ACE INDIA MEDICAL SYSTEM, Jaipur V. ACIT, Kota

ITA 394/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1932 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S NEHRAADDL CIT DHK
• Assessee Lawyers: S K GOGRA
• Keywords: Speculation loss; Wrong claim; Difference of opinion; Change of opinion

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 394/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09. M/S ACE INDIA MEDICAL SYSTEM, BEHIND CBI, ARYA SAMAJ ROAD, KOTA. CUKE VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAOFM 0273 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.K GOGRA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.S. NEHRA(ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 26.10.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 08/11/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT (A), RAWATBHATA ROAD, KOTA DATED 14.03.2017 PERTAINING T O ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1. THAT PENALTY ORDER PASSED BY LD. AO IN LEVYING OF PENALTY MAY PLEASE BE DECLARED AS ILLEGAL AND UNJUSTIFIED AND WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. 2. THAT LEVYING OF PENALTY ON SHARE TRADING TRANSAC TION WHICH WERE ALREADY BEEN SHOWN IN TRADING AND P & L ACCOUNT, BA LANCE SHEET IN RETURN OF INCOME AND SEGREGATING SAME FROM TOTAL TU RNOVER AND TREATING SAME AS SPECULATIVE TRANSACTION IS MERELY CHANGE OF OPINION AS NO NEW EVIDENCE, DOCUMENTS HAVE BEEN BROUGHT ON REC ORD BY LD. AO NOR BY CIT(A), THEREFORE LEVY OF PENALTY ON MERE CH ANGE OF OPINION IS ERRONEOUS AND MAY PLEASE BE DELETED. 2 ITA NO. 394/JP/2017. M/S ACE INDIA MEDICAL SYSTEM. 3. THAT LD. CIT(A) HAS ERRED IN GIVING FINDING THAT ASSESSEE COULD NOT JUSTIFY CLAIM OF TRADING LOSE OF SHARES OF RS. 11,4 1,070/-. WHEREAS ALL THESE DETAILS WERE SUBMITTED AT TIME OF PASSING OF ASSESSMENT AND AT THE TIME OF HEARING OF APPEAL BEFORE CIT(A). THUS ORDER OF CIT(A) TO SUCH EXTENT IS ERRONEOUS IN NATURE. 4. THAT LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING PENALTY ON SHARE TRANSACTION BY TREATING THE SAME SPECULATIVE IN NAT URE AT HIS OWN WHEREAS THE SAME IS NON SPECULATIVE IN NATURE AS TH ESE TRANSACTION WERE MADE THROUGH ELECTRONICS MODE AND WHEN THE PUR CHASE MADE AND SHARES COM ON SCREEN OF THE BROKER, IT TANTAMOU NT TO PURCHASE AND WHEN IT IS SOLD THEN IT IS A PERFECT SALE. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAME D VIDE ORDER DATED 30.12.2010. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER ALSO INITIATED PENALTY U/S 271(1)(B), 271(1)(C) FOR FILING INACCURATE PARTICUL ARS OF INCOME AND THEREBY CONCEALING THE TRUE PARTICULARS OF INCOME. FURTHE R, THE ASSESSING OFFICER VIDE ORDER DATED 25/03/2014 IMPOSED PENALTY U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, PARTLY ALLOWED THE APP EAL. THE LD. CIT(A) CONFIRMED THE PENALTY ON THE ADDITION, SUSTAINED BY THE TRIBU NAL IN QUANTUM PROCEEDINGS. AGGRIEVED BY THIS, THE ASSESSEE IS IN FURTHER APPEA L BEFORE THIS TRIBUNAL. 3. GROUND NOS. 1 TO 4 OF THE ASSESSEES APPEAL ARE LEVY OF PENALTY AND CONFIRMING THE SAME. 3.1 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN GIVING THE LEVY PENALTY AND CONFIRMING THE SAME. HE CONTENDED THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULA RS OF INCOME AND CONCEALED INCOME. HE SUBMITTED THAT PENALTY IS LEVIED IN RES PECT OF THE LOSS INCURRED IN TRADING 3 ITA NO. 394/JP/2017. M/S ACE INDIA MEDICAL SYSTEM. OF SHARES TREATED AS SPECULATION LOSS ON THE BASIS THAT DELIVERY OF SHARES WAS NOT TAKEN. HE SUBMITTED THAT UNDER THE IDENTICAL FACTS , CO-ORDINATE BENCH OF THIS TRIBUNAL AFTER CONSIDERING THE VARIOUS CASE LAWS IN THE CASE OF DY. CIT VS. SHREE RAM ELECTROCAST (P.) LTD. (2017) TAXPUB (DT) 2138 ( KOL-TRIB). LD. COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE JUDGMENT OF TH E HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HARSHVARDHAN CHEMICALS & MIN ERALS LTD. (2003) 259 ITR 0212, LD. COUNSEL FURTHER PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD. (2010) 322 ITR 158. 3.2 ON THE CONTRARY, LD. D/R OPPOSED THE SUBMISSION S. 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE CO-ORDINATE BENCH UNDER THE IDENTICAL FACTS, AFTER CONSIDERING VARIOUS DECISIONS OBSERVED AS UNDER:- 14. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE TRIBUNAL VIDE ITS ORDER DATED 22-3-2013 PASSED IN ITA NO. 759/KOL/2011 HAS ALREADY ACCEPTED THE GENUINENESS OF SHARE TRADING LOSS SHOWN BY THE ASSE SESE BY UPHOLDING THE FINDING RECORDED BY THE LEARNED COMMISSIONER (APPEA LS) THAT THE SAME CANNOT BE REGARDED AS A BOGUS LOSS. BY THE SAID ORDER, THE TRIBUNAL, HOWEVER, HAS UPHELD THE ORDER OF THE LEARNED COMMISSIONER (APPEA LS) PASSED IN THE QUANTUM PROCEEDINGS WHEREBY IT CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN TREATING THE SAID SHARE TRADING LOSS AS DEEMED S PECULATION LOSS AS PER SECTION 73 OF THE ACT AND CONSEQUENTLY NOT ENTITLED FOR SET OFF AGAINST OTHER INCOME OF NON-SPECULATIVE NATURE. THE QUESTION THAT REQUIRES OUR CONSIDERATION AND DECISION IS WHETHER THE DISALLOWA NCE OF ASSESSEE'S CLAIM FOR SET OFF OF SHARE TRADING LOSS AGAINST OTHER INCOME BY TREATING THE SAME AS SPECULATION LOSS AS PER EXPLANATION TO SECTION 73 O F THE ACT WILL ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IN THIS REGARD, WE FIND THAT THIS ISSUE IS 4 ITA NO. 394/JP/2017. M/S ACE INDIA MEDICAL SYSTEM. SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE V ARIOUS JUDICIAL PRONOUNCEMENTS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE INCLUDING THOSE WHICH HAVE BEEN RELIED UPON BY THE LEARNED COMMISSI ONER (APPEALS) IN HIS IMPUGNED ORDER WHILE CANCELLING THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C). IN ONE OF SUCH CASES, NAME LY SPK STEELS (P) LTD. (SUPRA), IT WAS HELD BY THE HON'BLE MADHYA PRADESH HIGH COURT THAT PENALTY UNDER SECTION 271(1)(C), AS NOT EXIGIBLE IN RESPECT OF DISALLOWANCE OF ASSESSEE'S CLAIM FOR SET OFF OF SHARE TRADING LOSS BY TREATING THE SAME AS SPECULATIVE IN NATURE AS PER EXPLANATION TO SECTION 73 ON THE BASIS OF PRELIMINARY DETAILS FURNISHED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME AS THE ASSESSEE COULD NOT BE SAID TO HAVE FILED INA CCURATE PARTICULARS OR CONCEALED PARTICULARS OF HIS INCOME, WHICH WAS CHAR GEABLE TO TAX. 15. IN THE CASE OF AURIC INVESTMENT & SECURITIES LT D. (SUPRA) BEFORE THE HON'BLE DELHI HIGH COURT, THE CLAIM OF THE ASSESSEE FOR SET OFF OF SHARE TRADING LOSS AGAINST OTHER INCOME OF NON SPECULATIVE NATURE WAS DISALLOWED BY THE ASSESSING OFFICER BY TREATING THE SAME AS THE LOSS OF SPECULATIVE NATURE BY INVOKING THE EXPLANATION TO SECTION 73. THE ASSESSI NG OFFICER ALSO IMPOSED PENALTY UNDER SECTION 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME TO THE E XTENT OF MAKING A WRONG CLAIM FOR SET OFF OF SHARE TRADING LOSS AGAINST NOR MAL INCOME. HON'BLE DELHI HIGH COURT, HOWEVER, HELD THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) WAS NOT SUSTAINABLE AS MERE TREATMENT OF BUSINESS LOSS AS SPECULATION LOSS BY THE ASSESSING OFFICER D ID NOT AUTOMATICALLY WARRANT INFERENCE OF CONCEALMENT OF INCOME AND THERE WAS NO THING ON RECORD TO SHOW THAT IN FURNISHING ITS RETURN OF INCOME, THE ASSESS EE HAD EITHER CONCEALED ITS INCOME OR HAD FURNISHED ANY INACCURATE PARTICULARS OF INCOME. SIMILARLY IN THE CASE OF BHARTESH JAIN (SUPRA), THE HON'BLE DELHI HI GH COURT HELD THAT MERE TREATMENT OF BUSINESS LOSS AS SPECULATION LOSS WOUL D NOT JUSTIFY LEVY OF PENALTY UNDER SECTION 271(1)(C). 16. AS FAR AS THE DECISION OF THE HON'BLE MUMBAI HI GH COURT IN THE CASE OF CLASSIC CREDIT LTD. (SUPRA) RELIED UPON BY THE LEAR NED DR IS CONCERNED, THE 5 ITA NO. 394/JP/2017. M/S ACE INDIA MEDICAL SYSTEM. FACTS OF THE AFORESAID DECISION WERE TOTALLY DIFFER ENT. IN THAT CASE CERTAIN ITEM OF EXPENDITURE WERE DISALLOWED BY THE ASSESSING OFF ICER ON THE ALLEGATION THAT THE EXPENDITURE WAS NOT SUBSTANTIAL BY ANY EVIDENCE AND THAT THE CLAIM WAS MADE ONLY TO DEFRAUD THE REVENUE AND THIS FINDING W AS CONFIRMED IN THE QUANTUM PROCEEDINGS. THESE FINDINGS WERE THE BASIS FOR IMPOSING PENALTY. THE TRIBUNAL THEREFORE CAME TO THE CONCLUSION THAT THE FINDING IN THE QUANTUM PROCEEDINGS JUSTIFIED THE IMPOSITION OF PENALTY. AS WE HAVE ALREADY SEEN THAT IN THE PRESENT CASE THERE IS NEITHER ALLEGATION OF THE ASSESSEE ATTEMPTING TO DEFRAUD THE REVENUE NOR IS THERE ANY ALLEGATION THA T THE LOSS IN QUESTION WAS NOT ACTUALLY SUSTAINED BY THE ASSESSEE. IN THE CIRC UMSTANCES THE AFORESAID DECISION IS NOT OF ASSISTANCE TO THE PLEA OF THE RE VENUE IN THIS APPEAL. 17. KEEPING IN VIEW THE RATIO OF THE JUDICIAL PRONO UNCEMENTS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, WHICH DECISIO NS ARE SQUARELY APPLICABLE IN THE PRESENT CASE, WE FIND NO INFIRMITY IN THE IM PUGNED ORDER OF THE LEARNED COMMISSIONER (APPEALS) CANCELLING THE PENALTY IMPOS ED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) AND UPHOLDING THE S AME, WE DISMISS THIS APPEAL FILED BY THE REVENUE. THE CO-ORDINATE BENCH HAS FOLLOWED THE JUDGMENT OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. SPK STEELS (P.) LTD. ( 2004) 270 ITR 156, CIT VS. BHARTESH JAIN (2010) 323 ITR 358 (DEL.), THE FACTS ARE IDENTICAL. THE REVENUE HAS NOT DISTINGUISHED THESE DECISIONS. THEREFORE, RESP ECTFULLY FOLLOWING THE SAME, WE HEREBY DIRECT THE AO TO DELETE THE PENALTY. THUS, GROUNDS RAISED IN THIS APPEAL ARE ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, THE 08 TH DAY OF NOVEMBER 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER 6 ITA NO. 394/JP/2017. M/S ACE INDIA MEDICAL SYSTEM. JAIPUR DATED:- 08/11/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S ACE INDIA MEDICAL SYSTEM, KOT A. 2. THE RESPONDENT- THE ACIT, CIRCLE-2, KOTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 394/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR