Shri Diya Shankar Nathani, Kolkata V. I.T.O, Ward-29(4), KOLKATA, Kolkata

ITA 1955/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4874 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 08-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2013
• Court: TRIBUNAL
• Department Lawyers: NILOY BARAN SOM J CITSR
• Assessee Lawyers: S JHAJHARIA
• Keywords: Business income; Source of fund; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SRI N.V.VA SUDEVAN, JM ] I.T.A NO. 1955/KOL/20 13 ASSESSMENT YEAR : 2006-0 7 SHRI DAYA SHANKAR NATHANI -VS.- I.T.O., W ARD-29(4), KOLKATA KOLKATA [PAN : ABPPN7346G] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : S.JHAJHARIA, FCA FOR THE RESPONDENT : SHRI NILOY BARAN SOM, J CIT,SR.DR DATE OF HEARING : 08.04.2016. DATE OF PRONOUNCEMENT : 11.05.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 13.01.2013 OF CIT(A)- XVI, KOLKATA, RELATING TO AY 2006-07. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE O RDER OF CIT(A) WHEREBY THE CIT(A) HAS CONFIRMED THE ORDER OF AO IMPOSING PENAL TY OF RS.86,963/- U/S 271B OF THE ACT. 3. THE ASSESSEE IS AN INDIVIDUAL. HE FILED RETURN OF INCOME AND DECLARED TOTAL INCOME OF RS.66,757/-. THE ASSESSEE PERSONALLY APPE ARED BEFORE AO AND WAS NOT ASSISTED BY ANY PROFESSION. IN THE COURSE OF ASSESS MENT PROCEEDINGS AO NOTICED THAT AS PER THE AIR INFORMATION THE ASSESSEE DEPOSITED A SU M OF RS.15,07,000/- IN CASH IN HIS BANK ACCOUNT DURING THE PREVIOUS YEAR. THE ASSESSEE EXPLAINED THE SOURCE OF FUNDS FOR THE AFORESAID DEPOSIT AND THE SAME WAS ACCEPTED BY THE AO. ASSESSMENT WAS COMPLETED ON THE RETURNED INCOME. 2 ITA NO1955/KOL/2013 SHRI DAYA SHANKAR NATHANI8 A.YR.2006-07 2 4. THE AO HOWEVER NOTICED THAT THE TOTAL TURNOVER OF THE ASSESSEE WAS TO THE TUNE OF RS.1,73,92,580/- AND THEREFORE THE ASSESSEE OUGHT T O HAVE GOT HIS BOOKS OF ACCOUNT AUDITED BY A CHARTERED ACCOUNTANT AS REQUIRED UNDER THE PROVISION OF SECTION 44AB OF THE ACT. THE THRESHOLD LIMIT FOR THE RELEVANT ASSES SMENT YEAR ON TURN OVER FOR COMPULSORY AUDIT U/S 44AB OF THE ACT WAS RS.40,00,0 00/-. FAILURE TO GET THE ACCOUNTS AUDITED AND SUBMITTED THE RETURN OF SUCH AUDIT WITH IN THE PRESCRIBED PERIOD ATTRACTS PENALTY U/S 271B OF THE ACT. HOWEVER U/S 273B OF T HE ACT NO PENALTY IS IMPOSED IF THE ASSESSEE IS ABLE TO SHOW THAT NOT GETTING THE BOOK S AUDITED WAS FOR A REASONABLE CAUSE. 5. THE AO IMPOSED PENALTY ON THE ASSESSEE U/S 271B OF THE ACT. THE APPELLATE PROCEEDINGS WERE DECIDED EX-PARTE BY CIT(A) AND HE CONFIRMED THE ACTION OF AO. THE PRAYER OF THE LEARNED COUNSEL FOR THE ASSESSEE BEFO RE US WAS THAT THE TURNOVER OF THE ASSESSEE WAS IN FACT NOT MORE THAN RS.40 LAKHS AND THE PROVISION OF SECTION 44AB OF THE ACT WERE NOT APPLICABLE AT ALL. IN THIS REGARD THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE TURNOVER OF RS.1,73,92,580-/- WAS ARRI VED AT BY THE AO WAS ON THE BASIS OF QUANTUM OF PURCHASE AND SALE OF SHARES MADE BY THE ASSESSEE. IN THIS REGARD THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ASSES SEE WAS TRADING IN CLOTH AND WAS NOT A DEALER IN SHARES. THE SHARES WERE HELD BY THE ASSES SEE AS INVESTMENTS AND DISCLOSED AS SUCH IN THE BOOKS OF ACCOUNTS. THEREFORE PURCHASE AND SALE OF THE SHARES OUGHT TO HAVE BEEN DECLARED UNDER THE HEAD CAPITAL GAIN BUT WAS W RONGLY DECLARED BY THE ASSESSEE AS INCOME FROM BUSINESS. THE FOLLOWING WAS THE TRANSAC TIONS IN PURCHASE AND SALE OF THE SHARES :- STATEMENT OF SHARE PROFIT & LOSS ACCOUNT SALES 17163924.81. ADD : CLOSING STOCK 1101300.73 18265225.54 3 ITA NO1955/KOL/2013 SHRI DAYA SHANKAR NATHANI8 A.YR.2006-07 3 LESS : PURCHASE 17652730.69 612494.85 LESS OPENING STOCK 733134.76 120639.91 PROFIT IN SHARE SPECULATION (FUTURE) 182628. 16 PROFIT IN SHARE DEALING 61988.25 6. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELI ANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS. A)CIT VS MARKET COMMITTEE (2012) 210 TAXMANN 20 (P& H) IN THIS CASE IT WAS HELD THAT SECTION 44AB WAS NOT APPLICABLE WHERE THE ASSESSEE WAS NOT INVOLVED IN OR HAS NO INCOME FROM PROFITS AND GAINS FROM BUSINESS OR PROF ESSION. B) CIT HEROS PUBLICITY SERVICES 248 ITR 256 (BOMBAY ) WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF AUDIT U/S 44AB OF THE ACT TOTAL AMOUNT O F TRANSACTIONS BETWEEN THE BUSINESS AND THE MEDIA CANNOT BE TREATED AS RECEIPT ACCRUING TO THE ASSESSEE. 7. THE LEARNED DR RELIED ON THE ORDER OF AO. 8. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS. IT IS CLEAR FROM THE ORDER OF AO THAT THE ASSESSEE WAS NOT A TR ADER IN SHARES BUT WAS DERIVING INCOME FROM SALE OF CLOTH. THE SHARES WERE HELD BY HIM AS INVESTMENTS AND THIS IS EVIDENT FROM A PERUSAL OF THE BALANCE SHEET. IN SUC H CIRCUMSTANCES THE SALE OF SHARES CANNOT BE TREATED AS TURNOVER IN BUSINESS FOR THE P URPOSE OF SECTION 44AB OF THE ACT. SECTION 44AB OF THE ACT REFERS TO A PERSON CARRYING ON BUSINESS WHERE THE TOTAL SALES TURN OVER OR GROSS RECEIPTS, IN BUSINESS , EXCEEDS RS.40 LAKHS. SINCE THE ASSESSEE IS NOT IN THE BUSINESS OF TRADING IN SHARES WE ARE OF THE VIE W THAT PROVISION OF SECTION 44AB OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEE. THOUGH THIS ASPECT WAS NOT HIGHLIGHTED EITHER IN THE COURSE OF ASSESSMENT PROCEEDINGS OR IN THE A PPELLATE PROCEEDINGS, WE ARE OF THE VIEW THAT THE TRIBUNAL CAN TAKE NOTE OF THESE FACTS IN THE PENALTY PROCEEDINGS. 4 ITA NO1955/KOL/2013 SHRI DAYA SHANKAR NATHANI8 A.YR.2006-07 4 9. FOR THE REASONS GIVEN ABOVE PENALTY IMPOSED U/S 271B OF THE ACT IS DIRECTED TO BE CANCELLED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 11.05.2016. SD/- SD/- [P.M.JAGTAP] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11.05.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SHRI DAYA SHANKAR NATHANI, C/O M/S. SALARPURIA JA JODIA & CO., 7, CHITTARANJAN AVENUE, KOLKATA-700072. 2. I.T.O., WARD-29(4), KOLKATA. 3. CIT(A)-XVI, KOLKATA 4. CIT-X, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES