ACIT CIRCLE - 58(1), NEW DELHI vs. NEERAJ AGGARWAL, NEW DELHI

On the facts and in the circumstances of the case, the order of the Ld. CIT(A) is bad in law and not in consonance with facts of the case.

On the facts and in the circumstances of the case, the decision of the Ld. CIT(A) to hold the transactions in shares on Short Term Capital Gain and not business income as held by the Assessing Officer, is not correct in law and facts. 3. Whether for application of Rule of consistency, the facts and circumstances in the respective years have to be identical 4. Whether in absence of such categorical of facts & circumstances of different years to show identity, finding of the CIT(A) is erroneous. 5. The appellant craves leave to add/ alter/delete / modify the grounds of appeal before or during the hearing of appeal.

Briefly stated the facts of the case are that the assessee filed his return of income for the year under consideration on 30.09.2015 electronically declaring total income of Rs.38369697/- and after reducing deduction of Rs.162500/-the net income was declared at Rs.38207200/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee.

While scrutinizing the return of income the AO noticed that the assessee has shown short term capital gains u/s.111A. The nature of income earned by the assessee was out of the purchase and sale of shares.

On perusal of the details the AO was of the opinion that the impugned income is not short term capital gains but business income. The AO based on his findings solely on the period of holding of the shares. According to the AO period of holding is an important criterion in deciding the nature of portfolio.

The AO also found that the assessee has very higher frequency buy and sell thereby indicating that the assessee is spending a lot of his time during the said transaction.

The Counsel for the assessee reiterated what has been stated before the lower authorities.

We have given a careful consideration to the orders of the authorities below and have considered the documentary evidences brought on record in the light of rule 18 (6) of the ITAT rules. At the very outset we have to state that in the immediately preceding assessment year and also in subsequent assessment year on similar high value transaction the AO has accepted the profits as short term capital gains.

It would be pertinent to mention to the observations of the Hon’ble High Court of Delhi in the case of Prem Kumar Chopra in W.P.(C) 12104 /2023 order dated 25.05.2023 wherein the Hon’ble High court has highlighted the importance of the rule of consistency and the same read as under :- “1. Cogent and consistent answering to every “why” is the DNA of demosprudence. Consistency of not just the content of reasoning, but consistency of also the anvil on which the process of reasoning rests are antedote to the vice of arbitrariness. Every decision making authority, be it judicial or administrative, being public servant is accountable to the State and its subjects. Consistency, both in content and in procedure has to be adhered to in order to ensure predictability of the decisions. The absence of consistency and the consequent unpredictability of the decisions, both judicial as well as administrative leads to cynicism in the society. In order to ensure procedural and content consistency in decisions, every decision making authority should ensure that in a given set of circumstances, their decision must be on same lines as that of their predecessor or co-ordinate authorities in similar set of circumstances. Where a decision making authority finds itself unable to agree with the view earlier taken, by the predecessor or the co-ordinate, the authority concerned is duty bound to record cogent reasons for deviating. Significance of precedence cannot be ignored even in administrative decision making.

There is no dispute to the legal proposition as submitted by counsel for respondents revenue that the doctrine of res judicata does not apply to income tax proceedings pertaining to different assessment years since each assessment year is a separate assessment unit in itself if rests in separate factual scenario. Xxxxxxx

So far as the respondent’s argument of two different sanctioning authorities is concerned, no doubt order dated 28.07.2022 was issued with the approval of Principal Commissioner Income Tax-10 and order dated 31.07.2022 was issued with the approval of Principal Chief Commissioner of Income Tax, but the satisfaction recorded in both orders' was of same Assistant Commissioner of Income Tax. There is nothing on record to suggest even feebly that the latter sanctioning authority was apprised of the earlier view taken in order dated 28.07.2022. An assessee, deals with the income tax department as a whole, like a body and not its individual organs, especially where left hand does not know what right had sanctioned.

In nutshell, the impugned notice and order suffer who infirmities, namely the same proceed on a view inconsistent with the earlier order despite the facts and circumstances being similar and the ACIT concerned did not support the said subsequent divergent view with reasoning.

In view of the above discussion, we are unable to uphold the impugned notice and order dated 31.07.2022 under Section 148 of the act so the same are set aside and accordingly the petition is allowed. No costs.

Considering the past and future assessment history of the assessee in the light of the decision of the Hon’ble Jurisdictional High Court of Delhi (supra) we do not find any reason to interfere with the findings of the CIT(A). The appeal filed by the revenue is dismissed.