BALAJI INFRA PROJECTS LTD, MUMBAI V. ACIT RG 2(1), MUMBAI

ITA 2627/MUM/2010

• Counselvise Citation: 262719914 RSA 2010
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 06-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S T BIDARI
• Assessee Lawyers: AJAY R SINGH
• Keywords: Speculation loss; Wrong claim; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R.S. SYAL R.S. SYAL R.S. SYAL R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 2627/MUM/2010 ASSESSMENT YEAR-2003-04 M / S . BALAJI INFRA PROJECTS LTD., NEW EXCELSIOR, 6 TH FLOOR, A.K. NAYAK MARG, FORT, MUMBAI-400 001 PAN-AAACB2055M VS. THE ACIT, RANGE 2(1), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AJAY R. SINGH RESPONDENT BY: SHRI S.T. BIDARI O R D E R O R D E R O R D E R O R D E R PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3.2.2010 PASSED BY THE LD. CIT(A)-4 IN TH E MATTER OF PENALTY U/S. 271(1)(C) OF THE I.T. ACT FOR THE ASSESSMEN T YEAR 2003-04. 2. IN THE PENALTY ORDER DT. 22.5.2009, THE ASSESSING OF FICER HAS NOTED THAT FOLLOWING ADDITIONS WERE MADE TO THE ASSESSEE S TOTAL INCOME. A) LOSS ON SALE OF CAR - `. 1,80,490/- B) LOSS ON SALE OF SHARES- `. 99,370/- 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE MATTER WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, THE ASSESSEE ACCE PTED THE ADDITION REGARDING LOSS ON SALE OF CAR STATING THAT THE RE IS AN ITA NO. 2627/M/2010 2 INADVERTENT ERROR. ON THE SECOND ADDITION ALSO THE A SSESSEE CLAIMED THAT SUCH LOSS WAS INADVERTENT AND REQUESTED TO CONSIDER THE LOSS AS A SPECULATION LOSS BY APPLYING EXPLANATION TO SEC. 73. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND LEVIED A PENALTY OF `. 1,01,101/- BEING 100% OF THE TAX SOUGHT TO BE EVADED . 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A). THE AR OF THE ASSESSEE REPEATED THE SUBMISSIONS MADE BEFO RE THE AO THAT THE FIRST DISALLOWANCE ON LOSS OF CAR WAS AN INADVE RTENT MISTAKE WHICH WAS ACCEPTED DURING THE COURSE OF ASSESSMENT PROCE EDINGS. THUS, NO PENALTY SHOULD BE LEVIED ON SALE OF CAR I.E. FIRST ADDITION . AS REGARDS LOSS ON SALE OF SHARES, THE ASSESSEE CLAIMED THAT TH IS LOSS IS ALSO AN INADVERTENT MISTAKE. HOWEVER, THIS SHOULD BE T REATED AS SPECULATION LOSS UNDER EXPLANATION 2 TO SEC. 73 AND N O PENALTY U/S. 271(1)(C) SHOULD BE LEVIED. ACCORDING TO THE ASSESSEE IT HAS NOT DELIBERATELY CONCEALED ANY FACT OR FILED AND INACCU RATE PARTICULARS OF INCOME AND THEREFORE PENALTY IS NOT LEVIABLE. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THE FOLLOWING CASE LAWS: 1) (1995) 212 ITR 417 (CAL) ASSOCIATED TRANSPORT PVT. LTD ., 2) (1992) 198 ITR 222 (M.P.) SETHI TEXTILES 3) (1991) 187 ITR 147 (BOM) ARKAY SAREE MUSEUM 4) (1996) 89 TAXMAN 420 (M.P>) SHIVNARAYAN JUMNALAL 5) (1996) 86 TAXMAN 30 (GUJ) SUBHASH TRADG CO. 6. THE ASSESSEE FURTHER RELIED ON THE FOLLOWING DECISION S: A) SIR SHADILAL SUGAR & GENERAL MILLS LTD. & ANR. VS CI T 168 ITR 705 ITA NO. 2627/M/2010 3 B) STAR GALVANIZERS VS ACIT 38 TTJ 12 (BOM) C) MUTUAL PLASTICS VS ITO 35 TTJ 467 (BOM) D) CIT VS KERALA SPINNERS LTD. (2001) 247 ITR 541 (KER) E) CIT VS MUSSADILAL RAM BHAROSE (1987) 165 ITR 14 (SC) F) VINOD KAPUR VS ITO-127 TAXMAN 53 (MUM) G) 124 ITR 15 (SC), 171 ITR 683 (ALL), 48 ITD 331 H) CIT VS P.K. NARAYANAN-238 ITR 905 (KER) I) CEMENT MARKETING CO. OF INDIA LTD. 124 ITR 15 (SC) J) CIT VS SMT. PADMA DEVI JAIN 245 ITR 818 (M.P) K) DELHI CLOTH & GENERAL MILLS CO. LTD. VS CIT (157 ITR 822)(DEL) L) IMPULSE INDIA (P) LTD. VS ITO 40 ITD 36 (DEL) M) ASSOCIATED CEMENT COMPANIES LTD. VS DY. CIT 40 ITD 70 (BOM) N) CIT VS SMT. BIMLA DEVI SHARMA 192 ITR 482 (PAT) O) SHRI ISHAR ALLOY & STEEL LTD. VS ACIT 68 ITD 117 (MUM ) P) CIT VS STI BIPLUS TUBING (INDIA) LTD. 247 ITR 426)(MP ) Q) HARSHVARDHAN CHEMICALS & MINERALS LTD. VS DCIT 101 TAXATION 31(JP) R) CTO VS SOJAT TYRE CO. 74 STC 288 (RAJ) S) PANCHRATNA HOTELS PVT. LTD. 44 TTJ AHD 282 T) CIT VS DEVI DAYAL ALUMINIUM INDIA PVT. LTD. 171 ITR 683 (ALL) U) CHANDRAPAL BAGGA 261 ITR 67 (RAJ) V) NUCHEM LTD. 47 ITD 487 W) MOHD. IBRAHIM ANIMULLA VS CIT 131 ITR 680 X) CIT VS KADRI MILLS 96 ITR 378 Y) DWARKAPRASAD SHIVKARAMDAS VS CIT 96 ITR 410 Z) HUSSANALI VS CIT 56 ITR 78 AA) CALCUTTA CREDIT CORPN. 166 ITR 29 (CAL) BB) BIJU PATNAIK 122 ITR 555 (ORISSA) CC) RAWATSINGH & SONS 129 ITR 65 (RAJ) DD) J.K. JAJOO 181 ITR 410 (MP) EE) NEPARI BIRI CO. TRUST 190 ITR 402 (ALL) 7. THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE AR AND I FIND THAT THE ASSESSING OFFICER IS JUSTIFIED IN LEVYING PENALTY U/S. 271(1). THE ASSESSMENT HIMSELF HAS ACCEPTED THAT THE LO SS ON SALE OF CAR IS A CAPITAL LOSS AND CANNOT BE ALLOWED AS R EVENUE EXPENDITURE. HENCE, IT SHOULD HAVE BEEN DISALLOWED B Y THE ITA NO. 2627/M/2010 4 ASSESSEE HIMSELF IN COMPUTATION OF INCOME. SIMPLY ACCE PTING THE MISTAKE DURING THE ASSESSMENT PROCEEDINGS, WOULD NOT ABSOLVE THE ASSESSEE FROM RIGOURS OF PROVISIONS OF SEC. 271 (1)(C). LIKEWISE, THE SECOND ADDITION ON SALE OF SHARES IS CAPIT AL LOSS ONLY AS THE ASSESSEE IS NOT IN THE BUSINESS OF SALE OF SHARES A ND SECURITIES. SINCE LOSS ON SALE OF SHARES IS A CAPITAL LOSS T HE SAME CANNOT BE TREATED AS A SPECULATION LOSS. HENCE, THE ASSESSING OFFICER I S JUSTIFIED IN TREATING THE LOSS AS CAPITAL LOSS. HENCE PENALTY U/S. 271(1)(C) IS LEVIABLE IN THE CASE OF THE APPELLANT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SUPR EME COURT HAS HELD IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (2 008) 306 ITR 977 (SC) THAT PENALTY IS A CIVIL MATTER AND MENSREA IS NOT REQUIRED TO BE PROVED FOR LEVY OF PENALTY U/S. 2 71(1)(C). IN THIS CASE, THE ASSESSEE HAS CLAIMED LOSSES WHICH ARE CLEARLY NOT ALLOWABLE. HENCE, PENALTY U/S. 271(1)(C) IS ATTRACTE D. THE CASE LAW RELIED BY THE AR ARE DISTINGUISHABLE ON FACTS AND ALL THESE CASE LAWS ARE PRIOR TO THE DECISION OF SUPREME COURT I N THE CASE OF DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 977 (S C). THE CLAIM OF THE APPELLANT THAT THERE WAS INADVERTENT MI STAKE CANNOT BE ACCEPTED WHEN WIT IS A FACT THAT THE CASE OF THE A PPELLANT IS AUDITED BY A C.A. HENCE, THE ASSESSING OFFICER IS JUSTIFIED IN LEVYING THE PENALTY U/S. 271(1)(C). THE PENALTY LEV IED BY THE ASSESSING OFFICER IS CONFIRMED AND APPEAL ON THIS GROUND IS DISMISSED. 8. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE SHRI AJAY R. SINGH SUBMITTED THAT THERE IS N O CONCEALMENT NOR ANY EFFORTS HAVE BEEN MADE BY THE ASSESSEE TO FURNI SH INACCURATE PARTICULARS OF INCOME. HE FURTHER RELIED ON THE DEC ISION IN THE CASE OF HINDUSTAN STEEL LTD. VS STATE OF ORISSA (83 ITR 26. THE ASSESSEES COUNSEL SUBMITTED THAT BONAFIDE CLAIMS MADE BY THE ASSE SSEE THOUGH IT DID NOT FIND FAVOUR WITH THE DEPARTMENT CANNOT I NVITE PENALTY U/S. 271(1)(C) AS HELD IN THE CASE OF VINOD KAPOOR 127 TAX MAN 53 (SC) THE LD. COUNSEL ALSO RELIED ON THE DECISION IN THE CASE OF CEMENT MARKETING CO. 124 ITR 15 9. THE LD. COUNSEL FURTHER ARGUED THAT THE ASSESSEE HAS F URNISHED EXPLANATION FOR THE CLAIM MADE BY IT IN THE RETURN OF INCOME AND SUBSTANTIATED THE SAME BY GIVING ALL THE PARTICULARS. THE ASSESSEE ALSO ITA NO. 2627/M/2010 5 RELIED ON THE DECISION OF MUMBAI BENCH IN THE CASE O F M/S. APW PRESIDENT SYSTEMS LTD. VS DCIT, DCIT VS ISE SECURITIES AN D SERVICES LTD., AND IN ITAT MUMBAI H BENCH IN THE CASE OF HI NDALCO INDUSTRIES LTD., 41 SOT 254 (MUM). 10. THE LD. DEPARTMENTAL REPRESENTATIVE SHRI S.T. B IDARI POINTED OUT THAT THE MISTAKE WAS NOTICED BY THE ASSESSING OFFICER AND ONLY WHEN THE ASSESSEE WAS CONFRONTED, THE ASSESSEE CAME FORWARD TO AC CEPT IT. THE DR THUS ARGUED THAT THE ASSESSEE HIMSELF HAS ACCEPTED THAT THE LOSS ON THE SALE OF CAR IS A CAPITAL LOSS AND CANNOT BE A LLOWED AS REVENUE EXPENDITURE. LIKEWISE ON SALE OF SHARES, THE ASSESSEE CAN CLAIM IT ONLY AS A CAPITAL LOSS AS THE ASSESSEE IS NOT IN T HE BUSINESS OF SALE OF SHARES AND SECURITIES AND LOSS ON SALE OF SHARES BEI NG A CAPITAL LOSS THE SAME CANNOT BE TREATED AS A SPECULATION LOSS. HE NCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME A S THE ASSESSEE HAS CLAIMED LOSS WHICH ARE CLEARLY NOT ALLOWABLE. 11. WE HEARD BOTH THE PARTIES. WE FIND THAT IN THE Q UANTUM APPEAL, THE ASSESSEE HAS AGREED TO THE ADDITION. ALTHOUGH AN A TTEMPT HAS BEEN MADE ON BEHALF OF THE ASSESSEE TO SUBMIT BEFORE TH E AUTHORITIES BELOW AS WELL AS BEFORE US THE SAID MISTAKE IN CLAIMING THE LOSS ON SALE OF CAR AND LOSS ON SALE OF SHARES WAS ATTRIBUTABLE TO HU MAN ERROR WHICH HAD INADVERTENTLY OCCURRED, THERE IS NOTHING ON RECO RD TO SUPPORT AND SUBSTANTIATE THE SAME. THE WRONG CLAIM MADE BY THE AS SESSEE WAS CORRECTED BY THE ASSESSEE AS A RESULT OF ENQUIRY MADE BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE HAD TO WITHDRAW THE CLAIM WRONGLY MADE WHICH IN OUR OPINION CANNOT BE REGARDED AS A VOLUNTARY ACT. THE VARIOUS JUDICIAL PRONOUNCEMENT CITED BY THE LD. COUNSEL FOR THE ASSESSEE ARE OF NO HE LP TO THE ASSESSEE AS THE SAME ARE PRIOR TO THE DECISION OF THE SUP REME COURT IN THE CASE OF DHARMENDRE TEXTILES 306 ITR 977 (SC). IN THE CASE OF ITA NO. 2627/M/2010 6 RELIANCE PETROPRODUCTS PVT. LTD., THE ASSESSEE WAS FOUND TO HAVE FURNISHED ALL THE RELEVANT PARTICULARS RELATING TO TH E CLAIM TRULY AND FULLY AND AS HELD BY THE HONBLE SUPREME COURT THAT THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S. 271(1)(C). HOWEVER, IN THIS CASE, CONSIDERING ALL THE FACTS, THE ASSESSEE HAS CLAIMED LOSS WHICH ARE CLEARLY NOT ALLOWABLE AND HENCE THE LOWER AUTHORITIES HAVE RIGHTLY HELD THAT THE ASSESS EE IS TO BE IMPOSED PENALTY U/S. 271(1)(C). 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED ON THIS 13 TH DAY OF APRIL, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 13 TH APRIL, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 2627/M/2010 7 DATE INITIALS 1 DRAFT DICTATED ON: 11 .0 4 .2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 11 .0 4 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10. DATE OF DISPATCH OF ORDER: _________ ______