The ITO, Ward-8(2), Ahmedabad V. Sukrut Chemicals Pvt.Ltd., Ahmedabad

ITA 1402/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8788 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 09-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: MUKESH M PATEL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING: 16.03.10 DRAFTED ON: 16.03.10 ITA NO.1402/AHD/2007 ASSESSMENT YEAR : 2003-2004 THE I.T.O., WD.8(2), 4 TH FLOOR, AJANTA COMM. CENTRE, A WING, ASHRAM ROAD, ABAD. VS. THE PRINCIPAL OFFICER, SUKRUT CHEMICALS PVT. LTD. SURYA, 1-B, VASUNDHARA COLONY, GULBAI TEKRA, AHMEDABAD. PAN/GIR NO. : AABCA 6022 A (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI C.K.MISHRA SR. D.R. RESPONDENT BY: SHRI MUKESH M. PATEL. A.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XIV, A HMEDABAD DATED 25.01.2007 FOR THE ASSESSMENT YEAR 2003-04. 2. THE SOLE GROUND OF THE APPEAL RELATES TO DELETIO N OF PENALTY UNDER SECTION U/S. 271(1)(C) OF THE ACT OF RS.4,04, 470/- 3. THE BRIEF FACTS OF THE CASE THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO P RODUCE BILLS OF TRANSACTION THROUGH WHICH SPECULATION PROFIT OF RS. 11,00,665/- WAS BOOKED, IN RESPONSE TO WHICH THE DETAILS WERE FILED . THE AO ISSUED NOTICE U/S. 133(6) AND 131 TO M/S. RIGHT FINSTOCK P VT. LID. , WHO HAD ISSUED THE BILLS, BUT THE SAID PARTY DID NOT RESPON D AND THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE. VIDE REPLY D ATED 22-8-2005, THE ASSESSEE OFFERED THE. SPECULATIVE INCOME OF RS.11.00.663/- AS ITA NO. 1402/AHD/2007 - 2 - INCOME FROM OTHER SOURCES. THE AO BY RELYING ON THE DECISION OF HON. HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HU SAN 247 ITR 290, AND AS ADMITTED BY THE ASSESSEE, HAS HELD THAT NO LOSS IS ALLOWED TO BE SET OFF AGAINST THE INCOME SURRENDERE D. IN RESPONSE TO SHOW CAUSE NOTICE ISSUED U/S. 271(1)(C), THE ASS ESSEE BY RELYING UPON THE DECISIONS IN THE CASE OF CIT V. NAVNITIAL OCHHAVIAL 213 ITR 69(GU). CIT VS. VINAYCHAND HARILAL 120 ITR 752 (GUJ ) AND SURCSHCHANDRA MITTAL VS. CIT 251 ITR 9 (SC) HAS MAD E A REQUEST TO DROP THE PENALTY PROCEEDINGS. THE AO AFTER DISCUSSI NG THE ISSUE, HAS HELD THAT THE ASSESSEE HAS FAMISHED INACCURATE PARTICULARS OF ITS INCOME/CONCEALED INCOME AND ACCORDINGLY LEVIED A PENALTY OF RS.4,04,470/-. 2.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT SUBMITTED THAT THE ADDITION OF RS.11,00,665/- IN RE SPECT OF WHICH THE PENALTY PROCEEDINGS HAVE BEEN INITIATED REPRESE NTED THE SPECULATIVE GAINS EARNED BY THE APPELLANT AS PER TH E TRANSACTIONS DONE WITH M/S. RIGHT FINSTOCK PVT. LTD. AND THE SAM E STOOD DULY EVIDENCED AS PER VARIOUS BILLS ISSUED BY THEM IN RE SPECT OF SCRIPTS OF RELIANCE, SATYAM, L&T. MASTEK AND ZEE. HOWEVER, THE Y WERE NOT ABLE I& PROVIDE THE CONFIRMATORY DETAILS IN RESPECT OF SPECULATIVE TRANSACTIONS FOR THE GAINS OF RS.11,00,665/- AS SHO WN IN THE P&L A/C. FOR A.Y. 2003-04. FURTHER, IT WAS SUBMITTED TH AT IN THE RETURN FOR A.Y. 03-04, THE NET LOSS AS PER P&L A/C. WAS DU LY REFLECTED AT RS.10,69,654/-, WHICH INCLUDED THE ABOVE SPECULATIO N GAIN AND HENCE THE SPECULATIVE GAINS STOOD DULY SET OFF AGAI NST THE BUSINESS LOSS FROM THE ACTIVITY OF TRADING IN SHARES. THE AP PELLANT ALSO OFFERED THE AFORESAID AMOUNT AS ITS INCOME CHARGEAB LE TO TAX AND PAID THE RELEVANT AMOUNT OF INCOME TAX ALONG WITH I NTEREST AS PER THE REVISED COMPUTATION. VIDE LETTER DT:22-08-2005, IT WAS CATEGORICALLY POINTED OUT MADE BY THE APPELLANT THA T THIS OFFER WAS ITA NO. 1402/AHD/2007 - 3 - MADE VOLUNTARILY AND IN GOOD FAITH WITH A VIEW TO E NSURE THAT NO CONTENTIOUS ISSUES COME TO BE RAISED WHICH MAY DRAG THE MATTER INTO UNNECESSARY LITIGATION AND KEEPING IN VIEW THE BONAFIDE AND SPIRIT OF COOPERATION EXTENDED TO THE INCOME TAX DE PTT., ITS REVISED COMPUTATION OF INCOME AND TAX VOLUNTARILY PAID THER EON BE ACCEPTED AND THAT NO PENALTY PROCEEDINGS BE INITIATED IN RES PECT OF THE SAME. THE APPELLANT, VIDE ITS REPLY TO SHOW CAUSE NOTICE ISSUED BY THE AO, HAS PLACED ITS RELIANCE ON THE CASE LAWS, IN THE EA SE OF CIT V. NAVNITLAL OCHHAVLAL 213 ITR 69 (GU), CIT VS. VINAYC HAND HARILAL 120 ITR 752 (GUJ) AND SURESHCHANDRA MITTAL VS. CIT 251 ITR 9 (SC), WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE BO NAFIDELY AGREES FOR CERTAIN ADDITIONS WITH A VIEW TO BUY PEACE OF M IND AND AVOID PROTRACTED LITIGATION, NO PENALTY U/S. 271(1)(C) BE COMES LEVIABLE. 2.3. AS REGARDS THE MERITS OF THE CASE, IT WAS CONT ENDED THAT NO PENALTY OUGHT TO HAVE BEEN LEVIED IN VIEW OF (HE FA CT THAT THERE WAS NO POSITIVE AMOUNT OF TAX SOUGHT TO BE EVADED BY RE ASON OF THE ALLEGED CONCEALMENT OR FURNISHING OF INACCURATE PAR TICULARS OF INCOME FOR A.Y. 2003-04. THIS IS CLEARLY EVIDENT FR OM THE COMPUTATION OF INCOME AS PER AST. ORDER, WHICH SHOW S THE TOTAL LOSS DETERMINED BY THE AC) AT RS.13,33,059/- WHICH REPRE SENTS THE BUSINESS LOSS FOR THE YEAR UNDER CONSIDERATION. EVE N IF THE INCOME OF RS.11,11,065/- OFFERED BY THE ASSESSEE IS TREATE D AS INCOME FROM OTHER SOURCES, THE BUSINESS LOSS OF RS.13,33,0 59/- IS REQUIRED TO BE SET OFF AGAINST THE SAME AND HENCE THE RESULT ANT TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION WOULD BE A NEGATIV E FIGURE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD AS UNDER:- 2.4 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS OF THE APPELLANT ALONG WITH THE CASE LA WS AS RELIED UPON. I AM OF THE OPINION THAT PENALTY PROCE EDINGS ARE ITA NO. 1402/AHD/2007 - 4 - ENTIRELY DIFFERENT THAN THE ASST PROCEEDINGS AND RE JECTION OF A BONAFIDE CLAIM DOCS NOT ATTRACT PENALTY PROCEEDINGS . FURTHER, IT IS SEEN THAT THE APPELLANT AGREED TO CERTAIN ADD ITIONS TO BUY PEACE OF MIND AND TO AVOID UNNECESSARY LITIGATION A ND THE APPELLANT HAS VOLUNTARILY OFFERED THE SPECULATIVE G AINS OF RS.11,00,665/-, WHICH WAS IN GOOD FAITH. HERE, THE APPELLANT HAS FAMISHED THE DETAILS AND THERE IS NO QUESTION O F FURNISHING ANY INACCURATE PARTICULARS OF ITS INCOME , EVEN THOUGH THE SUCH CLAIM HAS BEEN REJECTED.. LOOKING T O THE TOTALITY OF FACTS AND CIRCUMSTANCES AND BY FOLLOWIN G THE DECISIONS OF' VARIOUS COURTS, AS NARRATED SUPRA, I HOLD THAT MERE REJECTION OF A CLAIM DOCS NOT NECESSARILY AMOU NT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME, UNLESS IT IS SPECIFICALLY ESTABLISHED. T HE A.O. IS, THEREFORE, DIRECTED TO DELETE THE PENALTY SO LEVIED IN THIS CASE. 3. IN THE RESULT, THE APPEAL IS ALLOWED. 5. THE LEARNED DR SUPPORTED THE ORDER OF THE AO. 6. THE LEARNED AR SUPPORTED THE ORDER OF THE CIT(A) . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE, DURING THE ASSESSMENT PROCEEDING, AS THE SHARE BROKER TO WHOM THE ASSESSEE BOUGHT AND SOLD SHARES AND CLAIMED TO HAVE EARNED SPECULATIVE INCOME OF RS.11,00,665/- DID NOT RESPOND TO NOTICES ISSUED UNDER SECTION 133(6) AND 131 OF THE ITO, THE ASSESSEE OFFERED TO PAY TAX ON THE SAID AMOUNT BY TREATING THE SAME AS INCOME FROM OTHER SOURCES. ON THE ABOVE FAC TS, AMOUNT OF RS.11,00,665/- WAS ASSESSED BY THE AO AS ASSESSEES INCOME FROM OTHER SOURCES. IN RESPECT OF SUCH ASSESSMENT, THE A O ALSO LEVIED PENALTY OF RS.4,04,470/- UNDER SECTION 271(1)(C) WH ICH WAS DELETED BY THE CIT(A). THE REVENUE COULD NOT POINT OUT ANY SPECIFIC DEFECT IN THE FINDINGS OF THE LD. CIT(A). IT IS NOT THE CA SE OF THE REVENUE THAT THE CLAIM OF THE ASSESSEE TO HAVE EARNED SPECU LATIVE INCOME OF RS.11,00,665/- WAS FOUND TO BE BOGUS OR FALSE. NO M ATERIAL WAS BROUGHT ON RECORD BY THE AO TO SHOW THAT THE CLAIM OF THE ASSESSEE ITA NO. 1402/AHD/2007 - 5 - WAS BOGUS AND ADDITION IN THE ASSESSMENT WAS MADE O NLY ON ACCOUNT OF ASSESSEE OFFERED TO PAY TAX ON THE SAID AMOUNT BY TREATING IT AS INCOME FROM OTHER SOURCES. IN VIEW O F THE CIRCUMSTANCES, WHERE HE COULD NOT PROVE OR SUBSTANT IATE ITS CLAIM OF EARNING OF SAID AMOUNT AS SPECULATIVE INCOME, WE FIND OURSELVES IN FULL AGREEMENT WITH THE FINDINGS OF THE LD. CIT (A) THAT DIFFERENT CONSIDERATION APPLY IN PENALTY PROCEEDING THAN THE CONSIDERATION WHICH APPLY IN ASSESSMENT PROCEEDINGS. THERE IS A D IFFERENCE BETWEEN UNPROVED AND DISPROVED. IN THE INSTANT C ASE, THE CLAIM OF THE ASSESSEE WAS FOUND TO BE UNPROVED BUT THE SA ME WAS NOT DISPROVED BY THE REVENUE BY BRINGING SOME POSITIVE MATERIAL ON RECORD. ON THE ABOVE FACTS, WE DO NOT FIND ANY MERI TS IN THE APPEAL OF THE REVENUE. THEREFORE, THE SAME IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 19/03/2009. SD/- SD/- ( T.K. SHARMA ) ( N. S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; DATED 19/03/2009 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS) 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD