KUMAR S. TAURANI, MUMBAI V. ACIT CEN CIR 22 & 30, MUMBAI

ITA 5267/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8830 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Assessee Lawyers: DEEPAK TRALSHAWALLA
• Keywords: Bonafide belief; Question of law; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5267/MUM/2013 ASSESSMENT YEAR: 2009-10 MR. KUMAR S. TAURANI VS. ACIT CEN CIR 22 & 30 901 VIVENDI, SAROJINI NAIDU MARG, AAYAKAR BHAVA N, SANTACRUZ WEST MUMBAI 400 020 MUMBAI 400 054 PAN : AAAPT7706J (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. DEEPAK TRALSHAWALLA, AR REVENUE BY: MR.M.V. RAJGURU, DR DATE OF HEARING : 22/1 2/2016 DATE OF PRONOUNCEMENT: 16/01/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 39, MUMBAI AND ARISES OUT OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER:- I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE PENALTY OF RS. 1 ,50,000/-. A. MERELY ON THE GROUND THAT THE BROKERAGE OF RS. 1,85, 000/- CLAIMED WAS LEGALLY NON PERMISSIBLE, IGNORING THE FACT THAT THE SAID CLAIM WAS MADE UNDER BONAFIDE BELIEF AND ALL THE FACTS HAD BEEN DI SCLOSED DURING THE COURSE OF THE ASSESSMENT AND DETAILS FURNIS HED IN THE RETURN OF INCOME FILED. B. FURTHER, THE LD. CIT(A) HAS ERRED IN UPHOLDING PENALTY ON ACCOUNT OF DISALLOWANCE OF SPECULATION LOSS OF RS. 1,90,491/- M ERELY ON THE GROUND THAT THE RETURN OF INCOME HAD BEEN FILED IN A L ACKADAISICAL ITA NO. 5267/MUM/2013 2 MANNER IGNORING THE FACT THAT THE APPELLANT AT THE TIME OF ASSESSMENT HAD VOLUNTARILY SUBMITTED THE DAY TO DAY STATEMENT OF T RANSACTION OF SHARES DURING THE COURSE OF ASSESSMENT AND DISCLOSED TH AT THE LOSS FROM SHARES HAD BEEN WRONGLY CLAIMED AS TRADING LOSS INSTEAD OF SPECULATION LOSS. 3. IN A NUTSHELL, THE FACTS ARE THAT THE ASSESSING OFF ICER (AO) NOTICED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD DEDUCTED BROKERAGE OF RS. 1,85,000/- F ROM THE HOUSE PROPERTY. SINCE THIS IS NOT ALLOWABLE, THE AO DISAL LOWED THE SAME AND ADDED IT BACK TO THE INCOME FROM HOUSE PROPERTY. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE SUBMITTED BEFORE THE AO THAT THE BUSINESS LOSS ALSO INCLUDED LOSS FROM SPECULATIVE TRANSACTION IN SHARES OF RS. 1,90, 491/- AND REQUESTED TO ALLOW THIS TO BE CARRIED FORWARD TO TH E SUBSEQUENT YEARS FOR ADJUSTMENT. ACCORDINGLY THE AO REDUCED LOSS OF RS. 1,90,491/- FROM THE BUSINESS LOSS CLAIMED BY THE ASSESSEE AND ALLOWED IT TO BE CARRIED FORWARD AS SPECULATION LOSS. 3.2 THEN THE AO IMPOSED A PENALTY OF RS. 1,50,000/- U/S 271(1)(C) ON THE ABOVE AMOUNT OF RS. 3,75,491/- (RS. 1,85,000 /- PLUS RS. 1,90,491/-). 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEAR NED CIT(A). WE FIND THAT THE LEARNED CIT(A) RELYING ON THE JUDGEME NT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ZOOM TELECOMMUNICATIONS LTD . (327 ITR 510) CONFIRMED THE PENALTY OF RS. 1,50,000/- IM POSED BY THE A.O. 5. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE R ELIES ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS P LTD. (2010) 322 ITR 158 (SC) AND DELHI HIGH COURT IN THE CASE OF CIT VS. AURIC INVESTMENT & SECURITIES LTD . (2009) 310 ITR 121 (DEL). 6. THE LEARNED DR SUPPORTS THE ORDER PASSED BY THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD. (SUPRA) , THE HON'BLE SUPREME COURT HAS HELD AS UNDER: MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT, BY ITSELF, WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)( C). IF THE CONTENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE WAS NOT ACCEPTED BY THE ASSESSING OFFICE R FOR ANY REASON, ITA NO. 5267/MUM/2013 3 THE ASSESSEE WOULD INVITE PENALTY UNDER SECTION 271 (1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 7.1 WE ALSO FIND THAT IN THE CASE OF AURIC INVESTMENT & SECURITIES LTD. (SUPRA) , THE HON'BLE DELHI HIGH COURT HAS HELD AS UNDER: THE ASSESSEE VIDE ITS LETTER FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SUBMITTED THE DETAILS OF TRANSACTION, IT IS CLEAR FR OM THE RECORD THAT ALL THE REQUISITE INFORMATION AS REQUIRED BY THE AO, WAS FUR NISHED BY THE ASSESSEE. THERE IS NOTHING ON RECORD TO SHOW THAT IN FURNISHIN G ITS RETURN OF INCOME, THE ASSESSEE HAS EITHER CONCEALED HIS INCOME OR HAS FURN ISHED ANY INACCURATE PARTICULARS OF INCOME. THE MERE TREATMENT OF THE BU SINESS LOSS AS SPECULATION LOSS BY THE AO DOES NOT AUTOMATICALLY WARRANT INFERE NCE OF CONCEALMENT OF INCOME. THE ASSESSEE DID NOT CONCEAL ANY PARTICULAR S OF INCOME, AS HE FILED FULL DETAILS OF THE SALE OF SHARES. IN ANY CASE, IT CANNO T BE SAID THAT THE ASSESSEE HAS CONCEALED ANY PARTICULARS SO FAR AS ITS COMPUTATION OF INCOME IS CONCERNED AND AS SUCH PROVISION OF S.271(1)(C) ARE NOT ATTRACTED THERE IS NO INFIRMITY IN THE REASONING GIVEN BY THE TRIBUNAL. THE ABOVE BEING TH E POSITION, NO FAULT CAN BE FOUND WITH THE VIEW TAKEN BY THE TRIBUNAL. THUS, THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO A QUESTION OF LAW, MUCH LESS A SUB STANTIAL QUESTION OF LAW, TO FALL WITHIN THE LIMITED PURVIEW OF S.260A. 8. RESPECTFULLY FOLLOWING THE DECISIONS MENTIONED A T PARA 7 & 7.1 HERE-IN-ABOVE, THE PENALTY OF RS. 1,50,000/- IMPOSE D BY THE A.O. U/S 271(1)(C) IS DELETED. 9. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2017 SD/- SD/ (MAHAVIR SINGH) ( N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI; DATED: 16/01/2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, ITA NO. 5267/MUM/2013 4 //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI