Case Law Details
Amit Kumar Dey Vs DCIT (ITAT Delhi)
Now we come to the issue of the enhancement made by the CIT (Appeals). Firstly, on perusal of the above facts, we hold that when the case of the assessee was selected for limited scrutiny, the ld. CIT (Appeals) can make enhancement only with the aspect of issues that were part of the limited scrutiny. Otherwise, it may happen that the ld. Assessing Officer may pass an order on the issues related to limited scrutiny and the ld. CIT (Appeals) may enhance the income of the assessee on issues other than limited scrutiny issues. This will amount to bypassing the above quoted instructions of the CBDT. It also shows that if that happens then without obtaining the approval of Commissioner of Income Tax and CCIT, the whole assessment of the assessee remains open, despite the fact that the learned assessing officer has looked into the issues contained in the limited scrutiny notice. We do not find such an intention of the CBDT in issuing the instructions of limited scrutiny case. On this score, we do not approve the enhancement made by the ld. CIT (Appeals) on issues, which were not part of limited scrutiny.
Even on the merits of the case the facts clearly shows that assessee has purchased 575 shares of Infosys Ltd. against which he has received 575 bonus shares. The purchase cost of 575 shares were Rs. 12,90,553/-. Out of the above assessee sold 300 shares for Rs. 6,51,455/- only. Similarly in the case of Tech Mahindra Ltd. assessee purchased 225 shares for Rs. 4,33,684/-. Assessee received 300 bonus shares. Out of the above assessee sold 225 shares for Rs. 3,11,201/-. Assessee disclosed short-term capital loss and sale of those shares. The ld. CIT (Appeals) held that the same is chargeable to tax as business income. He computed profit of Rs. 3,14,789/- in the case of shares of Infosys Ltd. and Rs. 1,25,336/- for shares of Tech Mahindra Ltd. He drew a profit and loss account of the above transactions, displayed at page Nos. 12 and 13 of his order. The above transactions, if examined, based on CBDT Circular dated 13.12.2005, it is apparent that the assessee is an investor in the share and not a trader. The purchase and sale of the above isolated securities were not at all related to the business of assessee or show any trade activity. The transactions in the shares were merely an occasional independent activity. The scale of the activity is also not substantial, looking at the income offered by the assessee in the return of income at Rs. 1,28,09,820/-. The transactions were also not regular basis and the purchases are not shown to have been made out of borrowings. In view of this, we do not find any merit in the findings of the ld. CIT (Appeals) that the above transactions are chargeable to tax under the head business income. In view of this fact, the enhancement of income made by the ld. CIT (Appeals) deserves to be deleted and hence deleted.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)–I, Gurgaon, [ The ld CIT (A)] dated 28.06.2018, for assessment year 2015-16 raising two grounds of appeal as under:-
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
