Usharani Dhanraj Veena, Ahmedabad V. ITO, Ward-3(3)(5), Ahmedabad

ITA 1999/AHD/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0766 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-09-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 06-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Business income; Transactions in derivatives; Set aside
• Section: 143(3); 201; 271B; 44AB; 13

Judgement Text

PAGE 1 OF 7 , IN THE INCOME TAX APPELLATE TRIBUNAL , SM C BENCH, AHMEDABAD BEFORE , SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS . MADHUMITA ROY , JUDICIAL MEMBER ./ ITA NO . 1999 /AHD/2017 / ASSTT. YEAR : 2014 - 2015 USHARANI DHANRAJ VEENA , 63, MAHAVEER NAGAR SOCIETY , VASTRAPUR , AHMEDABAD - 380015 PAN: ADHPV3564E VS . I.T .O , WARD - 3(3)(5) , AHMEDABAD . (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI P.F. JAIN , A.R REVENUE BY : SHRI SATISH SOLANKI , SR . DR / DATE OF HEARING : 11 / 09 / 201 9 / DATE OF PRONOUNCEMENT: 02 /12 /2 01 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE AS SESSEE AGAINST THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) - 3 , AHMEDABAD [ LD. CIT (A) IN SHORT] , DATED 13 / 07 / 2017 ARI SING IN THE MATTER OF PENALTY ORDER PASSED UNDER S. 271B OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 20 / 01 / 201 7 RELEVANT TO ASSESSMENT YEAR (A . Y) 2014 - 1 5 . ITA NO.1999/AHD/2017 ASSTT. YEAR 2014 - 15 PAGE 2 OF 7 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 THE LEARNED A.O HAS ERRED IN LAW AND ON FACTS IN UPHOLDING PENALTY OF RS.1,50,000/ - IMPOSED U/S.271B FOR NON AUDIT BOOKS OF ACCOUNTS U/S.44AB WITHOUT PROPERLY APPRECIATING THE FACT AND PENALTY REPLY OF THE APPELLANT. 2 ON FACTS NO PENALTY U/S.271B OUGHT HAVE BEEN LEVIED AS A. ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS IN NORMAL COURSE OF BUSINESS. B. HE WAS UNDER BON FIDE BELIEF THAT FOR SHARE TRANSACTION C ARRIED OUT BOOKS OF ACCOUNTS ARE NOT REQUIRED TO BE MAINTAINED. A. THE RETURN INCOME HAS BEEN ACCEPTED UNDER SECTION 143(3) RESULTING INTO NO LOSS OF REVENUE. 3 THE CONTENTION OF THE ASSESSEE FOR NO MAINTENANCE OF BOOKS AND NON LEVY OF PENALTY U/S.271B OUGHT T O HAVE BEEN ACCEPTED. 4 ON THE FACTS NO SUCH ADDITION/DISALLOWANCE OUGHT TO HAVE BEEN MADE. 5 THE APPELLANT RAVES LEAVE, TO ADD/TO ALTER AND /OR MODIFY ANY GROUND OF APPEAL. THE EFFECTIVE ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT - A ERRED IN CONFIRMING THE PENA LTY FOR A SUM OF RS. 1,50,000/ - LEVIED BY THE AO U/S 271B OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS MADE LARGE VALUE TRANSACTIONS OF SALE AND PURC HASE OF SHARES WHICH RESULTED THE LOSS OF RS. 6,416 / - ONLY . BUT T HE ASSESSEE FAILED TO DECLARE THE CAPITAL GAIN TRANSACTIONS IN THE RETURN OF INCOME. AS SUCH THE ASSESSEE DECLARED THE INTEREST INCOME OF RS. 16,42,070 / - O NLY IN THE RETURN OF INCOME WHICH WAS ACCEPTED BY THE AO IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT. ITA NO.1999/AHD/2017 ASSTT. YEAR 2014 - 15 PAGE 3 OF 7 3. HOWEVER, THE AO FURTHER DURING THE ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT, PROFIT AND LOSS ACCOUNTS, BALANCE SHEET AND ALSO DID NOT GET THE ACCOUNTS AUDITED UNDER SECTION 44AB DESPITE THE TURNOVER EXCEED ING THE THRESHOLD FOR THE TRANSACTIONS RELATING TO SALE/PURCHASE OF SHARES . 3.1 HOWEVER, THE ASSESSEE DURING THE PROCEEDINGS FILED THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT SHOWING LO SS OF RS. 6,416.00. THE AO ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT OBSERVED THAT THE ASSESSEE HAS MADE SALES FOR RS. 5,46,75,327.00 AND PURCHASE FOR RS. 5,03,86,168.00 WITH RESPECT TO THE SHARES WHEREAS THE TOTAL TURNOVER WAS RS. 5,54,43,128.00 AFTER IN CLUDING SPECULATION PROFIT OF RS. 6,85,423.00, F&O PROFIT OF RS. 56,128.00 AND DIVIDEND INCOME OF RS. 26,250.00. 3.2 THUS THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS REQUIRED TO GET HER BOOKS OF ACCOUNT AUDITED U/S SECTION 44AB OF THE INCOME TAX ACT. 3.3 THE AO FURTHER NOTED THAT THE ASSESSEE FILED HER RETURN OF INCOME IN FORM - 2 (FOR INDIVIDUAL AND HUF NOT HAVING BUSINESS INCOME) WHEREAS THE SAME SHOULD HAVE BEEN FILED IN REQUISITE FORM - 4 AS THE ASSESSEE WAS HAVING THE BUSINESS TRANSACTIONS . 3.4 THE A O ACCORDINGLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE FOR LEVY OF THE PENALTY U/S 271B OF THE ACT FOR VIOLATING THE PROVISION OF SECTION 44AB OF THE ACT. 4. THE ASSESSEE IN RESPONSE TO THE NOTICE SUBMITTED THAT SHE WAS OF THE VIEW THAT ONLY NET PROFIT FR OM SHARE TRANSACTIONS HAS TO BE SHOWN IN THE RETURN ITA NO.1999/AHD/2017 ASSTT. YEAR 2014 - 15 PAGE 4 OF 7 OF INCOME. THE BOOKS OF ACCOUNT WERE NOT MAINTAINED AS THE TRANSACTIONS WERE MADE BY HER SON IN HER NAME A ND SHE WAS NOT AWARE ABOUT SUCH A HUGE TRANSACTION. 4.1 THE ASSESSEE ALSO SUBMITTED THAT SHE WAS NOT AWARE THAT THE ACCOUNTING OF SHARE TRANSACTIONS AS WELL AS AUDIT SHOULD HAVE BEEN DONE. THEREFORE, SHE DID NOT INFORM HER TAX CONSULTANT ABOUT SHARE TRANSACTIONS AS SHE WAS UNDER THE BELIEF THAT THE LOSS WOULD NOT BE SHOWN IN THE RETURN OF INCOME AS T HE TAX LIABILITY DOES NOT ARISE ON LOSS. 4.2 THE ASSESSEE FURTHER SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS SHE CAME TO KNOW THAT BOOKS OF ACCOUNT WERE REQUIRED TO BE AUDITED U/S 44AB OF THE ACT. THEREFORE SHE GOT THE BOOKS OF ACCOUNT AUDITED U/S 44AB OF THE ACT ON DATED 28 - 07 - 2016. AFTER THAT THE ASSESSEE SUBMITTED THE SAME ALONG - WITH TAX AUDIT REPORT U/S 44AB OF THE ACT ON DATED 29 - 08 - 2016. 4.3 HOWEVER, THE AO DISREGARDED THE CONTENTIONS OF THE ASSESSEE BY OBSERVING THAT THE SUBMISSION MADE BY THE ASSESSEE WAS WITHOUT ANY CONCRETE SUPPORT OR BASE. AS SUCH IT IS MANDATORY FOR THE ASSESSEE TO MAINTAIN THE BOOKS OF ACCOUNTS AND THE SAME NEEDS TO BE AUDITED U/S 44AB OF THE ACT IF THE TURNOVER EXCEEDS THE THRESHOLD LIMIT. THUS THE AO ACCORDINGLY LEVIED THE PENALTY U/S 271B OF THE ACT FOR NOT GETTING THE BOOKS OF ACCOUNT AUDITED AND FILING THE AUDIT REPORT ON OR BEFORE THE SPECIFIED DATE. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LD. CIT - A. THE ASSESSEE REITERATED THE SUBMISSION AS MADE BEFORE THE AO. THE ASSESSEE ALSO SUBMITS THAT THE AO DURING THE ASSESSMENT PROCEEDINGS CALLED FOR THE BOOKS OF ACCOUNT. THEREFORE SHE PREPARED THE BOOKS OF ACCOUN T TO SUBSTANTIATE THE LOSS ITA NO.1999/AHD/2017 ASSTT. YEAR 2014 - 15 PAGE 5 OF 7 ON SHARE TRANSACTION WHICH HAS BEEN REFLECTED FROM THE BROKER S GLOBAL STATEMENT. 6. HOWEVER THE LD. CIT - A OBSERVED THAT THE ASSESSEE WAS REQUIRED TO GET HER BOOKS OF ACCOUNT AUDITED U/S 44AB OF THE ACT WHICH IS NOT DONE SO. TH EREFORE THE LD. CIT - A UPHELD THE ORDER OF THE AO. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT - A, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. AR BEFORE US SUBMITTED A PAPER BOOK RUNNING FROM PAGES 1 TO 50 AND SUBMITTED THAT THE AUDIT REPORT UNDER SEC TION 44 AB OF THE ACT WERE NOT FURNISHED UNDER THE BONA FIDE BELIEVE AS THERE WAS LOSS FROM THE SALE PURCHASE OF THE SHARES. 8. ON THE OTHER HAND , T HE LD. DR BEFORE US VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE IS THAT THE ASSESSEE DID NOT MAINTAIN HER BOOKS ACCOUNT AS WELL AS NOT GOT THE BOOKS OF ACCOUNT AUDITED AS PER THE PROVISION OF SECTION 44AB OF THE ACT. 9.1 WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 44AA OF THE ACT. SUB CLAUSE (2) OF SECTION 44AA CLEARLY SAYS THAT EVERY PERSON CARRYING ON BUSINESS OR PROFESSION [NOT BEING THE PROFESSION REFERRED TO IN SUB CLAUSE (1)] SHALL KEEP AND MAINTAIN THE BOO KS OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL INCOME IN ITA NO.1999/AHD/2017 ASSTT. YEAR 2014 - 15 PAGE 6 OF 7 ACCORDANCE WITH THE PROVISIONS OF THIS ACT IN CASE THE INCOME FROM BUSINESS OR PROFESSION EXCEEDS ONE LAKH TWENTY THOUSAND RUPEES OR HIS TOTAL SALES, TURNO VER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS OR PROFESSION EXCEEDED OR EXCEEDS TEN LAKH RUPEES IN ANY ONE OF THE THREE YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR. IN THE EVENT OF DEFAULT, THE ASSESSEE SHALL BE PENALIZED UNDER SECTION 271A OF T HE ACT FOR NON - MAINTENANCE OF THE BOOKS OF ACCOUNTS. HOWEVER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE PREPARED HER BOOKS OF ACCOUNT AND GOT AUDITED FROM ACCOUNTANT UNDER THE PROVISION OF SECTION 44A B OF THE ACT. THE BOOKS OF ACCOUNTS, WHICH WERE SUBSEQUENTLY AUDITED, PREPARED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WERE ACCEPTED BY THE AO THEREFORE NO PENALTY WAS LEVIED UNDER SECTION 271A OF THE ACT. HOWEVER, THE AO LEVIED THE PENALTY FOR NOT FURNI SHING THE AUDITED REPORT IN FORM 3CD IN TIME UNDER SECTION 271B OF THE ACT. NEVER THE LESS, IT IS IMPORTANT TO NOTE THAT ADMITTEDLY THERE WAS THE LOSS FROM THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES AND THERE WAS THE SUBSTANTIAL COMPLIANCE ON THE PART OF T HE ASSESSEE FOR GETTING THE ACCOUNTS AUDITED. MORE SO, THE PLEA OF THE ASSESSEE THAT HER SON HAS CARRIED OUT THE SALE PURCHASE TRANSACTION OF SHARES HAS NOT BEEN PROVED WRONG. IT IS ALSO IMPORTANT TO NOTE THAT THERE WAS NO INFIRMITY IN SUCH REPORT WAS POIN TED OUT BY THE AO. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE UNDER THE BONA - FIDE BELIEF FAILED TO GET THE ACCOUNTS AUDITED AND IN SUCH FACTS AND CIRCUMSTANCES THE PENALTY UNDER SECTION 271B IS NOT WARRANTED. WITH THE ABOVE OBSERVATIONS, THE ORDER S OF LOWER AUTHORITIES ARE SET ASIDE AND THE PENALTY LEVIED U/S 271B IS DELETED. ITA NO.1999/AHD/2017 ASSTT. YEAR 2014 - 15 PAGE 7 OF 7 10. IN THE RESULT, THE APPEAL OF THE TAXPAYER STANDS ALLOWED. O RDER PRONOUNCED IN THE COURT ON 02 /12 / 2019 AT AHMEDABAD. - SD - - SD - (MS . MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 02 / 12 /2019 M ANISH