ACIT 21(1), MUMBAI V. NAILESH P DALAL, MUMBAI

ITA 4584/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8974 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 04-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: DEEPAK N KANABARAR
• Keywords: Business income; Difference of opinion
• Section: 143(3)

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL BBENCH M UMBAI BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & AMARJIT SINGH, JUDICIAL MEMBER ./I.T.A./4584/MUM/2014 , /ASSESSMENT YEAR: 2008-09 ACIT-21(1) 6TH FLOOR, C-10, PRATYAKSH KAR BHAVAN BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-400 051. VS. SHRI NAILESH P. DALAL 5-6, VIRAM, 62, HATKESH SOCIETY NS ROAD NO.8, JVPD SCHEME MUMBAI-400 049. PAN:AACPD 9844 N ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI SUMAN KUMAR -DR ASSESSEE BY: SHRI DEEPAK N. KANABAR-AR / DATE OF HEARING: 15.12.2016 / DATE OF PRONOUNCEMENT: 11.01.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM - CHALLENGING THE ORDER DATED 30.04.2014 OF THE CIT(A )-32,MUMBAI THE ASSESSING OFFICER (AO)HAS FILED THE PRESET APPEAL.ASSESSEE,AN INDIVID UAL,WHO DERIVES HIS INCOME FROM TRADING IN DERIVATES,FILED HIS RETURN OF INCOME ON 30.09.2 008,DECLARING TOTAL INCOME AT RS.1.42 CRORES.THE AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ON 16.12.2010 COMPUTING HIS INCOME AT RS.96.67 LAKHS. BRIEF FACTS: 2 .EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE P ENALTY LEVIED BY THE AO U/S. 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD SHOWN CAPITAL GAIN OF R S.81.67 LAKHS (RS.73.56 LAKHS STCG & RS.8.11 LAKHS LTCG).HE ASSESSED THE INCOME FROM SHA RE TRADING (I.E. STCG AND LTCG)THE UNDER THE HEAD BUSINESS INCOME AND INITIATED PENA LTY PROCEEDINGS U/S. 271(1)(C ) OF THE ACT. WHILE COMPUTING ASSESSMENT,THE AO HAD MADE CERTAIN DISALLOWANCES ALSO. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). VIDE HIS ORDER DATED 2.0 2.2012 HE PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AND HELD THAT THE AO HAD RIGHTLY TR EATED THE INCOME ARISING OUT OF SHARE TRANSACTIONS UNDER THE HEAD BUSINESS INCOME, AMOUNT ING TO RS.73.56 LAKHS. HE FURTHER HELD THAT RS.8.11 LAKHS SHOULD BE TAXED UNDER THE HEAD L TCG. 4. THE AO ISSUED NOTICE U/S. 274 R.W.S. 271(1)(C) OF T HE ACT. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,HE HELD THAT THE ASSESSEE HAD OFFER ED PROFIT ON SALE OF SHARES,SECURITIES AND 4584/M/14-NAILESH 2 MUTUAL FUNDS UNDER THE HEAD CAPITAL GAIN AS STCG OR LTCG, THAT THE CONDUCT OF THE ASSESSEE WAS OF A TRADER AND NOT OF AN INVESTOR, THAT THE OR DER OF THE AO WAS CONFIRMED BY THE FAA IN QUANTUM PROCEEDINGS, THAT THE ASSESSEE HAD FILED IN ACCURATE PARTICULARS OF INCOME. FINALLY, HE IMPOSED A PENALTY OF RS.17.45 LAKHS,INVOKING THE PR OVISIONS OF SECTION 271(1)(C) OF THE ACT. 5. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE TH E FAA.REFERRING TO THE ORDER OF THE TRIBUNAL DATED 26/03/2004 AND CORRIGENDUM ISSUED BY THE TRIBUNAL ON 16/04/2014 , THE FAA HELD THAT THE TRIBUNAL HAD REVERSED THE ORDER OF TH E FAA IN QUANTUM PROCEEDINGS, THAT THE TRIBUNAL HAD DIRECTED THE AO TO ALLOW THE CLAIM OF STCG MADE BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. FOLLOWING THE ORDER OF THE TRI BUNAL,THE FAA DELETED THE PENALTY. 6. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE (DR) STATED THAT THE MATTER CAN BE DECIDED ON MERITS.THE AUTHORISED REPRESENTATIVE (AR) REFERRED TO ITA NO.2925/MUM/2012 DATED 26/03/2014 OF THE TRIBUNAL AND RELIED UPON THE CASE OF ANANT OVERSEAS (P.) LTD. (54TAXMANN.COM 211) OF THE HON'B LE HIGH COURT OF DELHI. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD TREATED THE INCOME ARISING OUT OF SALE OF S HARES AS BUSINESS INCOME, THAT THE FAA HAD CONFIRMED THE ORDER OF THE FAA AND HAD HELD THAT IN COME ON SALE OF SHARES WAS TO BE ASSESSED AS STCG.AS THE QUANTUM APPEAL HAS BEEN DECIDED IN F AVOUR OF THE ASSESSEE BY THE TRIBUNAL, SO,THE PENALTY LEVIED BY THE AO WOULD NOT SURVIVE. OTHERWISE ALSO,THE BASIC ISSUE WAS HEAD OF INCOME,UNDER WHICH THE DISPUTED AMOUNT WAS TO BE ASSESSED.THE ASSESSEE HAD FURNISHED ALL NECESSARY PARTICULARS IN HIS RETURN OF INCOME.T HE AO AND THE ASSESSEE HAD DIFFERENCE OF OPINION ABOUT THE TREATMENT TO BE GIVEN TO THE INCO ME ARISING OUT OF SALE OF SHARES . IN OUR OPINION THERE IS NO JUSTIFICATION FOR LEVY OF PENAL TY U/S. 271(1)(C) OF THE ACT IN SUCH A CASE. THEREFORE,CONFIRMING THE ORDER OF THE FAA WE,DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO . IN THE RESULT,AP PEAL FILED BY THE AO IS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. 11 , 2017 SD/- SD/- ( (( ( / AMARJIT SINGH ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11.01.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 4584/M/14-NAILESH 3 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.