DCIT 17(1), MUMBAI V. MAHIYAR G. DASTOOR, MUMBAI

ITA 7096/MUM/2012

• Counselvise Citation: 709619914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 27-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: DILIP H HARIA
• Keywords: Business income; Difference of opinion

Judgement Text

, INCOME TAX APPELLAT E TRIBUNAL - B BENCH MUMBAI . . , / ! ! ! ! , BEFORE S/SH.B.R.MITTAL,JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 7096/MUM/2012, ' ' ' ' # # # # / ASSESSMENT YEAR 2007-08 DCIT 17(1) 1 ST FLOOR, R.NO.113, PIRAMAL CHAMBERS, LALBAUG, PAREL,MUMBAI. VS. MAHIYAR G. DASTOOR 616, WEST VIEW LANE, JAMSHED ROAD, PARSI COLONY, MUMBAI-400014 PAN: ABAPD0675M ( $% / APPELLANT ) ( &'$% / RESPONDENT) $% $% $% $% ( (( ( ) ) ) ) / REVENUE BY : SHRI M.L.PERUMAL &'$% ( ) / ASSESSEE BY : SHRI DILIP H. HARIA ' ' ' ' ( (( ( *+ *+ *+ *+ / DATE OF HEARING : 04 . 02 .201 4 ,-# ( *+ / DATE OF PRONOUNCEMENT : 21.02 .201 4 ' ' ' ' , 1961 ( (( ( 254 )1( *.* *.* *.* *.* / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,A.M: CHALLENGING THE ORDER DATED 28.09.2012 OF THE CIT ( A)-29-MUMBAI,ASSESSING OFFICER(AO) HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY WITHOUT CONSIDERING THE FACT T HAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY TREATING CLOSING STOCK OF SHARES AS STOCK-IN-TRADE INSTEAD OF INVESTMENT EVEN THOUGH HE HAS SHOWN INCOME FROM SHARES AS CAPITAL G AINS AND THE QUANTUM ADDITION MADE ON THIS ACCOUNT WAS ACCEPTED BY THE ASSESSEE. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE,AN INDIVIDUAL FILED HIS RETURN OF INCOME O N 31.10.2007 DECLARING INCOME OF RS.1,05,82, 565/-.AO FINALISED THE ASSESSMENT ON 27.10.2009 U/S .143(3) OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS.1,18,03,390/-.THE ONLY GROUND OF APPEAL IS ABOUT LEVY OF PENALTY U/S. 27(1)(C) OF THE ACT. FACTS OF THE CASE: 2. ASSESSEE HAD SHOWN INCOME FROM SHORT TERM CAPITAL G AIN (STCG) AS WELL AS FROM LONG TERM CAPITAL GAIN(LTCG)ON PURCHASE AND SALE OF SHARES AN D HAD ALSO SHOWN BUSINESS INCOME FROM PURCHASE AND SALE OF SHARES SOLD IN FORWARD MARKET. HE HAD SHOWN CLOSING STOCK OF 11,000 SHARES OF SBI VALUED AT RS.1,09,48,080/-.AS PER THE ASSESSEE SAID SHARES WERE PART OF HER CLOSING STOCK AND NOT THE PART OF INVESTMENT.ACCORDINGLY,HE VALUED THESE SHARES AT MARKET PRICE.HOWEVER,THE AO TREATED THESE SHARES AS INVESTMENT AS THE SHARES WERE HELD FOR MORE THAN THREE MONTHS AND HE VALUED THEM AT COST PRICE.AO ALSO INITIATED PENALTY PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. VIDE HIS ORDER DATED 30.04.2010,AO LEVIE D PENALTY OF RS.3,66,246/-. 3 .ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER,H E HELD THAT THE STOCK OF 11,000 SHARES OF SBI WAS REFLECTED IN THE RETURN OF INCOME AND IN THE AUDITE D REPORT,THAT IT WAS CLEARLY MENTIONED IN THE AUDIT REPORT THAT HE HAD VALUED THE STOCK AT MARKET RATE TREATING IT AS STOCK-IN-TRADE,THAT THE ASSESSEE HAD MAINTAINED TWO SEPARATE ACCOUNTS-ONE F OR SHARES HELD AS INVESTMENT AND OTHER FOR 2 ITA NO. 7096/MUM/2012 MAHIYAR G. DASTOOR SHARES HELD AS STOCK-IN-TRADE,THAT IN THE SUBSEQU ENT YEARS WHEN THESE SHARES WERE SOLD DEDUCTION ON ACCOUNT OF COST WAS TAKEN AND NOT AT THE PURCHAS E PRICE,THAT ALL THE MATERIAL FACTS WERE PROPERLY DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME A ND IN THE AUDIT REPORT,THAT AO HAD NOT ACCEPTED THE VIEW TAKEN BY THE ASSESSEE AND HAD TAKEN ANOTHER VIEW,TH AT THERE WAS ONLY A DIFFERENCE OF OPINION,THAT NO NEW OR HIDDEN FACTS WERE UNEARTHED BY THE AO DURING ASSESSMENT PROCEEDINGS,THAT PENALTY COULD NOT BE LEVIED FOR THE DIFFERENCE OF O PINION AS THERE WAS NO CONCEALMENT OR INACCURATE FURNISHING OF PARTICULARS BY THE ASSESSEE.FINALLY, HE DELETED THE PENALTY LEVIED BY THE AO. 4. BEFORE US,DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AO.AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE HAD FILED ALL THE NECESSARY DETAILS BEFORE THE AO,THAT HE HAD SHOWN CONSISTENCY IN SHOWING THE SHARES AT COST PRICE,THA T IN THE BOOKS OF ACCOUNTS SHARES WERE SHOWN AS STOCK IN TRADE, THAT THERE WAS NO CONCEALMENT OF IN COME.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT SHARES IN QUESTION WERE REFLECTED IN THE BOOKS OF THE ASSESSEE AND IN THE AUDIT REPORT AS STOCK AND NOT A S INVESTMENT.AT THE TIME OF SELLING THE SHARES ASSESSEE HAD ADOPTED COST PRICE TO DETERMINE TAX LI ABILITY.AO WAS OF THE OPINION THAT SHARES WERE INVESTMENT.IT IS POSSIBLE THAT HE COULD HAVE MADE A DDITION TO THE INCOME OF THE ASSESSEE ON THAT BASIS,BUT FOR IMPOSING PENALTY U/S.271 (1)(C)OF THE ACT,THESE FACTS WERE NOT SUFFICIENT.BECAUSE OF DIFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESS EE,PENAL PROVISIONS CANNOT BE INVOKED.SO, CONFIRMING THE ORDER OF THE FAA,WE DECIDE THE EFFEC TIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED . 1 *2 '1* + 3 4 '5 ( * 67 . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2014. / ( ,-# 8 21 9+ , 2014 - ( . . SD/- SD/- ( . . . B.R.MITTAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, :' /DATE: 21.02.2014 SK / / / / ( (( ( &*; &*; &*; &*; < ;#* < ;#* < ;#* < ;#* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR B BENCH, ITAT, MUMBAI / ;?. &*' CH CHCH CH , . . . 6. GUARD FILE/ . 9 . ';* &* //TRUE COPY// /' / BY ORDER, @ / 6 DY./ASST. REGISTRAR , /ITAT, MUMBAI.