ITO 12(2)(4), MUMBAI V. H.B. VASWANI, MUMBAI

ITA 3864/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83529 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 1999-2000
• Appeal Filed On: 15-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KISHORE CHAUDHARI
• Keywords: Business income; Question of law

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI .., ! , ' , # BEFORE SHRI I.P.BANSAL, JM AND SHRI RAJENDRA, AM ITA NO.3864/MUM/2013 (A.Y. 1999-2000) INCOME-TAX OFFICER 12(2)(4), ROOM NO.123, 1 ST FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400020 SHRI H.B.VASWANI, VASWANI GARDENS, 25, SOBANI ROAD, CUFFE PARADE, COLABA, MUMBAI 400 021 PAN: AAEPV 3344G ( $% / // / APPELLANT) ' ' ' ' / VS. ( ()$%/ RESPONDENT) $% * + * + * + * + /APPELLANT BY : SHRI JAVED AKHTAR ()$% * + * + * + * + /RESPONDENT BY : SHRI KISHORE CHAUDHARI ' * ,-' / / / / DATE OF HEARING : 25.8.2014 ./0 * ,-' / DATE OF PRONOUNCEMENT : 25.08.2014 1 1 1 1 / / / / O R D E R PER I.P.BANSAL (JM) : THIS IS AN APPEAL FILED BY THE REVENUE AND IT IS D IRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-23 MUMBAI DATED 28/2/2013 FOR ASSESSMENT YEAR 1999-2000. GROUNDS OF APPEAL READ AS UNDER: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AC. TO DELETE THE PEN ALTY U/S 271(I)(C ) AND HOLDING THAT THE AD. HAD NOT BROUGHT ANY MATERIAL T O JUSTIFY THAT THERE WAS CONCEALMENT OF INCOME ON FILING OF INACCURATE PARTI CULARS WHEN NO SUCH ONUS HAS BEEN CAST UPON THE ASSESSING OFFICER UNDER THE PROVISIONS OF INCOME-TAX ACT. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HELD THAT PROFIT ON SHARE TRANSACTIONS BEING TREATED AS BUSINESS INCOME AS AGAINST STCG THERE IS NO DIFFERENCE IN QUANTUM O F INCOME IE .ONLY THE HEAD OF INCOME HAS UNDERGONE THE CHANGE AS A RESULT OF ASSESSMENT, HOWEVER HE HAS FAILED TO APPRECIATE THAT THE AC HAD CLEARLY MENTIONED THAT THE TREATMENT OF STCG AS SPECULATION BUSINESS INCOME HA S RESULTED IN NOT ALLOWING ADJUSTMENT OF LONG TERM CAPITAL LOSS WHICH WAS SET OFF BY THE ASSESSEE. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HELD THAT THE DISCLOSURE MADE IN THE RETURN OF INCOME HAS NOT BEEN FOUND TO BE FALSE OR MISLEADING AND THAT IT CANNOT BE DENIED THAT THERE IS NO ITA NO.3864/MUM/2013 (A.Y. 1999-2000) 2 FAILURE ON THE PART OF THE ASSESSEE TO MAKE FULL AN D TRUE DISCLOSURE OF ALL MATERIAL FACTS AND ANY EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE, HOWEVER HE HAS FAILED TO APPRECIATE THAT THE AD HAD CLEARLY INDICATED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMA RY ONUS TO ESTABLISH THE FACT THAT HE HAS TAKEN DELIVERY OF THE SHARES EVEN THOUG H SHE WAS IN THE KNOWLEDGE OF THE AFFAIRS, A FACT WHICH WAS NOT ONLY RELEVANT BUT MATERIAL FOR COMPUTATION OF INCOME. (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THOUGH THE ASSESSE E WAS AWARE OF THE FACTS THAT WITHOUT TALKING UPON THE PHYSICAL DELIVERY ACC OUNT FOR SPECULATIVE TRANSACTION, HAS OFFERED THE PROFIT EARNED UNDER TH E HEAD SHORT TERM CAPITAL GAINS WHICH HAS RESULTED IN FURNISHING OF INACCURAT E PARTICULARS OF INCOME. (V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD F AILED TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM AND FURTHER TO PROVE THE BONAFIDE OF SUCH EXPLANATION AND THUS LEVY OF PENALTY HAS BEEN SQUAR ELY COVERED BY CLAUSE (B) OF EXPLANATION 1 TO SECTION 271(1)(C) AND NOT BY CL AUSE (A) OF EXPLANATION TO SECTION 271(I)(C). 2. AT THE OUTSET IT WAS POINTED OUT BY LD. AR THAT THE ISSUE RAISED BY THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE AS THE HONBLE HIGHT COURT HAS ADMITTED THE QUESTION OF LAW IN THE QUANTUM PROCEE DINGS. HE IN THIS REGARD REFERRED TO THE ORDER OF HONBLE BOMBAY HIGH COURT DATED 14/2/2013 IN INCOME TAX APPEAL NO.1838 OF 2011, WHEREBY THEIR LORDSHIPS HAV E ADMITTED THE FOLLOWING QUESTION OF LAW IN THE QUANTUM PROCEEDINGS. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE TRIBUNAL WAS JUSTIFIED IN TREATING THE INCOME OF TH E APPELLANT FROM THE SALE OF THE SHARES AS BUSINESS INCOME AS AGAINST INCOME FR OM SHORT TERM CAPITAL GAIN DECLARED IN THE RETURN OF INCOME FILED BY THE APPEL LANT? 3. LD. AR SUBMITTED THAT WHEN THE QUESTION OF LAW H AS BEEN ADMITTED IN THE QUANTUM PROCEEDINGS THEN AS PER DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NAYAN BUILDERS & DEVELOPERS(ORDER D ATED 8/7/2014) IN I.T. APPEAL NO.415 OF 2012 NO CONCEALMENT PENALTY CAN BE LEVIE D. THE OBSERVATION OF THEIR LORDSHIPS IN THE SAID DECISION ARE AS FOLLOWS AND C OPY WAS PLACED ON OUR RECORD. HAVING HEARD MR. AHUJA, LEARNED COUNSEL APPEARING ON BEHALF OF THE APPELLANT, WE FIND THAT THIS APPEAL CANNOT BE ENTERTAINED AS IT DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. THE IMPOSITION OF PENALTY WAS FOU ND NOT TO BE JUSTIFIED AND THE APPEAL WAS ALLOWED. AS PROOF THAT THE PENALTY WAS DEBATAB LE AND ARGUABLE ISSUE, THE TRIBUNAL REFERRED TO THE ORDER ON ASSESSEES APPEAL IN QUANTUM PROCEEDINGS AND THE ITA NO.3864/MUM/2013 (A.Y. 1999-2000) 3 SUBSTANTIAL QUESTIONS OF LAW WHICH HAVE BEEN FRAME D THEREIN. WE HAVE ALSO PERUSED THAT ORDER DATED 27 TH SEPTEMBER 2010 ADMITTING INCOME TAX APPEAL NO.2368 OF 2009. IN OUR VIEW, THERE WAS NO CASE MADE OUT OF IMPOSITI ON OF PENALTY AND THE SAME WAS RIGHTLY SET ASIDE. THE ARISES NO SUBSTANTIAL QUEST ION OF LAW, IT IS DISMISSED. NO COST. 4. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, AS THE QUESTION OF LAW IN QUANTUM PROCEEDINGS HAS ALREADY BEEN ADMIT TED BY THEIR LORDSHIPS, THE ISSUE BECAME DEBATABLE AND ARGUABLE. RELYING THE A FOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COURT WE DECLINE TO INTERFERE I N THE ORDER OF LD. CIT(A) VIDE WHICH IMPUGNED CONCEALMENT PENALTY HAS BEEN DELETED . 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH AUG., 2014. 1 * ./0 2'3 25.08.2014 / * : SD/- SD/- (RAJENDRA) (I.P.BANSAL) ' ' ' ' / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 2' DATED : 25 TH AUG. 2014. VM. 1 * (,; < ;0, 1 * (,; < ;0, 1 * (,; < ;0, 1 * (,; < ;0,/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. ()$% / THE RESPONDENT. 3. =() / THE CIT, MUMBAI. 4. = / CIT(A)-13, MUMBAI 5. ;@: (,' , , / DR, ITAT, MUMBAI 6. :A B / GUARD FILE. 1' 1' 1' 1' / BY ORDER, );, (, //TRUE COPY// C CC C/ // /D D D D (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI