SHRI Jitendra Kumar Rupani, Indore V. THE ACIT-2(1), Indore

ITA 361/IND/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5847 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Capital asset; Business income; Earning of tax free income; Question of law; Speculation loss; Accommodation entries; Speculative transactions; Set aside; Capital Gains
• Section: 143(3); 133A; 14A; 131; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.400/IND/2013 & ITA NO.361/IND/2016 ASSESSMENT YEAR: 2007-08 SHRI DHANISH RUPANI , AMRISH RUPANI, & ANILA RUPANI ( LEGAL HEIRS OF LATE SHRI JITENDRA KUMAR RUPANI) 7, SHIV VILAS PALACE, RAJWADA CHOWK, INDORE (M.P.) / VS. A CIT - RANGE - 2, INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. ABTPR3509B APPELLANT BY SHRI S.S. DESHPANDE , CA RESPONDENT BY SHRI R.P. MOURYA, SR. DR DATE OF HEARING: 12.11.2018 DATE OF PRONOUNCEMENT: 13.12.2018 / O R D E R PER KUL BHARAT, J.M: THESE TWO APPEALS BY THE ASSESSEE ARE AGAINST TWO D IFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- I, INDORE DATED 24.04.2013 & 29.01.2016 PERTAINING TO A.Y. 2007-08 IN RESPECT OF QUANTUM PROCEEDING AND PENALTY PROCEEDINGS RESPECTI VELY. BOTH THE APPEALS WERE TAKEN UP FOR HEARING TOGETHER AND ARE BEING DISPOSED J ITENDRA KUMAR RUPANI 2 OF BY WAY OF CONSOLIDATED ORDER FOR THE SAKE OF CON VENIENCE AND BREVITY. FIRST, WE TAKE UP ASSESSEES APPEAL IN ITA NO.400/I ND/2013 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEA L: 1. THE LD. CIT(A) HAS ERRED IN MAINTAINING THE ADDIT ION OF RS. 35,00,0001- IN THE NAME OF M/S. ALPINE AGROTECH LIMITED. COMPLETE DETAILS WERE FILED BEFORE THE LD. CIT (A) INCLUDING THE BANK STATEMENTS AND THE BALANCE SHEET WHICH CLEARLY SHOWED THAT THE LOANS WERE GENUINE. 1.1 THE LD. CIT (A) OUGHT TO HAVE REMANDED THE MATTER TO THE LD. AO FOR VERIFICATION FOR ISSUING NOTICE U/S. 131 AND CON FORMING THE TRANSACTION. THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE ASSESSEE SINCE HE WAS INFORMED THAT THE MATTER OF LU NKAD GROUP IS SUBJUDICE AND PENDING BEFORE THE HON. HIGH COURT. 1.2 THE ADDITION OF RS. 35,00,000/- AND THE ALLEGED EXPENSES OF RS. 1,75,0001- MAY PLEASE BE DELETED. 2. THE LD. CIT (A) HAS ERRED IN DISALLOWING RS. 16,55,914/- BEING THE CLAIM OF SHORT TERM CAPITAL LOSS AND TREATING THE T RANSACTION AS A SPECULATIVE BUSINESS. COMPLETE DETAILS WITH THE BRO KEN NOTES WERE FILED AND AS SUCH THE CLAIM SHOULD HAVE BEEN ALLOWED. 3. THE LD. CIT (A) HAS ERRED IN DISALLOWING THE CLAIM OF RS. 7,62,0531- BEING THE INTEREST AND SIT U/S. 14A. THE DISALLOWANCE IS TOTALLY UNCALLED FOR AND HENCE BE DELETED. 2. GROUND NOS. 1 TO 1.2 ARE AGAINST CONFIRMING THE AD DITION OF RS.35,00,000/- MADE U/S 68 OF THE ACT 3. BRIEF FACTS GIVING RISE TO PRESENT APPEAL ARE TH AT THE RETURN OF INCOME PERTAINING TO ASSESSMENT YEAR UNDER APPEAL W AS FILED ON 02.04.2008 DECLARING TOTAL INCOME OF RS.97,62,200/- . THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS TH E ACT) WAS FRAMED VIDE ORDER DATED 04.12.2009. DURING THE ASSE SSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE J ITENDRA KUMAR RUPANI 3 ENTERED INTO CERTAIN SHARE TRANSACTIONS WHICH WERE CLAIMED AS SHORT TERM CAPITAL GAIN. THE ASSESSING OFFICER OBSERVED T HAT THE ASSESSEE HAD INCURRED NET LOSS OF RS.16,54,914/-. HE WAS OF THE VIEW THAT THESE TRANSACTIONS ARE BEING SPECULATIVE IN NATURE AND TREATED AS SUCH. THE ASSESSING OFFICER ALSO MADE DISALLOWANCE U/S 14A OF RS.7,20,428/- THE INTEREST ADDED TO THE SHORT TERM CAPITAL GAIN BEING NOT ALLOWABLE AS EXPENDITURE. FURTHER, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE RECEIVED A SUM OF RS.35, 00,000/- AS UNSECURED LOAN FROM ALPINE AGROTECH LTD. IT WAS NOT ICED THAT THIS COMPANY WAS A GROUP COMPANY OF LUNKAD GROUP OF COMP ANY WHEREIN ON INVESTIGATION IT WAS FOUND THAT THIS GRO UP WAS INVOLVED IN GIVING ACCOMMODATION ENTRIES. THEREFORE, THE ASS ESSING OFFICER TREATING THE UNSECURED LOAN AS NOT GENUINE, MADE AD DITION OF RS.1,75,000/- IN RESPECT OF THE EXPENSES INCURRED O N RECEIVING THE ACCOMMODATION ENTRIES OF RS.35,00,000/- @ 5% AMOUNT ING TO RS.1,75,000/-. AGGRIEVED BY THIS THE AASSESSEE PREF ERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUB MISSIONS AND THE FACTS ON RECORD CONFIRMED THE FINDINGS OF THE ASSES SING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THI S TRIBUNAL. APROPOS GROUND NOS. 1 TO 1.2 5. LD. COUNSEL FOR THE ASSESSEE SHRI S.S. DESHPANDE REITERATED THE SUBMISSION AS MADE IN THE WRITTEN SUBMISSIONS. IT I S SUBMITTED THAT WHILE FRAMING THE ASSESSMENT, THE ASSESSING OF FICER MADE ADDITION U/S 68 OF THE ACT ON ACCOUNT OF CREDIT OF RS.35,00,000/- IN J ITENDRA KUMAR RUPANI 4 THE NAME OF M/S. ALPINE AGROTECH LTD.. HE IS CONTEN DED THAT THE ASSESSING OFFICER MADE RELIANCE ON THE FINDING OF T HE SURVEY CONDUCTED U/S 133A OF THE ACT AT THE BUSINESS PREMI SES OF THE CREDITOR. HE SUBMITTED THAT THE CONFIRMATION OF THE SAID CREDITOR WAS DULY FILED WHICH CATEGORICALLY STATED THAT THE AMOUNT HAVING BEEN RECEIVED BY CHEQUE. HE SUBMITTED THAT THE CONF IRMATION OF THE ADDITION IS PURELY BASED UPON THE FACT THAT THE ASS ESSEE COULD NOT PRODUCE THE DIRECTORS OF THE CREDITOR COMPANY. HE S UBMITTED THAT THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT THAT THE CREDIT HAVE BEEN ROUTED THROUGH PROPER BANKING CHANNEL AND IS VERIFIABLE FROM THE BOOKS OF ACCOUNTS OF THE SAID PARTY WHICH WERE SEIZED BY THE DEPARTMENT. LD. COUNSEL SUBMITTED THAT THE ASSE SSEE CANNOT FORCE THE CREDITOR TO APPEAR BEFORE THE REVENUE AUT HORITIES. HE SUBMITTED THAT SUFFICIENT AUTHORITY HAS BEEN CONFER RED ON THE REVENUE AUTHORITIES TO FORCE ATTENDANCE OF THE CRED ITOR. HE SUBMITTED THAT THE AO FAILED TO EXERCISE SUCH POWER . HE SUBMITTED THAT THE ADDITION SO MADE ON THE BASIS OF WHIMS CAN NOT BE SUSTAINED. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE AUTHORITIES BELOW HE SUBMITTED THAT IT IS INCUMBENT UPON THE ASSESSEE TO PROVE THE GENUINENESS OF TRANSACTION. H E SUBMITTED THAT AB INITIO THE GENUINENESS OF TRANSACTION IS SHROUDE D UNDER THE CLOUD. THE ASSESSEE HAS FAILED TO DISPEL THE SUSPIC ION BY PLACING PLAUSIBLE EVIDENCE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ALLEGATION OF REVENUE IS T HAT THE J ITENDRA KUMAR RUPANI 5 TRANSACTION IN QUESTION IS NOT GENUINE TRANSACTION. IT IS MERELY AN ACCOMMODATION ENTRY. THE ACTIONS OF THE ENTRY PROVI DED I.E. CREDITOR HEREIN ARE SHROUDED UNDER THE CLOUD OF DOUBT. IT IS TRUE THAT ACCOMMODATION ENTRY IS ONE OF THE TOOLS USED TO EVA DE TAX BY THE DISHONEST TAXPAYERS. IT IS ALSO A GREAT THREAT TO E CONOMIC FABRIC OF ANY COUNTRY. IT HAS LATELY BEEN NOTICED BY THE INVE STIGATING AGENCIES THAT THERE IS RAMPANT USAGE OF ACCOMMODATION ENTRY BY THE DISHONEST TAXPAYERS. UNDER SUCH A SITUATION WHERE A N HONEST TAXPAYER IS FASTENED BY INCREASED LIABILITY OF TAXE S IN THE FORM OF TAXES I.E. TAX, CESS OR DUTY. THE DISHONEST TAXPAYE R ESCAPES THROUGH CIRCUITOUS ROUTES LAID ON UNCLEAR LEGISLATION. TO C URB SUCH PRACTICES AND TO ENSURE THE DUE TAXES ARE COLLECTED NO LENIEN CY IS TO BE ADOPTED IN MAKING INVESTIGATION OF SUCH CASES. 8. IN THE PRESENT CASE, THE ASSESSING OFFICER HAD M ADE ADDITION ON THE GROUND THAT CERTAIN ACCOMMODATION ENTRIES WERE UNEARTHED ON THE BASIS OF A SURVEY CONDUCTED AT THE PREMISES OF M/S. LUNKAD GROUP AND ITS GROUP ENTITIES. THE ASSESSING OFFICER HAD EXPLAINED THE MODUS OPERANDI OF THE TRANSACTION. IT IS ALSO N OTICED THAT THE CREDITOR HAD NOT FILED RETURN OF INCOME BOTH ASSESS MENT YEARS 2006- 07 & 2007-08. IT WAS ALSO NOTICED BY THE AUTHORITIE S BELOW THAT THE DIRECTION ISSUED BY THIS TRIBUNAL WERE NOT COMPLIED WITH. AFTER CONSIDERING TOTALITY OF THE FACT AND MATERIAL PLACE D BEFORE US. WE DO NOT FIND ANY INFIRMITY INTO THE FINDING OF THE AUTH ORITIES BELOW. GROUND NO. 1 & 1.2 OF THE ASSESEES APPEAL ARE DISM ISSED. 9. GROUND NO.2 IS AGAINST DISALLOWING THE CLAIM OF THE ASSESSEE BEING SHORT TERM CAPITAL LOSS. J ITENDRA KUMAR RUPANI 6 10. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. HE SUBMITTED THAT THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE G ROUND THAT THE STT CERTIFICATE FROM ONE BROKER HAS NOT PRODUCED AND SH ARE TRANSACTIONS TREATED AS SPECULATIVE LOSS. THE ASSES SING OFFICER ACCEPTED THE DEALING OF SHREE PRECOATED STEELS LTD. HOWEVER, THE ASSESSING OFFICER UPHELD THE FINDING ON THE GROUND THAT BROKER NOTES WERE NOT PRODUCED BUT THE ASSESSEE HAS FAILED TO PR OVE THAT SHARES HAVE BEEN SOLD AFTER TAKING DELIVERY OF THE SHARE P URCHASED. IT WAS CONTENDED BEFORE THE LOWER AUTHORITIES THAT COMPLET E DETAILS OF SHAREHOLDING WAS FILED HE DREW OUR ATTENTION PAGES 47 TO 53 OF THE PAPER BOOK. HE SUBMITTED THAT IN MAJORITY OF THE CA SES HOLDING OF SHARE HAVE BEEN MORE THAN 30 DAYS AND AS SUCH LOSS SHOULD HAVE BEEN ADJUSTED AGAINST THE LONG TERM CAPITAL GAINS. 11. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE AUTHORITIES BELOW. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED MATERIAL ON RECORD. THE ASSESSING OFFICER DISALLOWED THE CLA IM OF THE ASSESSEE ON THE BASIS THAT THE ASSESSEE HAS INDULGED IN 40 S HARES TRANSACTIONS. THE ASSESSEE HAS NOT PRODUCED DE-MAT ACCOUNT RELATING TO THESE SALES CERTIFICATE FROM ONE BROKER . THEREFORE, CONCLUDED THAT THESE ARE THE TRANSACTIONS RELATED T O SPECULATION BUSINESS AND TREATED LOSS OF RS.16,54,914/- AS SPEC ULATION LOSS FOR THE YEAR UNDER CONSIDERATION. 13. LD. CIT(A) CONFIRMED THIS FINDING ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH THAT THESE SHARES WERE SOLD AFTER TAKING J ITENDRA KUMAR RUPANI 7 OF DELIVERY OF THESE SHARES SO PURCHASED. THE CONTE NTION OF THE ASSESSEE IS THAT THESE TRANSACTIONS CANNOT BE TREAT ED AS SPECULATIVE TRANSACTIONS AS THE ASSESSEE HAS HELD THE SHARES IN MAJORITY OF THE CASE FOR MORE THAN 30 DAYS. THE ISSUE OF DISPUTE IS WITH REGARD TO TREATING TRANSACTIONS AS RELATED TO SPECULATIVE BUS INESS. LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMEN T OF HON'BLE M.P. HIGH COURT RENDERED IN THE CASE OF CIT VS. OM PRAKASH SURI (2013) 359 ITR 39 (MP) WHEREIN HON'BLE HIGH COURT H ELD AS UNDER: HAVING HEARD THE LEARNED SENIOR COUNSEL FOR THE APPE LLANT, WE FIND THAT THE COMMISSIONER OF INCOME TAX(APPEALS) AS ALS O THE TRIBUNAL, AFTER DUE APPRECIATING ALL THE FACTS, HAVE CORRECTLY RECORDED THE FINDING THAT THE DELIVERY BASED TRANSACTIONS WERE MADE WITH AN INVESTMENT MOTIVE AND AS SUCH THE INCOME THEREFROM W AS IN THE NATURE OF SHORT TERM CAPITAL GAINS WHEREAS THE INCO ME FROM F & O TRANSACTIONS AND DAILY TRADING IN SHARE WERE WITH TH E BUSINESS MOTIVE, WHICH WERE SHOWED AS BUSINESS INCOME ONLY, W HICH WERE MAINLY THROUGH STOCK BROKER ARIHANT CAPITAL MARKET LTD. REGISTERED WITH THE NSC, NSE AND BSE. THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL HAVE CONSIDERED THE BOARD CI RCULAR NO.4 OF 2007, DATED JUNE 15, 2007, EMPHASIZING THAT IT IS POSSIBLE FOR A TAXPAYERS TO HAVE TWO PORTFOLIOS, NAMELY, AN INVEST MENT PORTFOLIO COMPRISING THE SECURITIES, WHICH ARE TO BE TREATED A S CAPITAL ASSETS AND TRADING PORTFOLIO COMPRISING STOCK-IN-TRADE, WHI CH ARE TO BE TREATED AS TRADE ASSET. THE CLARIFICATION ISSUED BY T HE BOARD WAS ALSO CONSIDERED, STATING THEREIN THAT NO SINGLE PRIN CIPLE WOULD BE DECISIVE AND THE TOTAL PROPOSITION IS TO BE CONSIDERE D. THE AUTHORITIES BELOW HAVE TAKEN INTO CONSIDERATION THAT THE RESPONDE NT-ASSESSEE HAD MAINTAINED ONLY TRADE PORTFOLIO AND CLAIMED THAT TO BE AN INVESTMENT PORTFOLIO AND UNDISPUTEDLY, THE PERIOD OF HOLDING LESS THAN ONE YEAR. HAVING REGARD TO THE AFORESAID, THE C OMMISSIONER OF INCOME TAX(APPEALS) AND THE TRIBUNAL HAVE HELD THAT T HERE IS NO INFIRMITY IN HOLDING THAT THESE TRANSACTIONS WOULD B E TREATED AS SHORT TERM CAPITAL GAINS. IN VIEW OF THE AFORESAID FINDING OF FACT RECORDED BY THE COMMISSIONER OF INCOME TAX(APPEALS) AFFIRMED BY THE TRIBUNAL, WE FIND NO GROUND MUCH LESS SUBSTANTIAL QUESTION OF LAW, IN THE MATTE R. J ITENDRA KUMAR RUPANI 8 14. ADMITTEDLY, ASSESSING OFFICER REJECTED THE CLAI M ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH THE BROKER NOTE S EVIDENCE OF STT PAID AFTER CONSIDERING THE TOTALITY OF THE FACTS AN D THE EVIDENCES PLACED BEFORE US. THE ASSESSEE HAS DEMONSTRATED THA T MAJORITY OF THE TRANSACTIONS UPHOLDING PERIOD OF SHARES IS MORE THAN 30 DAYS. THEREFORE, UNDER THESE FACTS OF THE PRESENT CASE, T HE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE BEING SHORT TERM CAPITAL LOSS WITHOUT MAKING VERIFICATION . WE THEREFORE SET ASIDE THE FINDING ON THIS ISSUE AND RESTORE THE ISS UE TO AO FOR VERIFICATION. IF THE CLAIM IS FOUND IN ORDER THE AS SESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE. THIS G ROUND IS ALLOWED FOR STATISTICAL PURPOSED ONLY. 15. GROUND NO.3 IS AGAINST DISALLOWING THE CLAIM OF RS. 7,62,053/- WHILE INVOKING THE PROVISIONS OF SECTION U/S 14A OF THE ACT. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS AS MADE IN THE WRITTEN SUBMISSIONS. IT IS CONTENDED THAT THE A SSESSEE HAS CLAIMED THE DEDUCTION OF INTEREST FROM THE SHORT TE RM CAPITAL GAINS AND NOT FROM THE BUSINESS INCOME. THE QUESTION OF D ISALLOWING THE SAME U/S 14A DOES NOT ARISE. IT IS FURTHER SUBMITTE D THAT THE LD. AO HAS TAKEN THE GROSS AMOUNT OF CAPITAL GAINS WHIL E COMPUTING THE INCOME. THUS THE CLAIM OF THE ASSESSEE ABOUT TH E DEDUCTION IS NOT CONSIDERED AT ALL AND THE ADDITION HAS BEEN MAD E FOR DISALLOWANCE OF THE CLAIM. IT IS SUBMITTED THAT THE DOUBLE ADDITION HAS BEEN MADE ONCE BY NOT CONSIDERING THE CLAIM OF THE ASSESSEE BY TAKING THE GROSS AMOUNT OF CAPITAL GAIN AND SECONDL Y BY DISALLOWING THE CLAIM OF THE ASSESSEE. HE SUBMITTED THAT THE CL AIM OF INTEREST OF J ITENDRA KUMAR RUPANI 9 RS.6,45,916/- MAY PLEASE BE ALLOWED SINCE THE INTER EST HAS BEEN PAID ON THE BORROWING FOR PURCHASE OF SHARES. HE SU BMITTED THAT STT OF RS.1,16,136/- HAS ALSO BEEN ADDED WHILE COMP UTING THE INCOME WHEN THE GROSS INCOME IS CONSIDERED. HE SUBM ITTED THAT WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE HAS A CAPITAL OF HIS OWN OF MORE THAN RS.65,00,000/- INCLUDING THE PROFI T HENCE THE DISALLOWANCE IS OTHERWISE THAN. 16. ON THE CONTRARY THE LD. DR OPPOSED THE SUBMISSI ONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 17. WE HAVE CONSIDERED THE RIVAL CONTENTIONS ONE OF THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE WAS HAVING SUF FICIENT OWN FUNDS FOR MAKING INVESTMENT IN SHARES ANOTHER CONTENTION OF THE ASSESSEE IS THAT THE INVESTMENT WAS MADE IN SHARES WHERE CAP ITAL GAIN IS CLAIMED, THEREFORE, IT IS NOT THE CASE OF EARNING O F EXEMPT INCOME. 18. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE FACT BEFORE US. THE CONTENTION OF THE ASSESSEE REQUIRES VERIFIC ATION WHETHER IT HAD SUFFICIENT OWN FUNDS TO MAKE INVESTMENTS. THE A O WOULD VERIFY, IN CASE THE AO FIND THE INVESTMENT HAVE BEEN MADE O UT OF OWN FUNDS, HE WOULD DELETE THE ADDITION. FURTHER THE AS SESSING OFFICER SHOULD ALSO VERIFY THE CLAIM OF THE ASSESSEE WITH R EGARD TO CLAIM OF SHORT TERM CAPITAL GAINS THIS GROUND OF THE ASSESSE ES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSED. NOW WE TAKE ASSESSEES APPEAL IN ITANO.361/IND/2016 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: J ITENDRA KUMAR RUPANI 10 1. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE PENALTY OF RS.1,00,000/- U/S 271B. THE LEVY OF PENALTY IS ILLE GAL AND BAD IN LAW. 2. IT WAS PROVED BEFORE THE LOWER AUTHORITIES THAT T HE AO HIMSELF HAS TREATED THE DEALING IN SHARES AS A CAPITAL GAIN. THE STT CERTIFICATE FOR THE MAJOR PORTION OF THE TRANSACTIONS WAS FILED. 3. THE ASSESSEE HAS GOT THE ACCOUNTS AUDITED FOR THE BUSINESS OF THE CLOTH AND AS SUCH THERE WAS NO DEFAULT. 4. THE PENALTY LEVIED MAY PLEASE BE CANCELLED. 20. THE FACTS GIVING RISE TO THE APPEAL ARE THAT TH E ASSESSING OFFICER IMPOSED THE PENALTY OF RS. 1,00,000/- U/S 271B OF T HE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) VIDE ORD ER DATED 25.06.2010, ON THE BASIS THAT THE ACCOUNTS WERE NOT AUDITED, THE LD. CIT(A) CONFIRMED THIS PENALTY BY OBSERVING AS UNDER : THE GROSS TURNOVER FROM SALE OF SECURITIES AS SHOW N BY THE ASSESSEE COMES TO RS.5,97,16,709/- WHICH IS ABOVE RS.40 LAKH S. SECTION 44AB REQUIRES TO GET ONES BOOKS OF ACCOUNTS AUDITED IF THE GROSS TURNOVER/RECEIPTS EXCEED RS.40 LAKHS IN A YEAR AND TO FURNISH AUDIT REPORT BEFORE THE SPECIFIED DATE. IN THE CASE NEITHE R BOOKS OF ACCOUNT WERE AUDITED NOR HAS AUDIT REPORT BEEN SUBMITTED. SO ASSESSEE MADE HIMSELF LIABLE FOR PENALTY U/S 271B. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM SATISFIED THAT ASSESSEE HAS VIOLATED THE PROVISION OF SECTION 44AB. PENALTY LEVIABLE IN THIS CASE COMES TO RS.2,98,584/- BEING % OF THE GROSS TURNOVER OF RS.5,97,16,709/-. HOWEVER THE MAXIMUM P ENALTY LEVIABLE IN THIS CASE IS RS.1,00,000/-. I THEREFORE , LEVY A PENALTY OF RS.1,00,000/- (RS. ONE LAKSH ONLY) ON THE ASSESSEE. 21. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSE SSING OFFICER HAS HIMSELF TREATED THE DEALING IN SHARES AS CAPITAL GA IN. THE STT CERTIFICATE, MAJOR TRANSACTION OF COMPANY WAS FILED . IT IS CONTENDED THAT ACCOUNTS OF THE BUSINESS ACTIVITY OF THE ASSES SEE ARE DULY AUDITED. SINCE THE TRANSACTIONS IN THE SHARES WERE IN RESPECT OF THE INVESTMENTS, THEREFORE, IT WAS NOT REQUIRED BY THE ASSESSEE TO GET THE ACCOUNTS AUDITED AS PER PROVISIONS OF SECTION 4 4AB. FROM THE J ITENDRA KUMAR RUPANI 11 ASSESSMENT ORDER WE FIND THAT THE ASSESSING OFFICER HAS COMPUTED INCOME FROM HOUSE PROPERTY, FROM SHARE TRANSACTIONS TREATED AS SPECULATED BUSINESS AND SHORT TERM CAPITAL GAIN. 22. SINCE IN ITANO.400/IND/2013, THE ISSUE OF SHARE TRANSACTIONS BEING SPECULATIVE IN NATURE HAS BEEN RESTORED TO TH E FIND OF ASSESSING OFFICER, THEREFORE, THE PENALTY LEVIED IS DELETED. HOWEVER, THE AO WOULD BE AT THE LIBERTY TO IMPOSE THE PENALT Y IF HE FIXED THAT THE TRANSACTIONS ARE OF SPECULATIVE IN NATURE. 23 . IN THE RESULT, BOTH THE APPEAL OF ASSESSEE IN ITANO.400/IND/2013 & ITANO.361/IND/2016 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 .12. 2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 13/ 12/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE