ACIT -33(1), MUMBAI V. AMIT P. PANDVA, MUMBAI

ITA 3078/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9102 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MISHRASR
• Keywords: Business income; Treatment of capital gains as business income; Difference of opinion
• Section: 27

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -IBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./3078/MUM/2015, / ASSESSMENT YEAR: 2008-09 ASSTT. CIT-33(1) ROOM NO.308, 3 RD FLOOR, BLDG. NO. C-11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX,BANDRA (E) MUMBAI-400 051. VS. SHRI AMIT P. PANDYA B/101,, 1 ST FLOOR, SHYAMKUNJ, POISAR GYMKHANA ROAD, MAHAVIR NAGAR, KANDIVALI (W),MUMBAI-400067. PAN:AFVPP 0474 K ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI S.K. MISHRA-SR.-DR /ASSESSEE BY: NONE / DATE OF HEARING: 07/11/2016 / DATE OF PRONOUNCEMENT:06/01/2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 20/02/2015 OF THE CIT ( A)-45,MUMBAI, THE ASSESSING OFFICER (AO)HAS FILED THE PRESENT APPEAL.ASSESSEE, AN INDIV IDUAL, FILED HIS RETURN OF INCOME ON 30/09/ 2008,DECLARING INCOME OF RS. 4.31 CRORES.THE AO COM PLETED THE ASSESSMENT U/S.143 (3) OF THE ACT ON 03/12/2010. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE PE NALTY LEVIED BY THE AO U/S.271(1)(C) OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS, THE AO F OUND THAT THE ASSESSEE HAD DECLARED INCOME FROM VARIOUS SOURCES. AFTER CONSIDERING THE MATERIAL AVAILABLE HE HELD THAT THE ASSESSEE HAD WRONGLY CLASSIFIED UNDER THE TWO HEADS I.E. BUSINESS INCOME AND CAPITAL GAINS. HE ASSESSED THE ENTIRE PROFITS ARISING OUT OF PURCH ASE AND SALE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS. THUS,PROFIT ON SALE OF SHARES ,AMOUNTING TO RS.60.86 LAKHS,SHOWN AS STCG WAS TREATED AS BUSINESS INCOME.HE ALSO INITIAT ED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. AS PER THE AO THE ASSESSEE DID NOT FILE ANY EXPLANATION WITH REGARD TO THE SHOW-CAUSE NOTICE ISSUED FOR IMPOSING PENALTY.HE HELD THAT THE ASSESSEE HAD OFFERED INCOME FROM SALE OF S HARES FOR TAXATION AT CONCESSIONAL RATE I.E. UNDER THE HEAD SHORT-TERM CAPITAL GAINS,THAT ASSESS EE HAD FURNISHED INACCURATE PARTICULARS. HE LEVIED A PENALTY OF RS.13.79 LAKHS UNDER SECTION 27 1(1)(C) OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HER, THE ASSESSEE ARGUED THAT PENALTY WAS LEVIED ON THE GROUND THAT ASSESSEE HAD OFFERED INCOME ON SALE OF SHARES HELD AS INVESTMENT UNDER THE HEAD 3078/M/15AMIT P.PANDYA 2 CAPITAL GAINS, THAT SAME WAS TO BE ASSESSED UNDER T HE HEAD PROFIT AND GAMES OF BUSINESS, THAT THERE WAS NO ADDITION TO TOTAL INCOME OF THE ASSESS EE,THAT HE BECAME LIABLE TO PAY TAX ONLY ON ACCOUNT OF DIFFERENCE IN RATE OF TAX ON THE INCOME, THAT THERE WAS NEITHER A CASE OF CONCEALING PARTICULARS OF INCOME NOR THAT OF FURNISHING INACCU RATE PARTICULARS OF INCOME, THAT NO PENALTY WAS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. HE RELIED UPON THE CASE OF INDERSON LEATHER (P.) LTD. (196 TAXMAN 103).AFTER CONSIDERING THE SU BMISSION OF THE ASSESSEE AND THE PENALTY ORDER, THE FAA REFERRED TO THE CASES OF EVERGREEN I NVESTMENTS AND SERVICES PRIVATE LTD. (ITA/4313/MUM/2012,DATED 22/ 01/2014),AURIC INVESTM ENT AND SECURITIES LTD. (310ITR121)AND HELD THAT THE ONLY ISSUE OF CONTENTI ON FOR IMPOSITION OF PENALTY WAS TREATMENT OF CAPITAL GAINS AS BUSINESS INCOME BY TH E AO, THAT IT WAS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME.RELYING UPON TH E CASES OF KANBAY SOFTWARE INDIA (P) LTD. (31SOT 153)AND EVERGREEN INVESTMENTS AND SERVICES P RIVATE LTD.(SUPRA),SHE HELD THAT WHERE TWO VIEWS WERE POSSIBLE AND THE ISSUE WAS ONLY REGA RDING THE TREATMENT AS TO UNDER WHICH HEAAD THE INCOME WAS TO BE TAXED, PENALTY UNDER SEC TION 271(1)(C) SHOULD NOT BE IMPOSED. FINALLY,SHE ALLOWED THE APPEAL FILED BY THE ASSESSE E. 4. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE (DR) RELIED UPON THE ORDER OF THE AO. NONE APPEARED ON BEHALF OF THE ASSESSEE, AS MENTIONED EARLIER. WE FIND THAT THE AO HAD IMPOSED THE PENALTY UNDER S ECTION 274 R.W.S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS, THAT THE AO HAD TREATED THE SHORT-TERM CAPITAL GAINS AS BUSINESS INCOME. IN OUR OPINION THE ACTION OF THE A O WAS NOT. THE DIFFERENCE OF OPINION ABOUT THE HEAD OF INCOME UNDER WHICH IT SHOULD BE T AXED CANNOT BE BASIS FOR LEVYING PENALTY FOR FURNISHING INACCURATE PARTICULARS. AS THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY AND IS SUPPORTED BY THE CASES CITED BY HER, SO, CONFIRMING THE SAME WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FI LED BY THE AO STANDS DISMISSED. !'# $%& . ORDER PRONOUNCED IN TH E OPEN COURT ON 06 TH JANUARY, 2017. , 2017 SD/- SD/- ( $ / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06.01.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 3078/M/15AMIT P.PANDYA 3 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.