Shri Rajendra Kumar Tongia , Bhilwara V. ITO, Ward-3, Bhilwara

ITA 485/JODH/2018

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9987 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 25-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S YADAV LD
• Assessee Lawyers: RAJENDRA JAIN LD ARS
• Keywords: Salary income; Capital Gains
• Section: 143(3); 271B; 44AB

Judgement Text

1 ITA NO.485/JODH/2018 SHRI RAJENDRA KUMAR TONGIA ASSESSMENT YEAR: 2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH , , BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.485/JODH/2018 ( / ASSESSMENT YEAR: 2014-15) SHRI RAJENDRA KUMAR TONGIA C/O. RAJENDRA JAIN ADVOCATE 106, AKSHAY DEEP COMPLEX, 5TH B ROAD SARDARPURA, JODHPUR RAJASTHAN-342 001. / VS. INCOME TAX OFFICER - WARD - 3 BHILWARA RAJASTHAN ./ ./PAN/GIR NO. ABJPT-2415-L ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : MS. RAKSHA BIRLA (CA) & SHRI RAJENDRA JAIN (ADVOCATE) LD. ARS. REVENUE BY : SHRI A.S. YADAV- LD. SR.DR / DATE OF HEARING : 05/11/2020 / DATE OF PRONOUNCEMENT : 21/12/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2014-15 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX-(APPEALS), AJMER, [IN SHORT REFERRED TO AS CIT(A)], 2 ITA NO.485/JODH/2018 SHRI RAJENDRA KUMAR TONGIA ASSESSMENT YEAR: 2014-15 APPEAL NO.26/2017-2018 DATED 17/09/2018 IN CONFIRMING PENALTY U/S 271B FOR RS.74,022/-. 2.1 FACTS LEADING TO THE SAME ARE THAT AN ASSESSMEN T WAS FRAMED FOR THE YEAR UNDER CONSIDERATION U/S. 143(3) ON 21/ 12/2016. THE ASSESSEE FILED ITS RETURN OF INCOME AT RS.5.48 LACS WHICH CONSISTED OF SALARY INCOME OF RS.3.19 LACS WHEREAS THE BALANC E WAS INTEREST INCOME FROM FIXED DEPOSITS. DURING ASSESSMENT PROCE EDINGS, IT TRANSPIRED THAT THE ASSESSEE SOLD SHARES ON DELIVER Y BASIS FOR RS.148.04 LACS WHEREAS SALE OF SHARES OTHERWISE THA N BY ACTUAL DELIVERY WAS RS.598.10 LACS. KEEPING IN VIEW THE SA ID TURNOVER, LD. AO OPINED THAT THE ASSESSEE WAS OBLIGATED TO MAINTA IN BOOKS OF ACCOUNTS AND GET THEM AUDITED AS PER THE PROVISIONS OF SEC.44AB OF THE ACT. 2.2 IN DEFENSE, THE ASSESSEE SUBMITTED THAT IT BEIN G A SALARIED BANK EMPLOYEE INVESTED SURPLUS FUNDS IN SHARES AND SECURITIES AS INVESTMENT AND NOT AS BUSINESS. THE INVESTMENT WAS NOT TO CARRY OUT ANY BUSINESS BUT ONLY IN THE NATURE OF CAPITAL INVESTMENT. IT INCURRED NET LOSS OF RS.0.74 LACS ON NON-DELIVERY B ASED TRANSACTIONS WHEREAS THE SHORT-TERM CAPITAL LOSS ON DELIVERY BASED TRANSACTIONS WAS RS.2.37 LACS. SINCE THE SAME COULD NOT BE SET-OFF FROM SALARIED INCOME, THE LOSS WAS NOT CLAIMED IN T HE RETURN OF INCOME. THEREFORE, CAPITAL INVESTMENT WAS NOT IN TH E NATURE OF BUSINESS BUT ASSESSABLE UNDER THE HEAD CAPITAL GAIN S. 2.3 HOWEVER, DISREGARDING THE SAME, LD AO MAINTAINE D THAT THE ASSESSEE WAS OBLIGATED TO MAINTAIN BOOKS OF ACCOUNT S AND GET THEM AUDITED U/S 44AB OF THE ACT. THE FAILURE TO DO SO WOULD ATTRACT 3 ITA NO.485/JODH/2018 SHRI RAJENDRA KUMAR TONGIA ASSESSMENT YEAR: 2014-15 PENALTY U/S 271B. ACCORDINGLY, PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE. 2.4 DURING PENALTY PROCEEDINGS, THE ASSESSEE REITER ATED THAT INVESTMENT WERE CAPITAL INVESTMENT AND NOT IN THE N ATURE OF BUSINESS. HOWEVER, NOT CONVINCED LD. AO LEVIED A PE NALTY OF RS.1.50 LACS U/S 271B VIDE PENALTY ORDER DATED 29/0 3/2017. 3. AGGRIEVED, THE ASSESSEE ASSAILED THE PENALTY, HO WEVER WITH PARTIAL SUCCESS, BEFORE LD.CIT(A) VIDE IMPUGNED ORD ER DATED 17/09/2018 WHEREIN LD. CIT(A) RESTRICTED THE PENALT Y TO RS.74,022/-, BEING 0.5% OF SALE TURNOVER OF RS.148.04 LACS ON DE LIVERY BASED TRANSACTIONS. STILL AGGRIEVED, THE ASSESSEE IS IN F URTHER APPEAL BEFORE US. 4. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ASS ESSEE WAS EMPLOYED WITH A BANK AND HIS PRIMARY SOURCE OF INCO ME WAS SALARY INCOME. THE SURPLUS FUNDS WERE INVESTED IN SHARES & SECURITIES WITH A VIEW TO EARN GAINS. THERE IS NOTHING ON RECORD WH ICH WOULD SUGGEST THAT BORROWED FUNDS WERE USED TO CARRY OUT THE TRANSACTIONS IN A BUSINESS-LIKE MANNER. THE ASSESSE E, ALL ALONG, HAS MAINTAINED THAT THE INVESTMENTS WERE CAPITAL IN VESTMENT AND THE GAINS / LOSSES ARISING THERE-FROM WERE ASSESSAB LE UNDER THE HEAD CAPITAL GAINS. IN SUCH A CASE, THERE WOULD BE A BONA FIDE BELIEF FOR THE ASSESSEE TO NOT TO MAINTAIN BOOKS OF ACCOUN TS AND GET THEM AUDITED UNDER LAW SINCE THE SAID REQUIREMENT WOULD ARISE ONLY IN CASE THE SHARE TRANSACTIONS WAS THE BUSINESS OF THE ASSESSEE. FROM THE ASSESSMENT ORDER, IT IS QUIRE DISCERNIBLE THAT LD. AO HAS NOT COMPUTED ANY INCOME / LOSSES UNDER THE BUSINESS HEAD AND 4 ITA NO.485/JODH/2018 SHRI RAJENDRA KUMAR TONGIA ASSESSMENT YEAR: 2014-15 ACCEPTED THE POSITION MAINTAINED BY THE ASSESSEE. T HEREFORE, ON THE FACTS AND CIRCUMSTANCES, THERE WOULD BE NO JUST IFICATION FOR LEVY OF IMPUGNED PENALTY AGAINST THE ASSESSEE. THEREFORE , WE ARE INCLINED TO DELETE THE SAME. WE ORDER SO. 5. THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED U/R 34(4) OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. SD/- SD/- (SANDEEP GOSAIN) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21/12/2020 SR.PS:-JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT 3. % ( ) / THE CIT(A) 4. % / CIT CONCERNED 5. &'#( ) , ) , / DR, ITAT, MUMBAI 6. '+,- / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, JODHPUR.