Shri Rakesh Agrawal, Indore V. ITO-4(4), Indore

ITA 478/Ind/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0518 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 18-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNEET KUMAR
• Assessee Lawyers: SHREYA JAIN A RS
• Keywords: Business income
• Section: 271(1)(c); 143(3); 274; 27; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.478/IND/2019 ASSESSMENT YEAR: 2010-11 SHRI RAKESH AGRAWAL, 36, TELI BAKHAL, MALHARGANJ, INDORE / VS. ITO-4(4) INDORE ( APPELLANT ) ( RE VENUE ) PAN: ADZPA0506H APPELLANT BY SHRI PRAKASH JAIN & SMT. SHREYA JAIN, ARS RE VENUE BY SHRI PUNEET KUMAR, SR. DR DATE OF HEARING: 10.12.2019 DATE OF PRONOUNCEMENT: 12.12.2019 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL AT THE INSTANCE OF ASSESSEE PERTAINING TO A.Y. 2010-11 IS DIRECTED AGAINST THE ORDER OF COMMISSION ER OF INCOME TAX(APPEALS)-II, INDORE, (IN SHORT CIT), DATED 11 .03.2019 WHICH IS ARISING OUT OF THE ORDER U/S 274/271(1)(C) OF THE I NCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 27. 03.2018 BY ITO- 4(4), INDORE. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: SHRI RAKESH AGRAWAL ITANO.478/IND/2019 2 1. THAT IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AS WELL AS ON THE FACTS. IT IS BASED ON INCORRECT I NTERPRETATION OF LAW AND THE FACTS HAVE ALSO BEEN INCORRECTLY CONSTR UED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN PASSING AN EX-PARTE ORDER WITHOUT ALLOWING REASONABLE OPPORTUNITY BEING HEARD AND WITHOUT DECIDING ON MERITS, THE GROUNDS OF APPEAL R AISED BEFORE HIM. THAT ON VERIFICATION OF FILE OF LD. CIT(A) IT IS FOUND THAT NOTICE FOR HEARING OF APPEAL WAS ISSUED AT THE ADDR ESS LG-8, ROYAL GOLD, 4 Y.N. ROAD, INDORE-452002 WHILE ON THE MEMO OF APPEAL ASSESSEE HAS GIVEN ADDRESS OF 36, TELI BAKHA L, MALHARGANJ, INDORE. 3. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW THE LD. CIT(A) FAILED TO APPRECIATE THE FACT TH AT PENALTY OF RS.20,00,000/- IS IMPOSED BY THE LD. AO ON THE GROU ND THAT SHORT TERM CAPITAL ON REDEMPTION OF MUTUAL FUND SHO WN BY THE ASSESSEE UNDER THE HEAD SHORT TERM CAPITAL GAIN WHI LE SAME IS ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND ON APPEAL THE HON'BLE I.T.A.T. VIDE ITANO.23/IND/2017 ORDER D ATED 31.05.2018 DIRECTED THE LD. AO TO ASSESSEE THE SAME UNDER THE HEAD SHORT TERM CAPITAL GAIN. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN NOT DECIDING THE FOLLOWING GROUNDS OF APPEAL RAISED BEFORE HIM ON MERITS; I. THAT NO REASONABLE OPPORTUNITY BEING HEARD HAVE BEEN ALLOWED BEFORE IMPOSING PENALTY WHICH WILL BE CLEAR FROM THE FACT THAT NOTICE IMPOSING PENALTY U/S 274 R.W.S. 27 1(1)(C) OF THE I.T. ACT DATED 23.03.2018 FIXING THE DATE OF HEARIN G ON 27.03.2018 ITSELF AND ON CONTACTING LD. AO ON 28.03 .2018 IT WAS TOLD THAT PENALTY ORDER IS ALREADY PASSED. II. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. AO HAS ERRED IN IMPOSING THE PENALTY U/ S 271(1)(C) OF THE ACT ON THE BASIS OF PRINTED NOTICE WITHOUT S TRIKING IRRELEVANT PORTION AND WITHOUT SPECIFYING THE LIMB FOR REASONS IN THE PENALTY NOTICE TO IMPOSE THE PENALTY I.E. WHETH ER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME. AND MORE SO E VER WITHOUT RECORDING SATISFACTION. III. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO ERRED IN IMPOSITION PENALTY U/S 271( 1)(C) WITHOUT SHRI RAKESH AGRAWAL ITANO.478/IND/2019 3 APPRECIATING THE FACT THAT IN THE INSTANT CASE THER E IS NO CONCEALMENT OF INCOME AS RETURNED INCOME AND ASSESS ED INCOME IS SAME. IN THE ASSESSMENT THE LD. AO MERELY ASSESSED SHORT TERM CAPITAL GAIN ON STT PAID STOCK UNDER THE HEAD INCOME FROM BUSINESS. IV.THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO ERRED THAT THE PENALTY OF RS.20,00,0 00/- IMPOSED U/S 271(1)(C) IS VERY EXCESSIVE AND HIGH. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D THE AFORESAID GROUNDS OF APPEAL AS AND WHEN NECESSARY. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE MADE TWO FOLD CONTENTION SUBMITTING THAT FIRSTLY, THE IMPUGNED OR DER PASSED BY THE LD. CIT(A) IS EX-PARTE AS NOTICE WAS SERVED ON WRONG ADDRESS. SECONDLY, THE IMPUGNED PENALTY IS LIABLE TO BE DELE TED SINCE THE QUANTUM ADDITION ON WHICH THE PENALTY HAS BEEN LEVI ED STANDS DELETED BY THE COORDINATE BENCH IN VIDE ITANO.153/I ND/2013 & OTHERS DATED 31.05.2018. 4. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE(DR) C OULD NOT CONTROVERT THE FACT THAT THE QUANTUM ADDITION STAND S DELETED. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US AND ALSO GONE THROUGH THE DECISION OF THE TRIBUNAL IN ASSESSEEES OWN CASE IN ITANO.154/IND/2013 REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. WE OBSERVE THAT T HE ASSESSEE OFFERED SHORT TERM CAPITAL GAIN FOR TAX AT RS. 63,9 9,568/- WHICH WAS EARNED FROM REDEMPTION OF MUTUAL FUNDS AFTER PA YING SECURITY TRANSACTION TAX. THE ASSESSEE PAID 15% TAX UNDER SE CTION 111A OF SHRI RAKESH AGRAWAL ITANO.478/IND/2019 4 THE INCOME TAX ACT ON THE SHORT TERM CAPITAL GAIN. THE LD. AO WHILE FRAMING ASSESSMENT U/S 143(3) OF THE ACT ON 2 7.02.2015 TREATED THE SHORT TERM CAPITAL GAIN AS BUSINESS INC OME WHICH WAS SUBJECT TO NORMAL RATE OF TAX. THE LD. AO ALSO LEVI ED PENALTY U/S 271(1)(C) OF THE ACT @ 100% OF TAX SOUGHT TO BE EVA DED ON THE INCOME OF RS.63,99,568/-, THEREBY, LEVYING PENALTY AT RS.20,00,000/- AGAINST WHICH THE ASSESSEE IS APPEAL BEFORE US. 6. WE ALSO OBSERVE THAT AGAINST THE QUANTUM ADDITIO N ASSESSEE CHALLENGED THE ACTION OF THE LOWER AUTHORITIES OF T REATING SHORT TERM CAPITAL GAIN FROM SALE OF MUTUAL FUNDS AS BUSINESS INCOME AND SUCCEEDED. TRIBUNAL VIDE ITS ORDER DATED 31.05.2018 IN PARA 24 ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE AND TRE ATED THE PROFIT OF RS.63,99,568/- AS SHORT TERM CAPITAL GAIN FROM SALE OF MUTUAL FUNDS OBSERVING AS FOLLOWS: 24. WE FURTHER FIND THAT SIMILAR ISSUE HAS BEEN RAI SED IN THE CASE OF ANOTHER ASSESSEE MR. RAKESH AGRAWAL FOR A.Y S. 2009- 10 & 2010-11. NO DISTINGUISHED FACTS HAS BEEN BROUG HT ON RECORD BY THE REVENUE AUTHORITIES. WE THEREFORE, AP PLYING OUR DECISION MENTIONED ABOVE IN RELATION TO ASSESSEE, S HRI SHARAD AGRAWAL IN ITANO.153/IND/2013, SIMILARLY HOLD IN TH E CASE OF RAKESH AGRAWAL FOR A.Y. 2009-10 & 2010-11 THAT INC OME FROM PURCHASE AND SALE OF MUTUAL FUNDS IS TO BE TAXED AS CAPITAL GAIN AND NOT BUSINESS INCOME. WE ACCORDINGLY ALLOW THIS COMMON ISSUE IN ALL THESE THREE APPEALS AND DIRECT THE AO TO TAX THE PROFIT/GAIN EARNED FROM PURCHASE AND SALE O F MUTUAL FUNDS/SHARES OF RS.60,86,999/- IN THE CASE OF SHARA D AGRAWAL AND RS.5,65,161/- & RS. 63,99,568/- IN THE CASE OF RAKESH AGRAWAL FOR A.Y. 2009-10 & 2010-11 AS SHORT TERM CA PITAL GAIN AND NOT AS BUSINESS INCOME. THIS FIRST COMMON ISSUE RAISED BY TWO ASSESSEEW IN GROUND NO.2 IN I.T.A. NO.153/IND/2 013 & SHRI RAKESH AGRAWAL ITANO.478/IND/2019 5 I.T.A. NO.154/IND/2013 AND GROUND NO. 3 IN I.T.A. NO.23/IND/2017 IS ALLOWED. 7. PENALTY U/S 271(1)(C) OF THE ACT IS LEVIED ON TH E TAX SOUGHT TO BE EVADED ON THE ADDITIONS. IF THE VERY BASIS OF LEVYI NG THE PENALTY I.E. ADDITION IS DELETED THEN THERE REMAINS NO LEGS FOR THE PENALTY TO STANDS FOR. 8. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE WHEREIN THE ADDITION ON WHICH THE PENALTY HAS BEEN LEVIED ALREADY STANDS DELETED BY THE TRIBUNAL, IRRESPECTIVE OF THE FACT THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS EX-PARTE , DELETE THE PENALTY OF RS.20,00,000/- LEVIED U/S 271(1)(C) OF T HE ACT AND ALLOW THE APPEAL OF THE ASSESSEE ON MERITS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12.12.20 19. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 12/12/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR