Sh. Ram Pal Thakur, Ludhiana V. ACIT, Ludhiana

ITA 698/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9151 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-07-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 29-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Income from undisclosed sources
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI MAHARISHI PRASHANT KUMAR, ACCOUNTANT MEMBE R ITA NO. 698/CHD/2015 (ASSESSMENT YEAR : 2003-04) SH.RAM PAL THAKUR, VS. THE A.C.I.T., S.C.O.545, ABOVE SURYA FLORIST, CIRCLE -V, COLLEGE ROAD, LUDHIANA-141001. LUDHIANA. OLD ADD: 95, DOUBLE STOREY, LABOUR COLONY, GILL ROAD, LUDHIANA-141003. PAN: AAJPT3444L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 02.08.2016 DATE OF PRONOUNCEMENT : 09.08.2016 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 2.3.2015 FOR ASSESSMEN T YEAR 2003-04, CHALLENGING THE LEVY OF PENALTY UNDER SECT ION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT TH E ACT). 2 2. BRIEF FACTS LEADING TO THE IMPOSITION OF PENALT Y IN THIS CASE ARE THAT RETURN DECLARING TOTAL INCOM E OF RS.14,83,440/- WAS FILED BY THE ASSESSEE. IN THIS RETURN, THE ASSESSEE HAD SHOWN TOTAL SALE CONSIDERATION OF SHARES AMOUNTING TO RS.11,25,000/- AND AFTER REDUCING THE COST OF SHARES AMOUNTING TO RS.48,750/- LONG TERM CAPIT AL GAIN ON SHARES AMOUNTING TO RS.10,76,250/- WAS SHOW N. TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH NEC ESSARY EVIDENCE AND DETAILS OF THE BROKERS, ETC. FROM THE DETAILS FILED ON RECORD, THE ASSESSING OFFICER NOTED THAT M AJORITY OF PROFIT OF TRADING OF SHARES WAS CLAIMED FROM THE SCRIP NAMED COUNTRY CREDIT CAPITAL LTD. THE ASSESSING OF FICER AFTER CONDUCTING ENQUIRIES FOUND THE CLAIM OF THE A SSESSEE TO BE INCORRECT. THE AMOUNT OF RS.11,25,000/- SHOW N BY THE ASSESSEE AS SALE PROCEEDS WAS TAXED UNDER SECTI ON 68 OF THE ACT, UPON WHICH PENALTY WAS IMPOSED, WHICH W AS CONFIRMED BY THE LEARNED CIT (APPEALS). 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE LEARNED CIT (APPEALS) THR OUGH IMPUGNED ORDER DATED 2.3.2015, DECIDED THE PENALTY MATTER IN RESPECT OF S/SHRI RAJNISH THAKUR AND RAM PAL THAKUR (ASSESSEE). IN THE CASE OF SHRI RAJNISH TH AKUR, I.T.A.T., CHANDIGARH BENCH(SMC) IN ITA NO.697/CHD/2 015 VIDE ORDER DATED 17.6.2016 CANCELLED THE PENA LTY ON 3 IDENTICAL FACTS. THE ORDER IN PARAS 7 TO 11 IS REP RODUCED AS UNDER : 7. I HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIAL ON RECORD. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE THAT ASSESSEE IN THE RETURN OF INCOME HAS DISCLOSED COMPLETE TRANSACTION OF SALE OF SHARES AND ALSO DISCLOSED EARNING OF LONG TERM CAPITAL GAIN ON SALE OF SHARES IN A SUM OF RS. 11,25,000/- WHICH IS THE BASIS OF LEVY OF THE PENALTY AGAINST THE ASSESSEE. THE ASSESSEE, THUS, DISCLOSED COMPLETE FACTS AND DETAILS NOT ONLY IN THE RETURN OF INCOME AND COMPUTATION OF INCOME BUT ALSO ALL THE FACTS WERE DISCLOSED TO THE ASSESSING OFFICER AT THE ASSESSMENT STAGE. THE ASSESSEE FILED RETURN OF INCOME AT RS. 14,83,440/- AND ASSESSMENT IS COMPLETED AT RS. 15,32,190/- MEANING THEREBY, ONLY MEAGER ADDITION OF RS. 48,750/- HAVE BEEN MADE. IT IS ALSO NOT IN DISPUTE THAT SHARES WERE PURCHASED IN PRECEDING ASSESSMENT YEAR 2002-03 THEREFORE, COULD NOT BE SUBJECT MATTER OF THE ASSESSMENT IN ASSESSMENT YEAR IN APPEAL I.E. 2003-04. THE ASSESSEE, ADMITTEDLY, FILED COPIES OF THE PURCHASE BILLS AND SALE BILLS ALONGWITH COPIES OF THE ACCOUNTS OF ASSESSEE IN THE BOOKS OF BROKERS. ALL THE TRANSACTIONS OF SALES HAVE BEEN CONDUCTED THROUGH D-MAT ACCOUNT AND THROUGH BANKING CHANNEL. THE ASSESSEE ALSO FILED DETAILS TO SHOW THAT SHARES IN QUESTION HAVE BEEN LISTED IN AHMEDABAD STOCK EXCHANGE. THE AUTHORITIES BELOW HAVE NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE IN QUANTUM PROCEEDINGS BECAUSE TRANSFER OF SHARES HAVE NOT BEEN CONDUCTED THROUGH RECOGNIZED STOCK EXCHANGE. HOWEVER, 4 THE ASSESSEE CLAIMED THAT THE SALE OF SHARES HAVE BEEN MADE THROUGH VARIOUS REGISTERED STOCK EXCHANGE BROKERS AND PAYMENTS HAVE BEEN RECEIVED BY CHEQUE. THEREFORE, IT IS A CASE WHERE THE HEAD OF INCOME HAVE BEEN CHANGED BY THE AUTHORITIES BELOW FOR THE PURPOSE OF CHARGING HIGHER TAX FROM THE ASSESSEE. THE ASSESSEE CLAIMED IN THE RETURN OF INCOME THE TRANSACTION TO BE EARNING OF INCOME ON ACCOUNT OF LONG TERM CAPITAL GAIN WHICH WAS CONSIDERED BY THE AUTHORITIES BELOW AS INCOME FROM UNDISCLOSED SOURCES. 8. THE AUTHORITIES BELOW ALSO MADE ADDITION AGAINST THE ASSESSEE BECAUSE THE BROKERS HAVE NOT PRODUCED BOOKS OF ACCOUNT WHICH IS NOT WITHIN THE CONTROL OF THE ASSESSEE TO DIRECT THE BROKERS TO PRODUCE BOOKS OF ACCOUNT BEFORE ASSESSING OFFICER. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS NATH BROS. EXIM INTERNATIONAL LTD. 288 ITR 670 HELD AS UNDER : THE ASSESSEE HAD CLAIMED DIVIDEND INCOME AS HIS BU SINESS INCOME AND ACCORDING TO THE ASSESSEE IT WAS ENTITLED TO A DEDUCTION UNDER CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC(4C) OF THE INCOME- TAX ACT, 1961. THE ASSESSING OFFICER DISALLOWED THE CLAIM AND IMPOSED PENALTY. THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS, AND THERE-FORE EVEN TH OUGH IT HAD MADE AN ERRONEOUS CLAIM WHICH COULD NOT BE JUSTIFIED IN LAW , THAT BY ITSELF DID NOT ATTRACT THE PENAL PROVISIONS OF THE ACT. ON APPEAL : TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THERE WAS FULL DISCLOSU RE OF ALL RELEVANT MATERIAL. IT COULD NOT BE SAID THAT THE CONDUCT OF THE ASSESSEE ATTRACTED THE PRO-VISIONS OF SECTION 271(L)(C). THE CANCELLATION OF PENALTY WAS JUSTIFIED. 5 8(I) HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS AMIT JAIN 351 ITR 74 HELD AS UNDER : THE ASSESSEE DECLARED AN INCOME OF RS. 2,60,73,558 FROM SHORT- TERM CAPITAL GAINS. THE ASSESSING OFFICER ON AN INT ERPRETATION OF THE RELEVANT PROVISIONS AND HAVING REGARD TO THE NATURE OF TRANSACTIONS ASSESSED IT AS INCOME FROM BUSINESS. HE ALSO LEVIED PENALTY UNDER SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961, TO T HE TUNE OF RS. 58,45,899 ON THE GROUND THAT THE ASSESSEE HAD FURNI SHED INACCURATE PARTICULARS OF HIS INCOME. THE COMMISSIONER (APPEAL S) CANCELLED THE PENALTY. THIS WAS CONFIRMED BY THE TRIBUNAL. ON APP EAL : HELD, DISMISSING THE APPEAL, THAT THE AMOUNT IN QUE STION, WHICH FORMED THE BASIS FOR THE ASSESSING OFFICER TO LEVY PENALTY, WAS IN FACT TRUTHFULLY REPORTED IN THE RETURNS. IN VIEW OF THIS CIRCUMSTANCE, THAT THE ASSESSING OFFICER CHOSE TO TREAT THE INCOME UND ER SOME OTHER HEAD COULD NOT CHARACTERIZE THE PARTICULARS OR REPORTED IN THE RETURN AS 'INACCURATE PARTICULARS OR AS SUPPRESSION OF FACTS . THEREFORE, THE TRIBUNAL WAS NOT IN ERROR IN DELETING THE PENALTY. 9. SINCE ASSESSEE DISCLOSED COMPLETE FACTS IN THE RETURN OF INCOME AS WELL AS AT THE ASSESSMENT STAGE AND ALL THE TRANSACTIONS ARE CARRIED OUT THROUGH D-MAT ACCOUNT AND BANKING CHANNEL, THEREFORE, IT MAY NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO LEVY THE PENALTY AGAINST THE ASSESSEE. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT THE CASE OF THE ASSESSEE THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY. FURTHER, THE ASSESSING OFFICER IN THE ASSESSMENT ORDER INITIATED THE PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME BUT IN THE PENALTY ORDER, ASSESSING OFFICER LEVIED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, ASSESSING OFFICER WAS NOT DEFINITE IN HIS CONCLUSION AND FINDING AS TO ON 6 WHICH ACCOUNT PENALTY SHOULD BE IMPOSED AGAINST THE ASSESSEE. MAY BE THE ADDITION ON MERIT HAVE BEEN CONFIRMED CONSIDERING THE LONG TERM CAPITAL GAIN TO BE INCOME FROM OTHER SOURCES, BUT THE FACTS CLEARLY DISCLOSE THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 10. CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTANCES NOTED ABOVE, IN THE LIGHT OF THE DECISIONS OF THE HON'BLE DELHI HIGH COURT REFERRED TO ABOVE, I AM OF THE VIEW IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. I, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 4. IT WAS, THEREFORE, SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE. THE LEARNED D.R . DID NOT DISPUTE THE SAME. 5. ON CONSIDERATION OF THE ABOVE FACT, WE FIND TH AT THE LEARNED CIT (APPEALS) DECIDED THE APPEAL OF THE ASSESSEE ALONGWITH SHRI RAJNISH THAKUR THROUGH THE IMPUGNED ORDER DATED 2.3.2015, THE SAME ORDER REMAI NED IN APPEAL BEFORE THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF SHRI RAJNISH THAKUR IN ITA NO.697/CHD/2015 FOR ASSESSMENT YEAR 2003-04 AND VIDE ORDER DATED 17.6.2 016, THE APPEAL OF THE ASSESSEE, SHRI RAJNISH THAKUR HAS BEEN ALLOWED AND PENALTY HAS BEEN CANCELLED. FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI RAJNISH THAKUR 7 (SUPRA), WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (MAHARISHI PRASHANT KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9 TH AUGUST, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH