ASST CIT 25(3), MUMBAI V. PANKAJ V. KARANI, MUMBAI

ITA 5472/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6855 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDE
• Keywords: Bonafide belief; Initiation of penalty proceedings; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI N. K. PRADHAN, AM ./ I.T.A. NO. 5472/MUM/2016 ( / ASSESSMENT YEAR: 2009 - 10 ) ASST. CIT - 25(3 ), ROOM NO. 601, C - 10, 6 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400 051 / VS. SHRI PANKAJ V. KARANI 7, QUEENS CRAFT CHS, ST. XAVIERS SCHOOL ROAD, VILE PARLE (EAST), MUMBAI - 400 057 ./ ./ PAN/GIR NO. AADPK 3126 A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SAURABH DESH PANDE / RESPONDENT BY : NONE / DATE OF HEARING : 09.05.2018 / DATE OF PRONOUNCEMENT : 01.06 .2018 / O R D E R PER SA KTIJIT DEY , J . M.: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 07.06.2016 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 37, MUMBAI DELETING THE PENALTY IMPOSED AMOUNTING TO RS.49 ,94,420/ - U/S. 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2009 - 10. 2. BRIEFLY THE FACTS ARE , THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING TOTAL INCOME OF RS.5,63,450/ - . DURING THE 2 ITA NO. 5472/MUM/2016 SHRI PANKAJ V. KAR ANI ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER WHILE VERIFYING THE RETURN OF INCOME AND THE COMPUTATION OF TOTAL INCOME FILED BY THE ASSESSEE FOUND THAT THE ASSESSEE HAS SHOWN LOSS ARISING ON THE SALE OF SHARES AMOUNTING TO RS.3,32,96,132/ - AS SHORT TERM CAPITAL LOSS AND H AS CL AIMED CARRY FORWARD OF THE SAID LOSS TO THE SUBSEQUENT ASSESSMENT YEARS. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND COMPLETED THE ASSESSMENT BY TREATING THE LOSS ARISING FROM SHARE TRANSACTION AS BUSINESS LOSS. AS A RESUL T OF DIFFERENCE IN LOSS CLAIMED BY THE ASSESSEE , THE ASSESSING OFFICER INITIATED PROCEEDING F O R IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT ALLEG ING FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALING THE INCOME. T HOUGH , THE ASSESSEE OBJECTED TO THE INITIATION OF PENALTY PROCEEDINGS ON THE GROUND THAT THE ASSESSEE HAS SUBMITTED FULL PARTICULARS RELATING TO THE SHARE TRANSACTION AND THE DIFFERENCE IN TREATMENT OF LOSS IN SHARE TRANSACTION WAS ON ACCOUNT OF A DIFFERENCE OF OPINION BETWEE N THE ASSESSEE AND THE DEPARTMENT, THEREFORE, THE PROVISION OF SECTION 271(1) (C) ARE NOT ATTRACTED, H OWEVER, THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSEE PROCEEDED TO PASS AN ORDER IMPO SING PENALTY OF RS.49,94,420/ - U/S. 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. BEING AGGRIEVED OF THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 3 ITA NO. 5472/MUM/2016 SHRI PANKAJ V. KAR ANI 4. AFTER CONSIDER ING THE SUBMIS SIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE ASSESSEE HAS HELD SHARES FOR NUMBER OF MONTHS AND SOME SHARES ACQUIRED IN THE PRECEDING YEAR WAS SOLD IN THE IMPUGNED ASSESSMENT YEAR. HE ALSO FOUND THAT THE ASSESSEE HAS UTILIZED ITS OWN FUNDS FOR INVESTING IN SHARES AND HAS SHOWN IT AS INVESTMENT IN THE BALANCE SHEET. ON THE BASIS OF THE FACT THAT DECLARING INCOME FROM SHARE TRANSACTION WAS DECLARED AS CAPITAL GAIN IN THE PRECEDIN G YEARS, THE ASSESSEE HAS OFFERED THE LOSS FROM SHARE TRANSACTION AS CAPITAL LOSS IN THE IMPUGNED ASSESSMENT YEAR UNDER A BONA FIDE IMPRESSION T HAT IT IS AN INVESTMENT ACTIVITY. HE ALSO FOUND THAT THE ASSESSEE HAS MADE FULL AND TRUE DISCLOSURE OF ITS SHARE TRANSACTIONS AND MERELY ON ACCOUNT OF CHANGE OF HEAD OF INCOME, IT CANNOT BE PRESUMED THAT THERE IS A DELIBERATE OR WILLFUL ATTEMPT BY THE ASSESSEE TO FURNISH IN ACCURATE PARTICULARS OF INCOME OR SUPPRESSION OF INCOME SO AS TO INVOKE THE PROVISION OF SECTI ON 271(1)(C) OF THE ACT. RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158 (SC), THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT UNDER A BONAFIDE BELIEF, THE ASSESSEE HA S MADE A CERTAIN CLAIM WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. HOWEVER, NON ACCEPTANCE OF ASSESSEES CLAIM BY ITSELF WOULD NOT RESULT IN FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. ACCORDINGLY , HE DELETED THE PENALTY I MPOSED BY THE ASSESSING OFFICER. 4 ITA NO. 5472/MUM/2016 SHRI PANKAJ V. KAR ANI 5. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE. EVEN , THE ASSESSEE HAS NOT FILED AN APPLICATION SEEKING ADJOURNMENT. IN VIEW OF THE AFORE - SAID, WE PROCEEDED TO DISPOSE OF F THE APPE AL EX PART E AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIALS ON RECORD. AS COULD BE SEEN FROM THE FACTUAL MATRIX OF THE CASE, THE ASSESSEE WAS CARRYING ON SHARE TRANSACTION ACTIVITIES. IT IS ALSO SEEN FROM THE RECORD THAT THE ASSESSEE HAS TREATED THE ACTIVITIES IN SHARE TRANSACTIONS AS INVESTMENT ACTIVITIES FROM THE PRECEDING ASSESSMENT YEARS. IN FACT , AS OBSERVED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , IN THE BALANC E SHEET OF THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS SHOWN THE SHARE TRANSACTIONS AS INVESTMENT. AS IT APPEARS , IN THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE INCURRED LOSS IN THE COURSE OF SHARE TRANSACTION WHICH WAS SHOWN AS SHORT TERM CAPITAL LOSS IN THE COMPUTATION OF INCOME AND THE ASSESSEE CLAIMED CARR Y FORWARD OF THE SAME. HOWEVER, IN THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER DID NOT ACCEPTED ASSESSEES CLAIM AND TREATED THE LOSS FROM SHARE TRANSACTION AS BUSINESS LOSS AND ON THAT BASIS INITIATED PROCEEDING FOR IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT , ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. AS COULD BE SEEN FROM THE AFORESAID FACTS, THE DIFFERENCE BETWEEN THE ASSESSEE AND THE ASSESS ING OFFICER WAS WITH REGARD TO THE PROPER HEAD UNDER WHICH THE LOSS FROM SHARE TRANSACTION IS TO BE ALLOWED. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE EITHER FURNISHED INACCURATE PARTICULARS OF INCOME OR 5 ITA NO. 5472/MUM/2016 SHRI PANKAJ V. KAR ANI CONCEALED HIS INCOME. ON THE CONTRARY, IT IS EVIDENT THAT THE ASSESSEE HAS FURNISHED FULL PARTICULARS RELATING TO ITS SHARE TRANSACTION. MOREOVER, CONSIDERING THE FACT THAT FROM THE PRECEDING ASSESSMENT YEARS THE ASSESSEE HAD BEEN TREAT ING THE ACTIVITIES IN SHARE TRANSACTIONS AS AN INVESTMENT ACTIVITY IT CANNOT BE DISBELIEVED THAT UNDER A BONAFIDE IMPRESSION THE ASSESSEE HAS CLAIMED THE LOSS FROM SHARE TRANSACT ION AS SHORT TERM CAPITAL LOSS. AS RIGHTLY HELD BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS MADE CERTAIN CLAIM UND ER A BONAFIDE IMPRESSION WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. HOWEVER, NON ACCEPTANCE OF ASSESSEES CLAIM BY ITSELF WIL L NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED HIS INCOME. IN VIE W OF THE AFORE - SAID, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY. THE GROUNDS RAISED ARE DISMISSED. 7. IN THE RESULT, THE DEPARTMENTS APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.06.2018 SD/ - SD/ - ( N. K. PRADHAN ) (S A KTIJIT DEY ) / A CCOUNTANT MEMBER / JUDICIA L MEMBER MUMBAI ; DATED : 01.06.2018 . . ./ ROSHANI , SR. PS 6 ITA NO. 5472/MUM/2016 SHRI PANKAJ V. KAR ANI / 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 F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI