S.P Ganesan, Chennai V. ACIT, Non Corporate Circle 10(1), Chennai

ITA 388/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1870 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C SUBRAMANIAN
• Keywords: Difference of opinion; Futures and options; Speculative transactions

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.388 & 389/CHNY/2018 ( )( / ASSESSMENT YEAR : 2007-08 & 2011-12 SHRI S.P. GANESAN, NO.1, MILLERS ROAD, KILPAUK, CHENNAI - 600 010. PAN : AADPG 3113 F V. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 10(1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI C. SUBRAMANIAN, CA -.+, / 0 / RESPONDENT BY : SHRI GURU BASHYAM, JCIT 1 / 2% / DATE OF HEARING : 07.11.2018 3') / 2% / DATE OF PRONOUNCEMENT : 16.11.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 12, CHENNAI, DATED 27.11.2017 AND PERTAIN TO ASSESS MENT YEARS 2007-08 AND 2011-12, CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT'). SINCE COMMON ISSUE ARIS ES FOR 2 I.T.A. NO.388 & 389/CHNY/18 CONSIDERATION IN BOTH THE APPEALS, WE HEARD THESE A PPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI C. SUBRAMANIAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS A MEDICAL PRACTITIONER BY PROFESSION. DURING THE ASSESSMENT YEARS UNDER CONS IDERATION, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE C LAIMED SET OFF OF LOSSES IN SHARE TRADING AGAINST THE PROFESSIONAL IN COME. THE ASSESSING OFFICER, HOWEVER, FOUND THAT THE TRANSACT IONS OF PURCHASE AND SALE OF SHARES ARE SPECULATIVE TRANSACTIONS WIT HOUT TAKING DELIVERY OF SCRIPS. ACCORDING TO THE LD. REPRESENT ATIVE, THE ASSESSEE HAS FURNISHED DETAILS OF THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES INCLUDING TRADING IN FUTURES AND OPTIONS. THE ASSESSEE SET OFF LOSSES SUFFERED IN THE SHARE TRADI NG AGAINST OTHER INCOME AND OFFERED THE NET INCOME FOR TAXATION. ME RE CLAIM OF SET OFF OF LOSSES WHILE FILING THE RETURN OF INCOME, AC CORDING TO THE LD. REPRESENTATIVE, CANNOT BE CONSTRUED TO BE EITHER FU RNISHING INACCURATE PARTICULARS OR CONCEALING ANY PART OF IN COME. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEAL S) IS NOT JUSTIFIED IN CONFIRMING THE ORDERS OF THE ASSESSING OFFICER. 3 I.T.A. NO.388 & 389/CHNY/18 3. ON THE CONTRARY, SHRI GURU BASHYAM, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE IS ENGA GED IN SPECULATIVE BUSINESS IN TRADING IN FUTURES AND OPTI ONS THROUGH BROKER M/S SHREYAS STOCK PVT. LTD. ACCORDING TO TH E LD. D.R., THE ASSESSEE DELIBERATELY FILED THE RETURN OF INCOME CL AIMING SET OFF OF LOSSES SUFFERED IN SHARE TRADING AGAINST INCOME FRO M OTHER SOURCE, THEREFORE, THE ASSESSEE HAS FURNISHED INACCURATE PA RTICULARS OF INCOME. SINCE THE ASSESSEE HAS FURNISHED INACCURAT E PARTICULARS OF INCOME WITH REGARD TO NATURE OF SHARE TRADING TRANS ACTIONS, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIG HTLY CONFIRMED THE ORDERS OF THE ASSESSING OFFICER. ON A QUERY FR OM THE BENCH, THE LD. D.R. CLARIFIED THAT THE ASSESSEE HAS FURNISHED THE ENTIRE DETAILS OF SHARE TRADING TRANSACTIONS INCLUDING FUTURES AND OPTIONS AND CLAIMED SET OFF, THEREFORE, THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF INCOME. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE APART FROM BEING A MEDICAL PRACTITIONER, IS ALSO EN GAGED IN SHARE TRADING. THE ASSESSEE ADMITTEDLY SUFFERED LOSSES A ND SET OFF THOSE LOSSES SUFFERED IN TRADING IN SHARES AGAINST OTHER INCOME. THE 4 I.T.A. NO.388 & 389/CHNY/18 ASSESSING OFFICER, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE TRANSACTIONS IN PURCHASE AND SALE OF SHARES ARE SPECULATIVE TRANSACTIONS, THEREFORE, IT CANNOT BE SET OFF. THE QUESTION NOW ARISES FOR CONSIDERATION IS WHETHER MA KING OF CLAIM, NAMELY, SET OFF OF LOSSES SUFFERED IN SHARE TRADING AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR N OT? 5. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT WHICH READS AS FOLLOWS:- S.271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES , CONCEALMENT OF INCOME, ETC. - (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE PRINCIPAL COMMISSIONE R OR COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (B) .. . . . . . . . . . . . . . . . . . (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,-- (II) IN THE CASES REFERRED TO IN CLAUSE (B), IN ADD ITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM OF TEN THOUSAND RUPEES FOR EA CH SUCH FAILURE ; (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NO T BE LESS THAN, BUT WHICH SHALL NOT EXCEED 1THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTIC ULARS OF HIS 4INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS. 5 I.T.A. NO.388 & 389/CHNY/18 6. THE ASSESSING OFFICER MAY LEVY PENALTY IF HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN THIS CAS E, ADMITTEDLY, THE ASSESSEE HAS FURNISHED THE ENTIRE TRANSACTION DETAI LS BEFORE THE ASSESSING OFFICER. THE ASSESSEE CLAIMS THAT THE LO SS SUFFERED IN SHARE TRADING HAS TO BE SET OFF AGAINST THE OTHER I NCOME. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS CONCEALED ANY PART OF INCOME. THE CLAIM OF THE LD. D.R. IS THAT MAKING T HE CLAIM OF SET OFF IN RESPECT OF LOSSES SUFFERED IN SHARE TRADING AMOU NTS TO FURNISHING INACCURATE PARTICULARS OF INCOME. 7. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER MERE MAKING A CLAIM FOR SET OFF OF LOSSES IN SHARE TRADI NG AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME? T HIS ISSUE WAS CONSIDERED BY THE APEX COURT IN CIT VS. RELIANCE PE TROPRODUCTS (P) LTD. (2010) 322 ITR 158. THE APEX COURT FOUND THAT AFTER FURNISHING ENTIRE DETAILS, MAKING A CLAIM IN THE RETURN OF INC OME DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OR CONC EALING ANY PART OF INCOME. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IF THE ASSESSEE MAKES A CLAIM AFTER FURNISHING ENTIRE DETA ILS, IT IS HIS PERSONAL OPINION WITH REGARD TO INCOME-TAX. THERE MAY BE 6 I.T.A. NO.388 & 389/CHNY/18 DIFFERENCE OF OPINION WITH REGARD TO NATURE OF TRAN SACTIONS BY THE ASSESSEE AT ONE END AND OPINION OF DEPARTMENT AT OT HER END. THIS DIFFERENCE OF OPINION WITH REGARD TO NATURE OF TRAN SACTION CANNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF I NCOME AS FOUND BY THE APEX COURT IN RELIANCE PETROPRODUCTS (P) LTD. ( SUPRA). IN VIEW OF THE ABOVE WE ARE UNABLE TO UPHOLD THE ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORI TIES BELOW ARE SET ASIDE AND PENALTY LEVIED BY THE ASSESSEE FOR BOTH T HE ASSESSMENT YEARS ARE DELETED. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 16 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 16 TH NOVEMBER, 2018. KRI. 7 I.T.A. NO.388 & 389/CHNY/18 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-12, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.