ASHOK M JAIN, NAVI MUMBAI V. ACIT 22(3), NAVI MUMBAI

ITA 601/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8007 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: V D PARMAR
• Keywords: Business income; Transactions in derivatives; Retrospective amendment; Speculation loss
• Section: 15

Judgement Text

P AGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 6 0 1 / MUM/ 2015 ( / ASSESSMENT YEAR: 2009 - 10 ) ASHOK M JAIN SHOP NO. RAJKAMAL BLD, G. SEC 15 VASHI , NAVI MUMBAI - 400703 / VS. ACIT 22(3) 3 RD FLOOR, TOWER NO. 6 VASHI RLY STN COMPLEX, VASHI NAVI MUMBAI 400703 ./ ./ PAN/GIR NO. AA IPJ 9350 L ( / APPELLANT ) : ( / RESPONDENT ) / ASSESSEE BY : SHRI V.D. PARMAR / REVENUE BY : SHRI RAJESH KUMAR YADAV / DATE OF HEARING : 20/02 /2017 / DATE OF PRONOUNCEMENT : 28 /02/2017 P AGE | 2 / O R D E R PER RAVISH SOOD, JM : THE PRESENT APPEAL HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) - 33, MUMBAI , DATED 23.09.2014, WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A . O U/S.271(1)( C ) OF THE INCOME T AX ACT, 1961 (FOR SHORT ACT), DATED 22.05.2012, THEREIN RAISING T HE FOLLOWING GROUNDS OF APPEAL. (1) . ON FACTS AND CI R CUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN RELYING ON DECISION OF CIT VS. MULTIPLAN INDIA PVT. LTD. 38 I TD (DELHI) AND OTHER DECISIONS FOR DISMISSAL OF APPEAL FOR WANT OF PERSUASION OF APPEAL WITHOUT APPRECIATING THE FACT THAT APPELLANT WAS NOT SERVED NOTICE OF HEARING. (2). ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) E RRED IN CONFIRMING CONCEALMENT PENALTY US 271(1)(C) OF RS.6,63,360/ - WITHOUT APPRECIATING THE FACTS THAT APPELLANT HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. (3). ON FACTS AND CIRCU MSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN RELYING ON DECISION IN CASE OF CIT VS. ZOOM COMMUNICATION (PV T.) LTD.(2010) 327 ITR 310/191 TAXMAN 179 (DELHI) WHICH IS DISTINGUISHABLE ON THE FACTS. (4). ON FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW LD. CIT(A) ERRED IN CONCLUDING THAT APPELLANT HAS FILED RETURN OF INCOME DISHONESTLY WITH A VIEW TO ESCAPE TA X LIABILITY WITHOUT APPRECIATING THE FACT THAT MCX STOCK P AGE | 3 EXCHANGE WAS RECOGNIZED EXCHANGE AT THE TIME OF FILING RETURN EVEN OTHERWISE NOTIFICATION 46/2009 DATED 22.05.2009 HAS RETROSPECTIVE EFFECT FROM 01.04.2006 BEING PROCEDURAL IN NATURE, RELIANCE IS PLACED ON DECISION IN CASE OF ACIT VS. ARNAV A MEHTA ITAT MUMBAI BENCH A DECISION ITA NO.2742/MUMBAI/2011 DATED 12.09.2012. (5). ON FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW LD. CIT(A) ERRED IN NOT FOLLOWING THE RATIO OF DECISION OF RELIANCE PETRO PRO DUCTS (2010) WHICH IS SQUARELY APPLICABLE TO THE PRESENT FACTS OF THE CASE AS APPELLANT HAS DISCLOSED ALL PARTICULARS OF INCOME AND NO FACT HAS BEEN CONCEALED. (6). ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT (A) ERRED IN CONFIRMING PENALTY U/S.271(1)(C) WITHOUT APPRECIATING THE FACTS THAT IN RETURN OF INCOME APPELLANT HAS DISCLOSED F & O AND COMMODITY TRANSACTIONS SEPARATELY IN P & L ACCOUNT AND AS SUCH APPELLANT HAS DISCLOSED ALL PARTICULARS OF INCOME. THE APPELLANT CRAVES, TO CONSIDER EAC H OF THE ABOVE GROUND OF APPEAL WITHOUT PREJUDICE TO EACH OTHER A ND CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2. B RIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PVC PROFILE, F&O TRADING IN SHARES AND TRADING OF COMMODITIES THROUGH MCX EXCHANGE HAD FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.38,38,583/ - ON 28 .12.2009. THE C ASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY PROCEEDINGS U/S. 143 (2) OF THE ACT . THAT DURING THE COURSE OF THE SCRUTINY PROCEEDINGS THE A . O BEING OF THE VIEW THAT THE LOSS OF RS.18,92,790/ - REFLECTED BY THE ASSESSEE FROM TRADING OF COMMOD ITIES THROUGH MCX EXCHANGE , P AGE | 4 BEING IN THE NATURE OF A S PECULATION LOSS HAD THUS WRONGLY BEEN SET OFF BY THE ASSESSEE AGAINST HIS BUSINESS INCOME , THEREFORE ADDED BACK THE SAME TO THE LATTERS RETURN ED INCOME . THE A.O FURTHER WHILE CULMINATING THE ASSESSMENT PROCEEDINGS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AS REGARDS THE AFORESAID ADDITION OF RS, 18,92,790/ - (SUPRA). 3. T HE A . O THEREAFTER IN THE COURSE OF THE PENALTY PROCEEDINGS BEING OF THE VIEW THAT THE ASSESSEE BY WRONGLY CLAIMING THE SET OFF OF THE LOSS OF RS.18,92,790/ - OF TRADING OF COMMODITIES THROUGH MCX EXCHANGE AGAINST ITS BUSINESS INCOME , HAD THUS FURNISHED WRONG PARTI CULARS IN ITS RETURN OF INCOME, THEREIN IMPOSED A PENALTY OF RS.6,43,360/ - U/S . 271(1)(C) . THE ASSESSEE ASSAILED THE ORDER OF T HE A.O IMPOSING PENALTY U/S 271(1 )(C) BEFORE THE CIT(A), WHO SUSTAINED THE SAME AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) THEREIN SUSTAINING THE P ENALTY OF RS.6,43,360/ - IMPOSED BY THE A.O U/S. 271(1)(C) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R ) CONCEDED THAT THOUGH THE CIT(A) HAD DISMISSED THE APPEAL OF THE ASSESSEE FOR WANT OF PROSECUTION BY RELYING ON THE ORDER OF THE ITAT, DELHI IN THE CASE OF : CIT VS. MULTIPLAN INDIA PVT. LTD (1991) 38 ITD 320 (DELHI) , BUT AS HE HAD THEREAFTER P ROCEEDED WITH AND ALSO DISMISSED THE APPEAL ON MERITS, THEREFORE IN THE BACKDROP OF THE SAID FACTUAL POSITION THE ASSAILING OF THE DISMISSAL OF THE APPEAL BY THE CIT(A) ON THE SAID COUNT , THUS D ID NOT SURVIVE. THAT IN THE LIGHT OF T HE CONCESSION OF THE LD. A.R THE GROUND OF APPEAL NO. 1 IS THUS DISMISSED AS HAVING BEING RENDERED AS INFRUCTUOUS. 5. THAT DURING THE COURSE OF THE HEARING OF THE APPEAL THE LD. A.R ADVERTIN G TO THE MERITS OF THE CASE THEREIN SUBMITTED THAT THE QUANTUM ADDITION OF P AGE | 5 RS.18,92,790/ - MADE BY THE A . O BY HOLDING THAT THE LOSS SU FFERED BY THE ASSESSEE FROM TRADING OF COMMODITIE S AT MCX EXCHANGE , BEING IN THE NATURE OF A SPECULATION LOSS WAS NOT ENTITLED TO BE SET OFF AGAINST THE BUSINESS INCOME OF THE ASSESSEE, HAD BEEN SET ASIDE BY THE CIT(A) VIDE HIS ORDER DATED 01.06.2015 PASSED IN A PPEAL NO. CIT(A) - 26, IT/64/14 - 15/1 (COPY PLACED ON RECORD) , WHEREIN THE SAID FIRST APPELLATE AUTHORITY HAD DIRECTED THE A . O TO TREAT THE LOSS OF RS.18,92,790/ - (SUPRA) AS A BUSINESS LOSS AND ALLOW SET OFF OF THE SAME AGAINST THE BUSINESS INCOME O F THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. A . R THAT THE APPEAL OF THE DEPARTMENT AGAINST THE AFORESAID ORDER OF THE CIT(A) HAD ATTAINED FINALITY , AS THE T RIBUNAL GOING BY THE CBDT C IRCULAR NO. 21/2015, DATED 10.12 .2015 HAD DISMISSED THE APPEAL OF THE REVENUE AS THE TOTAL TAX DEMAND INVOLVED THERE IN WAS BELOW THE PRESCRIBED LIMIT OF RS.10 LAKH S . THUS, IN THE BACKDROP OF THE AFORESAID FACTS IT WAS SU BMITTED BY THE LD. A . R THAT NOW WHEN THE QUANTUM ADDITION STOOD FINALLY DELETED ON MERITS , THEREFORE THE ORDER OF THE CIT(A) SUSTAINING THE PENALTY IMP OSED BY THE A.O U/S 271(1)(C) D OES NOT SURVIVE AND WAS LIABLE TO BE STRUCK DOWN. THAT ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVES (FOR SHORT D . R) THOUGH ACCEDED TO THE AFORESAID FACTUAL POSITION, BUT AVERRED THAT AS PENALTY PROCEE DING ARE SEPARATE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS, THEREFO RE MERELY ON THE COUNT THAT THE QUANTUM ADDITION MADE BY THE AO HAD BEEN DELETED IN APPEAL, THE PENALTY IMPOSED IN THE HANDS OF THE ASSESSEE WAS NOT LIABLE TO BE AUTOMATICALLY SET ASIDE . 6 . WE HAVE HEARD THE LD. REPRESENTATIVE S OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE FIND THAT IT IS A MATTER OF RECORD THAT THE ADDITION OF RS.18,92, 7 90/ - (SUPRA) MADE BY THE A . O IN THE QUANTUM P ROCEEDINGS BY OBSERVING THAT THE LOSS SUFFERED BY THE ASSESSEE ON TRADING OF COMMODITIES THROUGH MCX EXCHANGE , BEING IN THE NATURE OF SPECULATION LOSS P AGE | 6 WAS THUS NOT ENTITLED TO THE SET OFF AGAINST HIS BUSINESS INCOME, HAD BEEN SET ASIDE BY THE CIT(A) VIDE HIS ORDER DATED.01.06.2015 , WITH A CLEAR DIRECTION TO THE A.O TO TREAT THE SAID LOSS OF RS.18,92,790/ - (SUPRA) AS A BUSINESS LOSS AND ALLOW SET OFF OF THE SAME AGAINST THE BUSINESS INCOME OF THE ASSESSEE. WE FURTHER FIND THAT AS THE APPEAL OF THE DEPARTMENT AGAINST THE AFORESAID ORDER OF THE CIT(A) HAD BEEN DISMISSED BY THE T RIBUNAL, THEREFORE, THE SAME HAD ATTAINED FINALITY. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE PERSUADED TO BE IN AGREEMENT WITH THE L D. A.R THAT NOW WHE N THE VERY QUANTUM ADDITION OF RS.18,92,760/ - (SUPRA) IN ITSELF HAD BEEN DELETED ON MERITS BY THE CIT(A), AND THE SAID ORDER ON HAVING BEEN DISMISSED BY THE TRIBUNAL HAD THEREAFTER GOT THE STAMP OF FINALITY, THE PENALTY PERTAINING TO THE SAID ADDITION THEREFORE CANNOT SURVIVE AND HAS TO BE STRUCK DOWN. THAT THE ORDER OF THE CIT(A) SUSTAINING THE PENALTY OF RS.6,43,360/ - IMPOSED BY THE A.O U/S.271(1)(C) IS THUS SET ASIDE AND THE PENALTY IMPOSED BY THE A.O U/S 271(1)(C) IS VACATED. THUS TH E GROUND OF APPEAL NO. 2 TO 6 RAISED BY THE ASSESSEE BEFORE US, THEREIN ASSAILING THE ORDER OF THE CIT(A) SUSTAINING THE IMPOSITION OF PENALTY U/S 271(1)(C) ON MERITS ARE ALLOWED IN LIGHT OF OUR AFORESAID OBSERVATIONS. 7 . THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT AS ON 28 .02.2017 SD/ - SD/ - (G. S. PANNU) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 28 .02.2017 PS ROHIT KUMAR . P AGE | 7 / 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 FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) ,