Gitesh G. Mundhra, Jalgaon V. ITO, Wd.-1(3), Jalgaon

ITA 1252/PUN/2011

• Counselvise Citation: 125224514 RSA 2011
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 30-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RA J IV HARIT
• Keywords: Capital asset; Business income; Income from undisclosed sources; Opportunity of being heard; Question of law
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NOS.1252 & 1715/PN/2011 (ASSESSMENT YEAR 2005-06) GITESH G. MUNDHRA, M-38, MIDC, JALGAON-425003 PAN NO.AHWPM0815E .. APPELLANT VS. ITO, WARD-1(3), JALGAON .. RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI RAJIV HARIT DATE OF HEARING : 03-03-2015 DATE OF PRONOUNCEMENT : 18-03-2015 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST THE SEPARATE ORDERS DATED 24-08-2011 AND 07 -12-2011 RESPECTIVELY OF THE CIT(A)-II, NASHIK RELATING TO A SSESSMENT YEAR 2005-06. FOR THE SAKE OF CONVENIENCE, BOTH TH E APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER. ITA NO.1252/PN/2011 (A.Y. 2005-06) : 2. THIS IS THE SECOND ROUND OF LITIGATION BEFORE TH E TRIBUNAL. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN TRADING OF PVC PIPES, COMPOUNDS AND SCRA P. HE 2 FILED HIS RETURN OF INCOME ON 02-08-2005 DECLARING TOTAL INCOME OF RS.91,780/- AFTER CLAIMING EXEMPTION U/S.10(38) OF THE I.T. ACT IN RESPECT OF LONG TERM CAPITAL GAIN ON SALE OF SHARES AMOUNTING TO RS.23,22,355/-, THE DETAILS OF WHICH A RE AS UNDER : SCRIP NAME DATE OF PURCHASE QUANTITY PURCHASE CONSIDER- ATION DATE OF SALE QUANTITY SALE CONSIDE- RATION GAINS LIMITEX 07/04/03 3400 58242 22/12/04 3400 553214 494972 SANGOCON 11/06/03 5000 25100 02/11/04 5000 534050 508950 KAY VEE AAR LTD. 12/06/03 25/02/05 8000 1000 53360 133390 18/01/05 23/02/05 24/02/05 1000 5000 3000 289910 786050 432630 1321840 TOTAL 270092 2325762 2.1 THE RETURN WAS ORIGINALLY ACCEPTED U/S.143(3). SUBSEQUENTLY, THE AO IN THE ORDER PASSED U/S.143(3) R.W.S. 147 DATED 28-12-2007 DETERMINED THE TOTAL INCOME AT RS. 27,41,260/- BY DISALLOWING COMMISSION OF RS.1,25,520/- AND TREA TING THE LONG TERM CAPITAL GAIN ON SALE OF DIFFERENT SHARES AMOUN TING TO RS.25,10,402/- AS INCOME FROM UNDISCLOSED SOURCES. 3. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) W HO DELETED THE ADDITION OF RS.1,25,520/- MADE ON ACCOU NT OF ALLEGED PAYMENT OF COMMISSION. HE TREATED THE SURPLUS OF RS.10,03,922/- AS SHORT TERM CAPITAL GAIN ON SALE O F SHARES OF LIMITEX AND SANGOCON WHICH WAS TAXED AS INCOME FROM OTHER SOURCES BY THE AO. THE CIT(A) ALSO TREATED THE SUR PLUS OF RS.13,21,840/- ON SALE OF SHARES OF KAY VEE AAR LTD . AS BUSINESS INCOME WHICH WAS TAXED AS INCOME FROM OTHER SOURCES BY THE 3 AO AS THE SHARES OF KAY VEE AAR LTD. WERE NEVER TRA NSFERRED TO THE DEMAT ACCOUNT OF THE ASSESSEE. 4. THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 16-06-2010 RESTORED THE I SSUE TO THE FILE OF THE CIT(A) BY OBSERVING AS UNDER : '38. THE ASSESSEE RAISED ANOTHER ISSUE IN THIS APPEAL VIDE GROUND 5 AGAINST THE DECISION OF CIT (A) IN HOLDING T HAT THE PROFITS ARISING ON SALE OF SHARES IN KAY VEE AAR LTD AS ' SPECULATION BUSINESS PROFIT. IN CASE OF THESE SHARES, THE BROKER HAS NOT DELIVERED THEM TO THE ASSESSEE'S DEMAT ACCOUNT EVEN BELATEDLY. THEY WERE SOLD FROM THE BROK ER'S ACCOUNT ITSELF. THEREFORE, THE CIT (A) IS OF THE OPIN ION THAT THE SHARES WERE NOT CONSIDERED DELIVERED ACTUALLY WHEN THERE WAS CONSTRUCTIVE DELIVERY TAKEN BY THE BROKER A ND NOT THE ACTUAL DELIVERY BY THE ASSESSEE. IN THIS REGARD, VID E THE WRITTEN SUBMISSION; THE LD COUNSEL ARGUED THAT THE PROVISIONS OF SECTION 43 (5) OF THE ACT ARE NOT APPLIC ABLE TO THE IMPUGNED TRANSACTIONS AS THESE PROVISIONS ARE RELEVAN T FOR BUSINESS PROFITS AND NOT THE CAPITAL GAINS IN THIS CA SE. ON OTHER HAND, LD DR RELIED ON THE PARA 4.2 OF THE ORD ER OF THE CIT (A). 39. WE HAVE HEARD THE PARTIES AND PERUSED ORDERS OF T HE REVENUES AS WELL AS THE WRITTEN SUBMISSION OF THE ASSESSEE. PARA 4.2 CONTAINS THE REASONING OF THE CIT (A) AND TH E SAME READS AS FOLLOWS: '4.2 HOWEVER, AS PER THE ASSESSMENT ORDER, THE APPELLANT DID NOT TAKE DELIVERY OF SHARES IN RESPECT OF KAY VEE AARE LTD., PURCHASED ON VARIOUS DATES MENTIONED. THE APPELLANT RECEIVED TOTAL CONSIDERATION OF RS.15,07,373/-ON VARI OUS DATES TOWARDS THE SALE OF SHARES. THE PAYMENT ON ACCOUN T OF SALE OF THESE SHARES WAS ADMITTED BY THE APPELLANT IN TH E BOOKS OF ACCOUNTS. HOWEVER, THE APPELLANT WAS UNABLE T O GIVE ANY EVIDENCE REGARDING THE RECEIPT OF ACTUAL D ELIVERY OF THE SHARES EITHER IN THE PHYSICAL FORM OR CREDIT IN TH E DEMAT ACCOUNT MAINTAINED. IN THE ABSENCE OF ANY SALE WITHOU T TAKING ACTUAL DELIVERY OF SHARES, THE SURPLUS CANNOT BE ASSESSED AS CAPITAL GAIN. THIS SURPLUS HAS TO BE ASSESSED AS SPECULATIVE PROFITS. THEREFORE, THE AO IS DIRECTED T O ASSESS THE SURPLUS ARISING OUT OF THE SHARES OF KAY VEE AAR LTD . AS SPECULATIVE PROFIT'. 40. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE HAS NOT SUCCEEDED IN EVIDENCING THE DELIVERY OF SHARES OF KAY VEE AAR LTD., BUT THE FACT IS THAT HE RECEIVED THE SALE CONSIDERATION OF THE SAID AMOUNT. CORE ARGUMENT OF LD COUNSEL IS THAT THE PROVISIONS OF SECTION 43 (5) OF THE ACT ARE NOT APPLICABLE TO IMPUGNED TRANSACTIONS AS THESE PROVI SIONS ARE RELEVANT FOR BUSINESS & NOT THE CAPITAL GAIN. AS SE EN FROM 4 THE RECORDS, THIS ARGUMENT HAS COME UP FOR THIS FIRST TI ME BEFORE' US & THE CIT (A) DID NOT HAVE OCCASION TO EXA MINE THE SAME. IN ALL FAIRNESS, THIS PART HAS TO BE REFERRED TO THE FILES OF THE CIT (A) FOR THE LIMITED PURPOSE. CIT (A) SHALL OFFER HIS OPINION ON THIS LIMITED ISSUE AFTER GIVING REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CIT (A) SHAL L TAKE INTO CONSIDERATION THE FACT THAT THE ASSESSEE FINA LLY RECEIVED THE SALE CONSIDERATION IN HIS ACCOUNTS FROM T HE BROKER AND THE OTHER RELEVANT FACTS. HE SHALL ALSO TAK E INTO ACCOUNT OUR DECISIONS IN THIS ORDER ON THE VALIDITY OF THE DOCUMENTS OF CONTRACT NOTES, ENTRIES IN THE BOOKS OF ACCOUNTS OF THIS ASSESSEE, ETC., ACCORDINGLY, GROUND 5 O F ASSESSEE'S APPEAL IS SET ASIDE.' 5. THE ASSESSEE APPEARED BEFORE THE CIT(A) AND FILE D DETAILED SUBMISSIONS AND VARIOUS CASE LAWS TO SUPPORT HIS CO NTENTION THAT INCOME WAS CHARGEABLE UNDER THE HEAD CAPITAL GAINS ONLY. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE EXPL ANATION GIVEN BY THE ASSESSEE AND HELD THAT THE TRANSACTION OF SHARES OF KAY VEE AAR LTD. ARE SPECULATIVE TRANSACTION AND NO T CAPITAL GAIN AS THE SHARES UNDER REFERENCE WERE NEVER TRANSFERRE D INTO THE DEMAT ACCOUNT. THE RELEVANT OBSERVATION OF THE LD. CIT(A) READS AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT, APPEAL ORDERS PASSED BY THE HON'BLE ITAT AN D CIT (A)TI, ASSESSMENT ORDER AND MATERIAL AVAILABLE ON RECOR D. THE SPECIFIC ISSUE BEFORE ME IS TO DETERMINE WHETHER THE PR OFIT EARNED BY THE APPELLANT IN REGARD TO TRANSACTION OF SHARES OF KAY VEE AAR LTD. AMOUNTS TO SPECULATIVE PROFIT AS HELD BY CIT(A)-II OR CAPITAL GAINS AS CLAIMED BY THE APPELLANT. FACTS OF THE CASE HAVE ALREADY BEEN GIVEN IN DETAIL IN THE PRECEDING PARAS. IT IS AN UNDISPUTED FACT THAT THE APPELLANT DID NOT TRANSFER T HE SHARES OF KAY VEE AAR LTD. (8000 SHARES STATED TO HAVE BEEN PURC HASED ON 12/06/2003 AND 1000 SHARES ON 25/02/2005) IN HIS D-MAT ACCOUNT IN WHICH HE GOT OTHER SHARES (LIMITEX AND SAN GOCON ) TRANSFERRED EVEN AFTER A LAPSE OF 17 TO 19 MONTHS. THE HON'BLE ITAT IN THE ABOVE MENTIONED ORDER HAD HELD THAT PRO FITS ON SALE OF SHARES OF LIMITEX AND SANGOCON WOULD CONSTITUTE SHOR T TERM CAPITAL GAINS THOUGH THE APPELLANT HAD CLAIMED THE SAME AS LONG TERM CAPITAL GAINS. THE APPELLANT HAD SHOWN TO HAVE P URCHASED THESE SHARES VIDE PURCHASE CONTRACT DT.07/04/2003 AND 11/06/2003. THE ITAT HAD HELD THAT THE SAID PURCHASE CONTRACT NOTES SUFFERED FROM CREDIBILITY AND THEREFORE DID NOT TAKE THE DATE OF PURCHASE CONTRACT NOTE AS THE RELEVANT DATE O F HOLDING TO 5 CALCULATE HOLDING PERIOD OF THE SAID SHARES I.E. SHORT TERM OR LONG TERM. HON'BLE ITAT CONFIRMED THE DECISION OF CIT(A)- II IN ASSESSING THE CAPITAL GAIN AS SHORT TERM CAPITAL GAINS BY ADOPTING THE DATE OF TRANSFER INTO THE DEMAT ACCOUNT AS THE DATE OF ACQUISITION. THIS SHOWS THAT THE DATE OF TRANSFER OF SHA RES INTO THE D-MAT ACCOUNT WAS DECISIVE IN DECIDING THE HOLDIN G PERIOD OF THE SHARES FOR DETERMINING THE NATURE OF CAPITAL G AIN I.E. SHORT TERM OR LONG TERM. AS STATED EARLIER SHARES OF KAY VEE AAR LTD. WERE NEVER TRANSFERRED IN THE D-MAT ACCOUNT. INFACT THE APPELLANT NEVER TOOK THE ACTUAL DELIVERY OF THESE SHA RES. SEC. 43(5) EXPLAINS 'SPECULATIVE TRANSACTION'. ACCORDING TO THIS SECTION SPECULATIVE TRANSACTION MEANS A TRANSACTION IN WHICH A CONTRACT FOR THE PURCHASE OR SALE OF ANY COMMODITY, I NCLUDING STOCKS AND SHARES, IS PERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMMODITY OR SCRIPS. IN VIEW OF THE PROVISIONS OF SEC. 43 (5), I AM O F THE CONSIDERED VIEW THAT APPELLANT'S CASE IN REGARD TO TRA NSACTION OF SHARES OF KAY VEE AAR LTD. IS CLEARLY COVERED UNDER SPE CULATIVE TRANSACTION AS NO ACTUAL DELIVERY OF SHARES WAS TAKEN BY THE APPELLANT. THE CONTENTION OF THE APPELLANT THAT THE TRANSACTION AMOUNTED TO CAPITAL GAINS AND THAT THE CIT(A)-II WAS NOT JUSTIFIED IN TREATING IT AS SPECULATIVE TRANSACTION AND THERE BY CHANGING THE HEAD FROM 'CAPITAL GAINS' TO 'BUSINESS INCOME' IS D EVOID OF MERIT AND HENCE NOT ACCEPTABLE. THE APPELLANT HAS GI VEN PLETHORA OF CASE LAWS IN THIS REGARD. THE FACTS OF THOSE CASES EITHER RELATE TO CHANGE OF HEAD OF INCOME OR THE NA TURE OF TRANSACTION I.E. WHETHER A TRANSACTION WAS IN THE NATU RE OF TRADE OR ADVENTURE IN NATURE OF TRADE. THESE FACTS ARE NOT APPLICABLE IN THIS CASE AS THERE SEEMS TO BE NO AMBIGUITY IN TREATING THE TRANSACTION AS SPECULATIVE TRANSACTION FOR WANT OF ACTU AL DELIVERY OF SHARES BY THE APPELLANT. THE PURPORTED PURCHASE OR SALE OF THESE SHARES SHOULD HAVE BEEN FOLLOWED BY ACTUAL DELIVE RY OF SHARES WHICH DID NOT HAPPEN IN THE PRESENT CASE. I AM O F THE CONSIDERED VIEW THAT THE APPELLANT DID NOT HOLD THE SHARES AT ALL AND THEREFORE, SHARES WERE NOT ELIGIBLE TO BE CLASSIFIE D AS CAPITAL ASSET. THE ALLEGED PURCHASE CONTRACT NOTES WERE FOUND T O BE DEFECTIVE AND FULL OF DEFORMITIES BY 'THE ITAT IN TH E APPELLANT'S OWN CASE. IN THE PRESENT CASE THE APPELLANT CANNOT BE CONSIDERED TO BE HOLDING SHARES AS NO ACTUAL DELIVERY WAS TAKEN AN D NO TRANSFER OF SUCH SHARES TOOK PLACE IN APPELLANT'S DEMAT ACCOUNT.. IF THE DATE OF TRANSFER OF SHARES IN DEMAT A CCOUNT WAS THE ONLY CRITERIA ADOPTED BY THE CIT (A)-II AND ITA T IN HOLDING GAINS ON TRANSACTION OF SHARES OF LIMITEX AND SANGOCON AS SHORT TERM CAPITAL GAINS AS IS EVIDENT FROM THE ORDERS THEN UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE I AGREE WITH THE DE CISION OF CIT(A)-II IN TREATING THE TRANSACTION OF SHARES OF KAY VEE AAR LTD. AS SPECULATIVE TRANSACTION AND NOT AS CAPITAL GAINS AS TH E SHARES UNDER REFERENCE WERE NEVER TRANSFERRED IN DEMAT ACCO UNT. THE PROVISIONS OF SECTION 43(5) LEANS NO DOUBTS THAT IF THER E IS NO DELIVERY OF GOODS PURCHASED IN THE CONTRACT OF SALE O R TRANSACTION THEN SUCH SALE OR TRANSACTION IS SPECULATIVE. IN THIS C ASE, IT IS AN ADMITTED POSITION THAT THERE HAD BEEN NO ACTUAL DELI VERY OF SHARES TO THE APPELLANT AND THEREAFTER BY IT. THE BUSI NESS CONDUCT OF THE APPELLANT DOES NOT ALSO PROVE THAT THE PURPOSE OF ENTERING INTO TRANSACTION OF SHARES OF KAY VEE AAR LTD . WAS THAT OF 'INVESTMENT' AS CLAIMED BY HIM. IN VIEW OF THE ABO VE DISCUSSION, IT IS CONCLUDED THAT THE TRANSACTION IN REGA RD TO SHARES OF KAY VEE AAR LTD. HAS RIGHTLY BEEN HELD AS SPEC ULATIVE 6 TRANSACTION AND NOT AS CAPITAL GAIN AS CLAIMED BY THE APPELLANT. THE GROUNDS OF THE APPELLANT IN THIS REGARD ARE DISMISSE D. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW I N CONFIRMING THE ACTION OF THE AO IN TREATING THE INCOME OF SALE OF SHARES OF KEY VEE AAR LTD OF RS.25,10,402/- AS SPECULATIVE BUSINE SS PROFIT AS AGAINST THE CLAIM OF THE APPELLANT OF BEING INCOME UNDER THE HEAD CAPITAL GAINS. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE IMPUGNED TRANSACTION WAS NOT DO NE WITHOUT DELIVERY AS THERE WAS A CONSTRUCTION DELIVERY TO THE APPELLANT FROM THE BROKER. LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE IMPUGNED SHARES ALSO REPRESENTED INVESTMENT IN THE HANDS OF THE APPELLANT SIMILAR TO TH E OTHER SHARES AND THERE WAS NO BASIS TO GIVE DIFFERENTIAL TREAT MENT TO SHARES UNDER CONSIDERATION. 3. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW TH AT THE PROVISIONS OF SEC 43(5) ARE NOT APPLICABLE TO THE FACT S OF THE APPELLANT AND THEREFORE HAVE WRONGLY BEEN INVOKED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIF Y OR SUBSTITUTE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 7. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLE NGED THE ORDER OF THE CIT(A). HE DREW THE ATTENTION OF THE BENCH TO THE PROVISIONS OF SECTION 43(5)(B) WHICH READS AS UNDER : '(5) SPECULATIVE TRANSACTION' MEANS A TRANSACTION IN WH ICH A CONTRACT FOR THE PURCHASE OR SALE OF ANY COMMODITY, INCLUDING STOCKS AND SHARES, IS PERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMMO DITY OR SCRIPS: PROVIDED THAT FOR THE PURPOSES OF THIS CLAUSE (A) . . . . . . . . . . (B) A CONTRACT IN RESPECT OF STOCKS AND SHARES ENTERED INTO BY A DEALER OR INVESTOR THEREIN TO GUARD AGAINST LOSS IN HIS HOLDINGS OF STOCKS AND SHARES THROUGH PRICE FLUCTUATIONS; OR (C) . . . . . . . . . . (D) . . . . . . . . . . SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION. 7 REFERRING TO THE ABOVE HE SUBMITTED THAT IN VIEW OF THE ABOVE CLEAR CUT PROVISIONS THE TRANSACTION CANNOT BE CONS IDERED AS SPECULATIVE TRANSACTION. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THE GROUNDS RAISED B Y THE ASSESSEE BE ALLOWED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUB MITTED THAT IT IS AN ADMITTED FACT THAT THE SHARES NEVER CAME TO THE DEMAT ACCOUNT OF THE ASSESSEE EVEN AFTER 17 TO 19 MONTHS OF THE T RANSFER OF THE SHARES OF KAY VEE AAR LTD. HE SUBMITTED THAT THE T RIBUNAL HAD GIVEN SOME SPECIFIC DIRECTION TO THE CIT(A) TO ADOP T THE DATE OF TRANSFER INTO DEMAT ACCOUNT AS THE DATE OF ACQUISIT ION. SINCE THESE SHARES WERE NEVER TRANSFERRED TO THE DEMAT AC COUNT AND SINCE THE ASSESSEE NEVER TOOK THE ACTUAL DELIVERY O F THE SHARES, THEREFORE, THE TRANSACTIONS HAVE TO BE TREATED AS S PECULATIVE TRANSACTION. HE ACCORDINGLY SUBMITTED THAT THE ORD ER OF THE CIT(A) BE UPHELD. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND BEFORE THE TRIBUNAL THE ASSESSEE HAD ARGUED THAT PR OVISIONS OF SECTION 43(5) OF THE ACT ARE NOT APPLICABLE TO THE TRANSACTIONS OF THE SCRIP KAY VEE AAR LTD. ON THE GROUND THAT THESE PROVISIONS ARE RELEVANT FOR BUSINESS AND NOT CAPITAL GAIN. TH E PROVISIONS OF 8 SECTION 43(5)(B) ARE ALREADY EXTRACTED IN THE PRECE DING PARAGRAPHS. IT IS AN ADMITTED FACT THAT THE ASSESS EE, IN THE INSTANT CASE, HAS NOT TAKEN ACTUAL DELIVERY OF THE SCRIPS A ND THE SHARES WERE NEVER TRANSFERRED INTO THE DEMAT ACCOUNT OF TH E ASSESSEE. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 43( 5) THE TRANSACTION OF SHARES OF KAY VEE AAR LTD. IS CLEARL Y COVERED UNDER SPECULATIVE TRANSACTION AS NO ACTUAL DELIVERY OF SHARES WAS TAKEN BY THE ASSESSEE. SINCE IN THE INSTANT CASE T HE SO CALLED PURCHASE OR SALE OF THE SHARES HAVE NOT BEEN FOLLOW ED BY ACTUAL DELIVERY OF SHARES AND SINCE THE ASSESSEE DID NOT H OLD THE SHARES AT ALL, THEREFORE, THE SHARES IN OUR OPINION ARE NO T ELIGIBLE TO BE CLASSIFIED AS CAPITAL ASSET. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) IN TREATING THE TRANSACTION OF SHARES OF KAY VEE AAR LTD. AS SPECULATIVE TRANS ACTION AND NOT AS CAPITAL GAIN. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED DISCUSSION BY THE LD.CIT(A) WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS U PHELD. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISM ISSED. ITA NO.1715/PN/2011 (A.Y. 2005-06) : 10. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE HAD CLAIMED EXEMPTION U/S.10(38) ON ACCOUNT OF LONG TERM CAPITA L GAIN OF RS.23,22,355/- ON SALE OF SHARES OF LIMITEX, SANGOC ON AND KAY VEE AAR LTD, THE DETAILS OF WHICH ARE ALREADY GIVEN AT PARA 2 OF THE IMPUGNED ORDER WHILE DECIDING THE QUANTUM APPEA L IN ITA NO.1252/PN/2011. THE ASSESSING OFFICER AFTER MAKIN G DETAILED 9 ENQUIRIES FROM THE KOLKATA STOCK EXCHANGE AND AFTER EXAMINING THE DEMAT ACCOUNT, PURCHASE AND SALE CONTRACT NOTES ETC. HAD FOUND THAT THE PURCHASE CONTRACT NOTES WERE ANTEDAT ED (ISSUED IN THE FORMS PRINTED IN JUNE 2004) AND TRANSACTIONS ME NTIONED IN THE PURCHASE CONTRACT NOTES WERE NOT GENUINE. HE HAD A CCORDINGLY REJECTED THE CLAIM OF DEDUCTION U/S.10(38) AND TAX ED THE LONG TERM CAPITAL GAIN OF RS.23,22,355/- AS INCOME FROM OTHER SOURCES. IN APPEAL THE LD.CIT(A) HAD HELD THE SUR PLUS OF RS.10,03,922/- ON ACCOUNT OF SALE OF SCRIPS ON LIMI TEX AND SANGOCON AS SHORT TERM CAPITAL GAIN AND THE SURPLUS ON SALE OF SHARES OF KAY VEE AAR LTD. AMOUNTING TO RS.13,21,84 4/- AS SPECULATIVE PROFIT. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND DIST INGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM THE ASSESSING OF FICER LEVIED PENALTY OF RS.5,41,780/- U/S.271(1)(C) OF THE I.T. ACT. 11. IN APPEAL THE LD.CIT(A) UPHELD THE PENALTY LEVI ED BY THE ASSESSING OFFICER. WHILE DOING SO, HE HELD THAT TH E CLAIM OF EXEMPTION U/S.10(38) OF THE I.T. ACT WAS NOT A BONA FIDE CLAIM. THE ASSESSEE FILED A FABRICATED CONTRACT NOTE AND H IS CLAIM OF EXEMPTION U/S.10(38) ON ACCOUNT OF LONG TERM CAPITA L GAIN WAS BASED ON A CONCOCTED TRANSACTION OF PURCHASE AND SA LE OF PENNY STOCK. THE INVESTIGATIONS PROVED BEYOND DOUBT THAT THE ASSESSEE MANIPULATED THE RECORDS TO FALSELY CLAIM LONG TERM CAPITAL GAIN TO EVADE TAX. THE LD.CIT(A) FURTHER HELD THAT THE INT ENTION OF THE 10 ASSESSEE WAS MALAFIDE SINCE BEGINNING AS HE FURNISH ED INACCURATE PARTICULARS AND BOGUS CONTRACT NOTE WITH AN OVERALL OBJECTIVE TO EVADE TAX. THERE WAS A CONSCIOUS BREACH OF LAW AND THEREFORE THE PENALTY WAS RIGHTLY IMPOSED. HE FURTHER HELD THAT T HE ASSESSEE, NOT ONLY DELIBERATELY WITHHELD INFORMATION REGARDIN G THE TRANSACTION DETAILS BUT ALSO FURNISHED INCORRECT PA RTICULARS OF THE SAME. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND DISTINGUISHING THE VARIOUS DECISIONS CITED BEFO RE HIM, THE LD.CIT(A) UPHELD THE PENALTY LEVIED U/S.271(1)(C) O F THE I.T. ACT. 12. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED CTT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY U/S 271(1)(C) IN RESPECT OF THE INCOME ASSE SSED AS INCOME FROM SHORT TERM CAPITAL GAIN FROM SALE OF SHARE S AS AGAINST LONG TERM CAPITAL GAIN WHICH WAS FURTHER CLAI MED TO BE EXEMPT U/S 10(38) AS CLAIMED BY THE APPELLANT. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT HAV ING ACCEPTED THE GENUINE PURCHASE AND SALE OF SHARES SO AS TAX THE INC OME AS INCOME FROM CAPITAL GAIN, THE CLAIM MADE BY THE APP ELLANT WAS REJECTED MERELY BY TAKING A DIFFERENT VIEW AS TO THE HEAD OF INCOME ON THE FACTS OF THE CASE AND IT THEREFORE WOUL D NOT AMOUNT TO ANY CONCEALMENT OF ANY PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE APPELLANT. 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE CLAIM OF LONG TERM CAPITAL GAIN WAS NOT ALLOWED BECAUSE THE EX PLANATION OF THE APPELLANT WAS NOT ACCEPTED. THE EXPLANATION O F THE APPELLANT WAS HOWEVER A PLAUSIBLE AND BONAFIDE EXPLAN ATION ON FACTS AS WELL AS IN LAW AND ALL THE RELEVANT FACTS WER E PROPERLY AND FULLY DISCLOSED BY THE APPELLANT. 4. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY OR SUBST ITUTE ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 11 13. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO T HE ORDER OF THE HONBLE HIGH COURT SUBMITTED THAT THE HONBLE H IGH COURT HAS ADMITTED THE APPEAL FILED BY THE ASSESSEE ON TH E FOLLOWING QUESTIONS OF LAW : (A) WDHETHER ITAT ERRED BY IGNORING THE GROUND RAI SED BY THE DEPARTMENT THAT CIT(A) ERRED BY ACCEPTING COST O F PURCHASE/ACQUISITION OF SHARES AS STATED BY THE ASSESSEE CONTRADICTING HIS OWN FINDING IN APPELLATE ORDER THA T THE PURCHASE CONTRACT NOTES ARE NOT GENUINE AND THAT THE SHARES WERE NOT PURCHASED BY THE ASSESSEE IN FINANCIAL YEAR 200 3-04? (B) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT TO HOLD THAT, THE GAIN S EARNED BY THE APPELLANT ARE TREATED AS SHORT TERM CAPITAL GAIN BY ADOPTING DATE OF PURCHASE AND PURCHASE PRICE IN TWO DIFFERENT FINANCIAL YEARS INSTEAD OF LONG TERM CAPITAL GAINS AS CLAIMED BY THE APPELLANT. 13.1 REFERRING TO THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. M/S. NAYAN BUILDERS AND DEVELOPERS VIDE ITA NO.415/PN/2012 ORDER DATED 08-07-2014 HE SUBMITTED THAT THE HONBLE HIGH COURT HAS UPHELD THE ORDER OF THE TRIB UNAL WHERE THE PENALTY WAS DELETED BY THE TRIBUNAL ON THE GROU ND THAT PENALTY IS NOT LEVIABLE WHERE SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HIGH COURT. REFERRING TO THE DECIS ION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAMTA SHI RISH RAISONI VIDE ITA NO.104/PN/2012 ORDER DATED 28-08-2013 FOR A.Y. 2005-06 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS DELETED THE PENALTY HOLDING THAT THE ADMISSION OF S UBSTANTIAL QUESTION OF LAW IN QUANTUM PROCEEDINGS BY THE JURIS DICTIONAL HIGH COURT LENDS CREDENCE TO THE BONAFIDES OF THE A SSESSEE IN CLAIMING DEDUCTION AND UNDER SUCH SITUATION PENALTY IS NOT 12 EXIGIBLE UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT. HE ACCORDINGLY SUBMITTED THAT PENALTY IN THE INSTAN T CASE IS NOT LEVIABLE AND THEREFORE THE ORDER OF THE CIT(A) BE S ET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE BE ALLOWED. 14. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRI NG TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF RELATED PARTIES VIDE ITA NOS. 810/PN/2011 TO 812/PN/2011 AN D ITA NO.892/PN/2011 ORDER DATED 30-08-2012 FOR A.Y. 2005 -06 HE SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTAN CES THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE CIT(A) SUST AINING THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT. REFE RRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SA NGHVI SWISS REFILLS PVT. LTD. VS ACIT AND ANOTHER REPORTED IN ( 2014) 88 CCH 039 ISCC HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID DECISION HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE WHERE PENALTY WAS CONFIRMED BY THE HIGH COURT ON TH E GROUND THAT THE ASSESSEE FILED INACCURATE PARTICULARS OF E XPENDITURE PAID TO SISTER CONCERN WITH A VIEW TO REDUCE TAX LIABILI TY. VARIOUS INCRIMINATING DOCUMENTS WERE FOUND UNDER SEARCH SHO WING THAT ASSESSEE WAS MANIPULATING ITS ACCOUNTS. ACCORDINGL Y, IT WAS HELD THAT ASSESSEE HAD FILED INACCURATE PARTICULARS OF I NCOME BY SHOWING FALSE/EXAGGERATED EXPENSES LEADING TO CONCE ALMENT OF INCOME AND THEREFORE PENALTY LEVIED U/S.271(1)(C) O F THE I.T. ACT WAS JUSTIFIED. REFERRING TO THE FINDINGS GIVEN BY THE AO AT PAGES 13 7 AND 8 OF THE ASSESSMENT ORDER HE SUBMITTED THAT T HE SHARES OF KAY VEE AAR LTD. WERE NEVER PURCHASED, THEREFORE, T HE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME. IN THE CASE OF THE OTHER 2 SCRIPS THE AO HAD PROVED THAT THE CONTRACT NOTES ISSUED BY THE BROKER WERE NOT GENUINE AND WERE ANTI DATED. THE FORGERY DONE BY THE ASSESSEE REMAINS UNCONTROVERTED. UNDER THESE FACTS AND CIRCUMSTANCES, PENALTY LEVIED BY THE AO AND UPH ELD BY THE CIT(A) WAS FULLY JUSTIFIED. REFERRING TO THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOO M COMMUNICATIONS PVT. LTD. REPORTED IN 327 ITR 510 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HA S HELD THAT CLAIM FOR DEDUCTION, WHICH IS NOT BONAFIDE, AMOUNTS TO CONCEALMENT OF INCOME AND THEREFORE PENALTY IS LEVI ABLE U/S.271(1)(C) OF THE I.T. ACT. HE ALSO RELIED ON T HE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F ROADMASTERS INDUSTRIES OF INDIA LTD. VS. CIT REPORT ED IN 251 ITR 601 AND THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT REPORTED IN 358 ITR 593. 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE PENALTY WAS LEVIED BY THE AO ON THE GR OUND THAT ASSESSEE FILED FABRICATED PURCHASE CONTRACT NOTES A ND THE CLAIM OF EXEMPTION U/S.10(38) ON ACCOUNT OF LONG TERM CAPITA L GAINS WAS 14 BASED ON CONCOCTED TRANSACTION OF PURCHASE AND SALE OF PENNY STOCK. THE FACT THAT THE ASSESSEE HAS MANIPULATED THE RECORDS TO FALSIFY THE CLAIM OF LONG TERM CAPITAL GAIN TO EVAD E TAX REMAINS UNCONTROVERTED. WE FIND UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL VIDE COMMON ORDER DATED 30-08-2013 IN THE CASE OF THE RELATED PARTIES OF THE ASSESSEE HAS OBSERVED AS UNDER : 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND EXAMINED THE FACTS WHICH LED TO LEVY OF PENALTIES. I N THIS CASE, BOTH THE PARTIES HAVE CHALLENGED THE ORDER OF THE TR IBUNAL IN THE QUANTUM PROCEEDINGS BEFORE HON'BLE HIGH COURT AND TH EIR APPEALS ARE ADMITTED. IN RESPECT OF PENALTY PROCEED INGS WE HAVE TO CONSIDER THE FACTS WHICH HAVE REACHED FINALITY IN THIS CASE. SO FAR AS THE APPEALS FILED IN THE HON'BLE HIGH COURT AR E CONCERNED, WE ARE AWARE THAT SUBSTANTIAL QUESTION OF LAWS HAVE B EEN FRAMED BY ADMITTING APPEALS FILED BY BOTH THE ASSESSEES BUT WE A RE UNABLE TO ACCEPT THE CONTENTION OF THE LEARNED COUN SEL THAT IN ALL CASES ONCE THE MATTER IS ADMITTED BY THE HON'BLE HIGH COURT BY FRAMING THE SUBSTANTIAL QUESTION OF LAW HENCE, THE ISSUE BECOME DEBATABLE. 10. WE MAKE IT CLEAR THAT THE REVENUE HAS ALSO CHALLE NGED THE ORDER OF THE TRIBUNAL BY FILING THE APPEAL TO THE H ON'BLE HIGH COURT. MERELY BECAUSE THE MATTER HAS BEEN CARRIED B Y THE PARTIES BEFORE THE HON'BLE HIGH COURT AND THE SAME HA S BEEN ADMITTED THEN EACH AND EVERY CASE PENALTY CANNOT BE DELETED ON THE REASON THAT ISSUE IS A DEBATABLE ONE. THE PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS FROM THE ASSESSMENT PROCEEDINGS. A DEBATABLE ISSUE CONTEMPLATES THAT THERE ARE TWO VIEWS POSSIBLE ON SAID ISSUE. THERE IS A SERIOUS CHARGE ON THE ASSESSEE THAT THE DATE OF PURCHASE OF THE SHARES DECLARED BY THE ASSESSEE BY PRODUCING THE DEBATABLE NOTE FROM THE BROKE RS IS A MANIPULATED DATE TO TAKE THE BENEFIT OF SEC. 10(38) OF THE ACT CLAIMING THE GAIN ON SALE OF THE SHARES AS A LONG TER M CAPITAL GAIN. IN THIS CASE, THE TRIBUNAL HAS ALSO GIVEN A CATE GORICAL FINDING OF FACT THAT ORIGINAL BROKERS NOTES WERE NEV ER PRODUCED BY THE ASSESSEE EVEN BEFORE THE TRIBUNAL. THERE ARE CE RTAIN IMPORTANT FACTS WHICH ALSO HAVE BEEN CONSIDERED BY THE TRIBUNAL. INITIALLY THE ASSESSEE CLAIMED THAT ALL THE SHARES IN QUESTION WERE PURCHASED THROUGH THE STOCK EXCHANGE BU T SUBSEQUENTLY THE ASSESSEE CHANGED THE STAND AND CLAIMED T HAT ALL THE SHARE ARE PURCHASED IN OFF-MARKET TRANSACTIONS. IN THIS CASE, IT IS NOT DISPUTED THAT THERE WAS ALMOST 18 MONTHS DELAY IN DELIVERY OF THE SHARES. EVEN THE PAYMENTS TO THE BRO KER ARE MADE ONLY AFTER THE SALE OF THE SHARES AFTER THE LONG GAP OF TIME. THERE WERE CONTRADICTIONS IN THE DETAILS OF THE BROKE RS NOTES AND THOSE IN THE STOCK EXCHANGE I.E. IN RESPECT OF SETTLEME NT NO. ETC. THE TRIBUNAL HAS HELD THAT THE CONTRACT NOTES PRODUCE D BY THE ASSESSEE ARE NOT GENUINE . THE SAID FINDING IS GIVEN ON THE 15 APPRECIATION OF THE EVIDENCE AS WELL AS THE FACTS. WE ARE AWARE THAT EVEN IF THE ASSESSING OFFICER HAS TREATED THE ENTI RE CAPITAL GAIN DECLARED BY THE ASSESSEE AS INCOME FROM THE OTHER SOURCES BUT THE LD. CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE T O THE EXTENT THAT AT LEAST THE SALE OF THE SHARES IS A GENUINE ONE B ECAUSE THE SAME WAS ROUTED THROUGH D-MAT ACCOUNT. THE LD. CIT(A ) HELD THAT AT THE MOST IT CAN BE SAID THE SHARES WERE PURCHASE D ON THE DATE ON WHICH THOSE WERE CREDITED TO THE D-MAT ACCOU NT HENCE, THE PERIOD OF HOLDING WAS LESS THAN 12 MONTHS. HE , TH EREFORE, HELD THAT EVEN IF THE TRANSACTIONS OF THE SALE OF THE SHARES IS TREATED AS A GENUINE ONE BUT THE SHARES WERE HELD FOR THE LESS THAN THE 12 MONTHS AND HENCE, THE CAPITAL GAIN DECLA RED BY THE ASSESSEES IS TO BE ASSESSED AS A SHORT TERM CAPITAL GAIN. 11. IN CONSEQUENCE, THE ASSESSEES CLAIM OF EXEMPTION OF THE GAIN U/S. 10(38) WAS REJECTED AND THIS IS PRECISELY THE CASE OF THE ASSESSING OFFICER THAT BY USING THE BOGUS BROKERS NOTES THE ASSESSEE SHOWN THE PERIOD OF HOLDING MORE THAN 12 MONTHS AND ACCORDINGLY FURNISHED INACCURATE PARTICULARS OF HIS IN COME. IN OUR OPINION, IF THE CHARGE OF DELIBERATE ATTEMPT TO EVADE TAX BY MANIPULATION IS MADE WHICH ALSO COULD NOT BE DISPROVED BEFORE US, THE ASSESSEE CANNOT GET IMMUNITY FROM PENALTY. THOU GH THE LEARNED COUNSEL REITERATED THE ARGUMENTS MADE IN THE QUANTUM PROCEEDINGS TO MAKE OUT A CASE THAT THE BROKERS NOTES A RE GENUINE BUT AS ALL THE ARGUMENTS ON THE SAME FACTS AND THE EVIDENCES HAVE ALREADY BEEN CONSIDERED IN THE QUANTUM PROCEEDINGS, WE CANNOT SIT AS A REVIEWING AUTHORITY ON THE FINDINGS GIVEN BY THE TRIBUNAL ON THE GENUINENESS OF T HE BROKERS NOTES. WE, THEREFORE, FIND NO REASON TO INTERFERE WI TH THE ORDERS OF THE LD. CIT(A) IN ALL THESE CASES AND GROUNDS TAKEN BY THESE ASSESSEES ARE DISMISSED. 15.1 IN THE ABOVE CASE ALSO, THE APPEALS FILED BY T HE ASSESSEE AS WELL AS THE REVENUE WERE ADMITTED BY THE HIGH COURT BY FRAMING SUBSTANTIAL QUESTIONS OF LAW. HOWEVER, THE TRIBUNA L HAS GIVEN A CATEGORICAL FINDING THAT THERE IS A SERIOUS CHARGE ON THE ASSESSEE THAT THE DATE OF PURCHASE OF THE SHARES DECLARED BY THE ASSESSEE BY PRODUCING THE DEBATABLE NOTE FROM THE BROKERS IS A MANIPULATED DATE TO TAKE THE BENEFIT OF SECTION 10(38) OF THE I .T. ACT BY CLAIMING THE GAIN ON SALE OF THE SHARES AS LONG TER M CAPITAL GAIN. THUS, THE PENALTY LEVIED BY THE AO AND UPHELD BY TH E CIT(A) WAS CONFIRMED BY THE TRIBUNAL. 16 15.2 SO FAR AS THE DECISION OF THE TRIBUNAL IN THE CASE OF MAMTA SHIRISH RAISONI (SUPRA) IS CONCERNED WE FIND THERE WAS NO SUCH FINDING BY THE TRIBUNAL THAT THE DOCUMENTS WERE FAB RICATED FOR CLAIMING THE BENEFIT WHICH THE ASSESSEE WAS OTHERWI SE NOT ENTITLED TO. IN THAT CASE, THE ASSESSEE HAD TRADED IN VARIOUS SCRIPS DURING THE YEAR. CONSIDERING THE FREQUENCY AND MAG NITUDE OF THE TRANSACTIONS, THE AO TREATED THE SURPLUS AS BUSINES S INCOME AS AGAINST SHORT TERM AND LONG TERM CAPITAL GAIN D ECLARED BY THE ASSESSEE. THE ACTION OF THE AO IN TREATING SUCH CA PITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME WAS UPH ELD BY THE CIT(A) AS WELL AS THE TRIBUNAL. WHEN THE AO LEVIED PENALTY U/S.271(1)(C) OF THE I.T. ACT THE CIT(A) CONFIRMED THE PENALTY AND ON FURTHER APPEAL THE TRIBUNAL DELETED THE PENA LTY ON THE GROUND THAT SUBSTANTIAL QUESTION OF LAW HAS BEEN AD MITTED BY THE HIGH COURT. HOWEVER, IN THE INSTANT CASE, THE FACT OF MANIPULATION OF DOCUMENTS BY FORGING REMAINS UNCONT ROVERTED. THEREFORE, THE DECISION IN THE CASE OF MAMTA SHIRIS H RAISONI (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESE NT CASE. THE HONBLE SUPREME COURT IN THE CASE OF SANGHVI SWISS REFILLS PVT. LTD. (SUPRA) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE HIGH COURT IMPOSING PENALT Y U/S.271(1)(C). THE HONBLE HIGH COURT HAD IMPOSED PENALTY ON THE GROUND THAT VARIOUS INCRIMINATING DOCUMENTS FOU ND DURING THE SEARCH SHOWED THAT ASSESSEE WAS MANIPULATING IT S ACCOUNTS BY SHOWING EXPENDITURE PAID TO SISTER CONCERNS WITH A VIEW TO 17 REDUCE TAX LIABILITY. THE SAME AMOUNTS TO CONCEALM ENT OF INCOME AND THEREFORE PENALTY U/S.271(1)(C) IS LEVIA BLE. 15.3 NOW COMING TO THE FACTS OF THE PRESENT CASE, W E FIND THE ASSESSEE IN THE INSTANT CASE HAS DEALT WITH 3 SCRIP S, NAMELY LIMITEX, SANGOCON AND KAY VEE AAR AND CONSIDERED TH E SURPLUS AS LONG TERM CAPITAL GAIN AND CLAIMED EXEMPTION U/S .10(3) OF THE I.T. ACT. WE FIND WHILE THE SURPLUS OUT OF THE TRA NSACTION IN SHARES OF LIMITEX AND SANGOCON HAVE BEEN TREATED AS SHORT TERM CAPITAL GAIN BY THE CIT(A) AND UPHELD BY THE TRIBUN AL, HOWEVER, THE SURPLUS FROM THE TRANSACTION IN THE SHARES OF K AY VEE AAR LTD. WAS TREATED AS SPECULATIVE IN NATURE AS THE SH ARES NEVER ENTERED INTO THE DEMAT ACCOUNT OF THE ASSESSEE. TH ERE WAS NO EVIDENCE WHATSOEVER TO PROVE THAT THE ASSESSEE HAS TRADED IN SHARES OF KAY VEE AAR LTD. AND IT WAS CONCLUSIVELY PROVED THAT THE DOCUMENTS PRODUCED BY THE ASSESSEE ARE FABRICAT ED BY MANIPULATING THE RECORDS TO FALSIFY THE CLAIM OF LO NG TERM CAPITAL GAIN TO EVADE TAX. SIMILARLY, IN THE CASE OF OTHER 2 SCRIPS NAMELY LIMITEX AND SANGOCON, THE AO WAS ABLE TO PROVE THAT THE CONTRACT NOTES ISSUED BY THE BROKER MR. RAJENDRA SH AH WERE NOT GENUINE AS THE CONTRACT NOTES WERE ANTI DATED. THE REFORE, IT IS A CLEAR CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF PROVISIONS OF SECTION 271(1)( C) FOR WHICH PENALTY IS LEVIABLE. WE, THEREFORE, UPHOLD THE ORDE R OF LD.CIT(A) SUSTAINING THE PENALTY LEVIED BY THE AO U/S.271(1)( C) OF THE I.T. 18 ACT. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORD INGLY DISMISSED. 16. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18-03-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 18 TH MARCH, 2015 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, INCOME TAX APPELLAT E TRIBUNAL, PUNE