ASST CIT 25(2), MUMBAI V. RAJESH D NANDU (HUF), MUMBAI

ITA 1747/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4219 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2014
• Court: TRIBUNAL
• Department Lawyers: SU JIT BANGAR
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Business income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. NO.1747/MUM/2014 (ASSESSMENT YEAR: 2008 - 2009 ) ASST. CIT - 25(2), R.NO. 108, 1 ST FLOOR, BLDG. NO.C - 11, PRATYAKHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051. / VS. RAJESH D NANDU (HUF), C - 103, SHAILESH APARTMENT, S V P ROAD, BORIVALI (W), MUMBAI 400 092. ./ PAN : AAAHR1531H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MR. SUJIT BANGAR, DR / RESPONDENT BY : SHRI MANISH SANGHAVI / DATE OF HEARING : 05 .01.2016 / DATE OF PRONOUNCEMENT : 10 .02 .2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 13.8.2014 IS AGAINST THE ORDER OF THE CIT (A)35, MUMBAI DATED 23.12.2013 FOR THE ASSESSMENT YEAR 2008 - 2009. THIS APPEAL RELATES TO THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL LOSS OF RS. 4.77 CRS (ROUNDED OFF). IN THE ASSESSMENT, AO MADE A COUPLE OF ADDITIO N S VIZ., (I) INTER - HEAD ADJUSTMENTS OF SOME CAPITAL GAINS / LOSS AND (II) DISALLOWANCE U/S 14A OF THE ACT. ASSESSEE OFFERED CERTAIN GAINS ON SALE OF SHARES UNDER THE HEAD CAPITAL GAINS. AFTER SCRUTINIZING THE RELEVANT ACCOUNTS, THE SAME WERE ASSESSED U NDER THE HEAD BUSINESS INCOME. SAME WAS ACCEPTED BY THE ASSESSEE ABOUT WHICH THERE IS NO APPEAL. THE DISALLOWANCE U/S 14A WAS RS. 57.27 LAKHS. MATTER TRAVELLED TO THE ITAT AND THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILE OF THE AO. SUBSEQUENTLY, AO I NITIATED AND LEVIED PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS. 81,14,076/ - . THIS PENALTY WAS LEVIED IN CONNECTION WITH THE ABOVE REFERRED CAPITAL GAINS ON SALE OF SHARES. 2 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHO RITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES, WE FIND THERE IS NO DEFAULT OF DISCLOSURE BY THE ASSESSEE SO FAR AS PARTICULARS OF INCOME IS CONCERNED. IT IS A CASE OF CHANGE OF HEAD OF INCOME BY THE ASSESSEE. O N CONSIDERING THE LD COUNSELS ARGUMENTS, WE ARE OF THE VIEW THAT THE PENALTY IS NOT EXCISABLE MERELY FOR THE REASON OF CHANGE OF HEAD OF INCOME WHEN THERE IS NO CONCEALMENT OF PARTICULARS OF INCOME. IT IS ALSO NOT THE CASE OF FURNISHING OF INACCURATE PAR TICULARS. WE HAVE ALSO PERUSED THE CONTENTS OF PARA 7 OF THE CIT (A)S ORDER AND FIND, IN EARLIER OCCASIONS ALSO, SIMILAR ADJUSTMENTS WERE MADE TO THE HEAD OF INCOME QUA THIS KIND OF GAINS AND FOUND THE CIT (A) DELETED THE SAME. FOR THE SAKE OF COMPLETEN ESS OF THIS ORDER, THE SAID PARA 7 FROM THE CIT (A)S ORDER IS EXTRACTED AS UNDER: - 7. I HAVE GONE THROUGH THE CONTENTIONS OF THE AO AND THE SUBMISSIONS OF THE APPELLANT IN THIS REGARD. THE ISSUE FOR ADDITION WAS WHETHER THE GAINS ON SHARE TRADING SHOULD BE TREATED AS BUSINESS INCOME OF THE APPELLANT OR SHOULD IT BE TAKEN AS CAPITAL GAINS. THE AO TREATED THE SAME AS BUSINESS INCOME AND LATER IMPOSED PENALTY ON THE OPINION THAT THE APPELLANT HAD CONCEALED PARTICULARS OF INCOME WITHIN THE PURVIEW OF MEANING OF SECTION 271(1)(C). THE APPELLANT HAS MADE HIS SUBMISSIONS AND HAS EMPHASIZED ON TH E FACT THAT WHILE THERE CAN BE A DISCUSSION OR DEBATE ON WHICH HEAD SHOULD THE INCOME HAVE BEEN TAKEN UNDER, HOWEVER, IT CANNOT BE THE CASE OF REVENUE THAT THE APPELLANT HAD CONCEALED ANY PARTICULARS OF HIS INCOME. TO MAKE HIS POINT, THE APPELLANT HAS SUB MITTED JUDICIAL DECISIONS CITED SUPRA IN ITS SUBMISSIONS. I AM INCLINED TO AGREE WITH THE CONTENTIONS OF THE APPELLANT THAT ALL THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE DECLARED AND AL L THE DETAILS ASKED FOR BY THE AO DURING THE COURSE OF ASSE SSMENT WERE DULY SUBMITTED AND THE APPELLANT HAS BEEN MAINTAINING ITS BOOKS OF ACCOUNTS AS PER THE PRESCRIBED ACCOUNTING STANDARDS. IN LIGHT OF THE SAME, IT CANNOT BE SAID THAT THE APPELLANT HAD CONCEALED ANY PARTICULARS OF ITS INCOME AND THEREFORE, PENAL TY LEVIED U/S 271(1)(C) IS HEREBY DELETED. IT MAY BE MENTIONED IN THE APPELLANTS CASE THAT ON SIMILAR GROUNDS THE PENALTY FOR AY 2008 - 09 HAS ALSO BEEN DELETED VIDE ORDER NO. CIT (A) - 35/ACIT.25(2)/ITA.60/2011 - 12, DATED 14.1.2013. 4. CONSIDERING THE AB OVE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INT ERFERENCE. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN TH E OPEN COURT ON 1 0 T H FEBRUARY, 2016. S D / - S D / - ( SANDEEP GOSAIN ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 0 .2 .2016 3 . . ./ OKK , SR. PS / 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