ACIT CIR 15(1), MUMBAI V. AMRITA TALWAR, MUMBAI

ITA 6628/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4021 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 01-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G N MAKWANA
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA , ACCOUNTANT MEMBER ITA NO. 6628/MUM/2012 : (A.Y : 200 6 - 07 ) ASST. COMMISSIONER OF INCOME TAX - 15(1), MUMBAI (APPELLANT) VS SMT. AMRITA TALWAR FLAT NO. 20, MATRU CHHAYA, 70, MARINE DRIVE, MUMBAI 400 020. PAN : ADLPT7551R (RESPONDENT) ASSESSEE BY : SHRI SANJAY R. PARIKH REVENUE BY : SHRI G.N. MAKWANA DATE OF HEARING : 2 8 /01/2016 DATE OF PRONOUNCEMENT : 12 /02 /2016 O R D E R PER ASHWANI TANEJA , A M : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - 26, MUMBAI DT. 6.8.2012 PASSED AGAINST THE PENALTY ORDER U/S. 271(1)(C) FOR A.Y 2006 - 07. THE REVENUE IS AGGRIEVED WITH THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY OF RS.44,18,897/ - U/S. 271(1)(C) OF THE ACT BY THE AO. 2. F ACTS IN BRIEF ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 1,76,65,290/ - , CONSISTING OF SHORT TERM CAPITAL GAIN OF RS.1,75,47,772/ - , INTEREST INCOME OF RS. 1,17,522/ - AND EXEMPTED LONG TERM CAPITAL GAIN ON SECURITIES U/S.10(38) OF THE I.T. ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED AS TO WHY THE INCOME SHOWN UNDER THE 2 SMT. AMRITA TALWAR ITA NO. 6628/MUM/2012 HEAD CAPITAL GAIN BE NOT TREATED AS INCOME FROM BUSINESS. IN RESPONSE TO THE SAME, THE ASSESSEE OBJECTED TO THE PROPOSAL OF THE AO, BUT HER CONTENTION WAS NOT ACCEPTED BY THE AO. ACCORDINGLY, THE SHORT TERM CAPITAL GAIN OF RS.1,77,59,998/ - AND LONG TERM CA PITAL GAIN OF RS. 14,23,695/ - TOTALING TO RS.1,91,83,693/ - WAS TREATED BY THE AO AS BUSINESS INCOME. THEREAFTER THE AO ALSO LEVIED PENALTY U/S. 271(1)(C) FOR FILING OF INACCURATE PARTICULARS OF INCOME. 3. BEING AGGRIEVED, THE ASSESSEE CONTESTED THE MATTER BEFORE THE LD. CIT(A) WHEREIN THE PENALTY WAS DELETED BY THE LD. CIT(A) BY MAKING THE FOLLOWING OBSERVATIONS : 3.2 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. IT IS NOTED THAT THE CENTRAL ISSUE FOR LEVY OF PENALTY IN THIS CASE IS REGARDING THE TREATMENT OF TRADING PROFITS ON SALE OF SHARES I.E. AS TO WHETHER IT IS TAXABLE AS SHORT TERM AND LONG TERM CAPITAL GAINS OR AS BUSINESS INCOME. THIS IS A HIGHLY DEBATABLE ISSUE ON WHICH THERE MAY BE TWO D IVERGENT VIEW OF THE ASSESSEE AND THE AO. IN THE CASE OF GOPAL PUROHIT, HON BLE BOMBAY HIGH COURT 228 CTR 582 HAS HELD THAT IT IS A MIXED QUESTION OF FACTS AND LAW AS TO WHETHER INCOME FROM SHARES IN THE HANDS OF THE ASSESSEE IS TAXABLE AS CAPITAL GAIN OR BUSINESS INCOME. OTHERWISE ALSO, IT IS NOT THE CASE OF EITHER FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE AO HAS ALSO NOT BEEN ABLE TO POINT OUT IF THERE IS ANY DEFAULT OF THE ASSESSEE EITHER BY WAY OF FURNISHING OF INACCUR ATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THEREFORE, AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DO NOT FIND IT A FIT CASE OF LEVY OF PENALTY U/S. 271(1)(C). ACCORDINGLY, THE PENALTY LEVIED BY THE A O IS DELETED. 4. BEING AGGRIEVED, THE R EVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. DURING THE COURSE OF THE HEARING IT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. COUNSEL ON BEHALF OF THE ASSESSEE THAT THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE TRIBUNAL IN THE Q UANTUM ORDER IN ITA NO. 5959/M/2012 VIDE 3 SMT. AMRITA TALWAR ITA NO. 6628/MUM/2012 ORDER DT. 4.11.2015. IT HAS BEEN SUBMITTED THAT SINCE THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE TRIBUNAL, THERE REMAINS NO BASIS TO CONTINUE WITH THE PENALTY, AND THEREFORE, THE SAME SHOULD BE DELETED AND ORDER OF THE LD. CIT(A) DELETING THE PENALTY SHOULD BE UPHELD, AND THEREFORE, REVENUES APPEAL SHOULD BE DISMISSED. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE PENALTY ORDER OF THE AO 5. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND THE SUBMISSIONS MADE BY BOTH THE SIDES. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TRIBUNAL OF THE EARLIER YEARS WHEREIN IT HAS BEEN HELD BY THE TRIBUNAL THAT THE ENTIRE AMOUNT OF CAPITAL GAINS WAS TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS ONLY AND N OT AS BUSINESS INCOME. THE RELEVANT PORTION OF THE ORDER OF T HE TRIBUNAL IS REPRODUCED BELOW : 18. WE HAVE EARLIER NOTICED THAT THE DECISION TAKEN BY THE ASSESSING OFFICE IN AY 2006 - 07 WAS FOLLOWED IN OTHER YEARS. IN ASSESSMENT YEAR, THE ASSESSING OF FICER HAS CONSIDERED FOLLOWING POINTS TO HOLD THAT THE ASSESSEE HAS DEALT IN THE SHARES AS A TRADER: - (A) THE HOLDING PERIOD IN MAJORITY OF SHARES WAS LESS THAN A MONTH. (B) VOLUME OF TRANSACTIONS IS HIGH. HOWEVER A CR ITICAL ANALYSIS OF THE TRANSACTIONS OF THE ASSESSEE WOULD SHOW THAT THE ASSESSED HAS D EALT WITH 24 SCRIPS, 27 SCRIPS, 26 SCRIPS AND 17 SCRIPS RESPECTIVELY IN THE YEARS RELEVANT TO THE ASSESSMENT YEARS 2005 - 06, 2006 - 07, 2008 - 09 AND 2009 - 10. WE HAVE EARLIER NOTICED THAT THE ASSE SSEE HAS PURCHASED EACH SHARES IN HIGH QUANTITIES AND HENCE THE VOLUME OF TRANSACTIONS WAS SEEN AT HIGHER FIGURE. WITH REGARD TO HOLDING PERIOD, WE HAVE SEEN THAT THE ASSESSEE HAS HELD SHARES IN VAR YING PERIODS RANGING FROM ONE WEEK TO NINE MONTHS. HEN CE THE AVERAGE HOLDING PERIOD WAS REASONABLY GOOD. THE REPETITION OF TRANSACTIONS WERE VERY MINIMAL, I. E, UPTO A MAXIMUM OF FOUR TRANSACTIONS ONLY. THE ASSESSEE HAS NOT BORROWED FUNDS FOR PURCHASING THE SHARES. THE ASSESSEE HAS HELD MAJOR SHARES FOR MO RE THAN ONE YEAR AND HAS DECLARED LONG TERM CAPITAL GAINS. WE NOTICE THAT THE ASSESSING OFFICER HAS IGNORED ALL OTHER FACTORS, WHICH 4 SMT. AMRITA TALWAR ITA NO. 6628/MUM/2012 ARE IN FAVOUR OF THE ASSESSEE AND HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY CONSIDERING ONLY TWO FACTORS. WE HAVE SE EN THAT EVEN THE TWO FACTORS THAT WERE CONSIDERED BY THE ASSESSING OFFICER WORKS OUT IN FAVOUR OF THE ASSESSEE ONLY. HENCE, IN OUR VIEW, THE DECISION TAKEN BY THE ASSESSING OFFICER IN AY 2006 - 07 IS NOT CORRECT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND HENCE THE ASSESSMENT ORDERS PASSED IN OTHER YEARS BY FOLLOWING THE DECISION RENDERED IN AY 2006 - 07 WOULD CONSEQUENTLY RENDERED INCORRECT. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF LD A.R THAT THE ASSESSIN G OFFICER WAS NOT JUSTIFIED IN ASSESSING THE GAINS ARISING O N SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE. 19. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DIRECTING TO ASSESS THE LONG TERM CAPITAL GAINS UNDER THE HEAD CAPITAL GAINS ONLY. IN RESPECT OF SHORT TERM CAPITAL GAINS, WE SET ASIDE HIS ORDER FOR THE REASONS DISCUSSED IN THE PREVIOUS PARAGRAPHS AND DIRECT THE ASSESSING OFFICER TO ASSESS THE SAME UNDER THE HEAD CAPITAL GAINS ONLY FOR ALL T HE YEARS UNDER CONSIDERATION. THUS, WE FIND THAT SINCE THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED, THERE REMAINS NO BASIS TO CONTINUE WITH THE PENALTY. THUS, THE ACTION OF LD. CIT(A) IN DELETING THE PENALTY IS UPHELD. 6. AS A R ESULT, THE APPEAL FILE D BY THE R EVENUE IS DISMISSED. ORDER PRONOUNCED I N THE OPEN COURT ON 1 2 T H FEBRUARY , 2016. S D / - S D / - (SAKTIJIT DEY) JUDICIAL MEMBER (ASHWANI TANEJA) ACCOUNTANT MEMBER MUMBAI, DATE : 1 2 T H FEBRUARY , 2016 5 SMT. AMRITA TALWAR ITA NO. 6628/MUM/2012 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR *SSL* I.T.A.T, MUMBAI