AMADHI INVESTMENTS LTD., AHEMEDABAD V. ITO - 1(1)(1), MUMBAI

ITA 5747/MUM/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0348 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-02-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 20-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Section: 143(3)

Judgement Text

1 ITA NO.5747/MUM/2013 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.5747/MUM/2013 (ASSESSMENT YEAR: 2006-07) M/S AMADHI INVESTMENTS LTD E/10, GF, MEMNAGAR ASSOCIATION, NEAR STATE BANK OF INDIA, MEMNAGAR, AHMEDABAD-380 052 PAN : AAACA7300E VS ITO-1(1)(1), MUMBAI APPELLANT BY NONE REVENUE BY SHRI RAJESH KUMAR YADAV DATE OF HEARING 05 -02-2018 DATE OF PRONOUNCEMENT -02-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-1, MUMBAI DATED 29-07-2013 AND IT PERTAINS T O AY 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1 THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) - I, MUMBAI ['LD. CIT (A)'] ERRED IN CONFIRMING THE ASSESSING OFFICER 'S ACTION TO LEVY THE PENALTY U/S.271(1)(C) AMOUNTING TO RS. 19,47,2407- ON THE P OINT/GROUND WHERE THE PROFIT ON SALE OF SHARES HAS BEEN TREATED AS BUSINE SS INCOME AS AGAINST THE APPELLANT'S CLAIM OF TREATING THE SAME AS SHORT TER M CAPITAL GAIN. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 30-03-2007 DECLARING TOTAL INCOME OF RS.87,12,380. THE ASSESS MENT WAS COMPLETED 2 ITA NO.5747/MUM/2013 U/S 143(3) ON 23-12-2008 DETERMINING TOTAL INCOME A T RS.92,98,080 BY MAKING CERTAIN DISALLOWANCES AND ALSO TREATING INCO ME OFFERED UNDER THE HEAD SHORT TERM CAPITAL GAIN FROM SALE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THEREAFTER, THE AO INITIATED PENALTY U/S 271(1)(C) FOR FURNISHING INACCURATE PAR TICULARS OF INCOME. AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSES SEE AND ALSO BY RELYING ON CERTAIN JUDICIAL PRECEDENTS INCLUDING TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF KARAM CHAND THAPPAR & BROS PVT LTD CIT (1971) 83 ITR 899 (SC) OBSERVED THAT THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF SALE AND PURCHASE OF SHARES AND HENCE LEVIED U/S 271(1)(C) OF THE INCOME -TAX ACT, 1961 OF RS.19,47,240. 3. AGGRIEVED BY THE PENALTY ORDER, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A), ASSESSEE FILED ELABORATE WR ITTEN SUBMISSIONS AND ALSO RELIED UPON CERTAIN JUDICIAL PRECEDENTS. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE OB SERVED THAT THE ASSESSEE HAS FAILED TO FILE ANY EVIDENCE TO NEGATE THE OBSERVATIONS MADE BY THE AO WITH REGARD TO THE DECLARATION OF IN COME FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD SHORT TERM CAPIT AL GAIN; THEREFORE, HE OPINED THAT THE ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS OF INCOME SO AS TO SUPPRESS THE TAX PAYABLE WHICH ATTRACTS PE NAL PROVISIONS U/S 271(1)(C) OF THE ACT. WITH THESE OBSERVATIONS, UPH ELD PENALTY LEVIED BY 3 ITA NO.5747/MUM/2013 THE AO. 4. NONE APPEARED ON BEHAL OF THE ASSESSEE. WE HAVE HE ARD THE LD.DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO LEVIED PENALTY U/S 271(1)(C) IN RESPECT OF INCOME OFFERED BY THE ASSESSEE FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD SHORT T ERM CAPITAL GAIN BY HOLDING THAT THE NATURE OF TRANSACTIONS CARRIED OUT BY THE ASSESSEE ARE IN THE NATURE OF ADVENTURE IN THE NATURE OF TRADE AND COMMERCE AND RESULTANT GAIN IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION WHEREAS THE ASSESSEE HAS INTENTIONALLY DECLARED INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN THEREBY FU RNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE LO WER AUTHORITIES THAT IT IS IN THE BUSINESS OF INVESTMENT IN SHARES AND DEBE NTURES FROM THE FUND RAISED FROM SHARES BUT NOT IN THE BUSINESS OF PURCH ASE AND SALE OF SHARES SO AS TO TREAT SURPLUS UNDER THE HEAD INCOM E FROM BUSINESS. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE GAVE A CATEGORICAL FINDING THAT THE ASSESSEE INTENTIONAL LY AND CONSCIOUSLY MISREPRESENTED THE NATURE OF INCOME AND CONCEALED T HE PARTICULARS OF INCOME SO AS TO SUPPRESS THE TAX PAYABLE. THEREFOR E, HE OPINED THAT THE ASSESSEE HAS WILLFULLY FURNISHED INACCURATE PARTICU LARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THE R ELEVANT PORTION OF THE ORDER OF CIT(A) IS EXTRACTED BELOW:- 4 ITA NO.5747/MUM/2013 4.7 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, ASSESSMENT ORDER, PENALTY ORDER U/S.271(L)(C) AND SUBMISSIONS OF THE APPELLANT. THE FACTS OF THE. CASE SHOW THAT THE APPELLANT HAS CARRIED OUT SALE P URCHASE OF SHARES ON REGULAR BASIS DURING THE YEAR, IN LARGE QUANTITIES AND THERE IS NO ALLEGED STOCK LEFT WHICH COULD BE IN THE NATURE OF INVESTMENT HOL DING. THE SHARES SOLD AND PURCHASED DURING THE YEAR ARE ALSO HELD FOR VERY SH ORT PERIOD AND THERE IS NO ASPECT INDICATING THE INVESTMENT ELEMENT IN TERMS O F LAW AND FACT. IT IS FURTHER SEEN THAT IN THIS PARTICULAR YEAR THE APPELLANT HAS CARRIED ON BUSINESS IN ALL TOGETHER DIFFERENT WAY IN DEALING WITH IPO SHARES 'THROUGH THE MEDIUM OF THOUSANDS OF FICTITIOUS / BENAMI IPO APPLICANTS WIT H EACH OF THE APPLICATIONS BGEING OF SMALL VALUE I.E. BELOW RS.50 ,000/- SO AS TO BE ELIGIBLE FOR ALLOTMENT UNDER THE RETAILS INVESTMENT CATEGORY/' THE A.O. HAS DETAILED THIS ASPECT OF BUSINESS IN HIS ORDER, PART OF WHICH HAS BEEN REPRODUCED ABOVE. THERE IS NO EXPLANATION FORWARDED BY APPELLANT BEFORE ME SO AS TO UNPROVE THE FINDINGS GIVEN BY THE A.O, IN THE RELEVANT ASSESSMENT ORDER AND PENALTY ORDER UNDER APPEAL BEFORE ME. IT EMERGES FROM THE SUBMISSIONS AND THE RECORDS OF THEREFORE ME THAT TH E ACTIVITIES OF THE APPELLANT DURING THE YEAR ARE COMPLETELY IN THE NATURE OF TRADING IN SHARES AND THE A.O, HAS RIGHTLY POINTED SUCH FACTS IN DETAIL A S DISCUSSED ABOVE. 4.8 THE LEVY OF PENALTY U/S.271(L)(C) AS ALSO NOTED BY A.O. AND REPRODUCED ABOVE IS BASED ON MATERIAL FACTS AND EVIDENCE. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CLEAR THAT THERE H AS BEEN AN INTENTIONAL AND CONSCIOUS EFFORT ON THE PART OF THE APPELLANT T O WRONGLY RECORD, MIS- REPRESENT THE NATURE OF INCOME AND CONCEAL THE PART ICULARS AND THE INCOME BOTH IN THE NATURE OF INVESTMENT TRANSACTIONS/INCOM E RATHER THAN TRADING IN SHARES WHICH IS THE ACTUAL POSITION/FACT. THE A.O. HAS LEVIED A PENALTY AT 100% WHICH IS THE MINIMUM PRESCRIBED AS PER LAW IN THIS BEHALF. IN VIEW OF ABOVE DISCUSSION AND FOR THE REASONS THEREIN, THE P ENALTY LEVIED BY THE A.O. IS CONFIRMED AS PER LAW AND FACTS. ACCORDINGLY , GROUND NOS.1 OF APPEAL IS DISMISSED. 5. FACTS REMAIN UNCHANGED. THE ASSESSEE DID NOT APPEA R BEFORE US TO CONTROVERT THE FINDINGS OF FACTS RECORDED BY THE LD .CIT(A). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) WAS RIGH T IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT I N RESPECT OF TREATMENT OF INCOME FROM PURCHASE AND SALE OF SHARES. WE DO NOT FIND ANY ERROR IN THE ORDER OF CIT(A). HENCE, WE ARE INCLINED TO UPH OLD THE FINDINGS OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE ASSESSEE . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. 5 ITA NO.5747/MUM/2013 ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 05 TH FEBRUARY, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI