A.C.I.T. 21(2), MUMBAI V. TUSHAR SARDA, MUMBAI

ITA 4555/MUM/2012

• Counselvise Citation: 455519914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Transactions in derivatives; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 4555/M/12 ASSESSMENT YEAR: 2008 - 09 ACIT - 21 ( 2 ), R.NO. 508, C - 10, 5 TH FLOOR, B.K.C., BANDRA (E), MUMBAI - 51 VS. SHRI TUSHAR B. SARDA 11, GEETANJALI, 73, V.P. ROAD, SANTACRUZ (E) , MUMBAI - 400054 PAN: AAYPS9874Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIMAL PUNMIYA, A.R. REVENUE BY : SHRI JAVED AKHTAR, DR DATE OF HEARING : 08.08.13 DATE OF PRONOUNCEMENT : 11.10.13 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 12.04.12 RELEVANT TO ASSESSMENT YEAR 200 8 - 09 CHALLENGING THE DELETION OF THE PENALTY AMOUNT OF RS.42,57,496/ - WHICH WAS LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. IN BRIEF, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IN HIS RETURN OF INCOME HAD CLAIMED SHORT TERM CAPI TAL GAINS OF RS.1 , 23 , 5 0 ,413/ - ON SALE OF SHARES WHICH WAS SET OFF AGAINST F&O BUSINESS LOSS OF RS.1,48,95,129/ - . HOWEVER, THE AO ASSESSED THE PROFITS FROM THE SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSED INCOME BY THE AO REMAI NED THE SAME AS WAS THE RETURNED INCOME OF THE ASSESSEE AT RS.1,06,82,500/ - DESPITE CHANGE OF HEAD OF INCOME. THE AO ALSO INITIATED PENALTY PROCEEDINGS. HE WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE THAT HE HAD NOT CONCEALED ANY ITA NO .4555/M/12 SHRI TUSHAR SARDA 2 INCOME . THE AO THUS LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT AT RS.42,57,496/ - . IN FIR S T APPEAL THE LD. CIT(A) DELETED THE PENALTY OBSERVING THAT IT WAS NOT A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. HE F URTHER OBSERVED THAT THERE WAS NO TAX EFFECT EVEN AFTER THE CHANGE OF HEAD OF INCOME BY THE AO. HE THEREFORE DELETED THE PENALTY SO LEVIED BY THE AO. THE REVENUE IS THUS IN APPEAL BEFORE US. 3 . THE LD. A.R. BEFORE US HAS SUBMITTED THAT THE ASSESSEE US ED TO CLAIM PROFIT S FROM SALE OF SHARES AS SHORT TERM CAPITAL GAINS FOR THE EARLIER YEARS ALSO BUT THE REVENUE NEVER OBJECTED TO THE SAME. HOWEVER, T HE AO FOR THE YEAR UNDER CONSIDERATION TREATED THE SAID INCOME AS BUSINESS INCOME. HE FURTHER SUBMITTED T HAT THE ASSESSEE HAD SET - OFF THE SHORT TERM CAPITAL GAINS OF RS.1,23,50,413/ - AGAINST THE BUSINESS LOSS (F&O) OF RS.1,48,95,129/ - AND THERE WAS NO TAX LIABILITY ON THE SAID STCG OFFERED BY THE ASSESSEE IN RETURN OF THE INCOME. EVEN WHEN THE AO HAD TREATED THE SAID CLAIM OF SHORT TERM CAPITAL GAINS AS BUSINESS INCOME, STILL THE ASSESSEE WAS ENTITLED TO SET OFF THE SAID INCOME AGAINST THE BUSINESS LOSS (F&O) OF RS.1,48,95,129/ - , HENCE EVEN AFTER THE CHANGE OF HEAD OF INCOME THE TOTAL ASSESSED INCOME REMAINED EQUAL TO THE RETURNED INCOME AND VIRTUALLY THERE WAS NO TAX EFFECT . THERE WAS NO CONCEALMENT OF INCOME. HENCE, IT WAS NOT A CASE OF PENALTY. ON THE OTHER HAND THE LD. D.R. HAS RELIED UPON THE ASSESSMENT ORDER. 4 . WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. THE PROVISIONS OF PENALTY HAVE BEEN INCORPORATED IN THE ACT SO AS TO DISCOURAGE, PENALIZE OR TO ACT AS A DETERRENT FOR THE PERSONS WHO FURNISH INACCURATE PARTICULARS OR CONCEAL THEIR INCOME OR CLAIM WRONGFUL LOSS ES RESULTING INTO AVOIDANCE, LESS PAYMENT OR NON - PAYMENT OF THE OTHERWISE DUE TAX AMOUNT UNDER THE INCOME TAX ACT . HOWEVER, IN THE CASE IN HAND, EVEN AFTER THE CHANGE OF HEAD OF INCOME BY THE AO , THE ASSESSED INCOME HAS REMAINED THE ITA NO .4555/M/12 SHRI TUSHAR SARDA 3 SAME AS WAS THE RETURN ED INCOME . THERE WAS NO TAX E FFECT AT ALL. IT IS EVEN NOT A CASE OF ANY DISALLOWANCE ALSO. THE AO WAS NOT IN AGREEMENT WITH THE ASSESSEE REGARDING THE COMPUTATION HEAD OF THE INCOME I.E . UNDER STCG AND HE THEREFORE COMPUTED THE SAME UNDER THE HEAD BUSINE SS INCOME. THE CLAIM OF THE INCOME BY THE ASSESSEE UNDER THE HEAD SHORT TERM CAPITAL GAINS WAS BONAFIDE AND EVEN WHEN THE SAID INCOME HAS BEEN TREATED UNDER THE HEAD BUSINESS INCOME EVEN THEN ALSO , THERE WAS NO TAX EFFECT . I T IS A FA CT THAT THE ASSE SSEE NEITHER HAD FURNISHED INACCURATE PARTICULARS OF INCOME NOR CONCEALED HIS INCOME . MERELY BECAUSE THE AO HAD TREATED THE INCOME UNDER A DIFFERENT HEAD , ITSELF , IS NOT SUFFICIENT TO HOLD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. UNDER SUCH CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY WHICH WAS WRONGLY LEVIED BY THE AO. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 1.10. 2013. SD/ - SD/ - ( P.M. JAGTAP ) ( SANJAY GARG ) ACCOUNTANT M EMBER JUDICIAL MEMBER MUMBAI, DATED: 11.10. 2013. * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.