COMMISSIONER OF INCOME TAX Vs. REWASHANKER A. KOTHARI

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench "C" has referred the following two questions under s. 256(1) of the IT Act, 1961 (the Act) at the instance of the CIT, Rajkot : "(1) Whether the Tribunal is right in law and on facts in setting aside the order made by the CIT under s. 263 of the IT Act ? (2) Whether the Tribunal is right in law and on facts in observing that the income was required to be taxed as capital gain and not as business income - terms : "(3) The assessee's contentions have been considered. Considering the nature of this transaction year after year, it was clear that the assessee was doing business in shares and shares produced by him were also as stock -in -trade. Simply showing the shares as investment in the books cannot prove the contention of the assessee that shares were held as investment. What is to be seen is the intention of the assessee at the time of purchase of shares. Prima facie, it is clear from the records that the assessee was dealer in shares. The assessment was made under s. 143(1) and the ITO did not inquire into the real nature of the transaction. Failure on the part of the AO to inquire into the real nature of the transaction which prima facie appear in the nature of business resulted in an assessment which is erroneous and prejudicial to the interest of Revenue. Besides, full facts were not on record when the ITO made the assessment. (4) In view of the above facts, the assessment made by the AO is set aside and he is directed to re -do the same after considering the above points and after giving the assessee reasonable opportunity of presenting his case."

(2.) The assessee carried the matter in appeal before the Tribunal. After hearing both the sides, the Tribunal made an the process, holding that, on facts, the CIT had failed to point out any error committed by the AO.

(3.) Mr. B.B. Naik, the learned standing counsel appearing on behalf of applicant Revenue has been heard. Though served, there is no appearance on behalf of respondent -assessee.