ITO 12(3)(2), MUMBAI V. VINOD KUMAR GUPTA, MUMBAI

ITA 3037/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3167 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-06-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN
• Keywords: Unexplained cash credit; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER. ITA. NO. 3037/MUM/2013 (ASSESSMENT YEAR:2001-02) INCOME TAX OFFICER 12(3)(2), MUMBAI APPELLANT VS. MR. VINOD KUMAR GUPTA 162-C, MITTAL TOWER, NARIMAN POINT, MUMBAI 400 021 RESPONDENT PAN: AAIPG6320M /BY APPELLANT : SHRI RAJESH RANJAN, D.R. /BY RESPONDENT :NONE /DATE OF HEARING : 16.09.2015 /DATE OF PRONOUNCEMENT : 30.09.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-10, MUMBAI, DA TED 01.01.2013 FOR A.Y. 2001-02 ON FOLLOWING GROUNDS: ITA NO.3037/MUM/13 A.Y. 01-02 [ITO VS. MR. VINOD KU MAR GUPTA] PAGE 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE PENALTY U/S.271(1)(C) AMOUNTING TO RS.7,13,859/- LEVIED ON ACCOUNT OF INACCURATE PARTICULARS OF INCOME ON A/C OF INTEREST & DIFFERENCE IN CAPITAL ACCOUNT. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. ASSESSEE IS AN INDIVIDUAL AND CARRYIES ON BUSINE SS THROUGH HIS PARTNERSHIP CONCERN UNDER THE NAME AND STYLE OF M/S. M.P. IMPEX. THE FIRM DEALS IN OXYGEN CYLINDER S, SELENIUM METAL POWDER, VIDEO COMPONENTS ETC. 3. ASSESSING OFFICER LEVIED PENALTY IN RESPECT OF T HREE ADDITIONS WHICH ARE AS UNDER: CONCEALED/INACCURATE PARTICULARS OF INCOME ON A/C OF INTEREST: RS.22,97,072/- INACCURATE PARTICULARS OF INCOME: DIFFERENCE IN CAPITAL ACCOUNT: RS.1,22,470/- CAPITAL GAIN ON SALE OF JEWELLERY RS. 9,16,268/ - TOTAL RS.33,35,810/- 3.1 FIRST POINT OF LEVYING PENALTY IN RESPECT OF IN TEREST AMOUNT TO RS.22,97,072/- ON LOAN TAKEN FOR INVESTMENT IN S HAES. WHILE COMPLETING THE ASSESSMENT, ASSESSING OFFICER HAD HELD THAT CERTAIN TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARES THROUGH M/S. MANGALA CAPITAL SERVICES ARE SP ECULATIVE IN NATURE. THE AMOUNT IN THIS REGARD WAS RS.3,40,1 0,015/-. ASSESSEE HAD ALSO INCURRED INTEREST ON LOANS FOR FI NANCING ITA NO.3037/MUM/13 A.Y. 01-02 [ITO VS. MR. VINOD KU MAR GUPTA] PAGE 3 THESE TRANSACTIONS. THE INTEREST ON LOAN AMOUNTED TO RS.22,97,072/-. ASSESSING OFFICER TREATED THE LOSS ON SALE OF SHARES AS WELL AS INTEREST ON LOANS AS SPECULATIVE IN NATURE. HOWEVER, IN COURSE OF APPELLATE PROCEEDING, CIT(A) HELD THAT BOTH LOSS ON SALE AND PURCHASE OF SHARES AS WELL AS INTEREST ATTRIBUTABLE TO THE SAME WERE NOT SPECULATIVE IN NA TURE. ASSESSING OFFICER HAS HOWEVER STILL LEVIED PENALTY IN RESPECT OF INTEREST COST OF RS.22,97,072/-. IN THIS REGARD, I T WAS SUBMITTED ON BEHALF OF ASSESSEE BEFORE THE CIT(A) T HAT ON INTEREST OF RS. 22,97,072/-, CIT(A) HAS GRANTED FUL L RELIEF AND THEREFORE, THERE WAS NO QUESTION OF LEVY OF PENALTY . HAVING CONSIDERED THE SAME, CIT(A) OBSERVED THAT THERE IS NO DISALLOWANCE OF INTEREST, AS SUCH, ASSESSING OFFICE R HAS MERELY CATEGORIZED THE INTEREST AS ATTRIBUTABLE IN SHARE T RANSACTION AND HENCE HELD THAT INTEREST COST ALSO FORMS PART O F SPECULATIVE LOSS. HOWEVER, IN COURSE OF APPEAL IN QUANTUM PROC EEDING, CIT(A) ACCEPTED THE ASSESSEES STAND AND ALLOWED TH E ASSESSEE TO TREAT THE SHARE TRANSACTION AS WELL AS INTEREST COST AS SHORT TERM CAPITAL GAINS. THEREFORE, THERE WAS NO QUESTI ON OF CONCEALMENT OF INCOME ON THIS ISSUE AND IN FACT, CI T(A) HAD ACCEPTED THE STAND OF ASSESSEE. IN ANY CASE, FULL PARTICULARS RELATING TO INTEREST CLAIMED WERE DISCLOSED BY ASSE SSEE AND AT BEST ASSESSING OFFICER HAS COME TO A DIFFERENT VIEW ON EVALUATION OF RELEVANT FACTS. HENCE, PENALTY LEVIE D IN RESPECT OF ADDITION OF RS.22,97,072/- WAS RIGHTLY DELETED BY C IT(A). THIS ITA NO.3037/MUM/13 A.Y. 01-02 [ITO VS. MR. VINOD KU MAR GUPTA] PAGE 4 REASONED FINDING OF CIT(A), WHEREBY HE HAS DELETED PENALTY IN QUESTION, NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4. NEXT POINT IS WITH REGARDS TO ADDITION ON ACCOUN T OF DIFFERENCE IN OPENING BALANCE OF SHARE CAPITAL. TH IS ISSUE IS EXPLAINED BY ASSESSING OFFICER AT PARA 12 OF ASSESS MENT ORDER. HE OBSERVED THAT ASSESSEES CAPITAL IN ITS PROPRIET ORSHIP FIRM IS DISCLOSED AT RS.1,85,67,047/- IN BOOKS OF PROPRIETA RY BUSINESS WHEREAS IN ASSESSEES PERSONAL BOOKS, SHARE CAPITAL IN PROPRIETORSHIP CONCERN WAS DISCLOSED AT RS.1,81,42, 831/-. AFTER TAKING INTO CONSIDERATION, THE PROFITS OF THE YEAR OF RS.3,01,747/-, ASSESSING OFFICER HAS WORKED OUT THE DIFFERENCE IN OPENING BALANCE AT RS.1,22,469/-. THIS AMOUNT H AS BEEN BROUGHT TO TAX BY ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT IN ASSESSEES BOOKS OF ACCOUNTS. 4.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY IN QUANTUM ADDITION AND ADDITION MADE ON THIS ACCOUNT WAS CONFIRMED BY CIT(A). NO FURTHER APPEAL HAS BEEN FI LED BY ASSESSEE. HENCE, ASSESSING OFFICER IMPOSED PENALTY AS ASSESSEE FAILED TO EXPLAIN THE DIFFERENCE IN TWO AM OUNTS. IN PENALTY PROCEEDING, MATTER WAS CARRIED IN PENALTY M ATTER BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONT ENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) OBSERVED THAT DIFFERENCE AROSE ON ACCOUNT OF EARLIER ITA NO.3037/MUM/13 A.Y. 01-02 [ITO VS. MR. VINOD KU MAR GUPTA] PAGE 5 YEARS AND SIMILAR DISCREPANCY WAS THEREIN THE EARLI ER YEAR BALANCE ALSO. THUS, IT WAS EVIDENT THAT DISCREPANCY IN ISSUE HAS BEEN BROUGHT FORWARD FROM EARLIER YEARS AND IS NOT A QUESTION OF CONCEALMENT OF INCOME OR FURNISHING INA CCURATE PARTICULARS OF INCOME. ACCORDINGLY, PENALTY WAS DE LETED ON THIS ACCOUNT. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 30TH DAY OF SEPTEMBER, 2015. SD/- SD/- ( RAMIT KOCHAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 30/09/2015 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE !# / ASSESSEE $ %&%'( ) / CONCERNED CIT * )+ / CIT (A) ,-./00'(1 '( 12 %& / DR, ITAT, MUMBAI 3/4567 / GUARD FILE. BY ORDER / #8 1 9: ;% 1 '( 12 %&<