DCIT CIR 3(1), MUMBAI V. DOME BELL ELECTRONICS (I) P.LTD, MUMBAI

ITA 4397/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3253 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 23-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BISTSR

Judgement Text

INCOME-TAX APPELLATE TRIBUNAL -DBENCH MUMBAI BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHU KLA,JUDICIAL MEMBER . .. . /I.T.A./4397/MUM/2014 , ,, , / // / ASSESSMENT YEAR: 2010-11 DY. CIT, CIRCLE-3(1) ROOM NO.607, 6 TH FLOOR AAYAKAR BHAVAN MUMBAI-400 020. VS. M/S. DOME BELL ELECTRONICS (INDIA) PVT. LTD., 171, C WING, MITTAL COURT, NARIMAN POINT ,MUMBAI-400 021. PAN:AAACD 6266 G ( /ASSESSEE ) ( / RESPONDENT ) RE VENUE BY: SHRI B.S. BIST-SR. A.R. AS SESSEE BY: SHRI GOPAL SHARMA / DATE OF HEARING: 28.03.2016 / DATE OF PRONOUNCEMENT: 28.03.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 21/03/2014 OF THE CIT ( A)-6,MUMBAI, THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING,TRADING AND INVESTMENTS,FILED ITS RETURN OF INCOME ON 11/10/2010, DECLARING A LOS S OF RS. 7.57 CRORES. THE AO COMPLETED THE ASSESSMENT,U/S.143(3) OF THE ACT,ON 15/03/2013,ASSE SSING THE TOTAL LOSS AT RS.2.82 CRORES UNDER THE NORMAL PROVISIONS AND LOSS OF RS. 50.04 LAKHS U NDER THE MAT PROVISIONS.WHILE COMPLETING THE ASSESSMENT,THE AO DISALLOWED THE CLAIM OF LONG- TERM CAPITAL LOSS (LTCL) OF RS. 4, 74, 11,879/-.BESIDES,HE ALSO INITIATED PENALTY PROCEEDI NGS U/S.271 (1) (C)OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME LEADING TO CONCEAL MENT OF INCOME.IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE STATED THAT IT HAD FILED SALE NOTE DT.25.7.09,THAT DETAILS OF PURCHASE PRICE, DATE OF PURCHASE WERE ALSO FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE STATEMENTS REVEALED THAT WERE SHARES IN QUESTIO N WERE PURCHASED DURING THE YEAR 1995- 2002 PERIOD, THAT THE SALES WERE MADE ON OFF MARKET BASIS.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE AO HELD THAT ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE PURCHASE OF SHARES AND REJECTING THE EXPLANATION FILED BY THE A SSESSEE LEVIED A PENALTY OF RS.1,47,96,771/- VIDE ORDER U/S 271(L)(C) DATED 25.09.2013. 3. AGGRIEVED BY THE PENALTY ORDER,THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA). BEFORE HIM,IT WAS ARGUED THAT IT HA D SOLD THE SHARES THAT WERE HELD BY IT FOR MORE THAN A YEAR ON WHICH IT HAD INCURRED LTCL,THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS,THE ASSESSEE HAD SUBMITTED THE COMPUTAT ION OF LTCL ALONG WITH DETAILS OF SALE OF INVESTMENTS, COST OF PURCHASE,YEAR OF PURCHASE,S ALE PRICE AND DATE OF SALE IN RESPECT OF THE SHARES OF ALL THESE COMPANIES SOLD BY THE ASSESSEE RESULTING IN LTCL,THAT THE CLAIM OF THE AO ABOUT NON SUBMISSION OF REQUIRED DETAILS OF NAME OF THE SCRIPS, QUANTITY, RATE, DATE OF SALE AND DATE OF PURCHASE, IN RESPECT OF THE SCRIPS ON S ALE OF WHICH THE ASSESSEE CLAIMED TO HAVE SUFFERED THE SAID LOSSES WERE WAS WRONG AND CONTRAR Y TO FACTS OF THE CASE,THAT ONLY THE DOCUMENTS RELATED TO COST OF PURCHASE WERE NOT SUBM ITTED AS THE SAME RELATED TO VERY OLD RECORDS MORE THAN A DECADE OLD AND IN SOME CASES AL MOST TWO DECADES OLD,THAT THE INVESTMENTS WERE PART OF THE AUDITED BALANCE SHEET S OF THE RESPECTIVE YEARS OF PURCHASE AND ALL SUBSEQUENT YEARS AT THE COST TREATED AS ORIGINA L COST OF PURCHASE WHILE COMPUTING THE LTCL,THAT THE SALE CONSIDERATION OF RS. 6,66,85,750 / -RECEIVABLE FROM THE BUYER WAS ALSO 4397/14DOME BELL ELECTRONICS 2 DULY ACCOUNTED FOR,THAT THE PARTICULARS SUBMITTED B Y THE ASSESSEE WERE CORRECT AND FULL EXPLANATION HAD BEEN GIVEN WITH REGARD TO THE SALE TRANSACTION,THAT THE MERE FACT THAT ADDITION HAS BEEN MADE BY ITSELF COULD NOT LEAD TO A CONCLUS ION THAT PENALTY SHOULD ALSO BE LEVIED OR CONFIRMED,THAT THE ASSESSMENT AND THE PENALTY PROCE EDINGS WERE INDEPENDENT OF EACH OTHER. 3.1. AFTER CONSIDERING THE AVAILABLE MATERIAL,THE FAA HE LD THAT THE ASSESSEE HAS SUBMITTED THE COPY OF SALE NOTE DATED 25.07.2009 OF THE AFORESAID SHARES VIDE ITS LETTER DATED 05.03.2013 CONTAINING THE SCRIP WISE QUANTITY SOLD, SALE RATE PER SHARE AND THE TOTAL CONSIDERATION ALONG WITH THE COPIES OF THE BALANCE SHEETS OF THE RESPEC TIVE YEARS OF PURCHASES AND ALL SUBSEQUENT YEARS REFLECTING THE ORIGINAL COST OF PURCHASE, THA T THE BOOKS OF ACCOUNT OF THE ASSESSEE HAD BEEN REGULARLY AUDITED U/S.44AB OF THE ACT AND STAT UTORY AUDIT HAD ALSO BEEN CARRIED OUT ,THAT THE SHARES IN QUESTION WERE PURCHASED LONG BACK,THA T SAME BEING VERY OLD COULD NOT BE TRACED ,THAT SHARES WERE DULY REFLECTED IN THE AUDITED BAL ANCE SHEETS OF THE RESPECTIVE YEARS OF PURCHASE ,THAT IN EARLIER YEARS, THE ASSESSMENT ORD ERS HAVE BEEN PASSED U/S.143(3) OF THE ACT AND THUS SCRUTINY OF ASSESSEE'S ACCOUNTS HAD BEEN C ARRIED OUT BY THE DEPARTMENT FROM YEAR TO YEAR WITHOUT ANY DOUBT EXPRESSED REGARDING THE ASSE SSEE HAVING HELD THE SHARES,THAT THE ASSESSEE'S EXPLANATION IN CONNECTION WITH THE LTCL COULD NOT BE SAID TO BE FALSE.HE FURTHER OBSERVED THAT IT COULD BE HELD THAT A BONA FIDE CLA IM OF THE ASSESSEE REGARDING LTCL WAS REJECTED BY THE AO BECAUSE HE DID NOT FIND THE EXP LANATION OF THE ASSESSEE TO BE SATISFACTORY, THAT THE ASSESSEE HAD LARGELY SUBSTANTIATED THE BO NA FIDES OF ITS CLAIM OF LTCL, THAT THE CASE OF THE ASSESSEE WOULD FALL IN CLAUSE (A) OR CLAUSE( B) OF THE EXPLANATION TO THE SECTION 271(1)(C)OF THE ACT.FINALLY,HE DELETED THE PENALTY LEVIED BY THE AO. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPOR TED THE ORDER OF THE AO.THE AUTHORISED REPRESENTATIVE(AR)STATED THAT ALL THE DO CUMENTARY EVIDENCES ABOUT PURCHASE AND SALE OF SHARES WERE PRODUCED,THAT DUE TO PASSING OF LONG TIME PURCHASE DOCUMENTS COULD NOT BE PRODUCED,THAT IN THE EARLIER YEARS THE AO HAD AD MITTED THE INVESTMENT MADE IN PURCHASING THE SHARES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD SOLD SOME UNLISTED SHARES AND INCURRED LTCL OF RS.4,74,11,8791-,THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS,THE AO ASKED T HE ASSESSEE TO FURNISH THE DOCUMENTS RELATED TO PURCHASE & SALE OF THE SAID SHARES,THAT IN RESPONSE, THE ASSESSEE ONLY SUBMITTED AUDITED COPIES OF BALANCE SHEETS OF THE RESPECTIVE YEARS OF PURCHASE OF SHARES REFLECTING THE ORIGINAL COST OF PURCHASE/ ACQUISITION,THAT THE DET AILS OF PURCHASES WERE NOT SUBMITTED ON THE GROUND THAT THE SHARES WERE PURCHASED ALMOST A DECA DE AGO AND HENCE SUCH DETAILS COULD NOT BE TRACED,THAT WITH REGARD TO SALE OF SHARES, THE A SSESSEE HAD SUBMITTED A SALE NOTE ASSESSEE HAD SUBMITTED THE COPY OF SALE NOTE DATED 25. 07.20 09 OF THE AFORESAID SHARES VIDE ITS LETTER DATED 05.03.2013 CONTAINING THE SCRIP WISE QUANTITY SOLD, SALE RATE PER SHARE AND THE TOTAL CONSIDERATION,THAT THE INVESTMENT IN THE SHARES WER E DULY REFLECTED IN THE AUDITED BALANCE SHEETS OF THE RESPECTIVE YEARS OF PURCHASE AT THE S AME COST WHICH WAS TREATED AS ORIGINAL COST OF PURCHASE WHILE COMPUTING THE LTCL,THAT THE AO DI D NOT FIND THE CLAIM OF THE ASSESSEE TO BE GENUINE,THAT HE LEVIED THE PENALTY FOR FURNISHIN G INACCURATE PARTICULARS,THAT THE FAA HAD DELETED THE PENALTY.IT IS A FACT THAT THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS,HAD SUBMITTED THE COMPUTATION OF LTCL A LONG WITH DETAILS OF PURCHASE AND SALE OF INVESTMENTS. JUST BECAUSE THE AO DISALLOWED THE SAID CLAIM,IT CANNOT IN ITSELF AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS A MERE REJECTION OF A CLAIM MADE BY THE ASSESSEE. IT IS A WELL SETTLED LAW THAT BOTH THE AS SESSMENT AND THE PENALTY PROCEEDINGS ARE INDEPENDENT OF EACH OTHER AND IN THE PENALTY PROCEE DINGS, THE ASSESSEE HAS LIBERTY TO SHOW AND ESTABLISH THAT IT'S STAND WAS BONA FIDE AND ALL THE FACTS AND MATERIALS RELATING TO THE COMPUTATION OF INCOME WERE FULLY AND DULY DISCLOSED .IF THE ASSESSEE SUCCEEDS IN DISCHARGING 4397/14DOME BELL ELECTRONICS 3 THE SAID BURDEN,NO PENALTY COULD BE LEVIED.IN OTHER WORDS,IF THE AO DOES NOT BELIEVE THE EXPLANATION OF THE ASSESSEE AND DISALLOWS A CLAIM,L EVY OF CONCEALMENT PENALTY IS NOT JUSTIFIABLE.AN ADDITION OR DISALLOWANCE SHOULD NOT AND CANNOT RESULT IN AUTOMATIC LEVY OF PENALTY U/S.271(1)(C)OF THE ACT.THE CLAIM MADE BY T HE ASSESSEE WAS SUPPORTED BY THE DOCUMENTARY EVIDENCES INCLUDING THE SCRUTINY ASSESS MENT ORDERS OF THE EARLIER AY.S. CONSIDERING THESE FACTS,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.SO,CONFIRMING HIS OR DER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FIELD BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH ,MARCH, 2016. 28 , 2016 SD/- SD/- ( / AMIT SHUKLA ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28.03.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR D BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.