Shri Piyush Mahendrabhai Doshi, Ahmedabad V. The Income Tax Officer, Ward-12(1), Ahmedabad

ITA 2320/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5785 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 19-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHHA RASTOGI
• Assessee Lawyers: CHHAJED
• Keywords: Principle of natural justice; Speculation loss
• Section: 44AD; 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.2320/AHD/2013 ( / ASSESSMENT YEAR : 2007-08) PIYUSH MAHENDRABHAI DOSHI 22/539, SATYAGRAH CHHAVANI, NEAR BHAVNIRJAR MANDIR, VASTRAPUR ROAD, SATELLITE, AHMEDABAD - 380015 # VS. INCOME TAX OFFICER, WARD 12 (1), AHMEDABAD. $ # % & # PAN/GIR NO. : ACQPD 7794 Q ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI M. S. CHHAJED, AR ($'*) / RESPONDENT BY : MS. RICHHA RASTOGI, SR.DR + ,*-. / DATE OF HEARING 06/03/2017 /012*-. / DATE OF PRONOUNCEMENT 29/05/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE LE VY OF PENALTY UNDER SECTION 271(1)(C) AND DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XX, AHMEDABAD, DATED 23/07/2013 FOR THE ASSESSMENT YEAR (AY) 2007-08. ITA NO.2320/AHD /2013 PIYUSH MAHENDRABHAI DOSHI VS.ITO ASST.YEAR 2007-08 - 2 - 2. ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPE ALS: I. THE ORDER PASSED U/S. 250 ON 23.07.2013 FOR A.Y. 20 07-08 BY CIT(A)-XX, AHMEDABAD UPHOLDING PENALTY LEVIED U/S 2 71(L)(C) BASED ON DISALLOWANCE OF EXPENSES CONFIRMED BY HONO RABLE CIT(APPEAL) IN QUANTUM APPEAL AND THEREBY CONFIRMIN G PENALTY LEVIABLE ON ADDITION OF RS. 5,94,592/- IS WHOLLY IL LEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. II. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR O N FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCES PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED CONFIRMATION OF PENALTY SAME WAS BASED ON DISALLOWA NCE OF EXPENSES CONFIRMED BY CIT(APPEAL) IN QUANTUM APPEAL . III. BOTH THE LOWER AUTHORITIES HAVE GRIEVOUSLY ERRED IN UPHOLDING IMPUGNED PENALTY OF RS. L,99,353/- WITHOUT CONSIDER ING EVIDENCES REGARDING CLAIM OF EXPENSES UNDER GENUINE BELIEF TH AT THERE IS NEXUS BETWEEN DELAYED PAYMENT CHARGES AND INTEREST INCOME AND ERRED IN TREATING ASSESSEE FOR FURNISHING INACCURAT E PARTICULARS OF INCOME. IV. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD PENALTY BAS ED ON DISALLOWANCE OF EXPENSES FOR THE WANT OF NEXUS BETW EEN CLAIM OF EXPENSES AND INTEREST INCOME WHICH IS CONFIRMED BY CIT (APPEAL) IN QUANTUM APPEAL. V. THE OBSERVATIONS MADE AND CONCLUSION REACHED BY BOT H THE LOWER AUTHORITIES SO AS TO HOLD THAT THE APPELLANT HAD CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PART ICULARS OF INCOME TO THE EXTENT OF DISALLOWANCE OF EXPENSES CO NFIRMED BY CIT (APPEAL) IN QUANTUM APPEAL IS NOT ADMITTED BY T HE APPELLANT IN SO FAR AS THE SAME WERE CONTRARY TO THE FACTS OF THE CASE AND EVIDENCE ON RECORD OR PREJUDICIAL TO THE APPELLANT. ITA NO.2320/AHD /2013 PIYUSH MAHENDRABHAI DOSHI VS.ITO ASST.YEAR 2007-08 - 3 - 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- DURING THE COURSE OF ASSESSMENT, AN ADDITION OF RS. 30,765/- TOWARDS DISALLOWANCE OF MISC. EXP. RS.5,94,592/- TO WARDS DISALLOWANCE OF DELAY PAYMENT CHARGES AND RS.1,52,748/- TOWARDS ADDITION U/S 44AD WERE MADE. THE CIT(A), AHMEDABAD VIDE HIS ORDER DTD . 19.12.2011 HAS DELETED ADDITION MADE U/S 44AD OF THE ACT AMOUNTING TO RS.1,52,748/- AND DIRECTED TO ALLOWED MISC. EXP. TO THE TUNE OF R S.33,109/- AND CONFIRMED THE ADDITION OF RS.5,94,592/- ACCORDINGLY TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION IS WORKS OUT AT RS.21,49,3 93/-. 3.1 AS PER PARA 3 OF THE ORDER DISALLOWANCE MADE FO R DELAY PAYMENT CHARGES AT RS.5,94,592/- WAS CLAIMED AGAINST INCOME EARNED UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. ON EXAMINATION OF DETAILS FILED BY THE ASSESSEE, IT IS NOTED THAT THE INTEREST PAYMENT HAS BEEN MADE TO SOVEREIGN NV SECURITIES PVT. LTD. WITH WHOM SPECULATION ON SH ARES AND SECURITIES WERE CARRIED OUT AND WHICH LED TO A 'SPECULATION LO SS OF RS.11,60,753/- SINCE THESE EXPENSES ARE SQUARELY APPLICABLE TO THI S SPECULATIVE LOSS, THEY HAVE BEEN WRONGLY CLAIMED UNDER THE HEAD 'INCOME FR OM OTHER SOURCES' FURTHER THE SPECULATIVE LOSS AND ATTRIBUTABLE EXPEN SES ARE NOT ALLOWED TO BE CARRIED FORWARD SINCE RETURN IS FILED LATE ON 31 .03.2008. ITA NO.2320/AHD /2013 PIYUSH MAHENDRABHAI DOSHI VS.ITO ASST.YEAR 2007-08 - 4 - 3.2 A FRESH OPPORTUNITY WAS GRANTED BY THE AUTHORIT IES AND THE ASSESSEE HAS FILED HIS WRITTEN SUBMISSION ON 02.03.2012 AS U NDER: THE PROCEEDINGS FOR LEVY PENALTY U/S 271(1)(C) ARE INITIATED ON THE BASIS OF CONFIRMATION OF DISALLOWANCE MADE BY A SSESSING OFFICER ON DELAYED PAYMENT CHARGES. WE HAVE PAID DELAYED PAYME NT CHARGES OF RS.5,94,592/- TO SUB-BROKER WITH WHOM ASSESSEE HAD DEALING IN SHARES AND SECURITIES. WE ARE UNDER GENUINE BELIEF THAT EXPENSES INCURRED FOR EARNING INCOME OFFERED FOR TAXATION IS AN ALLOWABLE EXPENDI TURE AGAINST INCOME. WE HAVE EXPLAINED THAT THERE IS A NEXUS BETWEEN INC OMES EARNED IN THE FORM OF INTEREST INCOME AND DELAYED PAYMENT CHARGES CLAIMED AS EXPENSES OUT OF INTEREST INCOME. 4. AGAINST THE PENALTY ORDER ASSESSEE PREFERRED FIR ST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), BUT TO NO AVAIL AND LEAR NED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN OUR OPINION THIS CASE IS SQUARELY COVERED BY THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.)(LTD.), [2010] 189 TAXMA N 322(SC), HEAD NOTE OF WHICH READ AS UNDER:- FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE-COM PANY FILED ITS RETURN OF INCOME CLAIMING INTEREST EXPENDITURE IN R ESPECT OF LOAN INCURRED BY IT FOR PURCHASING SHARES BY WAY OF ITS BUSINESS POLICIES. THE ASSESSING OFFICER DISALLOWED SAID EXPENDITURE UNDER SECTION 14A AND SIMULTANEOUSLY LEVIED PENALTY UNDER SECTION 271(1)( C) ON ACCOUNT OF CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PART ICULARS OF INCOME. ITA NO.2320/AHD /2013 PIYUSH MAHENDRABHAI DOSHI VS.ITO ASST.YEAR 2007-08 - 5 - ON APPEAL, THE COMMISSIONER (APPEALS) DELETED THE P ENALTY. THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER (A PPEALS). THE REVENUE'S APPEAL TO THE HIGH COURT WAS ALSO DISMISS ED.' 6. RESPECTFULLY, FOLLOWING THE ABOVE SAID DECISION, WE DELETE THE PENALTY AGAINST THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/05/2017 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/05/2017 PRITI YADAV, SR.PS !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)- 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY