The ACIT, Ahmedabad Circle-3, Ahmedabad V. Bonafide Securities Ltd., Ahmedabad

ITA 194/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8621 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-03-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 10-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.194/AHD/2007 A. Y.: 200102 THE A. C. I. T., CIRCLE-3, 5 TH FLOOR, INSURANCE BUILDING, ASHRAM ROAD, AHMEDABAD VS BONAFIDE SECURITIES LTD., 25, KAMDHENU COMPLEX, AMBAWADI, AHMEDABAD PA NO. AAACB 6305Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI C. K. MISHRA, DR RESPONDENT BY SHRI TUSHAR P. HEMANI, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VII, AHMEDABAD DATE D 04-10-2006 FOR ASSESSMENT YEAR 2001-02, CHALLENGING THE CANCELLATI ON OF PENALTY U/S 271 (1) (C) OF THE INCOME TAX ACT. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN BUSINESS OF TRADING AND BROKERAGE OF SHARES AND SECURITIES. THE ASSESSEE DECLARED TOTAL INCOME OF RS.51,080/-. INCOME WAS DETERMINED AT RS.19,20,880/- AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES. THE A O DISALLOWED SET OFF OF SHARE TRADING LOSS TREATING THE SAME AS SPECULAT ION LOSS IN TERMS OF EXPLANATION TO SECTION 73 OF THE IT ACT. THE LEARNE D CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THE ISSUE OF SPECULATIVE LOSS. THE AO VIDE SEPARATE ORDER INITIATED THE PENALTY PROCEEDINGS AN D IMPOSED PENALTY ON THE DISALLOWANCE OF RS.17,70,151/- . IT WAS SUBMITT ED BEFORE THE LEARNED CIT(A) THAT THE SHARE TRADING LOSS CANNOT BE CONSID ERED AS SPECULATIVE ITA NO.194/AHD/2007 BONAFIDE SECURITIES LTD. 2 LOSS. THEREFORE, EXPLANATION TO SECTION 73 OF THE I T ACT IS NOT APPLICABLE. IT WAS FURTHER SUBMITTED THAT SINCE DIFFERENT DIVER GENT VIEWS HAVE BEEN EXPRESSED BY THE COURTS ON THE ISSUE OF INTERPRETAT ION OF EXPLANATION TO SECTION 73 OF THE IT ACT. THEREFORE, IT IS NOT A FI T CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS FURTHER SUBMITTED THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD THAT TH E ASSESSEE CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS. SEVERAL CASE LAWS WERE RELIED UPON ON THE ISSUE OF INTERPRETATIO N OF EXPLANATION TO SECTION 73 OF THE IT ACT. THE LEARNED CIT(A) NOTED SOME DECISIONS IN THE IMPUGNED ORDER SOME OF WHICH ARE IN FAVOUR OF THE A SSESSEE AND SOME DECISIONS ARE AGAINST THE ASSESSEE. THE LEARNED CIT (A) CONSIDERING THE ABOVE FACTS NOTED THAT WHEN TWO VIEWS ARE POSSIBLE ON THE ISSUE AND THAT THE ASSESSEE FURNISHED ALL THE PARTICULARS IN THE R ETURN OF INCOME AND THE AUDITED REPORT, THEREFORE, IT IS NOT A FIT CASE FOR HOLDING THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONC EALED PARTICULARS OF INCOME. THE LEARNED CIT(A) ALSO HELD THAT ON DEBATA BLE ISSUE PENALTY CANNOT BE IMPOSED U/S 271 (1) ( C ) OF THE IT ACT. PENALTY WAS ACCORDINGLY CANCELLED. 4. LEARNED DR RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW. REFERRING TO THE DECISION OF ITAT AHMEDABAD SPECIAL BENCH IN THE CASE OF GUJARAT CREDIT CORPORA TION LTD. VS ACIT 113 ITD 133 IN WHICH THE TRANSACTION WAS HELD TO BE SP ECULATIVE IN NATURE AS PER SECTION 73 OF THE IT ACT THE PENALTY U/S 271 (1 ) ( C ) OF THE IT ACT WAS CANCELLED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS SETTLED LAW THAT CONCEAL MENT PROCEEDINGS ARE PENAL IN NATURE AND UNDER SUBSTANTIVE PROVISIONS OF SECTION 271 (1) ( C) OF THE IT ACT, IT IS FOR THE REVENUE TO PROVE THAT THE ASSESSEE HAS CONCEALED ITA NO.194/AHD/2007 BONAFIDE SECURITIES LTD. 3 THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS THEREOF TO PROVE THE CASE OF THE ASSESSEE UNDER THE PROVISI ONS OF SECTION 271 (1) ( C ) OF THE IT ACT. IN THE ABOVE CASE, IT IS NOT T HE CASE OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION OR THAT ITS EXPLANATION WAS FOUND TO BE FALSE. THE ASSESSEE FURNISHED COMPL ETE PARTICULARS AND EXPLANATION BEFORE THE AUTHORITIES BELOW AND ALSO E XPLAINED THAT SOME OF THE DECISIONS ARE IN FAVOUR OF THE ASSESSEE ON THE INTERPRETATION OF EXPLANATION TO SECTION 73 OF THE IT ACT. SOME DECIS IONS ARE AGAINST THE ASSESSEE. THEREFORE, ON SUCH FACT AND ON THE CIRCUM STANCES OF THE CASE, ON MERE REJECTION OF ASSESSEES CLAIM WOULD NOT PRO VE THAT IT IS A CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTI CULARS OF INCOME. ITAT AHMEDABAD SPECIAL BENCH IN THE CASE OF GUJARAT CRED IT CORPORATION LTD. (SUPRA) CANCELLED THE PENALTY IN THE IDENTICAL FACT S. SINCE THE ASSESSEE MADE OUT A CASE OF DEBATABLE ISSUE BY REFERRING TO CONTRARY DECISIONS ON THE ISSUE BEFORE THE LEARNED CIT(A), THE LEARNED CI T(A) WAS JUSTIFIED IN HOLDING THAT ON A DEBATABLE ISSUE, IT COULD NOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PA RTICULARS OF INCOME. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE , WE HOLD THAT IN THE INSTANT CASE NO PENALTY COULD BE LEVIED. THE AS SESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED I NACCURATE PARTICULARS OF ITS INCOME. THE EXPLANATION OFFERED BY THE ASSES SEE WAS NOT WITHOUT ANY BASIS AND FOUNDATION. THE EXPLANATION OF THE AS SESSEE AT THE PENALTY PROCEEDINGS COULD, THEREFORE, BE CONSIDERED FAVOURA BLY WHICH THE LEARNED CIT(A) HAS RIGHTLY CONSIDERED IN FAVOUR OF THE ASSE SSEE FOR CANCELING THE PENALTY. WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISSED THE APPEAL OF THE REVENUE. ITA NO.194/AHD/2007 BONAFIDE SECURITIES LTD. 4 6. AS A RESULT, THE DEPARTMENTAL APPEAL STANDS DISM ISSED. ORDER PRONOUNCED ON 12-03-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 12-03-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD