ASST CIT 17(2), MUMBAI V. JUMANA GOOLAM VAHANVATI, MUMBAI

ITA 3901/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0036 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN LD
• Assessee Lawyers: NIY ANTA MEHTA LD
• Section: 143(3)

Judgement Text

ITA.NO.3901/MUM/2016 JUMANA GOOLAM VAHANVATI ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 3901/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) ASSISTANT COMMISSIONER OF INCOME-TAX 17(2) R.NO.134 AAYKAR BHAVAN M.K.ROAD MUMBAI - 400 020 / VS. JUMANA GOOLAM VAHANVATI BUCKLEY COURT, 21 ST AND 22 ND DUPLEX NO.6 NATHALAL PAREKH MARG, COLABA MUMBAI-400 039 ./ ./PAN/GIR NO. ABUPV-1085-D ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : NIY ANTA MEHTA, LD. AR REVENUE BY : M.C.OMI NINGSHEN, LD. DR / DATE OF HEARING : 22/02/2018 / DATE OF PRONOUNCEMENT : 28 /02/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2011- 12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME- TAX (APPEALS)-28 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-28/IT-236/DCIT-12(2)/2014-15 DATED 18/03/2016 QUA DELETION OF PENALTY U/S 271(1)(C) FOR RS.16,82,505/-. THE QUANTUM ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ADDITIONAL COMMISSIONER OF INCOME TAX-RANGE 12( 2) U/S 143(3) ITA.NO.3901/MUM/2016 JUMANA GOOLAM VAHANVATI ASSESSMENT YEAR 2011-12 2 ON 26/03/2014 WHEREAS IMPUGNED PENALTY U/S 271(1)(C ) WAS LEVIED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-12(2) ON 2 3/09/2014. IN THE QUANTUM ASSESSMENT, THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.3,21,05,790/- AFTER CERTAIN ADJUSTMENTS AS AGAIN ST RETURNED INCOME OF RS.3,20,85,564/- FILED BY THE ASSESSEE ON 29/12/201 1. 2. BRIEF FACTS LEADING TO IMPOSITION OF PENALTY ARE THAT DURING ASSESSMENT PROCEEDINGS IT WAS NOTED THAT THE ASSESS EE EARNED SHORT TERM CAPITAL GAIN [STCG] OF RS.1,06,25,985/- ON SALE OF SHARES OF VARIOUS COMPANIES AND OFFERED THE SAME TO TAX AT CO NCESSIONAL RATE OF TAX @15% IN TERMS OF PROVISIONS OF SECTION 111A. HO WEVER, UPON PERUSAL, IT WAS FOUND THAT STCG OF RS.108.90 LACS WAS EARNED ON SALE OF SHARES OF AN ENTITY NAMELY BSE LTD., WHICH WERE NOT LISTED SHARES AND THEREFORE, NOT ELIGIBLE TO BE TAXED AT CONCESSIONAL RATE U/S 111A. THE ASSESSEE, WHILE ACCEPTING THE SAME, SUBMITTED THAT THE SAID TRANSACTION WAS CLAIMED U/S 111A DUE TO INADVERTENT ERROR UNDER THE IMPRESSION THAT THE SHARES WERE TRADED THROUGH RECOGNIZED STOCK EXC HANGE AND SECURITIES TRANSACTION TAX [STT] WAS PAID ON THESE TRANSACTIONS. CONSEQUENTLY PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED IN THE QUANTUM ASSESSMENT ORDER AND THE ASSESSEE HAS BEEN SADDLED WITH IMPUGNED PENALTY OF RS.16,82,505/- ON 23/09/2014. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME ON VA RIOUS GROUNDS WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 18/03/2016 WHERE LD. CIT(A), AFTER CONSIDERING VARIOUS SUBMISS IONS MADE BY THE ASSESSEE DELETED THE PENALTY BY MAKING FOLLOWING OB SERVATION:- 5. DECISION : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE , GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS MADE BEFORE ME. THERE ARE T WO GROUNDS OF APPEAL BOTH ITA.NO.3901/MUM/2016 JUMANA GOOLAM VAHANVATI ASSESSMENT YEAR 2011-12 3 RELATED TO LEVY OF PENALTY AND ARE THEREFORE DISPOS ED TOGETHER FOR THE SAKE OF CONVENIENCE. 5.1 FROM THE FACTS I FIND THAT THE APPELLANT CLAIME D THAT THE STCG ARISING FROM THE SALE OF SHARES OF BSE ARE TO BE CHARGED AT A LOWER RATE OF 15% U/S 111A ON THE GROUNDS THAT THE SAID TRANSACTION OF SALE HAS SUFFE RED STT. DURING SCRUTINY IT WAS FOUND THAT THE SHARES OF BSE ARE NOT LISTED ON THE STOCK EXCHANGE AND THEREFORE HAVE NOT BEEN SOLD THROUGH ANY RECOGNIZED STOCK EXC HANGE BUT HAVE BEEN SOLD OFF MARKET IN PHYSICAL FORM AND THAT STT WAS NEVER LEVI ED ON THE TRANSACTION. BY VIRTUE OF THESE FACTS, THE STCG FELL OUT OF THE PURVIEW OF SEC 111A AND BECAME TAXABLE AT THE NORMAL RATE APPLICABLE TO STCG. THE APPELLANT A CCEPTED THIS POSITION AND PAID THE DIFFERENTIAL TAX . I ALSO FIND THAT FROM THE COMPUTATION OF INCOME F ILED BEFORE ME THAT THE TRANSACTION OF SALE OF BSE SHARES APPEA RS AT SL NO 1 IN THE TABLE OF STCG AND IS TITLED SALE OF SHARES QUANTITY 70000. OTHER DETAILS OF THIS PARTICULAR TRANSACTION SUCH AS SALE PRICE, SALE DAT E, PURCHASE PRICE, PURCHASE DATE ETC HAVE BEEN CLEARLY MENTIONED IN THE COMPUTATION. HOWEVER, IN THE COMPUTATION THE NAME OF THE SHARE IS NOT MENTIONED. HOWEVER, THERE ARE 26 OTHER TRANSACTIONS OF SALE OF LISTED SHARES WHEREIN FULL DISCLOSURE HAS BEEN MADE IN THE COMPUTATION ITSELF SUCH AS NAME OF SCRIP, QUANTITY, SALE PRICE, SALE DATE, COST PRICE, PURCHASE DATE ETC. 5.2 DURING PENALTY PROCEEDINGS, THE AO HELD THIS AC TION OF THE APPELLANT AT DECLARING THE STCG AT A LOWER RATE OF 15% AS AN INACCURATE PA RTICULAR OF INCOME AND LEVIED PENALTY ON THE DIFFERENTIAL TAX SOUGHT TO BE EVADED . THE APPELLANT ON THE OTHER HAND SOUGHT TO EXPLAIN THIS AS AN INADVERTENT ERROR WHIC H WAS NOT ACCEPTED BY THE AO. THE DISPUTE THEREFORE IS WHETHER THE CLAIM OF THE APPEL LANT IN THE COMPUTATION OF INCOME THAT THE STCG ON SALE OF BSE SHARES WAS TAXABLE @15 % U/S 111A IS AN INADVERTENT ERROR OR INACCURATE PARTICULARS OF INCOME. I FIND T HAT THE QUANTUM OF STCG ON THE SALE OF BSE SHARES HAS BEEN ACCEPTED BY THE AO. IT IS ON LY THE TAX RATE WHICH IS IN QUESTION. I FIND THAT THE FACTS OF THIS ARE ALMOST IDENTICAL TO THOSE IN THE CASE OF BENNETTE COLEMAN & CO LTD. THE HONBLE BOMBAY HIGH COURT HAS IN ITS DECISION OF BENNETTE COLEMAN & CO LTD 33 TAXMANN.COM 277 (BOM) HELD AS UNDER:- (HEAD NOTE) SECTION 271(1)(C) OF THE INCOME-TAX ACT,1961 PENA LTY FOR CONCEALMENT OF INCOME [ BONA FIDE CLAIM, DISALLOWAN CE OF] ASSESSMENT YEAR 1999-2000 ASSESSEE CLAIMED DEDUCT ION OF INTEREST ON TAX FREE BONDS ASSESSING OFFICERS ASKED ASSESS EE TO GIVE DETAILS OF INTEREST ON TAX FREE BONDS WHILE PREPARING SAI D DETAILS, ASSESSEE NOTICED THAT PER CENT GOVERNMENT OF INDIA CAPITAL INDEX BONDS PURCHASED DURING YEAR HAD BEEN CATEGORIZED AS TAX F REE BONDS AND, THEREFORE, INTEREST EARNED ON SUCH BONDS HAD ESCAPE D TAX THEREUPON ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271( 1)(C) UPON ASSESSEE TRIBUNAL AFTER RECORDED A FINDING OF FACT THAT TH ERE WAS AN INADVERTENT MISTAKE ON PART OF ASSESSEE IN CLAIMING INTEREST RE CEIVED ON GOVERNMENT OF INDIA CAPITAL INDEX BONDS AS INTEREST RECEIVED ON TAX FREE BONDS, DELETED PENALTY LEVIED UPON ASSESSEE WHETHER SINCE IT WAS NOT CONTENDED BY REVENUE THAT ABOVE FINDING OF FACT BY TRIBUNAL WAS PERVERSE, ORDER OF TRIBUNAL DESERVED TO BE UPHE LD HELD, YES [ PARA 2] [ IN FAVOR OF ASSESSEE] SECTION 271(1)(C) OF THE INCOME-TAX ACT,1961 PENA LTY FOR CONCEALMENT OF INCOME [ BONA FIDE CLAIM, DISALLOWAN CE OF] ASSESSMENT YEAR 1999-2000 ASSESSEE CLAIMED PREMIU M RECEIVED ON REDEMPTION OF DEBENTURES AS INCOME FROM CAPITAL GAI NS ASSESSING OFFICER HELD THAT SAID PREMIUM WAS ASSESSABLE TO TA X UNDER HEAD INCOME FROM OTHER SOURCES- THEREUPON HE ALSO LEVIE D PENALTY UNDER SECTION 271(1)(C) ON ASSESSEE TRIBUNAL DELETED PE NALTY ON PLEA THAT THERE WAS ONLY A CHANGE OF HEAD OF INCOME BY ASSESS ING OFFICER AND IT ITA.NO.3901/MUM/2016 JUMANA GOOLAM VAHANVATI ASSESSMENT YEAR 2011-12 4 WAS NOT CASE OF DEPARTMENT THAT ASSESSEE HAD CONCEA LED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME BY STATING INCORRECT FACTS WHETHER TRIBUNAL WAS JUST IFIED IN CANCELLING PENALTY LEVIED UPON ASSESSEE HELD, YES [ PARA 3] [ IN FAVOR OF ASSESSEE] DECISION: 2. SO FAR AS QUESTION (I) IS CONCERNED, THE RESPOND ENT- ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST ON TAX FREE BONDS OF RS.5,60, 11644/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASK ED TO GIVE DETAILS OF INTEREST ON TAX FREE BONDS. WHILE PREPARING THE SAI D DETAILS, IT WAS NOTICED THAT 6% GOVERNMENT OF INDIA CAPITAL INDEX BONDS PURCHASE D DURING THE YEAR HAD INADVERTENTLY BEEN CATEGORIZED AS TAX FEE BONDS AND , THEREFORE, INTEREST OF RS.75,00,000/- EARNED ON SUCH BONDS HAD ALSO INADVE RTENTLY ESCAPED TAX. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961(THE ACT). THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER. ON FURTHER APPEAL, THE TRIBUNAL IN THE IMPUGNED ORD ER RECORDS A FINDING OF FACT THAT BY INADVERTENT MISTAKE INTEREST @6% ON THE GOV ERNMENT OF INDIA CAPITAL INDEX BONDS WAS SHOWN AS TAX FREE BONDS. THE TRIBUN AL CONCLUDED THAT THERE WAS NO DESIRE ON THE PART OF THE RESPONDENT-ASSESSE E TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID PAYMENT OF TAX ON INTEREST FR OM THE BONDS. IN THAT VIEW OF THE MATTER, THE TRIBUNAL DELETED THE PENALTY IMP OSED UPON THE RESPONDENT- ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT. IN VIE W OF THE FACT THAT THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FAC T THAT THERE WAS AN INADVERTENT MISTAKE ON THE PART OF THE ASSESSEE IN INCLUDING THE INTEREST RECEIVED OF 6% ON THE GOVERNMENT OF INDIA CAPITAL I NDEX BONDS AS INTEREST RECEIVED ON TAX FREE BONDS. IT IS NOT CONTENDED BY THE REVENUE THAT ABOVE FINDING OF FACT BY THE TRIBUNAL IS PERVERSE. IN THE SE CIRCUMSTANCES, WE SEE NO REASON TO ENTERTAIN THE PROPOSED QUESTION (I). 3. SO FAR AS QUESTION (II) IS CONCERNED, THE RESPON DENT-ASSESSEE HAD CLAIMED PREMIUM ON REDEMPTION OF DEBENTURE AS INCOME FROM C APITAL GAINS. WHEREAS THE ASSESSING OFFICER HELD THAT THE REDEMPTION OF D EBENTURES IS REVENUE RECEIPT ASSESSABLE TO TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER . THE RESPONDENT- ASSESSEE DID NOT FILE ANY FURTHER APPEAL ON THE QUA NTUM PROCEEDINGS. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY UN DER SECTION 271(1)(C) OF THE ACT ON THE RESPONDENT-ASSESSEE. THE CIT(A) ALSO CON FIRMED THE LEVY OF PENALTY UPON THE RESPONDENT-ASSESSEE. ON FURTHER AP PEAL, THE TRIBUNAL HELD THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT TH AT THE RESPONDENT-ASSESSEE HAD DISCLOSED THAT THE AMOUNT RECEIVED AS PREMIUM O N REDEMPTION OF DEBENTURES IN ITS COMPUTATION OF INCOME. FURTHER, T HE TRIBUNAL RECORDS THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE RESPONDE NT- ASSESSEE HAD CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME BY STATING INCORRECT FACTS. THE ASSESSING OF FICER CONSIDERED THE SAID PREMIUM RECEIVED ON REDEMPTION OF DEBENTURES TO BE TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES WHILE THE RESPONDENT-ASSE SSEE CONSIDERED THE SAME TO BE TAXABLE UNDER THE HEAD CAPITAL GAINS. IN VIEW OF THE FACT THAT THERE IS ONLY A CHANGE OF HEAD OF INCOME AND IN THE ABSEN CE OF ANY FACTS THAT THE CLAIM OF THE ASSESSEE WAS NOT BONA FIDE, THE TRIBUN AL DELETED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. THE REV ENUE HAS NOT BEEN ABLE TO POINT OUT THAT THE FINDING OF THE TRIBUNAL IS PE RVERSE. IN THESE CIRCUMSTANCES, WE SEE NO REASON TO ENTERTAIN THE PR OPOSED QUESTION (II). 5.3 FROM THE ABOVE, IT COULD BE SEEN THAT IN THE PR ESENT CASE ALSO, THE APPELLANT CLASSIFIED STCG ON SALE OF BSE SHARES AS TAXABLE @ 15% U/S 111A. DURING SCRUTINY IT WAS NOTICED THAT THE STCG HAS TO BE TAXED AT NOR MAL RATES WHICH WAS ACCEPTED BY THE APPELLANT. THE 1 ST QUESTION REFERRED TO IN THE CASE OF BENNETT CITED SUPRA WOULD ITA.NO.3901/MUM/2016 JUMANA GOOLAM VAHANVATI ASSESSMENT YEAR 2011-12 5 THEREFORE SQUARELY APPLY TO THE FACTS OF THE PRESEN T CASE. EVEN OTHERWISE, THE STCG HAD BEEN OFFERED TO TAX @15% BY THE APPELLANT IN HE R ROI. THIS WAS THEN RECLASSIFIED TO SUFFER TAX AT NORMAL RATES WITHOUT DISTURBING THE QUANTUM . QUESTION 2 OF BENNETT WOULD THEREFORE ALSO APPLY TO THE FACT S OF THE PRESENT CASE AS THE DISPUTE IS ABOUT THE QUANTUM OF TAX AND NOT OF INCO ME. IN THE CIRCUMSTANCES, I DO NOT THINK THIS IS A CASE OF INACCURATE PARTICULARS OF I NCOME OR CONCEALMENT OF INCOME. THE QUANTUM OF STCG DECLARED FROM SALE OF BSE SHARE S HAS NOT BEEN DISTURBED & PARTICULARS OF THE TRANSACTION HAVE BEEN SHOWN IN T HE COMPUTATION ITSELF. ON FACTS, I AM OF THE OPINION THAT THE CASE OF THE APPELLANT IS SQUARELY COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT CITED SUPRA. I THE REFORE HOLD THAT THERE IS NO CASE TO LEVY PENALTY U/S 271(1)(C) IN THE MATTER. I ACCO RDINGLY CANCEL THE PENALTY LEVIED BY THE AO. 6. IN THE RESULT, THE APPEAL IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US WHEREAS THE ASSESSEE HAS FILED PETITION UNDER RULE-27 OF THE IN COME TAX (APPELLATE TRIBUNAL) RULES, 1963 CONTENDING THAT THE LEGAL GRO UND RAISED BY THE ASSESSEE HAS NOT BEEN DEALT WITH BY LD. FIRST APPEL LATE AUTHORITY. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITT ED THAT THE ASSESSEE DELIBERATELY OFFERED THE STCG AT CONCESSIONAL RATES DESPITE FULLY KNOWING THAT THE SAME WERE WITH RESPECT TO UN LISTED SHARES ON WHICH STT WAS NEVER PAID AND THEREFORE, THE PENALTY WAS JUSTIFIED. PER CONTRA, LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE [AR], NIYANTA MEHTA , JUSTIFIED THE STAND OF LD. CIT(A) AND DREW OUR AT TENTION TO ASSESSEES PETITION UNDER RULE 27 TO CONTEND THAT T HE PENALTY PROCEEDINGS EVEN OTHERWISE STOOD VITIATED ON LEGAL GROUNDS SINCE THE LD. AO FAILED TO SPECIFY THE PARTICULAR CHARGE FOR WHIC H THE PENALTY WAS BEING INITIATED / LEVIED. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. AFTER CONSIDERING THE FACTUAL M ATRIX, WE FIND THAT THE THERE IS NO DIFFERENCE IN THE ASSESSED INCOME AND R ETURNED INCOME UNDER THE HEAD STCG. THE ASSESSEE CLAIMED THE SAID GAIN AT CONCESSIONAL RATE UNDER BONA FIDE BELIEF THAT THE S AID GAIN ACCRUED FROM ITA.NO.3901/MUM/2016 JUMANA GOOLAM VAHANVATI ASSESSMENT YEAR 2011-12 6 SALE OF LISTED SHARES ON WHICH STT WAS PAID BY THE ASSESSEE. THE ASSESSEE EARNED SIMILAR GAINS ON NUMBER OF SCRIPS A S NOTED BY LD. CIT(A) AND THERE WAS EVERY POSSIBILITY THAT THE STA TED FACT SKIPPED THE ASSESSEES ATTENTION AND THE ASSESSEE, AFTER BEING POINTED OUT, ACCEPTED THE SAME AND PAID DUE TAXES THEREUPON. THEREFORE, T HE FACTUAL MATRIX DOES NOT JUSTIFY IMPOSITION OF IMPUGNED PENALTY AND THEREFORE, THE RELIANCE OF LD. CIT(A) ON THE CITED JUDGMENT OF HON BLE BOMBAY HIGH COURT WAS QUITE APPROPRIATE. THEREFORE, FINDING THE ORDER OF LD. FIRST APPELLATE AUTHORITY QUITE REASONED ONE, WE CONFIRM THE SAME AND DISMISS REVENUES APPEAL WHICH MAKES ASSESSEES PET ITION UNDER RULE 27 INFRUCTUOUS. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018 SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28. 02.2018 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. !$- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI