Shri Manish Krishnakant Shah, Gandhinagar V. The Dy.CIT, Gandhinagar Circle, Gandhinagar

ITA 2946/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8619 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Salary income; Revised return; Bonafide mistake

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 2946/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) SHRI MANISH KRISHNAKANT SHAH 553/1, SAURABH SOCIETY SECTOR 23, GANDHINAGAR - 382023 / VS. THE DCIT GANDHINAGAR CIRCLE GANDHINAGAR ./ ./ PAN/GIR NO. : AFDPS 6936 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANISH RAJVAIDYA, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. / DATE OF HEARING 25/07/2017 !'# / DATE OF PRONOUNCEMENT 30/08/2017 $% / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)- GANDHINAGAR, D ATED 11/08/2014, FOR CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ASSESSMENT YEAR (AY) 2010-11, ON THE FOLLOWING GROU NDS: I. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS WH ILE CONFIRMING THE PENALTY OF RS. 4,00,000/- MADE BY LE ARNED DCIT WHILE CONSIDERING THE INTEREST EXPENSES WHETHER INT EREST HAS BEEN CLAIMED UNDER THE HEAD OF INCOME FROM BUSINESS OR P ROFESSION OR UNDER HEAD AS INCOME FROM OTHER SOURCES WHILE NOT C ONSIDERING THE FACTS OF THE CASE OF THE APPELLANT. ITA NO.2946/AHD /2014 SHRI MANISH KRISHNAKANT SHAH VS. DCIT ASST.YEAR 2010-11 - 2 - II. (A) ORIGINAL RETURN WAS FILED BY TAKING HEAD WISE I NCOME FROM PROFIT AND LOSS ACCOUNT DIRECTLY. (B) UNDER HEAD 'INCOME FROM BUSINESS PROFESSION' - DERIVATIVE LOSS OF RS.16,74,542/- IS SHOWN (C) UNDER HEAD 'INCOME FROM OTHER SOURCES' INTEREST PAID OF RS.12,53,5447- IS CLAIMED (D) DEDUCTION CLAIMED BY ASSESSEE ON THE BASIS OF L EGAL ADVICE GIVEN BY HIS CONSULTATION AND HE HAS FURNISHED ALL DETAILS RELATING TO INCOME AND EXPENDITURE BUT EXPENSE IS CLAIMED IN DIFFERENT HEAD. IT CANNOT BE HELD THAT THERE WAS ANY MALAFIDE INTENSION OF ASSESSEE TO CONCEAL INCOME. (E) WHEN YOUR APPELLANT COME TO KNOW THAT ABOVE GE NUINE BONAFIDE MISTAKE, REVISED RETURN BECOME TIME BARRED ON 31/03/2013. (F) YOUR APPELLANT HAS ACCEPTED GENUINE BONAFIDE MI STAKE, IN FIRST SUBMISSION TO THE AO DATED 20/09/2012. MATTER OF TH E SAME IS AS UNDER: IN CONNECTION WITH THE ABOVE, I AM SUBMITTING HERE WITH RECOMUTATION OF INCOME, IN WHICH INTEREST PAID OF RS.12,53,544/- IS CONSIDERED AS BUSINESS EXPENSES I NSTEAD OF PREVIOUSLY IT WAS TREATED AS INCOME FROM OTHER SOUR CES. 1. BY THAT MY TAXABLE INCOME WILL INCREASE FROM RS.9,5 4,490/- TO 21,82,500/-. 2. TAX PAYABLE INCREASE FROM RS. 1,96,057/- TO RS. 5 ,75,513/-. 3. REFUND DECREASE FROM RS. 3,86,943/- TO RS.7,4 87/- (AFTER CONSIDERING TDS OF RS.5,83,000/-). 4. CARRIED FORWARD BUSINESS LOSS INCREASE FROM RS .11,81,097/- TO RS.23,44,123/-. OTHER CIF LOSS OF STCG RS.2,80,021/-AND GIF SPECULA TION LOSS RS.18,014/-REMAIN SAME. ITA NO.2946/AHD /2014 SHRI MANISH KRISHNAKANT SHAH VS. DCIT ASST.YEAR 2010-11 - 3 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE ASSESSEE IS ENGAGED IN TRADING AND INVESTMENT ACTIVITY OF SHARES AND SECURITIES. THE RETURN OF INCOME IN THIS CASE WAS E-FILED ON 22/09/2010, DECLARING TOTAL INCOME OF RS.9,54,490/- . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT U /S.143(3) WAS COMPLETED ON 11/01/2013 DETERMINING TOTAL INCOME AT RS.21,82,500/-. 2.2 DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTIC ED THAT, THE ASSESSEE HAD CLAIMED LOSS UNDER THE HEAD INCOME FRO M OTHER SOURCES AND HAD SET OFF THE SAME AGAINST THE SALARY INCOME OF R S.22,97,500/- AND ARRIVED AT THE GROSS TOTAL INCOME OF RS.10,69, 494/ -. 2.3 THE ASSESSEE HAD BORROWED FUNDS FOR ITS SHARE T RADING ACTIVITIES. HE HAD SUBSTANTIAL TURNOVER IN DERIVATIVE SEGMENT A ND THROUGHOUT THE YEAR FUNDS WERE USED FOR DERIVATIVE BUSINESS. ON PE RUSAL OF BANK ACCOUNTS AND AFTER CONSIDERING HIS ACTIVITIES IT WA S OBSERVED THAT BORROWED FUNDS WERE USED FOR ITS SHARE TRADING ACTI VITIES. HE WAS HAVING INTEREST INCOME OF ONLY RS,47,613/- AND WAS NOT HAV ING ANY OTHER INCOME EXCEPT SALARY INCOME. THE BORROWED FUNDS ON WHICH I NTEREST OF RS.12,53,544/- WAS PAID WERE USED ONLY FOR BUSINESS OF DERIVATIVES & THUS THE BUSINESS LOSS INCREASED BY RS.12,53,544/-. AS PROVIDED IN SECTION 71(2A) WHEN THERE IS A LOSS UNDER THE HEAD BUSINESS OR PROFESSION AND WHEN THERE IS INCOME UNDER THE HEAD SALARY IT C ANNOT BE SET OFF AGAINST THE SALARY INCOME. ACCORDINGLY, RS.12,53,54 4/- WAS NOT ALLOWED TO BE SET OFF AGAINST SALARY INCOME AS IN STATEMENT OF INCOME. THE ITA NO.2946/AHD /2014 SHRI MANISH KRISHNAKANT SHAH VS. DCIT ASST.YEAR 2010-11 - 4 - ASSESSEE TREATED IT AS LOSS UNDER INCOME FROM OTHER SOURCES ONLY WITH AN INTENTION OF SET OFF AGAINST SALARY INCOME BY GIVIN G COLORABLE DEVICE. AS PER THE AO SAME WAS NOT PERMITTED IN THE I.T. ACT. THEREFORE, PENALTY U/S.271(1)(C) OF THE ACT WAS LEVIED FOR FURNISHING THE INACCURATE PARTICULARS OF THE INCOME. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIST S TATUTORY APPEAL BEFORE THE LEANED CIT(A). LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 4. NOW APPELLANTS APPEAL IS BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE IMPUGNED ORDER. LEARNED AR STATED THAT ASSESSEE CLAIMED DEDU CTION UNDER THE BONAFIDE MISTAKE THAT HE IS ENTITLED TO GET DEDUCTI ON ON THE BASIS OF LEGAL ADVICE GIVEN BY HIS CONSULTANT AND HE HAS FURNISHED ALL DETAILS OF CAPITAL GAIN ALONGWITH RETURN OF INCOME AND HE ALSO CITED A JUDGMENT OF CIT VS. AMAR NATH [2008] 173 TAXMAN 395 (PUNJ.& HAR). IN TH IS CASE, IT CANNOT BE HELD THAT THERE WAS ANY MALA FIDE INTENTION OF A SSESSEE TO CONCEAL INCOME. 5.2 AR HAS FURTHER CITED A JUDGMENT OF CIT VS. RELI ANCE PETROPRODUCTS [2010] 3 TAXMANN.COM 47, IN WHICH FOLLOWING OBSERVA TION WERE MADE IN SECTION 271(1)(C) APPLIES WHERE THE ASSESSEE HAS CO NCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. THE PRESENT WAS NOT A CASE OF CONCEALMENT OF INCOME. AS ITA NO.2946/AHD /2014 SHRI MANISH KRISHNAKANT SHAH VS. DCIT ASST.YEAR 2010-11 - 5 - REGARDS THE FURNISHING OF INACCURATE PARTICULARS, N O INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. THE WORDS INACCURATE PARTICULARS MEANS THAT THE DETAILS SUPPLIED IN THE RETURN ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. IN THE ABSENCE OF A FINDING BY THE ASSESSING OFFICER THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT O R ERRONEOUS OR FALSE, THERE WOULD BE NO QUESTION OF INVITING PENALTY UNDE R SECTION 271(1)(C). 6. IN THE PRESENT CASE, ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO INCOME EXPENDITURE BUT EXPENSE CLAIMED IN DIFFERENT HEAD WHEN HE CAME TO KNOW ABOUT THE ERROR THEN HE RECTIFIED HIS OMISS ION. WE ARE OF THE CONSIDERED OPINION THAT IN THIS CASE PENALTY CANNOT BE LEVIED. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/08/2017 SD/- SD/- IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/08/2017 PRITI YADAV, SR.PS ITA NO.2946/AHD /2014 SHRI MANISH KRISHNAKANT SHAH VS. DCIT ASST.YEAR 2010-11 - 6 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-GANDHINAGAR. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION ..28/08/2017 (DICTATION-PAD 4 PAGES ATTACHED AT THE END OF THIS APPEAL- FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/08/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 29/08/2017 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER