VENKATARAGHAVAN VENUGOPAL, NAVI MUMBAI V. ITO (IT) 2(1), MUMBAI

ITA 5168/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3657 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 18-07-2013
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3); 154; 15

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NOS.5168 & 5225/MUM/2013 ASSESSMENT YEAR: 2009-10 VENKATRAGHAVAN VENUGOPAL, 403, SAIRAJ CHS, PLOT NO.22, SECTOR 6, AIROLI, NAVI MUMBAI-400708 / VS. ITO(IT)-2(1), MUMBAI ( #$% & /ASSESSEE) ( ' / REVENUE) PAN. NO. ACAPV2578G ( ') * & + / DATE OF HEARING : 10/03/2016 * & + / DATE OF ORDER: 14/03/2016 / O R D E R PER BENCH THE ASSESSEE IS IN APPEAL FOR ASSESSMENT YEAR 2009- 10, AGAINST THE IMPUGNED ORDERS BOTH DATED 20/05/2013 O F THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE UP ITA #$% & ! / ASSESSEE BY SHRI M. SUBRAMANIAN ' ! / REVENUE BY SHRI RAJIV PANT ITA NO.5168 & 5225/MUM/2013 VENKATRAGHAVAN VENUGOPAL. 2 NO.5168/MUM/2013, WHEREIN, THE GROUND RAISED PERTAI NS TO DISMISSING THE APPEAL U/S 154 HAS BEEN CHALLENGED W ITHOUT APPRECIATING THE FACT THAT THERE WAS MISTAKE APPARE NT FROM RECORD THAT CERTAIN SHARES SOLD IN TWO DAYS OR LESS AT LOSS OF RS.3,45,648/- INCLUDED IN CAPITAL GAINS AND CONSIDE RING THE SAME AS INCOME FROM OTHER SOURCES. 2. DURING HEARING, SHRI M. SUBRAMANIAN, LD. COUNSE L FOR THE ASSESSEE ADVANCED ARGUMENTS WHICH IS IDENTI CAL TO THE GROUND RAISED BY EXPLAINING THAT THE LD. ASSESSING OFFICER IGNORED THE FACTS ON WHIMS AND FANCIES BY INVITING OUR ATTENTION TO PAGE-1, PARA 4 OF THE ASSESSMENT ORDER AND ALSO PAGE-8 OF THE PAPER BOOK. THE LD. ASSESSING OFFICER TREATED THE GAINS AS INCOME FROM OTHER SOURCES AND IGNORED THE CASES, WHERE, THERE WAS A LOSS BUT HOLDING PERIOD IN BOTH THE CASES WAS TWO DAYS. THE TRANSACTIONS WERE ARGUED TO BE T RANSACTED THROUGH EXCHANGE ONLY AND NO PERIOD HAS BEEN SET OU T BY THE EXCHANGE. THE CRUX OF ARGUMENT IS THAT IT WAS A MI STAKE APPARENT FROM RECORD. ON THE OTHER HAND, THE LD. DR , SHRI RAJIV PANT, DEFENDED THE CONCLUSION ARRIVED AT IN T HE ASSESSMENT ORDER/IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A NON-RESIDENT INDIAN, DEC LARED INCOME OF RS.6,90,389/-, WHICH INCLUDES INTEREST IN COME AND CAPITAL GAINS, ETC. THE CASE OF THE ASSESSEE WAS S ELECTED FOR SCRUTINY THROUGH CASS. THE ASSESSEE WAS ASKED TO FURNISH THE WORKING OF LOSS OF RS.1,11,167/-, CLAIMED UNDER THE HEAD CAPITAL GAINS. THE LD. ASSESSING OFFICER CONCLUDE D THAT ALL THE ITA NO.5168 & 5225/MUM/2013 VENKATRAGHAVAN VENUGOPAL. 3 SHARE TRADED WITH A HOLDING PERIOD OF TWO DAYS OR L ESS SHOULD BE CONSTRUED AS SPECULATIVE AND THUS TREATED THE SA ME AS INCOME FROM OTHER SOURCES INSTEAD OF UNDER CAPIT AL GAINS. THE ASSESSEE FILED RECTIFICATION APPLICATION U/S 15 4 OF THE ACT BY EXPLAINING THAT THERE IS APPARENT MISTAKE IN THE ASSESSMENT ORDER, THEREFORE, THE SAME CAN BE RECTIF IED. THE ASSESSEE FILED LETTER DATED 05/01/2012 CONTAINING S TATEMENT OF FACTS. THE LD. COUNSEL TOOK US TO VARIOUS PAGES OF THE PAPER BOOK. BEFORE COMING TO ANY CONCLUSION, WE ARE EXPEC TED TO ANALYZE, IF THERE WAS AN APPARENT MISTAKE. IT IS NO TICED THAT IN THE LAST PARA OF PAGE 1 OF THE ASSESSMENT ORDER, IT HAS BEEN MENTIONED THAT THE ASSESSEE WAS ACTIVELY DEALING IN SHARES/MUTUAL FUND SCHEMES AND IN ITS STATEMENT OF SHORT TERM CAPITAL GAINS, FILED BY THE ASSESSEE, THERE AR E TRANSACTIONS, WHERE THE HOLDING PERIOD IS LESS THAN THREE DAYS. SUCH TRANSACTIONS HAS BEEN SUMMARIZED AT PAGE-2 OF THE ASSESSMENT ORDER. THE SHARES OF LANCO INFRA WERE PU RCHASED ON 23/07/2008 AND SOLD ON 25/07/2008, MEANING THERE BY, THE HOLDING PERIOD IS TWO DAYS AND THE SHORT TERM C APITAL GAINS WAS RS.24,433/- AND LIKEWISE, FOR SONATA, THE DATE OF PURCHASE IS 13/10/2008, WHICH WERE SOLD ON 15/10/20 08 AND THE SHORT TERM CAPITAL GAIN IS RS.51,400/-. THE HOLDING PERIOD IS AGAIN TWO DAYS. THE LD. ASSESSING OFFICER OBSERVED THAT IN SHARE TRANSACTION, THE STOCK EXCHANGE TAKES MINIMUM THREE DAYS TO DELIVER/TRANSFER OF SHARES SO PURCHAS ED, THUS, HE OPINED THAT IT CANNOT BE CONSIDERED AS SHORT TERM C APITAL GAIN. WE HAVE PERUSED THE PAPER BOOK AND AT PAGE-8, WE FI ND THAT THERE IS ANOTHER TRANSACTION IN THE CASE OF UNION B ANK, WHERE, ITA NO.5168 & 5225/MUM/2013 VENKATRAGHAVAN VENUGOPAL. 4 THE SHARES WERE PURCHASED ON 23/07/2008 AND SOLD ON 25/07/2008, LIKEWISE, THE SHARES OF YES BANK WERE P URCHASES ON 23/07/2008 AND SOLD ON 25/07/2008 CAUSING LOSS O F RS.54,771/- AND RS.89,550/- RESPECTIVELY. THESE FIG URES OF LOSS WERE IGNORED BY THE ASSESSING OFFICER, WHERE A LSO THE PERIOD OF HOLDING IS TWO DAYS. THIS APPROACH OF THE ASSESSING OFFICER CANNOT BE SAID TO BE JUSTIFIED. LIKEWISE, I N THE CASE OF TATA SPONGE, TATA METALIKS, KEC INTAL, THE PERIOD O F HOLDING IS THREE DAYS. THIS PAPER BOOK WAS VERY MUCH FILED BEF ORE THE ASSESSING OFFICER AND IT IS A FACTUAL ISSUE, THEREF ORE, CLEARLY, THERE IS MISTAKE APPARENT FROM RECORD. IT IS ALSO NOTED THAT THE COPY OF RETURN, COMPUTATION OF INCOME ALONG WIT H ENCLOSURES (PAGES 1 TO 10 OF THE PAPER BOOK) WERE D ULY AVAILABLE WITH THE ASSESSING OFFICER. TOTALITY OF F ACTS, CLEARLY INDICATES THAT MISTAKE WAS APPARENT FROM RECORD AND LOSS SHOULD HAVE BEEN SET OFF AGAINST GAINS. ALL THE TRA NSACTIONS WERE ROUTED THROUGH EXCHANGE. IN VIEW OF THIS FACTU AL MATRIX, THE ALLEGED GAINS CANNOT BE SAID TO BE INCOME FROM OTHER SOURCES, THEREFORE, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE AFRESH AS THE MISTAKE WAS APPARENT FROM RECORD AND ALLOW SET OFF OF LOSS AGAINST GAINS . THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD, THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 3. NOW, WE SHALL TAKE UP ITA NO.5225/MUM/2013, IMPOSING/CONFIRMATION OF PENALTY OF RS.6,54,972/- U /S 271(1)(C) OF THE ACT. THE CRUX OF ARGUMENT ON BEHAL F OF THE ASSESSEE IS THAT THE ASSESSEE IS A NON-RESIDENT, FI LED REVISED COMPUTATION AND THERE WAS NO MOTIVE OF AVOIDING TAX . OUR ITA NO.5168 & 5225/MUM/2013 VENKATRAGHAVAN VENUGOPAL. 5 ATTENTION WAS INVITED TO PAGE-15 OF THE PAPER BOOK BY CLAIMING THAT THERE WAS NO LOSS TO THE REVENUE AND RATHER IT WAS A CASE OF REFUND. THE INADVERTENT MISTAKE, IF ANY, DOES NO T AMOUNT TO CONCEALMENT. ON THE OTHER HAND, THE LD. DR, DEFENDE D THE IMPOSITION AS WELL AS CONFIRMATION OF PENALTY. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A NON-RESIDENT INDIAN. THE ASSESSEE INVESTED IN MUTUAL FUNDS AS WELL AS SHARES AND SECU RITIES. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 16/12/2011 ASSESSING THE TOTAL INCOME AT RS.12,34,430/- AGAINS T THE RETURNED INCOME OF RS.6,90,389/-. THE MAIN ADDITION S WERE MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES, CLAIME D AGAINST SHORT TERM CAPITAL GAIN OF RS.2,32,477/- AND SHORT TERM CAPITAL GAIN ON SALE OF MUTUAL FUNDS OF RS.1,86,963 /-. THE LD. ASSESSING OFFICER ALSO MADE ADDITION IN RESPECT OF SHORT TERM CAPITAL GAINS ON THE PLEA THAT THERE WAS NON-DELIVE RY TRADING TO THE EXTENT OF RS.75,834/- AND SHORT TERM CAPITAL GA INS OF NON- REPATRIABLE TRADING TO THE EXTENT OF RS.4,68,207/- AGGREGATING RS.5,44,041/-, WHICH WAS TREATED AS SPECULATIVE IN NATURE. PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED FO R ABOVEMENTIONED ADDITIONS/TRANSACTIONS. IT IS NOTED THAT THE ASSESSEE CLAIMED EXPENSES LIKE DP/CUSTODIANS/PIS SH ARES, COURIER CHARGES, OVERSEAS TELEPHONE CHARGES, INTERE ST PAID ON LOAN, STD PAID. THESE EXPENSES WERE DISALLOWED BY THE ASSESSING OFFICER BY OBSERVING THAT THE CAPITAL GAI NS IS TAXABLE UNDER CONCESSIONAL RATE OF TAX AND THE EXPENDITURE FOR EARNING CAPITAL GAIN WAS ALSO DISALLOWED. THE LD. ASSESSING OFFICER ITA NO.5168 & 5225/MUM/2013 VENKATRAGHAVAN VENUGOPAL. 6 TREATED THE SHORT TERM CAPITAL GAIN AS SPECULATIVE UNDER THE HEAD INCOME FROM OTHER SOURCES. WE HAVE DISCUSSED T HIS ISSUE WHILE DECIDING ITA NO.5168/MUM/2013 HOLDING THAT TH E INCOME WAS NOT INCOME FROM OTHER SOURCES RATHER IT WAS SHORT TERM CAPITAL GAIN, THEREFORE, ON THIS COUNT, THE PE NALTY CANNOT SURVIVE. SO FAR AS, DISALLOWANCE OF EXPENSES IS CON CERNED, AUTOMATICALLY DOES NOT TANTAMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INC OME. OUR VIEW FIND SUPPORTS FROM THE RATIO LAID DOWN IN RELI ANCE PETROPRODUCTS LTD. 322 ITR 158 (SC). IF THE CLAIM OF THE ASSESSEE IS NOT ACCEPTABLE TO THE ASSESSING OFFICER OR OUT OF THE CLAIM, ANY DISALLOWANCE IS MADE BY HIM, IT DOES NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HIDES SOMETHING OR FURNISHED INACCURATE PARTICULARS, THUS, THE PENALTY CANNOT SU RVIVE. THE APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IN ITA NO.5168/MUM/2013 IS ALLOWED WITH CERTAIN DIRECTIONS FOR STATISTICAL PURPOSES, WHEREAS, THE APPEAL IN ITA NO.5225/MUM/2013 IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 10/03/2016. SD/- SD/- ( JASON P. BOAZ ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER ( ) MUMBAI; , DATED : 14/03/2016 F{X~{T? P.S / /. .. ITA NO.5168 & 5225/MUM/2013 VENKATRAGHAVAN VENUGOPAL. 7 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./ / THE APPELLANT (RESPECTIVE ASSESSEE) 2. 01./ / THE RESPONDENT. 3. 2 2 ( 3& ( - ) / THE CIT, MUMBAI. 4. 2 2 ( 3& / CIT(A)- , MUMBAI, 5. 5'6 0&# , 2 -+ -# 7 , ( ) / DR, ITAT, MUMBAI 6. 8$ ) / GUARD FILE. ! / BY ORDER, 15& 0& //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , ( ) / ITAT, MUMBAI