Sureshkumar Babulal Bhayani, Bhavnagar V. The Income tax Officer,Ward-2(4), Bhavnagar

ITA 433/AHD/2010

• Counselvise Citation: 43320514 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 10-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PBB
• Keywords: Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.433 / AHD/2010 (ASSESSMENT YEAR 2001-02) SHRI SURESHKUMAR BABULAL BHAYANI PROP. M/S. POPATLAL NAGARDAS SHAH, MANDI CHOWK, CHADHADA, DISTT. BHAVNAGAR -364750 VS. ITO, WARD 2(4), BHAVNAGAR PAN/GIR NO. : ABYPB5166B (APPELLANT) .. (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI JASBIR S CHOUHAN, SR. DR DATE OF HEARING: 19.12.2011 DATE OF PRONOUNCEMENT: 30.12.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) XX, AHMEDABAD DATED 03.11.2009 FOR THE ASSESSMENT Y EAR 2001-02. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE SERVED ON THE ASSESSEE AS PER THE ACKNOWLEDGEMENT PLACED O N RECORD ALTHOUGH THERE WAS A REQUEST FOR ADJOURNMENT WHICH AS REJECT ED. HENCE, WE PROCEED TO DECIDE THE APPEAL EX-PARTE QUA THE ASSES SEE. 3. ALTHOUGH THE ASSESSEE HAS RAISED VARIOUS GROUND BUT THE ONLY GROUND OF THE ASSESSEE IS REGARDING IMPOSITION OF P ENALTY OF RS.2.50 LACS U/S 271(1)(C) OF THE ACT. 4. LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. I.T.A.NO. /AHD/200 2 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D. R. AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND T HAT THE ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 2001-02 WHEREAS THE PRO VISIONS OF SECTION 94(7) HAD BEEN INSERTED IN THE INCOME TAX ACT, 1961 BY THE FINANCE ACT 2001 W.E.F. 01.04.2002 I.E. ASSESSMENT YEAR 2002-03 . IN THE LIGHT OF THIS LEGAL POSITION, NOW, WE EXAMINE THE FACTS OF THE PR ESENT CASE. 6. WE FIND THAT THE PENALTY IN THE PRESENT CASE HAD BEEN IMPOSED IN RESPECT OF THE DISALLOWANCE OF LOSS CLAIMED BY THE ASSESSEE IN RESPECT OF PURCHASE AND SALE OF SHARES WITHIN A PERIOD OF TWO DAYS AFTER RECEIVING THE DIVIDEND. THE CLAIM OF THE ASSESSEE REGARDING THIS LOSS HAD BEEN DISALLOWED BY THE A.O. ON THE BASIS THAT TO THE EXT ENT OF EXEMPT INCOME BEING DIVIDEND, LOSS CANNOT BE ALLOWED. ALTHOUGH T HE A.O. HAS NOT INVOKED THE PROVISIONS OF SECTION 94(7) BECAUSE IT WAS NOT ON THE STATUTE BOOK DURING THE RELEVANT ASSESSMENT YEAR, THE ACTIO N TAKEN BY THE A.O. IS NOTHING BUT AS PER THE PROVISIONS OF SECTION 94(7) WHICH HAS BEEN INSERTED IN THE STATUTE W.E.F. NEXT ASSESSMENT YEAR. UNDER THESE FACTS, WE FEEL THAT THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CA SE OF CIT VS WALFORT SHARE & STOCK BROKERS P. LTD. AS REPORTED I N 326 ITR 01 (S.C.) IS SQUARELY APPLICABLE. IN THAT CASE ALSO, THE ASSESS MENT YEAR INVOLVED WAS ASSESSMENT YEAR 2000-01 I.E. PRIOR TO THE INSERTION OF THE PROVISIONS OF SECTION 94(7) INSERTED W.E.F. ASSESSMENT YEAR 2002- 03. IN THAT CASE, IT WAS HELD BY THE HONBLE APEX COURT THAT LOSS ON SAL E OF SHARES IS NOT AN EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME AND HENCE, THE SAME CANNOT BE DISALLOWED U/S 14A. SECTION 94(7) IS NOT APPLICABLE BECAUSE THE SAME IS INSERTED ON THE STATUTE BOOK BY THE FIN ANCE ACT 2001 W.E.F. 01.04.2002 AND HENCE, IT IS APPLICABLE FOR THE ASSE SSMENT YEAR 2002-03 AND NOT BEFORE THAT. IN VIEW OF THIS JUDGEMENT OF THE HONBLE APEX I.T.A.NO. /AHD/200 3 COURT, EVEN THE DISALLOWANCE MADE BY THE A.O. APPEA RS TO BE NOT JUSTIFIED BUT BEFORE US IS A PENALTY MATTER AND HENCE, IN THE FACTS OF THE PRESENT CASE, AT LEAST THE PENALTY IS NOT AT ALL JUSTIFIED AND HENCE, WE DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (G. C. GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER SP ORDER PRONOUNCED ON 30.12.2011 SD./- SD./- (G.C.GUPTA) VP (B.P.JAIN)AM COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 21/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.23/12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30/12/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..