The DCIT, Circle-3, Ahmedabad V. M/s. Canon Capital & Finance Ltd., Ahmedabad

ITA 2696/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9607 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Keywords: Speculation loss
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER ./ ITA NO. 2696/AHD/2015 / ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER WARD-1(3)(2), AHMEDABAD .. APPELLANT VS M/S. CANON CAPITAL & FINANCE LTD., 204 SARAP, NAVJIVAN PRESS LANE, ASHRAM ROAD, AHMEDABAD .. RESPONDENT PAN : AAACC 6315 P REVENUE BY : SHRI D.V. SINGH , DR ASSESSEE(S) BY : SHRI SANJAY R. SHAH , AR / DATE OF HEARING 06/01/2016 /DATE OF PRONOUNCEMENT 03/02/2016 / O R D E R THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-10, AHMEDA BAD DATED 9 TH JULY 2015 FOR ASSESSMENT YEAR 2009-10, ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE PENALTY U/S 271(1)(C) OF RS.11,57,012/ - ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER O F THE ASSESSING OFFICER TO THE EXTENT MENTIONED ABOVE SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME/BOOK PROFIT. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G (SMC) ITA NO. 2696/AHD/2015 ITO VS. CANON CAPITAL & FINANCE LTD AY 2009-10 - 2 - OFFICER BE RESTORED TO THE ABOVE EXTENT. THE APPEL LANT CRAVES, TO LEAVE, TO AMEND OR ALTER ANY GROUND OR A DD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A COMPANY DOING THE BUSINESS OF BROKING OF SHARES AND SECURIT IES AND ALSO TRADING IN SHARES, SECURITIES AND FUTURE AND OPTION S TRANSACTIONS WITH RECOGNIZED STOCK EXCHANGES. DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FILED ITS RET URN OF INCOME ON 30.09.2009, DECLARING TOTAL INCOME OF RS.23,64,7 10/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ORDER U/S 143(3) WAS PASSED ON 26.11.2011 AFTER MAKING ADDITIONS OF RS.65,99,157/-. AGGRIEVED BY THE SAID ORDER, THE A SSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) ON REMAINING ISSU E ON WHICH PENALTY CANNOT BE LEVIED BECAUSE OF THE CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THAT WHETHER PENALTY U/S 271(1)(C) WILL APPLY ON THE ADDITIONS OF RS.37,44,374/- BY INVOKING PROVISO TO SECTION 73(4) OF THE ACT WHICH IS A DEEMING PROVISION AND F URTHER THE ASSESSEE HAS ALSO ACCEPTED ITS MISTAKE AND ACCEPTED BEFORE THE ASSESSING OFFICER THAT BY VIRTUE OF SECTION 73 THE LOSS ON SALE AND PURCHASE OF SHARES WERE TO BE TREATED AS SPECUL ATION LOSS INSTEAD OF BUSINESS LOSS. ON APPEAL, THE CIT(A) H AS DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE (SMC) ITA NO. 2696/AHD/2015 ITO VS. CANON CAPITAL & FINANCE LTD AY 2009-10 - 3 - ACT ON THE GROUND THAT NO COGENT MATERIAL OR EVIDEN CE WAS BROUGHT TO KNOWLEDGE WHICH MAY PROVE THAT THE REVEN UE HAD DETECTED THE CONCEALMENT OR THE EXPLANATION SUBMITT ED BY THE ASSESSEE WAS A FALSE ONE. AGAINST THE AFORESAID OR DER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US, INTER A LIA, SUBMITTING THAT THE CIT(A) ERRED IN DELETING THE PE NALTY IN QUESTION. 2.1 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. I FIND THAT THE ASSESSEE CLAIMED A TRAD ING LOSS OF RS.37,44,374/- IN THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDING, WHEN IT WAS POINTED OUT TO T HE ASSESSEE THAT ASSESSEE THAT THIS LOSS WAS NOT TRADI NG LOSS BUT IN THE NATURE OF SPECULATION LOSS IN VIEW OF EXPLANATION TO PROVISIONS OF SECTION 73 OF THE ACT, THE ASSESSEE A GREED TO THE SAME AND STATED THAT BEING A BONA FIDE INADVERTENT MISTAKE, THE AMOUNT WAS OFFERED FOR TAX WITH A REQUEST NOT T O INITIATE PENALTY PROCEEDINGS. HOWEVER, THE ASSESSING OFFIC ER IMPOSED THE PENALTY, INTER ALIA, STATED THAT IF THE CASE WO ULD NOT HAVE BEEN SELECTED FOR SCRUTINY, THE ASSESSEE WOULD NOT HAVE PAID THE TAX ON THIS AMOUNT AND THUS CONCEALED THE PARTI CULARS OF INCOME AND SUBMITTED INACCURATE PARTICULARS OF INCO ME. THE STAND OF THE ASSESSEE HAS BEEN THAT THERE WAS NO CO NCEALMENT (SMC) ITA NO. 2696/AHD/2015 ITO VS. CANON CAPITAL & FINANCE LTD AY 2009-10 - 4 - OF INCOME AS EVERYTHING WAS DISCLOSED IN THE RETURN OF INCOME AND IT WAS MERELY AN INCORRECT CLAIM WHICH WAS LATE R RECTIFIED THE MOMENT IT HAS BEEN POINTED OUT. TO SUBSTANTIATE THE CLAIM THAT INCORRECT CLAIM OF SPECULATION LOSS DOES NOT A TTRACT PENALTY PROVISIONS U/S 271(1)(C), THE ASSESSEE HAS RELIED U PON THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AURIC INVESTMENT & SECURITIES LTD, REPORTED IN (2007) 310 ITR 0121, WHEREIN THE HONBLE DELHI HIGH COURT HAS HELD THAT MERE TREATMENT OF BUSINESS LOSS AS SPECULATIVE LOSS, THE ASSESSEE COULD NOT BE SAID TO HAVE CONCEALED OR FURNISHED IN ACCURATE PARTICULARS OF INCOME, PENALTY U/S 271(1)(C) COULD NOT BE LEVIED IN SUCH CASES. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE IN THIS REGARD. SO FACTS BEING SIMILAR, FOLLOWING THE SAME REASONING, THE CIT(A) WAS JUSTIF IED IN DELETING THE PENALTY IN QUESTION. THEREFORE, THE O RDER PASSED BY THE CIT(A) REQUIRES NO INTERFERENCE, WHICH IS CO NFIRMED. 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 3RD FEBRUARY, 2016 AT AHMEDABAD. SD/- ( SHAILENDRA K. YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 03/02/2016 BIJU T., PS (SMC) ITA NO. 2696/AHD/2015 ITO VS. CANON CAPITAL & FINANCE LTD AY 2009-10 - 5 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' / CONCERNED CIT 4. ' ( ) / THE CIT(A), 5. #$% , , / DR, ITAT, AHMEDABAD 6. %) / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) !' , / ITAT, AHMEDABAD