NEW HORIZON EQUITY ADVISORS P.LTD, MUMBAI V. DCIT 3(2), MUMBAI

ITA 7085/MUM/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9223 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 02-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-11-2014
• Court: TRIBUNAL
• Keywords: Business income; Speculation loss; Difference of opinion; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 7085 /MUM/201 4 ASSESSMENT YEAR: - 2008 - 09 NEW HORIZON EQUITY ADVISORS PVT. LTD. 104, 1 ST FLOOR, RAHEJA CENTRE, FREE PRESS JOURNAL MARG, NARIMAN POINT, MUMBAI 400 021. VS.` DEPUTY COMMISSIONER OF INCOME TAX 3(2) AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17.09.2014 OF CIT(A) ARISING FROM PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT FOR A.Y. 2008 - 09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - 4, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN UPHOLDING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME TAX 3(2) MUMBAI (HEREINAFTER ASSESSEE BY SHRI NEELKANTH KHANDELWAL REVENUE BY SHRI JEETENDRA KUMAR DATE OF HEARING 02.02.2015 DATE OF PRONOUNCEMENT 25 .03.2015 NEW HORIZON EQUITY ADVISORS PVT. LTD. 2 | P A G E REFERRED TO AS THE ASSESSING OFFICER ) IN LEVYING PENALTY OF RS. 2 4,05,795/ - UNDER SECTION 271(1)(C) OF THE ACT . 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND ADVISORY IN THE COURSE OF ASSESSMENT COMPLETED U/S 143(3), THE ASSESSING OFFICER ASSESSED THE GAIN ARISING FROM THE SALE AND PURCHAS E OF SHARES AS INCOME FROM BUSINESS AS AGAINST THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE. THE ISSUE OF TREATMENT OF GAIN FROM SALE AND PURCHASE OF SHARES HAS ATTAINED THE FINALITY AS THIS TRIBUNAL IN THE QUANTUM APPEAL HAS CONFIRMED THE TREATMENT OF THE SAID INCOME AS BUSINESS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) ON ACCOUNT OF THE INCOME OFFERED BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN WAS ASSESSED AS BUSINESS INCOME AND LEVIED THE PENALT Y OF RS. 24,05,795/ - BEING 100% OF TAX SOUGHT TO BE EVADED VIDE ORDER DATED 22.3.2013. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFFICER AGAINST THE LEVY OF PENALTY BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE HAS SUBMITTED THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE BUT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CHANGE OF HEAD OF INCOME WHICH IS BASED ON CHANGE OF OPINION AND WOULD NOT ATTRACT THE PENALTY PROCEEDINGS U/S 271(1)(C) . HE HAS FURTHER SUBMITTED THAT THERE IS NO ADDITION IN THE QUANTUM OF INCOME OFFERED BY THE ASSESSEE BUT THE ASSESSING OFFICER HAS TREATED THE SHORT TERM CAPITAL GAIN AS BUSINES S INCOME OF THE ASSESSEE AND ACCORDINGLY THE DIFFERENCE IS ONLY TAX LIABILITY BECAUSE OF CHANGE OF HEAD OF NEW HORIZON EQUITY ADVISORS PVT. LTD. 3 | P A G E INCOME. THE ASSESSEE FURNISHED ALL THE DETAILS, FACTS AS WELL AS EXPLANATION OF CLAIMING GAIN ARISING FROM PURCHASE AND SALE OF SHARES AS SHORT TERM CAPITAL GAIN. THUS THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT ASSESSING THE INCOME UNDER A DIFFERENT HEAD WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OF FURNISHING INACCURATE PARTICULARS OF INCOME WHEN THE INCOME REMAINED SAME. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMIT JAI N DATED 21.12.2012 IN ITA 683/ 2012 AND SUBMITTED THAT ON THE IDENTICAL ISSUE, THE HONBLE HIGH COURT HAS OBSERVED THAT WHEN THE ASSESSEE REPORTED ALL THE FACTS TRUTHFULLY IN THE RETURN OF INCOME AND THE ASSESSING OFFICER CHOSE TO TREAT THE INCOME UNDER SO ME OTHER HEAD CANNOT CHARACTERIZE THE PARTICULARS RECORDED IN THE RETURN AS AN INACCURATE PARTICULAR OR AS SUPPRESSION OF FACTS. HE HAS ALSO RELIED UPON THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL DATED 11.01.2012 IN CASE OF SUKHDHAM CONSTRUCTION & D EVELOPERS LTD. VS. DCIT IN ITA NO. 2172/MUM/2011 AND SUBMITTED THAT AN IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND CONSEQUENTLY DELETED THE PENALTY. 4. ON THE OTHER HAND, THE LD. DR HAS HEAVILY RELIED UPON THE ORDERS OF AUTHO RITIES BELOW AND SUBMITTED THAT THE ADDITIONAL AMOUNT HAS BEEN BROUGHT TO TAX BY THE ASSESSING OFFICER BY ASSESSING THE INCOME CORRECTLY. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THERE IS NO DISPUTE THAT THE ASSESSEE OFFERED SHORT TERM CAPITAL GAIN ON SALE OF SHARES AMOUNTING TO RS. 77,85,745/ - WHICH WAS TREATED BY THE ASSESSING OFFICER AS BUSINESS INCOME OF THE ASSESSEE. THERE IS NO OTHER ADDITION MADE BY THE ASSESSING OFFICER EXCEPT THE INCOME NEW HORIZON EQUITY ADVISORS PVT. LTD. 4 | P A G E OFFER ED BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN WAS TREATED AS BUSINESS INCOME. THE ASSESSEE FURNISHED THE PARTICULARS OF SALE AND PURCHASE OF THE SHARES AND THE AMOUNT OF GAIN ARISING FROM THE TRANSACTION OF SALE AND PURCHASE . T HEREFORE, IT IS NOT THE CASE OF REVENUE THAT THE ASS ESSEE HAS SUPPRESSED ANY FACT OR PRESENTED INACCURATE PARTICULARS OF INCOME SO FAR AS THE NATURE OF TRANSACTION BEING SALE AND PURCHASE OF SHARES AND THE AMOUNT OF GAIN ARISING FROM THE TRANSACTION ARE CONCERNED. THE ONLY DISPUTE IN THE ASSESSMENT PROCEEDINGS, IS THE TREATMENT OF INCOME AND ACCORDINGLY THE HIGHER AMOUNT OF TAX. THE ASSESSING OFFICER TREATED THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE AS BUSINESS INCOME AND BROUGHT THE SAME TO TAX AS PER THE APPLICABLE RATE OF TAX. AT THE OUTSET, WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUKHDHAM CONSTRUCTION & DEVELOPERS LTD. VS. DCIT (SUPRA), IN PARA 3 AND 3.1 AS UNDER: - 3 WE HAVE CONSIDERED THE RIVAL CONTENTION AS WELL A 3 S THE RELEVANT MATERIAL ON RECORD. IN THIS CASE THE ASSESSEE DECLARED THE INCOME OF `.1,01,85,887/ - WHICH WAS CLAIMED AS SHORT TERM CAPITAL GAIN. THE ASSESSING OFFICER TREATED THE INCOME FROM PURCHASE AND SALE OF SHARES AS BUSINESS I NCOME AND ACCORDINGLY SHOWN THE TOTAL INCOME OF THE ASSESSEE AT `. 1,02,42,338/ - . THUS, IT IS CLEAR THAT AS FAR AS THE QUANTUM OF INCOME AS DECLARED BY THE ASSESSEE AND FINALLY ASSESSED BY THE ASSESSING OFFICER IS CONCERNED, THERE IS NO CHANGE EXCEPT SOME MINOR DISALLOWANCE OF LOSS ON ACCOUNT OF SPECULATIVE LOSS BY THE ASSESSING OFFICER. THUS THE PENALTY HAS BEEN LEVIED BY THE REASON OF TREATMENT OF CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME, WHICH CLEARLY SHOWS THAT AS FAR AS THE QUANTUM ON A CCOUNT OF CAPITAL GAIN OR EXPENDITURE, NO MISTAKE WAS FOUND BY THE ASSESSING OFFICER, BUT THERE WAS A DIFFERENCE OF VIEW AND OPINION AS THE ASSESSEE DECLARED SAID INCOME AS SHORT TERM CAPITAL GAIN, WHICH WAS TREATED BY THE ASSESSING OFFICER AS BUSINESS INC OME. ACCORDINGLY, THE CLAIM OF THE ASSESSEE TREATING THE INCOME FROM SALE AND PURCHASE OF SHARES AS CAPITAL GAIN CANNOT BE TREATED AS IMPOSSIBLE VIEW OR ABSOLUTELY ILLEGAL AND INCORRECT TREATMENT OF INCOME. THE TRIBUNAL WHILE DECIDING THE ISSUE IN QUANTUM APPEAL HAS CONCLUDED IN PARAS 7 & 8 AS UNDER. NEW HORIZON EQUITY ADVISORS PVT. LTD. 5 | P A G E TAKING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THIS CASE INTO CONSIDERATION, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN THE ORDERS OF THE REVENUE AUTHORITIES IN TREATING THE PURCHASE A ND SALE OF SHARES BY THE ASSESSEE COMPANY AS ADVENTURE IN THE NATURE OF TRADE AND ACCORDINGLY ASSESSING THE PROFIT UNDER THE HEAD PROFITS AND GAINS OF BUSINESS. BEFORE PARTING WITH THIS APPEAL, IT MAY BE PERTINENT TO MENTION THAT OUR ATTENTION WAS INVIT ED TO THE ASSESSMENT ORDER FOR THE SUBSEQUENT ASSESSMENT WHEREIN THE ASSESSING OFFICER HAS NOT TREATED THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES AS BUSINESS. THE SHORT TERM CAPITAL GAIN HAS BEEN ASSESSED BY THE AS DECLARED BY THE ASSESSEE. IN OUR CON SIDERED VIEW, THE SUBSEQUENT ASSESSMENT ORDER WILL NOT CLOUD THE FINDING OF THE REVENUE AUTHORITIES IN THE YEAR UNDER APPEAL, WHICH IS BASED ON THE FACTS AND CIRCUMSTANCES AS PREVAILING IN THE YEAR UNDER APPEAL. THERE IS NO DISCUSSION IN THE ASSESSMENT ORD ER FOR ASSESSMENT YEAR 2006 - 07 ABOUT THE TRANSACTIONS TAKING PLACE IN THAT YEAR. THEREFORE, THE SAID ASSESSMENT ORDER, IN OUR VIEW, DOES NOT AFFECT THE DECISION OF THE REVENUE AUTHORITIES IN THE YEAR UNDER APPEAL. FINDING NO MERIT IN THIS APPEAL OF THE ASS ESSEE, WE DISMISS THE SAME. 3.1 THUS, IT IS CLEAR THAT EVEN FOR THE SUBSEQUENT YEAR I.E. AY 2006 - 07, THE INCOME ADMITTED BY THE ASSESSEE AS CAPITAL GAIN WAS ACCEPTED BY THE ASSESSING OFFICER. THEREFORE, THE ISSUE OF TREATMENT OF THE INCOME IS A DEBATABLE ISSUE AND THE VIEW TAKEN BY THE ASSESSEE IN TREATING THE SAME AS CAPITAL GAIN, THOUGH WAS NOT ACCEPTABLE BUT COULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. A CCORDINGLY, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P LTD REPORTED IN 322 TR 158(SC), THE PENALTY IS NOT JUSTIFIED IN THE FACTS OF THE PRESENT CASE; ACCORDINGLY, WE DELETE THE PENALTY LEVIED BY THE LOWER A UTHORITIES. 6. THE FACTS OF THE PRESENT CASE ARE IDENTICAL AS IN THE CASE OF SUKHDHAM CONSTRUCTION & DEVELOPERS LTD. VS. DCIT (SUPRA). FURTHER THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMIT JAIN (SUPRA), WHILE CONFIRMING THE ORDER OF TRIBUNAL IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF CHANGE OF HEAD HAS OBSERVED THAT THE ASSESSING OFFICER CHOSE TO TREAT THE INCOME UND E R SOME OTHER HEAD CANNOT CHARACTERIZE THE NEW HORIZON EQUITY ADVISORS PVT. LTD. 6 | P A G E PARTICULARS OR INCO ME REPORTED IN THE RETURN AS AN INACCURATE PARTICULARS OR SUPPRESSION OF FACTS. A SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN CASE OF IMMORTAL FINANCE SERVICES PVT. LTD. VS. DCIT IN ITA NO. 2563/MUM/2012, DATED 30.04.2013. FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL AS WELL AS THE JUDGMENT OF HONBLE DELHI HIGH COURT, WE ARE OF THE VIEW THAT THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE FROM SALE AND PURCHASE OF SHARES TREATED BY THE ASSESSING OFFICER AS BUSINESS INCOME WOULD NOT AMOUNT TO FURN ISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. ACCORDINGLY, WE DELETE THE PENALTY LEVIED U/S 271(1)(C) . 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUCNED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH 2015 SD/ - SD/ - ( N.K. BILLAIYA ) (VIJAY PAL RAO) ( ACCOUNTANT MEMBER ) (JUDICIAL MEMBER ) MUMBAI DATED 25 .03.2015 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI