Smt. Sushilaben D. Shah, Ahmedabad V. The Income Tax Officer, Ward-1(3)(5), Ahmedabad

ITA 627/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7498 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-07-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KIRITBHAI B SONI
• Section: 271(1)(c)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 627/AHD/2018 ( ASSESSMENT YEAR : 2006-07) SMT. SUSHILABEN D. SHAH 302, SIMANDHAR FLATS, USMANPURA, AHMEDABAD / VS. ITO WARD 1(3)(5), AHMEDABAD ./ ./ PAN/GIR NO. : ACTPS7388C ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI KIRITBHAI B. SONI, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR.D.R. DATE OF HEARING 24/07/2019 !'# / DATE OF PRONOUNCEMENT 26/07/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-10, AHMEDABAD (CIT(A) IN SHORT), DATED 22.01.2018 ARI SING IN THE PENALTY ORDER DATED 17.03.2016 PASSED BY THE ASSESSING OFFI CER (AO) UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) CON CERNING AY 2006-07. 2. THE ASSESSEE HAS CHALLENGED THE IMPOSITION OF P ENALTY OF RS.50,330/- IMPOSED BY THE AO UNDER S. 271(1)(C) OF THE ACT. ITA NO. 627/AHD/18 [SMT. SUSHILABEN D. SHAH VS. ITO] A.Y. 2006-07 - 2 - 3. BRIEFLY STATED, THE RETURN FILED BY THE ASSESSEE FOR AY 2006-07 WAS REOPENED UNDER S.147 OF THE ACT. IN THE COURSE OF THE RE-ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAIN OF RS.2,13,350/- ON SALE OF SHARES OF TALENT INFOWAYS, THE TRANSACTION OF WHICH WAS ENTERED INTO THROUGH MAHAS AGAR GROUP OF COMPANIES. THE AO RELIED UPON CERTAIN STATEMENT OF SHRI MUKESH M. CHOKSHI (A KEY PERSON OF MAHASAGAR GROUP) THAT THE TRANSACTIONS CARRIED OUT BY HIM WERE NOT GENUINE BUSINESS TRANSACTIONS A ND HE WAS ENGAGED IN THE BUSINESS OF ISSUING BOGUS BILL. THE ASSESSEE W AS FOUND TO BE ONE OF THE BENEFICIARIES OF SUCH TRANSACTIONS AND ACCORDINGLY THE BENEFIT OF TAX EXEMPTION ON CAPITAL GAINS ARISING FROM TRANSACTION CARRIED OUT THROUGH MAHASAGAR GROUP WAS DENIED TO THE ASSESSEE AND THE LONG TERM CAPITAL GAIN SO DECLARED WAS TREATED AS UNEXPLAINED INCOME OF TH E ASSESSEE UNDER S.68 OF THE ACT AS CHARGEABLE TO INCOME TAX. THE AFORESAID ACTION OF AO WAS ALSO ENDORSED BY CO-ORDINATE BENCH OF ITAT IN QUANTUM PR OCEEDINGS. THE AO ALSO IMPOSED THE PENALTY ON ADDITION OF THE AFORESA ID AMOUNT OF RS.2,13,350/- TO THE TAXABLE INCOME. THE PENALTY O F RS.50,330/- WAS DETERMINED @ 100% OF TAX SOUGHT TO BE EVADED ON SUC H LONG TERM CAPITAL GAINS WHICH WERE FOUND TO BE UNTRUE. 4. THE CIT(A), IN FIRST APPEAL, CONFIRMED THE IMPOS ITION OF PENALTY. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THE ISSUE AS POINTED OUT ON BEHALF OF THE ASSESSEE. IT IS NOT IN DISPUTE TH AT THE ASSESSEE HAS FURNISHED THE SUPPORTING BILLS AND DETAILS OF PAYME NTS IN SUPPORT OF TRANSACTIONS REPORTED TO BE LONG TERM CAPITAL GAIN. IT WAS CONTENDED THAT ENTIRE ADDITION IS BASED ON THE STATEMENT OF MR. MU KESH CHOKSHI WHICH WAS NEVER PROVIDED TO THE ASSESSEE. IT WAS ALSO POINTE D OUT THAT IT IS QUITE POSSIBLE THAT MR. MUKESH CHOKSHI HAS NOT INCLUDED T HE TRANSACTIONS WITH ASSESSEE IN HIS STATEMENT AT ALL. ITA NO. 627/AHD/18 [SMT. SUSHILABEN D. SHAH VS. ITO] A.Y. 2006-07 - 3 - 7. AT THIS STAGE, WE BEAR IN MIND THAT INCIDENCE OF PENALTY UNDER S. 271(1)(C) OF THE ACT IS NOT AUTOMATIC AND SHOULD N OT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO. CONSIDERING THE SMALLN ESS OF THE AMOUNT INVOLVED, WE CONSIDER IT EXPEDIENT TO GIVE BENEFIT OF DOUBT TO THE ASSESSEE OWING TO MITIGATING CIRCUMSTANCES VIZ; THE ABSENCE OF COPY OF STATEMENT OF MR. MUKESH CHOKSHI OR ANY OTHER SUBSTANTIVE MATERIA L. THE ASSESSEE HAS SUPPORTED THE FACE VALUE OF TRANSACTIONS WITH BILLS AND PAYMENTS. IN THE BACKDROP OF AMBIGUITY IN CIRCUMSTANCES, IT IS DIFFI CULT TO HOLD THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS BLATANTLY FA LSE. WE ARE THUS INCLINED TO EXONERATE THE ASSESSEE FROM THE INCIDENCE OF PEN ALTY. HOWEVER, IN PECULIAR CIRCUMSTANCES, THIS VIEW SHALL NOT OPERATE AS PRECEDENT IN ANY MANNER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 26/07/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 26/07/2019