ACIT 20(1), MUMBAI V. HEMANT M. GUPTA, MUMBAI

ITA 1568/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83541 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 19-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 23-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Keywords: Business income
• Section: 143(3); 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 THE ACIT 20(1), PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400012 (APPELLANT ) VS. SHRI HEMANT M. GUPTA, D-702, SHERE PUNJAB COLONY, HILTON TOWER TOWER,ANDHERI (E), MUMBAI 400093 PAN: AIOPG 9523G (RESPONDENT) APPELLANT BY : SHRI PITAMBAR DAS RESPONDENT BY : SHRI HARIDAS BHAT DATE OF HEARING : 19/08/2014 DATE OF PRONOUNCEMENT : 19 /08/2014 ORDER PER I.P.BANSAL, J.M, BOTH THESE APPEALS ARE FILED BY THE REVENUE. THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LD. CIT(A)-31, MUMBAI DAT ED 15/12/2010 AND 14/12/2010 RESPECTIVELY FOR ASSESSMENT YEAR 2006-0 7. ITA NO.1568/MUM/2011 IS AN APPEAL FILED IN RESPECT OF ORDER PASSED BY THE AO U/S.154 OF THE INCOME TAX ACT (THE ACT) AND ITA NO.1570/MUM/2011 IS WITH REGARD TO AN ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT. THE GROUNDS OF APPEA L IN BOTH THE APPEALS READ AS UNDER: GROUNDS OF APPEAL IN ITA NO.1568/MUM/2011: 1.THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN ACCEPTING THE ASSESEES PLEA IN REJECTING ORDER U/S. 154 OF THE I.T.ACT,1961 AND IN ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 2 DIRECTING THE ASSESSING OFFICER TO COMPUTE AND ALLO W LOSS ON ACCOUNT OF DIMINUTION IN VALUE OF SHARES IN CLOSING STOCK DESPITE THE FACT T HAT THE ASSESSEES CLAIM FOR SUCH LOSS WAS REJECTED IN THE ASSESSMENT ORDER AS WELL AS REC TIFICATION ORDER AS THE ASSESSEE COULD NOT FURNISH RELEVANT EVIDENCE IN SPITE OF REP EATED OPPORTUNITIES PROVIDED. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(AP PEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. GROUNDS OF APPEAL IN ITA NO.1568/MUM/2011: 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W AND IN THE CIRCUMSTANCES OF THE CASE IN THE CIRCUMSTANCES OF THE CASE IN DELETING T HE PENALTY LEVIED BY AO U/S. 271(1) (C) OF RS.15,00,000/- 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. ACCORDING TO THE FACTS OF THE CASE THE ASSESSEE IS A DEALER IN SHARES AND DURING THE YEAR UNDER CONSIDERATION IT HAS EARNED FOLLOWI NG INCOMES: PROFIT OF SHARES/SHORT TERM - RS.1,74,68,216/- PROFIT ON SALE OF SHARES, LONG TERM - RS.1,45,36,012/- (AS MENTIONED AT PAGE 5 OF THE ASSESSMENT ORDER) 2.1 WHILE THE AO HAD ACCEPTED THE INCOME ARISING O UT LONG TERM CAPITAL GAIN TO BE ASSESSABLE AS SUCH HOWEVER, IN RESPECT OF SHORT TER M CAPITAL GAIN THE AO IS OF THE VIEW THAT IT HAD GIVEN RISE TO BUSINESS INCOME IN PLACE OF INCOME ASSESSABLE UNDER THE HEAD CAPITAL GAIN SHOWN BY THE ASSESSEE. ACCO RDINGLY, THE AO ASSESSED THE INCOME SHOWN BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR PROFESSION. WHILE GIVING S UCH TREATMENT, HE ALLOWED THE DEDUCTION ON ACCOUNT OF VARIOUS EXPENSES INCURRED B Y THE ASSESSEE AND THUS, ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.1, 01,81,110/-. IT MAY ALSO BE MENTIONED HERE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE IN COME ARISING FROM SHORT TERM CAPITAL GAIN SHOULD NOT BE TREATED AS BUSINESS INCO ME, THE ASSESSEE HAD SUBMITTED THE LIST OF EXPENSES WHICH HAVE BEEN SPECIFICALLY A LLOWED BY THE AO. HOWEVER, IN RESPECT OF DIMINUTION IN THE VALUE OF INVESTMENT I N SHARES AS ON 31/3/2006 WAS NOT ALLOWED AS THE ASSESSEE WAS NOT HAVING SPECIFIC DET AILS AND IT WAS REQUESTED BY THE ASSESSEE TO THE AO THAT DUE TO NON-AVAILABILITY OF THE SAID DETAILS THE ASSESSEE MAY BE PROVIDED ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 3 A PERIOD OF SEVEN TO TEN DAYS AND HAD SUBMITTED TO THE AO TO MAKE NECESSARY RECTIFICATION UNDER SECTION 154 OF THE ACT. THESE SUBMISSIONS OF THE ASSESSEE ARE ALSO RECORDED BY THE AO AT PAGE 12 IN PARA-4 OF THE ASSE SSMENT ORDER AND RELEVANT PORTION IS REPRODUCED BELOW: FURTHER IN THE CASE OF TREATMENT AS BUSINESS INCOM E, NECESSARY DETAILS OF DIMINUTION IN THE VALUE OF INVESTMENTS IN SHARES AS ON 31.03.2006 WILL BE SUBMITTED TO YOU IN 7-10 FOR WHICH I PRAY TO MAKE NECESSARY RECTIFICATION U/S.15 4 OF THE INCOME TAX ACT, 1961 AND ALLOW NECESSARY EXPENDITURE FROM BUSINESS INCOME. THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED ON 3 0/12/2008. 2.2 SUBSEQUENT TO FRAMING OF THE ASSESSMENT ORDER D ATED 30/12/2008, THE ASSESSEE HAD FILED AN APPLICATION UNDER SECTION 154 OF THE ACT ON 11/2/2009 GIVING ALL THE DETAILS AND CLAIMING EXPENDITURE ON ACCOUNT OF DIMINUTION IN VALUE OF STOCK AS ON 31/3/2006 FOR A SUM OF RS.28,13,503/-. THE A O DID NOT ACCEPT SUCH APPLICATION ON THE GROUND THAT ASSESSEE COULD NOT F URNISH EVIDENCE OF THE VALUE OF EACH SHARE SHOWN IN STOCK EXCHANGE AS ON 31/3/2006 AS PER RECORD OF STOCK EXCHANGE AND THE NEXT DATE OF HEARING WAS FIXED ON 26/2/2009. ACCORDING TO AO TILL DATE OF PASSING THE ORDER UNDER SECTION 154 I.E. 26 /6/2009 THE ASSESSEE DID NOT FURNISH THE DETAILS, THEREFORE, HE HAS DISMISSED TH E APPLICATION FILED BY THE ASSESSEE UNDER SECTION 154 OF THE ACT. THE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER AND LD. CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESS EE AND HE HAS DIRECTED THE AO TO ALLOW THE CLAIM AFTER VERIFICATION. THE DIRECTIONS OF LD. CIT(A) ARE AS UNDER: 2.3.2. THEREFORE, ON ACCOUNT OF THE AFORESAID DI SCUSSION AND IN THE ABSENCE OF COMPLETE DETAILS FURNISHED BY THE APPELLANT, THE AO IS DIRECTED TO VERIFY THE COMPUTATION OF DIMINUTION IN THE VALUE OF SHARES PURCHASED BY T HE APPELLANT WHICH ARE FORMING PART OF HIS CLOSING STOCK AS ON 31.03.2006; BY CALLING F OR NECESSARY DETAILS WHILE GIVING EFFECT TO THIS ORDER. ACCORDINGLY, ALL THOSE SHARE S PURCHASED BY THE APPELLANT DURING THE RELEVANT PREVIOUS YEAR AND HELD BY HIM AS PART OF H IS CLOSING STOCK ON 31.3.2006 WOULD BE VALUED; AT COST OR MARKET PRICE WHICHEVER IS LOW ER, AND THE DIMINUTION IN VALUE AS ON 31.03.2006, IF ANY, ON THIS ACCOUNT SHALL BE ALLOWE D TO BE DEDUCTED FROM HIS TOTAL INCOME. OR IN OTHER WORDS, IF THE RELEVANT TRADING AND P&L ACCOUNT IS DRAWN FOR THE YEAR ENDING AS ON 31.03.2006, THE VALUE OF CLOSING STOCK WOULD BE REDUCED TO THE EXTENT OF DIMINUTION IN VALUE OF THESE SHARES. ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 4 3. AFTER NARRATING THE FACTS IT WAS PLEADED BY LD. DR THAT THE IMPUGNED RECTIFICATION DOES NOT FALL WITHIN THE AMBIT OF MIS TAKE AS PER SECTION 154 OF THE ACT. THEREFORE, HE PLEADED THAT THE RELIEF COULD NOT BE GRANTED TO THE ASSESSEE ON THE BASIS OF ORDER PASSED UNDER SECTION 154 OF THE ACT. 4. AS AGAINST THE ABOVE PLEADING OF LD. DR IT IS TH E CASE OF LD. AR THAT DUE TO WANT OF TIME THE DETAILS COULD NOT BE FURNISHED TO THE AO AND A PERIOD OF SEVEN TO TEN DAYS WAS SOUGHT. HE SUBMITTED THAT AO DID NO T DENY THE APPLICABILITY OF SECTION 154 AS HE WAS AWARE OF THE FACT THAT THOSE DETAILS COULD NOT BE SUBMITTED BEFORE FINALIZATION OF THE ASSESSMENT. THE ONLY OBJECTIO N OF THE AO WAS THAT ASSESSEE COULD NOT FURNISH FURTHER DETAILS TO JUSTIFY ITS CLAIM. HE SUBMITTED THAT LD. CIT(A) HAS RIGHTLY DIRECTED THE AO TO ALLOW THE CLAIM OF THE A SSESSEE AFTER VERIFICATION. HE SUBMITTED THAT AFTER VERIFICATION THE AO HAS FOUND THAT THE CLAIM OF THE ASSESSEE IS ALL RIGHT AND VIDE ORDER DATED 24/12/2012 THE AO HAS GR ANTED APPROPRIATE RELIEF AND HAS MADE THE FOLLOWING COMPUTATION: INCOME AS PER ORDER U/S.143(3) DATED 30.12.2008 RS . 1,01,81,110/- LES: RELIEF ALLOWED BY THE CIT(A) ON ACCOUNT OF DIMINUTION IN VALUE OF STOCK OF SHARES. RS. 28,13,503/- REVISED TOTAL INCOME FROM BUSINESS RS. 73,67,607 /- THUS, IT WAS PLEADED BY LD. AR THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN PASSING THE IMPUGNED ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. WE HAVE ALSO GONE THROUGH THE ASSESSME NT ORDER; ORDER PASSED UNDER SECTION 154 OF THE ACT AND THE ORDER PASSED BY LD. CIT(A). AFTER CAREFUL CONSIDERATION OF THE SAME WE FIND THAT THE AO WAS NOT OF THE VIEW THAT IMPUGNED EXPENDITURE COULD NOT BE ALLOWED TO THE ASSESSEE BU T FOR WANT OF DETAILS, AS THE ASSESSMENT WAS GETTING TIME BARRED THE IMPUGNED REL IEF WAS NOT GRANTED TO THE ASSESSEE. IT IS, THEREFORE, THE ASSESSEE HAD REQUESTED THE AO TO GRANT APPROPRIATE RELIEF IN THE RECTIFICATION PROCEEDINGS. IT IS IN THESE CIRCUMSTANCES THE APPL ICATION UNDER SECTION 154 WAS FILED ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 5 BY -+-THE ASSESSEE. EVEN IN THE ORDER PASSED UNDER SECTION 154, IT IS NOT THE CASE OF AO THAT ASESSEE IS DEBARRED FOR CLAIMING THESE EXPE NDITURE UNDER SECTION 154 OF THE ACT. THE REJECTION OF APPLICATION FILED UNDER SECT ION 154 HAS BEEN DONE BY THE AO ON THE GROUND THAT ASSESSEE COULD NOT FILE FURTHER DET AILS. LD. CIT(A) HAS DIRECTED THE AO TO VERIFY ALL THE FACTS AND THEN ALLOW THE CLAIM OF THE ASSESSEE. THE AO IN PURSUANCE TO SAID DIRECTION HAS ALLOWED THE RELIEF TO THE ASSESSEE AFTER VERIFICATION OF THE FACTS. THE CLAIM OF THE ASSESSEE HAS BEEN FOUN D TO BE IN ORDER AND IT IS NOT OBJECTED ON MERITS. KEEPING IN VIEW THE ENTIRETY O F THE FACTS AND CIRCUMSTANCES, WHICH HAVE BEEN EXPLAINED IN DETAIL IN THE ABOVE P ART OF THIS ORDER, WE ARE OF THE OPINION THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN DIRECTING THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AFTER NECESSARY VERIFICATION. WE DECLINE TO INTERFERE IN SUCH ORDER AND THE APPEAL FILED BY THE REVENUE IS DISMIS SED. ITA NO.1570/MUM/2011: 6. ACCORDING TO THE FACTS OF THE CASE CONCEALMENT P ENALTY HAS BEEN LEVIED ON ACCOUNT OF DIFFERENCE IN THE INCOME RETURNED AND AS SESSED DUE TO CHANGE OF HEAD. THE ASSESSEE RETURNED THE INCOME UNDER THE HEAD SH ORT TERM CAPITAL GAIN. THE AO ASSESSED THE SAME UNDER THE HEAD PROFITS AND GAIN S FROM BUSINESS ORDER PROFESSION. THIS IS APART FROM THE FACT THAT THE SAME BUSINESS OF THE ASSESSEE OF SALE AND PURCHASE OF SHARES IN RESPECT OF TRANSACTI ON GIVING RISE LONG TERM CAPITAL GAIN HAVE BEEN ACCEPTED BY THE AO AS INCOME ARISING OUT OF LONG TERM CAPITAL GAIN. THUS, IN THESE CIRCUMSTANCES THE CONCEALMENT PENALT Y HAVE BEEN LEVIED ON THE ASSESSEE. LD. CIT(A) HAS DELETED THE PENALTY ON TH E GROUND THAT ALL THE NECESSARY MATERIAL FACTS FOR THE COMPUTATION OF TOTAL INCOME WERE DISCLOSED BY THE ASSESSEE. THE ASSESSEE HAD OFFERED EXPLANATION WHICH HAS NOT BEEN FOUND BY THE AUTHORITIES TO BE FALSE AND THE ASSESSEE WAS ALSO ABLE TO SUBSTANT IATE THE EXPLANATION WHICH WAS BONAFIDE AND ALL FACTS RELATING TO THE SAME WERE DI SCLOSED. LD. CIT(A) HELD THAT IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR 2005-06 THE ASS ESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT WHERE THE AO HAD ACCEPTED THE CLAIM OF THE ASSESSEE THAT INCOME HAD GIVEN RISE TO SHORT TERM CAPITAL GAIN ON SALE OF SHARES AND THUS, LD. ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 6 CIT(A) HAS HELD THAT PENALTY IS NOT LEVIABLE. THE REVENUE IS AGGRIEVED, HENCE, HAS FILED AFOREMENTIONED GROUNDS OF APPEAL. 7. IT WAS VEHEMENTLY PLEADED BY LD. DR THAT THE ASS ESSEE DID NOT CONTEST THE ACTION OF THE AO IN TREATING THE INCOME AS GIVING R ISE TO INCOME ASSESSABLE UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR PROFESSION . HE SUBMITTED THAT IN VIEW OF ADMITTANCE BY THE ASSESSEE OF THE ASSESSABILITY OF THE INCOME UNDER THE HEAD BUSINESS ITSELF IS SUFFICIENT FOR LEVY OF PENALTY. FOR THIS PURPOSE LD. DR RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE SUPRE ME COURT IN THE CASE OF MAK DATA P. LTD. (2013) 358 ITR 593 (SC) AND THUS, IT WAS PLEADED BY LD. DR THAT PENALTY HAS WRONGLY BEEN CANCELLED BY LD. CIT(A) AN D HIS ORDER SHOULD BE SET ASIDE AND THAT OF AO BE RESTORED. 8. ON THE OTHER HAND, LD. AR SUBMITTED THAT ASSESSE E DID NOT CONCEAL ANY PARTICULARS OF INCOME. HE SUBMITTED THAT ON DEBATA BLE ISSUE NO PENALTY CAN BE LEVIED AND THE LAW IS WELL SETTLED ON THIS ASPECT AND REFE RENCE WAS MADE BY LD. AR TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF R ELIANCE PETROPRODUCTS P. LTD. 322 ITR 158(SC). HE SUBMITTED THAT THE ISSUE BECAM E DEBATABLE IN VIEW OF THE FACT THAT LONG TERM CAPITAL GAIN HAS BEEN ACCEPTED BY TH E AO ON THE SHARE TRANSACTION GIVING RISE TO INCOME UNDER THE HEAD CAPITAL GAIN. HE SUBMITTED THAT SIMILAR INCOME WAS ASSESSED BY THE AO IN PRECEDING YEAR UNDER THE HEAD CAPITAL GAIN BY WAY OF ORDER PASSED UNDER SECTION 143(3) OF THE ACT. HE S UBMITTED THAT ALL THESE FACTS HAVE BEEN TAKEN INTO CONSIDERATION BY LD. CIT(A) AND HIS ORDER ON THIS ISSUE IS IN ACCORDANCE WITH LAW AND SHOULD BE UPHELD. HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: 1. BSEL INFRASTRUCTURE REALTY LTD. VS. ACIT, 137 IT D 61, WHEREIN ON SIMILAR CIRCUMSTANCES IT WAS HELD THAT PENALTY UNDER SECTIO N 271(1)(C) CANNOT BE LEVIED WHERE ASSESSEE SHOWS INCOME UNDER THE HEAD CAPITAL GAIN A ND AO TREATED THE SAME AS INCOME FROM SPECULATIVE BUSINESS. ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 7 2. CIT VS. BENNETT COLEMAN & CO. LTD., 259 CTR 383 , WHEREIN IT HAS BEEN HELD THAT WHEN THE INCOME RECEIVED HAS BEEN DISCLOSED IN COMP UTATION OF INCOME AND THERE IS ONLY CHANGE OF HEAD OF INCOME; IN THE ABSENCE OF AN Y FACT THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE PENALTY CANNOT BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. IN THE SAID CASE PENALTY OF RS.35,64,000/- WA S LEVIED UNDER SECTION 271(1)(C) IN RESPECT OF ADDITION MADE ON ACCOUNT OF TREATING THE PREMIUM RECEIVED ON REDEMPTION OF DEBENTURE AS INCOME FROM OTHER SOURCES AGAINST THE CLAIM OF THE ASSESSEE AS CAPITAL GAIN. 9. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE FACT THAT INCOME ARISING OUT OF TH E SAME ACTIVITY OF SALE AND PURCHASE OF SHARES GIVING RISE TO LONG TERM CAPITAL GAIN HAS NOT BEEN DISTURBED BY THE AO REGARDING ITS ASSESSABILITY UNDER THE HEAD CAPITAL GAIN. ONLY ON THE ACTIVITY OF SALE AND PURCHASE OF SHARE WHICH HAS GIVEN RISE TO SHORT TERM CAPITAL GAIN IS TREATED AS BUSINESS INCOME. IT IS ALSO A MATTER OF FACT THAT FOR IMMEDIATE PRECEDING YEAR THE SAME ACTIVITY HAS BEEN TREATED TO GIVE RIS E TO THE INCOME ASSESSABLE UNDER THE HEAD CAPITAL GAIN AND THIS FACT IS MENTIONED IN THE ORDER PASSED BY LD. CIT(A) IN PARA 2.3.3. KEEPING IN VIEW ALL THESE FACTS, WE AR E OF THE OPINION THAT THE ISSUE WAS DEBATABLE IN THE CASE OF THE ASSESSEE AS DEPARTMENT ITSELF HAS APPLIED DIFFERENT TREATMENT TO THE SAME INCOME IN THE IMMEDIATE PR ECEDING ASSESSMENT YEAR AND IN THE YEAR UNDER CONSIDERATION. THE DECISION RELIED UPON BY LD. DR WILL HAVE NO APPLICATION TO THE FACTS OF THE PRESENT CASE. HOWE VER, THE DECISIONS RELIED UPON BY LD. AR WILL BE APPLICABLE TO THE PRESENT CASE. HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BENNETT COLEMAN & CO. LTD.(SUPRA) WHICH IS A RECENT DECISION RENDERED ON 26/2/2013, THEIR LORDSHIPS HAVE DECIDED THE ISSUE A S PER FOLLOWING OBSERVATIONS. THE QUESTION FRAMED WAS AS UNDER: (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN CANCELING THE PENALTY LEVIED OF RS.35, 64,000/- U/S. 271(1)(C) IN RESPECT OF ADDITION MADE ON ACCOUNT OF TREATING PREMIUM RECEIV ED ON REDUCTION OF DEBENTURES AS INCOME FROM OTHER SOURCES AGAINST CLAIM OF ASSESSEE AS CAPITAL GAIN.? ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 8 THE ABOVE QUESTION WAS ANSWERED AS FOLLOWS: 3. SO FAR AS QUESTION (II) IS CONCERNED, THE RESPON DENT- ASSESSEE HAD CLAIMED PREMIUM ON REDEMPTION OF DEBENTURES AS INCOME FROM CAPITAL GAI NS. WHEREAS THE ASSESSING OFFICER HELD THAT THE REDEMPTION OF DEBENTURES IS REVENUE R ECEIPT ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CIT(A) CONFIRME D THE ORDER OF THE ASSESSING OFFICER. THE RESPONDENT-ASSESSEE DID NOT FILE ANY FURTHER AP PEAL ON THE QUANTUM PROCEEDINGS. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY UN DER SECTION 271(1)(C) OF THE ACT ON THE RESPONDENT-ASSESSEE. THE CIT(A) ALSO CONFIRMED THE LEVY OF PENALTY UPON THE RESPONDENT-ASSESSEE. ON FURTHER APPEAL, THE TRIBUNA L HELD THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE RESPONDENT- ASSESSEE HA D DISCLOSED THAT THE AMOUNT RECEIVED AS PREMIUM ON REDEMPTION OF DEBENTURES IN ITS COMPU TATION OF INCOME. FURTHER, THE TRIBUNAL RECORDS THAT IT IS NOT THE CASE OF THE DEP ARTMENT THAT THE RESPONDENT-ASSESSEE HAD CONCEALED ANY PARTICULARS OF INCOME OR FURNISHE D INACCURATE PARTICULARS OF INCOME BY STATING INCORRECT FACTS. THE ASSESSING OFFICER C ONSIDERED THE SAID PREMIUM RECEIVED ON REDEMPTION OF DEBENTURES TO BE TAXABLE UNDER THE HE AD INCOME FROM OTHER SOURCES WHILE THE RESPONDENT- ASSESSEE CONSIDERED THE SAME TO BE TAXABLE UNDER THE HEAD CAPITAL GAINS. IN VIEW OF THE FACT THAT THERE IS ONLY A CHA NGE OF HEAD OF INCOME AND IN THE ABSENCE OF ANY FACTS THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE, THE TRIBUNAL DELETED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. THE REVENUE HAS NOT BEEN ABLE TO POINT OUT THAT THE FINDING OF THE TRIBUNAL IS PERVERSE. IN THESE CIRCUMSTANCES, WE SEE NO REASON TO ENTERTAIN THE PROPOSED QUESTION (I I). 9.1 IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE OPINION THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN DELETING THE IMPUGNED PENALTY. WE DECLINE TO INTERFERE AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/08/2 014 ! ' #$ % &'( 19/08/2014 ' ) SD/- SD/ - ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 19/08/2014 ITA NO.1568/MUM/2011, A.Y. 2006-07 ITA NO.1570/MUM/2011, A.Y. 2006-07 9 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS