Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 6753 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-02-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
F
Next Hearing Date
17-12-2015
Assessment Year
2008-2009
Appeal Filed On
29-08-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI , JM IT A NO . 4996 /DEL /2013 : ASSTT. YEAR : 2008 - 0 9 SH. RAMESH CHANDER GUPTA, C - 32, HANS APARTMENTS, EAST DELHI - 110032 VS INCOME TAX OFFICER, WARD - 35(4 ), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A CMPG7708F ASSESSEE BY : MS. NEHA SAPRA, CA REVENUE BY : SH. V. R. SONBHADRA , SR. DR DA TE OF HEARING : 1 7 .12.2015 DATE OF PRONOUNCE MENT : 26 .02 .201 6 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.05.2013 OF LD. CIT(A) - XXVII , NEW DELHI . 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE CONFIRMATION OF PENALTY OF RS.45,458/ - LEVIED BY THE AO U/S 271B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 30.09.2008 DECLARING AN INCOME OF RS.3,19,850/ - WHICH WAS SUBSEQUENTLY REVISED ON 20.10.2008 AT THE SAME INCOME. HOWEVER, ASSESSMENT WAS COMPLETED ITA NO . 4996 /DEL/2013 RAMESH CHANDER GUPTA 2 EX - PARTE AT AN INCOME OF RS. 32,18,840/ - U/S 144 OF THE ACT. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF SHARES AND MANUFACTURING OF GLS LAMPS UNDER THE PROPRIETORSHIP M/S R.S. ELECTRICAL. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE APART FROM THE BUSINESS OF M/S R.S. ELECTRICAL HAD ENTERED IN TO ANOTHER BUSINESS ACTIVITY OF SALE AND PURCHASE OF SHARES WITH M/S RELIGARE SECURITIES PVT. LTD. AND TOTAL TURNOVER FROM THE SAID BUSINESS ACTIVITY OF SALE AND PURCHASE OF SHARES WAS RS.90,91,580/ - . THE AO ALSO NOTICED THAT THE ASSESSEE HAD NOT GOT HIS ACCOUNTS AUDITED RELATING TO BUSINESS OF SALE AND PURCHASE OF SHARES AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT. THE AO INITIATED THE PENALTY PROCEEDINGS U/S 271B OF THE ACT AND LEVIED THE PENALTY OF RS.45,458/ - . 4 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AN D SUBMITTED THAT IT WAS NOT A CASE WHERE ABSOLUTELY NO COMPLIANCE HAD BEEN MADE U/S 44AB OF THE ACT BUT WAS A CASE WHERE COMPLIANCE U/S 44AB OF THE ACT COULD NOT BE MADE WITH RESPECT TO ONE SEGMENT OF BUSINESS, T HEREFORE, PROVISIONS OF SECTION 271B OF THE ACT WERE NOT APPLICABLE. IT WAS FURTHER STATED THAT THE ASSESSEE HAD CONSIDERED THE SALE AND PURCHASE OF SHARES AS TRANSACTION ITA NO . 4996 /DEL/2013 RAMESH CHANDER GUPTA 3 INVOLVING CAPITAL ASSETS AND THEREFORE, IT REMAINED OUTSIDE THE PURVIEW OF TAX AUDIT. 5 . THE LD. CIT(A) AFTER CONSIDERING THE SU BMISSIONS OF THE A SSESSEE OBSERVED THAT NO DETAIL HAD BEEN FILED BY THE ASSESSEE WITH RESPECT TO PURCHASE AND SALE OF SHARES AND IT HAD SIMPLY BEEN SUBMITTED THAT AS THE TRADING IN SHARE DID NOT CONTINUE BEYOND FEW M ONTHS, T HEREFORE, IT DID NOT CONSTITUTE A REGULAR BUSINESS OF THE ASSESSEE AND FURTHER TRADING IN SHARES WAS CONSIDERED AS TRADING IN CAPITAL ASSETS. THE LD. CIT(A) ALSO OBSERVED THAT IT WAS NOT BROUGHT ON RECORD BY THE ASSESSEE TO SHOW AS TO HOW THE PURCHASE AND SALE TRANSACTION S OF THE SHARES WERE TREATED BY HIM IN THE BOOKS OF ACCOUNTS I.E. WHETHER THE SHARES WERE HELD AS STOCK IN TRADE OR AS AN INVESTMENT. THE LD. CIT(A) HELD THAT THE ASSESSEE S ACCOUNTS RELATING TO THE BUSINESS ACTIVITY OF TRADING IN SHARES WERE NOT AUDITED AS REQUIRED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT. HE ACCORDINGLY CONFIRMED THE PENALTY LEVIED BY THE AO. 6 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT TAX AUDIT WAS CONDUCTED FOR THE BUSINESS ACTIVITY AND THE AUDIT REPORT WAS OBTAINED ON 22.07.2008, THEREFORE IT CANNOT BE SAID THAT THE ITA NO . 4996 /DEL/2013 RAMESH CHANDER GUPTA 4 ASSESSEE DID NOT COMPLY WITH THE PROVISIONS OF SECTION 44AB OF THE ACT (COPY OF THE SAID AUDIT REPORT WAS FURNISHED WHIC H IS PLACED ON RECORD). IT WAS FURTHER SUBMITTED THAT THE ACTIVITY RELATING TO SALE AND PURCHASE OF SHARES WAS THE TRANSACTION INVOLVING CAPITAL ASSETS AND QUALIFIED FOR THE TREATMENT UNDER THE HEAD SHORT TERM CAPITAL LOSS. HENCE, IT WAS EXCLUDED TO BE COV ERED UNDER THE SCOPE OF TAX AUDIT. THEREFORE, THE PENALTY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A) U/S 271B OF THE ACT WAS NOT JUSTIFIED. 7 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CO NSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSEE GOT HIS ACCOUNTS AUDITED RELATING TO REGULAR BUSINESS OF MANUFACTURING OF GLS LAMPS. HOWEVER, NO AUDIT WAS GOT CONDUCTED IN RESPECT OF THE TRANSACTION RELATING TO SALE AND PURCHASE OF SHARES. I N THE INSTANT CASE, THIS CONTENTION OF THE ASSESSEE THAT THE TRANSACTION RELATING TO PURCHASE AND SALE OF SHARES RESULTED INTO SHORT TERM CAPITAL LOSS AND THE TRANSACTI ON WAS INVOLVING CAPITAL ASSETS, IS NOT REBUTTED AT ANY STAGE. FROM ITA NO . 4996 /DEL/2013 RAMESH CHANDER GUPTA 5 THE ABOVE NARRATED FACTS, IT IS CLEAR THAT THE ASSESSEE GOT HIS ACCOUNTS AUDITED FOR THE REGULAR BUSINESS RELATING TO MANUFACTURING OF GLS LAMPS AND THE OTHER TRANSACTION WAS RELATING TO THE SAL E AND PURCHASE OF SHARES WHICH RESULTED INTO SHORT TERM CAPITAL LOSS. IN THE PRESENT CASE, IT IS NOT BROUGHT ON RECORD TO SUBSTANTIATE THAT THE LOSS RELATED TO THE SALE AND PURCHASE OF SHARES WAS ASSESSED AS A BUSINESS LOSS OR ADJUSTED AGAINST THE REGULAR BUSINESS INCOME AND THAT THE SHARES SOLD BY THE ASSESSEE WERE KEPT AS A STOCK - IN - TRADE. THEREFORE, THE PROVISIONS OF SECTION 44AB OF THE ACT WERE NOT APPLICABLE TO THE TRANSACTION RELATING TO SALE & PURCHASE OF SHARES AND THE PENALTY U/S 271B OF THE ACT LE VIED BY THE AO AND SUSTAINED BY T HE LD. CIT(A) WAS NOT JUSTIFIED, THEREFORE, THE SAME IS DELETED . 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 26 /02 / 2016 ) SD/ - SD/ - ( BEENA PILLAI ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 /02 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR
