ACIT 25(2), MUMBAI V. LAXMI DEVENDRAKUMAR GUPTA, MUMBAI

ITA 1501/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75550 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 18-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: YAGNESH DESAI
• Keywords: Salary income; Bonafide belief; Reasonable cause; Difference of opinion
• Section: 143(3)

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI SANJAY GARG, JM ./I.T.A. NO.1501/M/2011 ( / ASSESSMENT YEAR: 2005 - 2006 ) ACIT - 25(2), C - 11, 1 ST FLOOR, PRATYAKSHKAR BHAVAN, BANDRA (E), MUMBAI - 51. / VS. SMT. LAXMI DEVENDRAKUMAR GUPTA, B - 7, SHASHI TARA APARTMENTS, S.V. ROAD, BORIVALI (W), MUMBAI 400 092. ./ PAN : AEEPG 4990 B ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI O.P. SINGH, DR / RESPONDENT BY : SHRI YAGNESH DESAI / DATE OF HEARING : 18.2.2014 / DATE OF PRONOUNCEMENT : 18.2.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 21.2.2011 IS AGAINST THE ORDER OF THE CIT (A) - 35, MUMBAI DATED 3.12.2010 FOR THE ASSESSMENT YEAR 2005 - 2006. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) IS ERRED IN DELETING THE PENALTY LEVIED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF RS. 3,79,342/ - BY THE ASSESSING OFFICER FOR FILING INACCURATE PARTICULARS OF INCOME BY TREATING THE INCOME FROM SALE OF SHARES UNDER THE HEAD CAPITAL GAINS I NSTEAD OF PROFITS AND GAINS OF BUSINESS AND PROFESSION . 2. THE APPELLANT, PRAYS THAT THE ORDER OF THE CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES BESIDES EARNING INCOME FROM SALARY AND CAPITAL GAINS. ASSESSEE FILED THE RETURN DECLARING THE TOTAL INCOME OF RS. 1 8,96,570/ - . 2 ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 71,85,105/ - . DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE ASSESSEE IS ONLY ENGAGED IN THE ACTIVITY OF EARNING PROFIT THROUGH SALE AND PURCH ASE OF SHARES. THEREFORE, THE ENTIRE PROFIT ARISING OUT OF THE SAID ACTIVITY WAS ASSESSED BY THE AO UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AGAINST THE SHORT TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE. MATTER TRAVELLED TO THE FIRST APPELLAT E AUTHORITY. DURING THE PROCEEDINGS BEFORE THE CIT (A), AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, CIT (A) HAS CONFIRMED THE DECISION OF THE AO AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE HIS ORDER DATED 9.5.2008. ACCORDINGLY, AO INIT IATED THE PENALTY PROCEEDINGS AND ISSUED ORDER U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS. 3,79,342/ - , AS 100% OF CONCEALED INCOME SOUGHT TO BE EVADED AND VIDE ORDER DATED 23.3.2010. AGGRIEVED WITH THE PENALTY ORDER ISSUED BY THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CIT (A) DELETED THE PENALTY LEVIED BY THE AO AND ALLOWED THE APPEAL OF THE ASSESSEE VIDE PARA 5 OF HIS ORDER DA TED 3.12.2010 . AGGRIEVED WITH THE ABOVE DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. FURTHER, LD DR MENTIONED THAT THE IS FOR THE ASSESSEE TO PROVE THAT THERE WAS NO CONCEALMENT OF INCOME AND CONSIDERING THE FREQUENCY OF PURCHASE AND SALE OF SHARES, NUMBER OF TRANSACTIONS, AO REASONABLY LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. 6. ON THE OTHER HAND, LD COUN SEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT (A). FURTHER, HE SUBMITTED THAT THE MERELY BECAUSE THE AO ASSESSED THE CAPITAL GAIN ADMITTED BY THE ASSESSEE UNDER THE HEAD BUSINESS, THERE IS NO CASE FOR LEVY OF PENALTY. HE ALSO MENTIONED TH AT THE ASSESSEE DISCLOSED ALL THE FACTS TRULY AND FULLY DURING THE ASSESSMENT PROCEEDINGS. FURTHER, LD COUNSEL SUBMITTED THAT AS LONG AS THERE IS NEITHER SUPPRESSION NOR MISREPRESENTATION OF FACTS BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, CONCEAL MENT PENALTY CANNOT BE LEVIED FOR CHANGING THE HEAD OF INCOME. 3 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER IN GENERAL, PARA 5 OF HIS ORDER IN PARTICULAR, WE FIND THE SAID PARA IS RELEVANT HERE AND REPRODUCED AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRESENTATIVE AND THE STAND TAKEN BY THE AO. ADMITTEDLY, THE INCOME ADMITTED UNDER THE HEAD CAPITAL GAIN WAS ASSESSED BY THE AO UNDER THE HEAD BUSINESS BASED ON THE FREQUENCY AND VOLUME TRANSACTIONS. THE AO HAS NOT POINTED OUT THE FACTS WHICH WERE SUPPRESSED OR MISREPRESENTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. I ACCEPT THE PLEA OF THE REPRESEN TATIVE THAT THERE WAS HONEST AND BONAFIDE DIFFERENCE OF OPINION BETWEEN THE APPELLANT AND THE AO REGARDING THE HEAD OF INCOME. THE APPELLANT WAS UNDER THE BONAFIDE BELIEF THAT THE PROFIT ON SALE OF SHARE HELD AS INVESTMENT IN THE BALANCE SHEET WAS TO BE A SSESSED UNDER THE HEAD CAPITAL GAINS AND THE RE ARE MANY DECISIONS OF THE HONBLE MUMBAI TRIBUNAL AND THE HONBLE MUMBAI HIGH COURT SUPPORTING THE CASE OF THE APPELLANT . UNDER SUCH CIRCUMSTANCES, THE AO IS NOT JUSTIFIED IN IMPOSING CONCEALMENT PENALTY ME RELY BECAUSE THE CIT (A) HAS CONFIRMED THE ASSESSMENT ORDER . I ACCEPT THE CLAIM OF THE APPELLANT THAT SHE WAS UNDER THE BONAFIDE BELIEF THAT THE PROFIT ON SALE OF SHARES IS ASSESSABLE UNDER THE HEAD CAPITAL GAIN AND THIS BONAFIDE BELIEF WOULD CONSTITUTE R EASONABLE CAUSE AND THEREBY THE PENALTY CANNOT BE IMPOSED. ACCORDINGLY, I CANCEL THE PENALTY IMPOSED BY THE AO. 8. FROM THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT MERE CHANGE OF HEAD OF INCOME DOES NOT INVITE CONCEALMENT PENALTY U/ 271(1) (C) OF THE ACT. THEREFORE, THE CLAIM OF THE ASSESSEE THAT SHE WAS UNDER THE BONAFIDE BELIEF THAT THE PROFIT ON SALE OF SHARES IS ASSESSABLE UNDER THE HEAD CAPITAL GAINS AND THIS BONAFIDE BELIEF WOULD CONSTITUTE REASONABLE CAUSE. THEREFORE, WE ARE OF THE OPINION T HAT THE CIT (A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE PENALTY IMPOSED BY THE AO. THE ORDER PASSED BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DIS MISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY, 2014 IMMEDIATELY AFTER COMPLETION OF HEARING. SD / - S D / - (SANJAY GARG ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE MUMBAI ; .2.2014 . . ./ OKK , SR. PS 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI