PENTAGON BUILDERS P.LTD, MUMBAI V. DCIT RT 5(2), MUMBAI

ITA 4905/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75383 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 30-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4905/MUM/2012 ASSESSMENT YEAR: 2005-06 M/S. PENTAGON BUILDERS P. LTD. 6 TH FLOOR, DEEJAY APARTMENT, 46, BHULABHAI DESAI ROAD, MUMBAI-400 026 VS. DCIT, RANGE-5(2) 5 TH FLOOR, ROOM NO. 525 AAYAKAR BHAVAN, MK ROAD, MUMBAI. 400 020 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AABCP 8971 F APPELLANT BY : SHRI DEEPAK TRALSHAWALA RESPONDENT BY : SHRI PITAMBAR DAS DATE OF HEARING : 31.12.2013 DATE OF PRONOUNCEMENT : 15 .01.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -9, MUMBAI DATED 08.05.2012 CONFIRMING T HE PENALTY OF RS.14,61,400/- LEVIED BY THE AO U/S 271(1)(C) FOR THE ASSESSMENT Y EAR 2005-06. 2. BRIEFLY STATED, THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINESS OF EXPORT OF READY MADE GARMENTS, MADE UPS & FANCY FABRICS AND D ESIGNED MATERIALS AS WELL AS INVESTMENT & DEALING IN SHARES & SECURITIES, ITS RE TURN OF INCOME HAD DECLARED A TOTAL INCOME AT RS.39,24,442/- THIS INCLUDED AN INCOME OF RS.35,55,875/- AND OF RS.16,53,683/- DISCLOSED AS SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN RESPECTIVELY. IN THE QUANTUM APPEAL, THE TRIBUNAL H ELD THAT THE TRANSACTIONS CLAIMED AS SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL G AIN ARE IN THE NATURE OF DEALING IN SHARES AND THEREFORE, THE PROFIT IS TAXABLE AS BUS INESS INCOME. THE SAID ORDER OF THE ITA NO. 4905/MUM/2012 M/S. PENTAGON BUILDERS P. LTD. ASSESSMENT YEAR: 2005-06 2 TRIBUNAL CONFIRMED THE FINDINGS OF THE AO. CONSEQUE NTLY, IN THE PENALTY PROCEEDINGS, THE AO LEVIED A PENALTY @ 100% TAX SOUGHT TO BE EVA DED WAS RS.14,61,400/- BY INVOKING SECTION 271(1)(C) OF THE ACT. ON APPEAL, T HE LD.CIT(A) CONFIRMED THE ACTION OF THE AO. AGGRIEVED BY THE IMPUGNED ORDER, THE ASS ESSEE IS IN APPEAL BEFORE US. 3. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE DISPUTE IN THE QUANTU M PROCEEDINGS HAVE BEEN ONLY WITH REGARD TO THE LEGAL CONTENTION WHETHER THE PRO FITS ARE TO BE TAXED UNDER THE HEAD BUSINESS INCOME OR CAPITAL GAINS. IN THIS CONNECTION, THE TRIBUNAL HAS CONFIRMED THE ACTION OF THE AO TREATING THE IMPUGNE D RECEIPTS UNDER THE HEAD BUSINESS INCOME. THE DELHI HIGH COURT, IN THE CAS ES OF CIT VS. AURIC INVESTMENT AND SECURITIES LTD. 310 ITR 121 AND CIT VS. BHARTESH JAIN 323 ITR 358 HAS HELD THAT IF THE ADDITION IS MADE BY CHANGE OF HEAD OF INCOME , IT DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR PROVIDING INACCURATE PARTI CULARS. THESE RATIOS OF THE DELHI HIGH COURT HAVE ALSO BEEN FOLLOWED BY THE TRIBUNAL IN THE CASE OF BENNETT COLEMAN COMPANY LTD. VS. CIT IN ITA NO. 3710/MUM/2011. CONSIDERING THE FACT OF THE ASSESSEES CASE IN THE QUANTUM PROCEEDINGS, THE ADD ITION CONFIRMED BY THE TRIBUNAL IS ONLY BASED ON THE DIFFERENCE IN THE HEAD OF THE INCOME UNDER WHICH THE INCOME HAS TO BE TREATED. HENCE, THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISIONS OF THE DELHI HIGH COURT WHICH HAVE BEEN F OLLOWED IN BENNETT COLEMANS CASE (SUPRA). THEREFORE, WE ARE OF THE CONSIDERED V IEW THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE A O. RESULTANTLY, THE PENALTY IS DELETED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JANUARY, 2014. SD/- SD/- (D. KARUNAKARA RAO) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 15. 01.2014. *SRIVASTAVA ITA NO. 4905/MUM/2012 M/S. PENTAGON BUILDERS P. LTD. ASSESSMENT YEAR: 2005-06 3 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.