Sh. Mohan Singh Chhabra HUF, Amritsar. V. The Dy. Commissioner of Income-tax, Amritsar.

ITA 270/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63519 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: PADAM BAHL
• Keywords: Opportunity of being heard; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.270(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN : SH. MOHAN SINGH CHHABRA (HUF), VS. DY. COMMR. OF IN COME-TAX, AMRITSAR. CIRCLE-5, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. PADAM BAHL, CA RESPONDENT BY:SH. R.L.CHHANALIA, DR DATE OF HEARING:09/10/2012 DATE OF PRONOUNCEMENT:10/10/2012 ORDER PER BENCH ; THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER OF CIT(A), AMRITSAR, DATED 23.04.2012 FOR THE ASSES SMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS: 1. THAT LD. CIT(A), AMRITSAR HAS GROSSLY ERRED IN CONFIRMING THE ORDER PASSED BY ACIT, CIRCLE V, AMRITSAR, LEVYING P ENALTY U/S 271B OF THE INCOME TAX ACT, 1961 AT RS.1,00,000/-. 2. THAT BOTH LD. CIT(A), AMRITSAR AND ACIT, CIRCLE V, AMRITSAR, HAVE GROSSLY ERRED IN NOT APPRECIATING THE FACT THA T SINCE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. H E WAS ITA NO.270(ASR)/2012 2 PREVENTED BY A REASONABLE CAUSE FROM GETTING THESE AUDITED U/S 44AB O THE I. TAX ACT, 1961. 3. THAT BOTH LD. CIT(A), AMRITSAR AND ACIT, CIRCLE V, AMRITSAR, HAVE GROSSLY ERRED IN NOT APPRECIATING THAT THE ASS ESSEE WAS AN INVESTOR IN SHARES AND NOT A DEALER IN SHARES AND T HAT FOR F & O SEGMENT NO AUDIT U/S 44AB WAS CALLED FOR AS NO DELI VERY OF SHARES WERE TAKEN. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE AUTHORITIES. THEREFORE, THERE IS NO NEED TO REP EAT THE SAKE FOR THE SAKE OF CONVENIENCE. 3. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE IS A DEALER/TRADER IN SHARES AND IS AN INVESTOR AND IS D OING DAY TO DAY TRADING IN SHARES AND ALSO INVOLVED IN F & O SEGMENT. HE FURTH ER STATED THAT THE ASSESSEE IS NOT TAKING DELIVERY OF SHARES AND BUYIN G & SELLING THE SHARES IS SPECULATIVE TRANSACTION AND IS NOT LIABLE TO GET IT S ACCOUNTS AUDITED UNDER SECTION 44AB OF THE INCOME-TAX ACT, 1961 ( IN SHORT , THE ACT). THEREFORE, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS WITHOUT ANY BASIS AND IS LIABLE TO BE DELETED. IN SUPPORT O F HIS CONTENTIONS, HE HAS FILED PAPER BOOK CONTAINING COPY OF STATEMENT OF TA XABLE INCOME FOR THE ASSESSMENT YEARS 2004-05, 2005-06, 2006-07 AND DATE -WISE TRANSACTION OF ASSESSEE OF PURCHASE & SALE OF SHARES (DAY TRADING) FOR 01.04.2006 TO 31.03.2007 I.E. ASSESSMENT YEAR 2007-08. SECONDLY, HE STATED THAT THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT AN D PENALTY U/S 271B OF THE ITA NO.270(ASR)/2012 3 ACT, CANNOT BE IMPOSED. IF THE ASSESSEE IS NOT MAI NTAINING BOOKS OF ACCOUNT THEN THE REVENUE AUTHORITIES CAN LEVY PENALTY U/S 2 71A FOR VIOLATION OF SECTION 44AA OF THE ACT. HE REQUESTED THAT PENALTY IN DISPUTE MAY BE CANCELLED. 4. THE LD. DR, SH. R.L.CHHANALIA, ON THE OTHER HAND , RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE WITH US, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH DOCUMENTARY EVIDENCE FILED BY THE ASSESS EE IN THE SHAPE OF PAPER BOOK IN WHICH, THE LD. COUNSEL FOR THE ASSESSEE HAS ATTACHED COPY OF STATEMENT OF TAXABLE INCOME FOR THE ASSESSMENT YEAR S 2004-05, 2005-06, 2006-07, DATE-WISE TRANSACTION OF ASSESSEE OF PURC HASE & SALE OF SHARES (DAY TRADING) FOR 01.04.2006 TO 31.03.2007 I.E. ASS ESSMENT YEAR 2007-08, COPY OF DECISIONS OF ITAT MUMBAI BENCH IN THE CASE OF BABULAL ENTERPRISES VS. ACIT IN ITA NO.6031/MUM/1996, REPOR TED AT 31 BCAJ788 (MUM.), COPY OF DECISION OF ITAT, MUMBAI BENCH IN T HE CASE OF GROWMORE EXPORTS LTD. VS. ACIT 78 ITD 95 (MUM.), COPY OF D ECISION OF GAUHATI HIGH COURT IN THE CASE OF SURAJMAL PARSURAM TODI VS . CIT REPORTED AT 222 ITR 219 (ALL) AND COPY OF DECISION OF ITAT DELHI BE NCH IN THE CASE OF CHANDRA SUDHIR KUMAR VS. ITO REPORTED AT 56 ITD (DE L) 470. ITA NO.270(ASR)/2012 4 5.1. AFTER PERUSING THE AFORESAID DOCUMENTARY EVIDE NCE FILED BY THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS NOT ESTABLISHED BEFORE THE A.O. AS WELL AS BEFORE THE L D. CIT(A) THAT THE ASSESSEE WAS AN INVESTOR IN THE SHARES AND NOT A DEALER IN S HARES AND THAT FOR F & O SEGMENT. THE ASSESSEE HAS ALSO FAILED TO PROVE BEFO RE THE REVENUE AUTHORITIES THAT THE ASSESSEE HAS NOT TAKEN DELIVER Y OF SHARES IN DISPUTE. ON THE SECOND ARGUMENT REGARDING NON-MAINTENANCE OF BO OKS OF ACCOUNT BY THE ASSESSEE AND NON LEVIABLE OF PENALTY U/S 271B OF T HE ACT, THE ASSESSEE HAS ALSO FAILED TO ESTABLISH SUFFICIENT AND REASONABLE CAUSE FOR NOT GETTING THE ACCOUNTS AUDITED UNDER SECTION 44AB OF THE I.T.ACT. WE HAVE THOROUGHLY GONE THROUGH THE ORDERS PASSED BY THE REVENUE AUTH ORITIES AS WELL AS DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE ALONGWIT H AVERMENTS MADE BY THE ASSESSEE BEFORE THE AO AS WELL AS BEFORE THE LD . CIT(A). WE ARE OF THE CONSIDERED OPINION THAT IN THE INTEREST OF JUSTICE, THE MATTER REQUIRES THOROUGH INVESTIGATION AT THE LEVEL OF THE A.O. AND WITH LIBERTY TO THE ASSESSEE TO ESTABLISH THAT THE ASSESSEE IS NOT A DE ALER/TRADER IN SHARES AND IS AN INVESTOR. THE ASSESSEE HAS ALSO TO ESTABLISH THA T HE IS DOING DAY TO DAY TRADING IN SHARES AND WAS INVOLVED IN F & O SEGMENT AND IS NOT TAKING DELIVERY OF SHARES IN DISPUTE AND IS NOT REQUIRED T O GET HIS ACCOUNTS AUDITED AS REQUIRED UNDER SECTION 44AB OF THE ACT. WITH TH ESE DIRECTIONS, THE MATTER ITA NO.270(ASR)/2012 5 IS SET ASIDE TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH OCTOBER, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10TH OCTOBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.MOHAN SINGH CHHABRA (HUF), AMRITSAR . 2. THE DCIT, CIR.5, ASR. 3. THE CIT(A),ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.