Ashok Kumar Dutta, Kolkata V. I.T.O.,Ward-37(4), Kolkata

ITA 106/KOL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5315 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 22-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER
• Keywords: Business income; Transactions in derivatives
• Section: 143(2); 44AB; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.106/KOL/2019 ( / ASSESSMENT YEAR: 2015-16) ASHOK KUMAR DUTTA 90/1B, DURGA CHARAN MITRA STREET, KOLKATA VS. DCIT, CIRCLE-12, KOLKATA ./ ./PAN/GIR NO. : ADGPD 0600 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI K.M. ROY, FCA RESPONDENT BY : SHRI SHA NKAR HALDER, JCIT, SR. DR / DATE OF HEARING : 12/03/2019 /DATE OF PRONOUNCEMENT : 15/05/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE , PERTA INING TO ASSESSMENT YEAR 2015-16, IS DIRECTED AGAINST AN ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS)-11, KOLKATA WHICH IN TURN ARISES OUT O F PENALTY ORDER PASSED BY THE ASSESSING OFFICER U/S.271A OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT), DATED 28.06.2018. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THAT THE IMPOSITION OF PENALTY U/S 271A IS BAD IN LAW. 3. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE RETUR N OF INCOME OF THE ASSESSEE WAS FILED ON 30.03.2017 DECLARING TOTAL INCOME OF RS. 2 ,33,290/-. THE ASSESSEES CASE ASHOK KUMAR DUTTA ITA NO.106/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 2 WAS SELECTED FOR SCRUTINY THROUGH 'CASS' U/S 143(2) OF THE ACT. THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE I.T. ACT, 1961 ON 0 8.12.2017 DETERMINING TOTAL INCOME TO THE TUNE OF RS 2,33,290/-. IT WAS NOTICE D THAT THE ASSESSEE HAD MADE HIGH VALUE TRANSACTION IN FUTURES(DERIVATIVE) IN RE COGNIZED STOCK EXCHANGE. SUCH TRANSACTIONS ARE BUSINESS IN NATURE. THE BUSINESS T URNOVER OF THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR EXCEEDED THE FINANCIAL LIMI T FOR MAINTAINING BOOKS OF ACCOUNTS U/S 44AA. THOUGH THE ASSESSEE FILED HIS RE TURN IN ITR-2 ALTHOUGH ASSESSEE HAD RESPONSIBILITY TO MAINTAIN BOOKS OF AC COUNTS AND GET THEM AUDITED AS THE TRANSACTIONS WERE OF BUSINESS NATURE, VOLUMINOU S AND EXCEEDED THE LIMIT MENTIONED IN SECTION 44AB FOR GETTING THEM AUDITED. AS ASSESSEE FAILED TO DO SO THEREFORE NOTICE U/S 271A WAS ISSUED TO HIM INITIAT ING PENALTY PROCEEDING U/S 271B. PENALTY PROCEEDING U/S. 271A OF THE INCOME T AX ACT, 1961 WAS INITIATED ON 08.12.2017 BY ISSUING SHOW CAUSE NOTICE AND FIXI NG THE DATE OF HEARING ON 17.01.2018. A REPLY WAS SUBMITTED BY THE ASSESSEE DURING THE PENALTY PROCEEDINGS VIDE LETTER DATED 17.01.2018 AS FOLLOWS: ' WITH REFERENCE TO THE ABOVE, I AM HEREBY TO INFOR M YOU THAT THE ASSESSEE IS A RETIRED SENIOR CITIZEN AND MAKING THE INVESTMENT IN DIFFERENT AREAS ONLY. ACCORDINGLY, HE INVESTS IN SHARES AND CARRIES OUT T HE SHARE AND FUTURE AND OPTION TRANSACTION THROUGH THREE DIFFERENT RECOGNIZED BRO KERS DURING THE PREVIOUS YEAR AND ALL THE ACCOUNTS ARE MAINTAINED BY THEM ONLY AN D THE ASSESSEE IS GETTING THE TRANSACTION STATEMENT ONLY FROM THEM WHICH ALREADY SUBMITTED BEFORE YOU, WHERE THE PROFIT OR LOSS EARNED OR INCURRED BY THE ASSESS EE ARE SHOWN. THE ASSESSEE NEITHER HAS ANY INFRASTRUCTURE FOR DOING BUSINESS N OR ANY PERSONNEL DEPLOYED FOR BUSINESS IN THE, OFFICE, AS SUCH THE ASSESSEE DOESN 'T HAVE ANY BUSINESS SET UP, SO HE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS ON ITS OWN BUT HIS ACCOUNTS ARE MAINTAINED BY RECOGNIZED BROKER ON BEHALF OF HIM FO R ALL SHARE AND F & O TRANSACTION AND ONLY COPIES OF ALL THE DOCUMENTS AR E WITH HIM. IN THIS CONNECTION, I WOULD LIKE TO SUBMIT THAT THE ENTIRE INCOME FROM THE SHARES OF THE ASSESSEE CAN BE CLASSIFIED EITHER EARNINGS OF C APITAL TRANSACTIONS WHERE CAPITAL GAIN/LOSS HAS ARISEN OR FROM SPECULATIVE IN COME, SO THE ASSESSEE HAS NO BUSINESS INCOME. AS PER THE DECISION OF ITAT DELHI BENCH, BETWEEN AC IT, CIRCLE-19(1) VS. M/S ARORA AND BHARAT ASSOCIATES, PENALTY U/S 271A AND 2 71B IS NOT APPLICABLE. COPY OF JUDGMENT IS ENCLOSED HEREWITH FOR YOUR PERUSAL. THEREFORE MY HUMBLE REQUEST TO KINDLY WAIVE THE ABOVE MENTIONED PENALTY AND OBL IGE. 4. THE ASSESSING OFFICER HAD GONE THROUGH THE REPLY OF ASSESSEE AND NOTICED THAT THE REPLY OF THE ASSESSEE IS PERUSED CAREFULLY. THE ASSESSEE CITED THE DECISION OF ASHOK KUMAR DUTTA ITA NO.106/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 3 33 3 ITAT DELHI BENCH, BETWEEN ACIT, CIRCLE-19(1) VS. M/ S ARORA AND BHARAT ASSOCIATES. AT THE LAST PARA OF THE APPELLATE ORDE R IT IS CLEAR THAT IN CASE OF TRANSACTIONS WITHOUT DELIVERY LIKE COMMODITY TRANSA CTION, THE AMOUNT OF TURNOVER FOR THE PURPOSES OF SECTION 44AB OF THE ACT SHALL B E ONLY PROFIT AND LOSS AND NOT THE WHOLE TURNOVER EMBEDDED THEREIN. AND EVEN IN TH E LIGHT OF ABOVE DECISION THE ASSESSEE WAS LIABLE TO MAINTAIN BOOKS OF ACCOUNTS A ND GET THEM AUDITED AS HIS TOTAL TURNOVER WAS OF RS. 1,51,03,566/-. THE ASSESSING OF FICER ALSO NOTED THAT IN THE INSTANT CASE THE AGGREGATE FIGURE OF PROFITS AND LO SSES I.E. FAVOURABLE AND UNFAVOURABLE BALANCES OF ASSESSEES TRANSACTIONS IN FUTURE (DERIVATIVES) IS FOUND TO BE RS. 1,51,03,566/- WHICH EXCEEDS THE LIMIT ENVISA GED IN SECTION 44AA OF INCOME TAX ACT, 1961 FOR MAINTAINING BOOKS OF ACCOUNTS. AS THE ASSESSEE FAILED TO MAINTAINED THE BOOKS OF ACCOUNTS U/S 44AA NOTICE U/ S 271A WAS ISSUED INITIATING PENALTY PROCEEDING U/S 271A. THE ASSESSEE IN THIS C ASE MIGHT HAVE FILED HIS RETURN OF INCOME IN FORM NO. ITR-2 TO AVOID TO MAINTAIN BO OKS OF ACCOUNTS AND GET THEM AUDITED U/S 44AB. IN VIEW OF ABOVE, ASSESSING OFFICER SATISFIED THA T IT IS A FIT CASE FOR IMPOSITION OF PENALTY U/S 271A OF THE ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, A PENALTY RS. 25,000/- WAS IMPOSED ON THE ASSESSEE U/ S 271A. 5. AGGRIEVED BY THE PENALTY IMPOSED BY THE ASSESSIN G OFFICER U/S 271A OF THE ACT, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE LD. CIT(A), WHO HAS CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFI CER OBSERVING THE FOLLOWING: 3. I HAVE CONSIDERED THE FACTS OF THIS CASE AND I FIND THAT THE APPELLANT HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS WHATSOEVER. IT MAY BE MENTIONED HERE THAT THERE ARE PRESCRIBED WAYS OF MAINTAINING THE BOOKS OF ACCOUNTS. WHAT THE APPELLANT HAS TALKED OF IS MERELY AN ACCOUNT OF SHA RE AND F&O TRANSACTIONS OF THE APPELLANT. BUT BOOKS OF ACCOUNTS ARE MUCH MORE THAN THIS. THUS, THE BOOKS RECORD THE DAY-TO-DAY FINANCIAL TRANSACTIONS THE OUTSTANDI NG BALANCE, INVESTMENTS ETC. IN OTHER WORDS, THE BOOKS OF ACCOUNTS HAVE ALL THE DET AIL REQUIRED TO FURNISH THE RETURN OF INCOME. THEREFORE, THE ACCOUNTS MAINTAINE D BY THE BROKER OF THE APPELLANT CANNOT BE COMPARED WITH THE REGULAR BOOKS OF ACCOUNTS . 4. HENCE IT IS HELD THAT THE APPELLANT HAS DEFAULTE D BY NOT MAINTAINING THE REGULAR BOOKS OF ACCOUNTS AND THEREFORE HE IS LIABLE TO FAC E PENALTY U/S 271A. ASHOK KUMAR DUTTA ITA NO.106/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 4 44 4 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW WHEREAS THE LD. DR HAS PRIMARIL Y REITERATED THE STANDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY DISCUSS ED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE MAIN REASON TO IMPOSE THE PENALTY U/S 271A IS THAT THE FIGURES SHOWN IN THE PROFIT & LOSS ACCOUNT I.E. FAVOURABL E AND UNFAVOURABLE BALANCES OF ASSESSEES TRANSACTION IN FUTURE DERIVATIVES WAS FO UND TO BE RS. 1,51,03,560/- WHICH EXCEEDS THE LIMIT ENVISAGED IN SECTION 44AA O F THE ACT FOR MAINTAINING BOOKS OF ACCOUNTS. SINCE, THE ASSESSEE FAILED TO MA INTAIN THE BOOKS OF ACCOUNTS U/S 44AA OF THE ACT THEREFORE THE ASSESSING OFFICER IMP OSED PENALTY TO THE TUNE OF RS. 25,000/-. WE NOTE THAT THIS ISSUE IS SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE BY THE HONBLE DELHI HIGH COURT IN THE CASE OF MEHT A PARVESH VS. ITO [1998] 60 TTJ (DEL) 278 WHEREIN IT WAS HELD AS FOLLOWS: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE LEARNED REPRESENTATIVES OF THE PARTIES. THE ASSESSEE SUBMIT TED THE COMPUTATION OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION AT AN INCOME OF RS. 40,000 AND RS. 42,000 RESPECTIVELY. THE ASSESSEE ALSO ENCLOSED WITH THE R ETURNS OF INCOME A STATEMENT OF AFFAIRS GIVING THE DETAILS OF ASSETS AND LIABILITIE S AS AT THE BEGINNING OF THE YEAR AS WELL AS ON THE CLOSE OF THE YEAR. THE DECLARED INCO ME WAS ESTIMATED BY TAKING INTO CONSIDERATION THE NET INCREASE IN ASSETS ALONG WITH THE TREADINGS MADE BY THE ASSESSEE-FIRM AND THE HOUSEHOLD EXPENSES. THE DETAI LS SO FURNISHED BY THE ASSESSEE COULD ENABLE DETERMINATION OF TAXABLE INCO ME IN A REASONABLE MANNER. THE PROVISIONS OF S. 44AA WAS REQUIRED TO KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNTS AND DOCUMENTS, AS MAY ENABLE THE AO TO COM PUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE IT ACT . SUB-S. (3) OF S. 44AA AUTHORISES THE BOARD TO PRESCRIBE BY RULES THE BOOKS OF ACCOUNTS A ND OTHER DOCUMENTS TO BE KEPT AND MAINTAINED AND THE PARTICULARS TO BE CONTAINED THEREIN AND THE FORM AND THE MANNER IN WHICH AND THE PLACE AT WHICH SUCH BOOKS O F ACCOUNTS SHALL BE KEPT AND MAINTAINED. THE BOARD HAS NOT YET PRESCRIBED ANY RU LE SO FAR AS PERSONS DERIVING INCOME FROM BUSINESS ARE CONCERNED. IT HAS ONLY PRE SCRIBED R. 6F REQUIRING THE PERSONS DERIVING INCOME FROM PROFESSION TO MAINTAIN THE SPECIFIED BOOKS OF ACCOUNTS. SINCE THE BOARD HAS NOT PRESCRIBED THE NE CESSARY RULES RELATING TO MAINTENANCE OF ACCOUNTS BY THE PERSONS CARRYING ON BUSINESS, AND AS THE ASSESSEE HAS FURNISHED ADEQUATE INFORMATION, SO AS TO ENABLE THE ITO TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THIS AC T, THE PENALTY LEVIED UNDER S. 271A CANNOT BE SUSTAINED ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. I, THEREFORE, CANCEL THE SAID PENALTIES FOR BOTH THE Y EARS UNDER CONSIDERATION. ASHOK KUMAR DUTTA ITA NO.106/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 5 55 5 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MEHTA PARVESH SUPRA WE NOTE THAT IT IS NOT A FIT CASE TO IMPOSE PENALTY U/S 271A OF THE ACT AND HENCE WE DELETE THE PENALTY OF RS. 2 5,000/- 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15.05.2019. SD/- (S.S.GODARA) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED 15/05/2019 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ASHOK KUMAR DUTTA 2. ITO, WARD-37(4), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES