M/s. WEIZMANN CAPITAL LTD., MUMBAI V. ACIT - 4(3), MUMBAI

ITA 4268/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49513 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 28-06-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 16-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MALATHI SHRIDHARAN
• Keywords: Speculation loss; Reassessment proceedings
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI T.R.SOOD (A. M) ITA NO.4268/MUM/2008(A.Y. 1999-2000) M/S. WEIZMANN CAPITAL LTD., 26, GOBIND MAHAL, 86B, NETAJEE SUBHASH ROAD, MARINE DRIVE, MUMBAI 400 001. PAN:AAACK 5643G (APPELLANT) VS. THE ACIT 4(3), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : MS. MALATHI SHRIDHARAN ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 7/5/2008 OF CIT(A) XV, MUMBAI RELATING TO ASSESSMENT YEAR 1999- 2000. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) WHEREBY THE CIT(A) HAS CONFIRMED THE ORDER OF THE AO IMPOSING PENALTY ON T HE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT.) 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY WAS IMPOSED ON THE ASSESSEE BY THE AO UNDER SECTION 271(1)(C) ARE AS F OLLOWS: THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MERCHANT BANKI NG, MONEY LENDING AND SHARE TRADING. FOR A.Y. 1999-2000 A RETURN OF INCOME WAS FILED ON 30/12/1999 DECLARING TOTAL LOSS OF RS. 9,25,052/-. THE SAME WAS PROCESSED UNDER SECTION 143(1) ON 16/10/2001. LATER ON NOTIC E UNDER SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE ON 14 /5/2003. IN THE REASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE AS SESSEE HAD SET OFF THE ITA NO.4268/MUM/2008(A.Y. 1999-2000) 2 LOSS ON SALE OF SHARES AGAINST INTEREST INCOME AND THEREBY ARRIVED AT A LOSS WHICH WAS DECLARED IN THE ORIGINAL RETURN OF INCOME . APPLYING THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT THE AO TRE ATED THE LOSS FROM SHARE TRADING OFFERED BY THE ASSESSEE AS SPECULATION LOSS . CONSEQUENTLY THE SET OFF OF INTEREST INCOME AGAINST THE SPECULATION LOSS WAS NOT ALLOWED BY THE AO. CONSEQUENTLY THE INTEREST INCOME WAS BROUGHT TO TAX BY THE AO. THE ORDER OF THE AO WAS CONFIRMED BY THE CIT(A). 3. IN RESPECT OF THE CLAIM OF SET OFF AS MADE IN T HE ORIGINAL RETURN OF INCOME BY TREATING SPECULATION AS A REGULAR BUSINESS LOS S AND SETTING IT OFF AGAINST INTEREST INCOME OF THE ASSESSEE, WHICH CLAIM WAS RE JECTED IN THE REASSESSMENT PROCEEDINGS THE AO IMPOSED PENALTY ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT. THE AO IMPOSED PENA LTY HOLDING THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME . THE CIT(A) CONFIRMED THE ORDER OF THE AO, HENCE, THIS APPEAL BY THE ASSE SSEE BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING OF THIS APPEAL IT WAS BRO UGHT TO OUR NOTICE THAT THE TRIBUNAL IN ITA NO.7136/M/06 FOR A.Y 1999-2000 HAS ALREADY HELD THAT THE RE-OPENING OF ASSESSMENT UNDER SECTION 148 IN THE CASE OF THE ASSESSEE FOR THE PRESENT ASSESSMENT YEAR, WAS NOT VALID. CO NSEQUENTLY THE ORDER OF RE-ASSESSMENT WAS ANNULLED BY THE TRIBUNAL. IN VIE W OF THE FACT THAT THE ORDER OF ASSESSMENT AND THE ADDITION MADE IN THE SA ID ORDER OF ASSESSMENT BASED ON WHICH PENALTY UNDER SECTION 271(1)(C) OF T HE ACT WAS LEVIED ON THE ASSESSEE, NO LONGER SURVIVES, WE ARE OF THE VIEW TH AT PENALTY CANNOT BE IMPOSED ON THE ASSESSEE. IN OTHER WORDS, THE QUAN TUM PROCEEDINGS HAVE ALREADY BEEN ANNULLED AND, THEREFORE, THE ADDITION MADE IN THE QUANTUM PROCEEDINGS DO NOT SURVIVE AND, THEREFORE, THERE IS NO QUESTION OF IMPOSING PENALTY ON AN ADDITION WHICH NO LONGER SURVIVES. F OR THE REASONS STATED ITA NO.4268/MUM/2008(A.Y. 1999-2000) 3 ABOVE, WE DIRECT THAT THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE CIT(A) BE CANCELLED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 15TH DAY OF JULY, 2011. SD/- SD/- (T.R.SOOD ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 15TH JULY.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RH BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.4268/MUM/2008(A.Y. 1999-2000) 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 28/6/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 30/6/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER