Shri. Vinod Gard, Nagpur V. Assistant Commissioner of Income TAx Circle-2, Nagpur

ITA 135/NAG/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3086 (ITAT-NAGPUR)
• Duration Of Justice: 7 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 23-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAJARAM
• Section: 271(1)(c); 68

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI RAJENDRA , A M ITA NO. 1 35 / N AG / 20 1 1 ( ASSESSMENT YEAR : 200 4 - 05 ) SHRI VINOD GARG HUF, A - 102, UTKARSH ALANKAR, RMT MARG, CIVIL LINES, NAGPUR (MAHARASHTRA) VS. ACIT, CIR - 2, NAGPUR - 440 001 PAN/GIR NO. : A AAHV 6555 R ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 13 4 / NAG /20 11 ( ASSESSMENT YEAR :2004 - 05 ) SMT. UMA GARG, A - 102, UTKARSH ALANKAR, RMT MARG, CIVIL LINES, NAGPUR (MAHARASHTRA) VS. ACIT, CIR - 2, NAGPUR - 440 001 PAN/GIR NO. : A BQPG 8394 N ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : NONE /REVENUE BY : MR. B. RAJARAM DATE OF HEARING : 21 ST DEC ., 2012 DATE OF PRONOUNCEMENT : 9 TH JAN . ,201 3 O R D E R P ER SHRI R.K.G UPTA, JM : TH E SE TWO APPEALS FILED BY THE TWO DIFFERENT ASSESSEES BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAINST THE ORDER OF LEANED CIT (A) - I I , ITA NO S . 144&145 /20 1 1 2 NAGPUR (MAHARASHTRA) , WHO CONFIRMED THE LEVY OF PENALTY UNDER SECTION 271(1)(C) RELATING TO ASSESSMENT YEAR 2004 - 05 AT RS. 3,25,000/ - AND RS. 4,20,000/ - RESPECTIVELY IN THESE TWO CASES, WHICH HA VE BEEN HEARD THROUGH E - COURT, MUMBAI . 2 . THE FACTS ARE SIMILAR IN BO TH OF THESE CASES, THEREFORE, THEY ARE DISPOSED OF BY A SINGLE ORDER. WE WILL DISCUSS THE FACTS IN THE CASE OF SHRI VINOD GARG HUF AND THE OUTCOME OF THE SAME WILL BE APPLICABLE IN THE CASE OF SMT. UMA GARG ALSO AS THE FACTS ARE SIMILAR. 3 . THE ASSESSEE H AS SHOWN LONG TERM CAPITAL GAINS ON SALE OF 18000 SHARES OF M/S FAST TRACT ENTERTAINMENT LTD. FOR RS. 6,30,000/ - AND 6700 SHARES OF M/S HIGH LAND INDUSTRIES FOR RS. 4,05,182/ - . IT WAS SUBMITTED THAT THE SHARES HAVE BEEN PURCHASED BY THE ASSESSEE IN THE YEA R 2002 - 03 FROM SHRI JAGANNATH TIBREWALA AND SHREEJEE INVESTMENTS WHO WERE THE RESPECTIVE BROKERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO SOUGHT CONFIRMATION OF THESE TRANSACTIONS FROM THE BOMBAY STOCK EXCHANGE. VIDE LETTER DATED 8 TH NOVEMBER, 2006, THE AUTHORITIES IN BOMBAY STOCK EXCHANGE CONFIRMED THAT SHRI JAGANNATH TIBREWALA WAS DECLARED DEFAULTER FROM 27 TH JANUARY, 1998 AND SHRI KIRIT J. SHAH AND SHREEJEE INVESTMENTS WERE DEFAULTER W.E.F. 8 - 6 - 2000 RESPECTIVELY. THEREFORE, IT WAS POINTED OUT THAT THE BROKERS COULD NOT CARRY ON THE BUSINESS IN THE BOMBAY STOCK EXCHANGE. ACCORDINGLY, THE AO CAME TO THE CONCLUSION THAT THESE AMOUNTS INVESTED ON ACCOUNT OF PURCHASE AND SHARES WERE NOT ITA NO S . 144&145 /20 1 1 3 GENUINE AND, THEREFORE, HE TREATED THE SAME UNDER SECTION 68 OF THE ACT. THEREAFTER PENALTY PROCEEDING WAS ALSO INITIATED. IN RESPONSE TO THE PENALTY PROCEEDING, THE ASSESSEE VOLUNTARILY ASSESSED RS. 10,60,618/ - , SUBJECT TO NON - LEVY OF ANY PENALTY, HOWEVER, THE AO WAS NOT SATISFIED AND ACCORDINGLY, HE LEVIED THE PENA LTY ON THE GROUND OF RS. 10,60,618/ - ASSESSED UNDER SECTION 68. 4 . DETAILS SUBMISSION WERE FILED BEFORE THE CIT(A) . RELIANCE WAS PLACED ON VARIOUS CASE LAWS, WHICH HAVE BEEN MENTIONED IN THE ORDER OF CIT(A) AT PAGE 4. AFTER CONSIDERING THE SUBMISSION AND PERUSING HE MATERIAL ON RECORD, THE CIT(A) FOUND THAT THE ASSESSEE HAS SURRENDERED THE AMOUNT ON ACCOUNT OF INVESTMENT IN SHARES. IT WAS ALSO OBSERVED BY THE CIT(A) THAT THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE PURCHASE OF SHARES, THEREFORE, THE AMOUNT WAS SURRENDERED BY THE ASSESSEE. ACCORDINGLY, HE WAS OF THE VIEW THAT THE PENALTY LEVIED BY THE AO WAS JUSTIFIED. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . THE CONTENTIONS RAISED BEFORE THE CIT(A) WERE REITERATED HERE BEFOR E THE TRIBUNAL BY THE LEARNED AR. 6 . LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF THE CIT(A) . 7 . AFTER CONSIDERING THE ORDER OF THE AO AND THE CIT(A) , WE FOUND THAT THE AO AS WELL AS THE CIT(A ) WERE NOT JUSTIFIED IN LEVYING AND CONFIRMING THE PENALTY U NDER SECTION 271(1)(C). IT IS A MATTER OF FACT THAT INVESTMENT WAS MADE IN THE ASSESSMENT YEAR 2002 - 03. WHEN THE ITA NO S . 144&145 /20 1 1 4 SHARES WERE PURCHASED THROUGH M R JAGANNATH TIBREWALA AND SHRI KIRIT J. SHAH AND SHREEJEE , RECORDS WERE MAINTAINED. THEREFORE, IF ANY ADVERSE IN FERENCE COULD BE DRAWN THAT COULD HAVE BEEN DRAWN FOR THE ASSESSMENT YEAR 2002 - 03 AND NOT FOR THE ASSESSMENT YEAR 2004 - 05. THE AO WHILE CONFIRMING THE ADDITION UNDER SECTION 68, WAS BASED ON THE REPORT OF BOMBAY STOCK EXCHANGE THAT MR JAGANNATH TIBREWALA A ND SHRI KIRIT J. SHAH AND SHREEJEE INVESTMENTS WERE DECLARED DEFAULTER. IF BY ANY REASON THE BROKERS WERE DECLARED DEFAULTER, IT DOES NOT MEAN THAT TRANSACTIONS MADE THROUGH THOSE BROKERS WERE ALSO NOT GENUINE. THERE MAY BE SOME POSSIBILITY THAT THESE BROK ERS MAY BE DOING THE WORK IN THE GR A Y MARKET AND SHARES MAY HAVE PURCHASED THROUGH SOMEBODY BY THEM. THEREFORE, IN OUR CONSIDERED VIEW, AT LEAST PENALTY SHOULD NOT HAVE BEEN LEVIED FOR THE SIMPLE REASON THAT THE ASSESSEE CAME FORWARD TO SURRENDER THE AMOU NT SUBJECT TO NON - LEVY OF PENALTY. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE CANCEL THE LEVY OF PENALTY IN CASE OF SHRI VINOD GARG HUF. 8 . SIMILAR FACTS ARE INVOLVED IN CASE OF SMT. UMA GARG AS THE ISSUE INVOLVED IN CASE OF SHRI VINOD G ARG HUF. WE HAVE ALREADY ALLOWED THE APPEAL IN CASE OF SHRI VINOD GARG HUF, THEREFORE, FOR THE SAME REASON, WE CANCEL THE LEVY OF PENALTY IN CASE OF SMT. UMA GARG ALSO AS THE FACTS ARE SIMILAR. 9 . IN THE RESULT , APPEAL S OF BOTH THE ASSESSEES ARE ALLOWED . ITA NO S . 144&145 /20 1 1 5 ORDER PRONOUNCED IN THE E - COURT ON THIS 9 TH DAY OF JAN . 201 3 . - 201 3 S D / - SD/ - ( ) ( RAJENDRA ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 09 / 01 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI