Hence, this ground of appeal is restored to the file of AO to verify the facts and pass the order in accordance with law. Needless, to say that the AO shall provide opportunity to the assessee before passing the order. In the result this ground of appeal is allowed for statistical purpose. 26. Ground No.5 relates to addition of Rs. 40,00,000/- under section 68 of the Act. The ld. AR for the assessee argued that the assessee has furnished all the evidences to prove the identity, capacity and genuineness of the advances received. The assessee has discharged primary onus lie upon the assessee. On the other hand the ld DR for the revenue argued that the assessee has not proved the genuinity of the advance. The ld PCIT examined the parties and they gave inconsistent statement, which do not confirm the contention of the assessee. The ld Dr for the revenue prayed for dismissal of the ground. 27. We have considered the rival submissions of the ld representatives of the parties and have gone through the orders of the authorities below. We have seen that the AO made the additions on the basis of observation and the queries raised by ld PCIT during the proceedings under section 263. The ld CIT(A) confirmed the action of AO on the basis of observation of ld PCIT. We have seen that before us, the assessee has placed the copy of ledger account, confirmation of account, bank statement and statement recorded

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under section 131 of Aesha Ashok Chedda, Nikhil Chopra and M/s

Dreamjinni Consultancy. The assessee has given a certificate that these

documents were filed before the AO. The AO has not made any

verification of these documents. The AO while passing the order observed

that the assessee has not any submission nor filed evidences. Considering

the facts that the AO has neither considered the evidences filed by assessee

nor verified the facts before making the addition. Hence, we deem it

appropriate to restore this ground of appeal to the file of AO to considered

the facts afresh and pass the order after verification of the evidences

furnished by the assessee in accordance with law. Needless to say that the

AO shall provide opportunity to the assessee before passing the order. In

the result this ground of appeal is allowed for statistical purpose. 28. Ground No.6 relates to the addition on account of low withdrawal. We

have seen that this ground of appeal is identical to the ground no. 5 of

appeal for AY 2005-06, which we have already allowed. Hence, this

ground of appeal is also similar observations. 29. In the result the appeal of the assessee is partly allowed.

ITA No. 592/Mum/2017 AY-2009-10 30. The assessee has raised the following grounds of appeal: 1. The Ld. Commissioner of Income-tax (Appeals)-33, Mumbai [hereinafter referred to as "Ld. CIT(A)"] erred in passing the order dated 02.11.2016 upholding the order passed by Ld. A. O. dated 31.03.2015 under section 143(3) r.w.s. 254 of the Income Tax Act, 1961 ['of the Act' for short] determining total income of the Appellant at Rs.58,57,290/- as against returned income of Rs. 20

ITA No. 589 to 592/M/2017- Smt. Sarah Faisal Hawa

1,00,900/- without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the order dated 02.11.2016 passed by Ld. CIT(A) is bad in law and the same may be quashed. 2. Treating 'Short Term Capital Loss' as 'Business Loss' unjustified - Rs.2,92,04, 577/- i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in treating the 'Short Term Capital Loss' as 'Business Loss' without appreciating the fact that the Appellant is an investor in the shares and mutual funds and also has shown the same as investments in her Balance Sheet. Hence, treating the ‘short term capital loss’ of Rs. 2,92,04,577/- as 'Business loss' is not at all justified and the same may be deleted. ii. Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to allow the benefit available to the Appellant under section 45(2) of the Act while treating the 'Short Term Capital Gain' as 'Business Income' of the Appellant. Without Hence, the Appellant prays that the benefit of provisions of section 45(2) may be granted to the Appellant. 3. Treating 'Long Term Capital Gain' as 'Business Income' unjustified - Rs.3,47,14,538/- i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in treating the 'Long Term Capital Gain' as 'Business Income' without appreciating the fact that the Appellant is an investor in the shares and also has shown the same as investments in her Balance Sheet. Hence, the addition of Rs. 3,47,14,538/- made under the head 'Business income' is not at all justified and the same may be deleted. ii Without prejudice to the above, the Ld. CIT(A) erred in not directing the Ld. A.O. to allow the benefit available to the Appellant under section 45(2) of the Act while treating the 'Long Term Capital Gain' as 'Business Income' of the Appellant. Without Hence, the Appellant prays that the benefit of provisions of section 45(2) may be granted to the Appellant. 4. Addition on account of dividend stripping under section 94(7) of the Act unjustified- Rs.18,929/- i. The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in making addition of Rs.18,929/- invoking the provisions of section 94(7) of the Act without appreciating the fact and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.18,929/- under section 94(7) is unjustified and the same may be deleted. 5. Addition on account low withdrawals unjustified- Rs.2,25,000/. i. The Ld. CIT(A) erred in confirming the action of Ld. A.O. in making addition of Rs.2,25,000/- on account of low withdrawals without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.2,25,000/- on account of low withdrawal is unjustified and the same may be deleted. 31. Ground No.1 is general in nature and need no specific adjudication. Hence,

dismissed.

ITA No. 589 to 592/M/2017- Smt. Sarah Faisal Hawa

ITA No. 589 to 592/M/2017- Smt. Sarah Faisal Hawa

(Asstt.Registrar) ITAT, Mumbai