DCIT, New Delhi V. M/s. Dreamland Buildtech Pvt. Ltd., New Delhi

ITA 736/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97117 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Assessee Lawyers: SANTOSH K AGGARWAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER AND SMT BEENA A PILLAI, JUDICIAL MEMBER ITA NO: 736/DEL/2012 ASSTT. YEAR 2006-07 DCIT VS. M/S. DREAMLAND BUILDTECH PVT. LTD. CENTRAL CIRCLE-14, 910, ANSAL BHAWAN, ROOM NO. 320 16 , K.G. MARG 3 RD FLOOR, ARA CENTRE, NEW DELHI 110 00 1 JHANDEWALAN EXTN. (PAN AACCD0809M) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. PARVINDER KAUR, SR. DR RESPONDENT BY :SHRI SANTOSH K AGGARWAL, ADVOCATE DATE OF HEARING :28.8.2015 DATE OF PRONOUNCEMENT : 1 .9.2015 O R D E R PER T.S. KAPOOR, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGA INST THE ORDER OF LD. CIT(A) DATED 21.11.2011. THE REVENUE IS AGGRIEVED WITH THE ACTIO N OF LD. CIT(A) BY WHICH HE HAD DELETED THE PENALTY IMPOSED BY AO U/S 271(1)(C) OF THE ACT. AT THE OUTSET LD. AR INVITED OUR ATTENTION TO AN ORDER OF TRIBUNAL DATED 12 TH DECEMBER , 2014 AND SUBMITTED THAT THE ISSUE OUT OF WHICH PENALTY WAS I MPOSED HAS ALREADY BEEN DECIDED BY THE HONBLE TRIBUNAL IN FAVOUR OF ASSESEE AND IN THIS RESPECT HE INVITED OUR ITA NO. 736/DEL/2012 DCIT VS. M/S. D REAMLAND BUILDTECH PVT. LTD.. 2 ATTENTION TO PARA 8.3 AND PARA 8.4 OF THE SAID ORDE R. THE LD. DR THOUGH SUPPORTED THE ORDER OF AO FAIRLY ACCEDED THAT THIS HAS BEEN D ELETED BY HONBLE TRIBUNAL. 2. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE PENALTY U/S 271(1)(C) W AS IMPOSED BY THE AO AS HE TREATED PART OF INCOME FROM SALE OF SHARES AS BUSI NESS INCOME INSTEAD OF CAPITAL GAINS BY THE ASSESSEE. IN THIS RESPECT RELEVANT PA RT OF AO IMPOSING PENALTY ARE REPRODUCED BELOW :- AFTER CONCLUDING THE ORDER U/S 143(3) OF THE ACT, THE AO INITIATED PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE ACT, 1961, ESPECIALLY ON THE ISSUE DISCUSSED ABOVE. A NOTICE U/ S 274 READ WITH THE PROV ISIONS OF SECTION 271 OF THE ACT, WAS ISSUED TO THE ASSESSEE ON 22.12.2008 A ND REQUESTED THAT IT SHOULD HAVE BEEN PRESENT ON 15.01.2009, AND SHOW CAUSED AS WHY THE PENALTY U/ S 271(1)(C) SHOULD NOT BE IMPOSED. ASSESSEE RESPONDED THE NOTICE AND SUBMITTED THAT IT WAS GOING TO FILE APPEAL BEFORE THE LD CIT(A ) AGAINST THE ORDER. LD. CIT(A), VIDE HIS ORDER DATED 01.04.2010 (APPEAL N O. 342/08-09), HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE, AND HELD THAT RS. 36,09,941/- EARNED BY THE ASSESSEE ON ACCOUNT OF SALES OF SHARES IS BUSINESS INCOME, AND THUS CONFIRMED THE ADDITION MADE BY THE AO AT LEAST UP TO THIS EXTENT. THE RELEVANT EXTRACT OF THE DECISION OF THE LD. CIT(A) ON THIS VERY ISSUE IS REPRODUCED BELOW.- 'I AM OF THE VIEW THAT IT CANNOT BE SAID IN RESPECT OF SALE OF SHARES MADE WITHIN A SHORT PERIOD OF 30 DAYS OF PURCHASE OF SHARES THAT THESE SHARES HAS ALSO BEEN PURCHASED BY THE APPELLANT COMPANY BY WAY OF INVESTMENT AND GAIN ARISING ON SALE OF THESE SHARES S HOULD ALSO BE CONSIDERED AS SHORT TERM CAPITAL GAIN. IN MY V.IEW IT WOULD BE QUITE LOGICAL TO HOLD THAT GAIN ARISING ON SALE OF SHARES PURCHASE WITHIN THE PERIOD 30 DAYS WAS IN THE NATURE OF BUSINESS INCOME A ND NOT CAPITAL GAIN. I ACCORDINGLY, HOLD THAT GAIN OF RS. 36,09,941 /- EARNED BY THE COMPANY ON SALE OF SHARES WITHIN A PERIOD OF 30 DAYS WAS IN THE NATURE OF BUSINESS INCOME. ACCORDINGLY, I ACCEPT THE CONTEN TION OF THE APPELLANT TO THE EXTENT OF SHORT TERM CAPITAL GAIN OF RS. 1,39,41,555/- ITA NO. 736/DEL/2012 DCIT VS. M/S. D REAMLAND BUILDTECH PVT. LTD.. 3 AND HOLD THAT AMOUNT OF RS. 36,09,941/- IN THE NATU RE OF BUSINESS INCOME. AFTER RECEIVING THE ORDER OF THE LD CIT(A) ON 04.05.201 0, THE UNDERSIGNED, ONCE AGAIN, ISSUED A SHOW CAUSE NOTICE U/ S 271(1)(C) OF THE INCOME TAX ACT, 1961 (DATED 08.09.2010) , AND ASKED WHY PENALTY SHOULD NOT BE IMPOSED IN YOUR CASE WITH REQUEST TO AT TEND MY OFFICE ON20.09.2010 AT 11.30 A.M. ASSESSEE, ON THE OTHER HA ND, REPLIED AFTER EXPIRY OF 15 DAYS FROM THE DATE FIXED FOR APPEARANCE, RE QUESTED FOR TWO WEEK ADJOURNMENT VIDE ITS LETTER DATED 05.10.2010. FI NALLY, IT SUBMITTED ITS REPLY ON 26.10.2010, AND ITSELF ACCEPTED/ CONFIRM ED THAT THE LD CIT(A) SUSTAINED THE ADDITION MADE BY THE AO TO THE EXTENT OF RS. 36,09,941/ -. IT SPECIALLY' MENTIONED THE DECISION OF THE HON,BLE SUPREME COURT IN THE CASE OF CIT AHMADABAD VS RELIANC E PETROPRODUCTS PVT LTD. THE CONTENTION OF THE ASSESSEE IS REPRODUCED BELOW :- 'IT SHALL FURTHER BE APPRECIATED THAT IT IS A CASE WHE RE INCOME OF SHORT TERM CAPITAL GAIN TREATED AS BUSINESS INCOME; WH ICH HAVE VERY LESS MAGNITUDE OF TRANSACTIONS DURING THE ASSESSMENT YEAR A ND GENUINE EXPENSES WERE CLAIMED UNDER THE BONA FIDE BELIEF THAT THEY ARE ALLOWABLE WHICH WERE DISALLOWED BY YOUR HONOUR. THERE I S NEITHER ANY CONCEALMENT NOR ANY INACCURATE PARTICULARS OF ANY INCOM E. ALL THE FACTS ARE ON RECORD AND WERE DISCLOSED SUO MOTTO. IT IS SUBM ITTED THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LA W NO PENALTY UNDER SECTION 271 (1) (C) OF THE ACT IS LEVIABLE. 'DISALLOWANCE MADE BY THE ASSESSING AUTHORITY IN THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WERE SOLELY ON ACCOUNT OF DIFFERENT VIEWS TAKEN ON THE SAME SET OF FACTS, AND, THEREFORE, THEY COULD, AT THE MOST, BE TERMED AS DIFFE RENCE OF OPINION BUT NOTHING TO DO WITH THE CONCEALMENT OF INCOME OF FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THE REPLY OF THE ASSESSEE WAS WELL CONSIDERED, BUT FO UND THAT IT HAS NO FORCE BECAUSE HOLDING THE ADDITION MADE BY TH E A O UP TO THE EXTENT OF RS. 36,09,941/ - BY THE LD CIT(A) IS CLEA R CUT EVIDENCE OF CONCEALMENT ON THE PART OF THE ASSESSEE. BESIDES THI S, IT IS ALSO NOTED THAT INITIALLY THE ASSESSEE DID NOT OFFER EVEN SUCH AMOUNT AS ITS BUSINESS INCOME, IT WAS AO WHO ARDUOUSLY MADE IT POSSIBLE. TH EN, THE CONTENTION ITA NO. 736/DEL/2012 DCIT VS. M/S. D REAMLAND BUILDTECH PVT. LTD.. 4 OF THE ASSESSEE .THAT IT IS NEITHER CONCEALMENT NOR F URNISHING INACCURATE PARTICULARS, WAS ACCORDINGLY REJECTED. IN VIEW OF THE ABOVE FACTS & CIRCUMSTANCES, AND ORDER OF THE LD CIT(A) VIDE WHICH THE ADDITION MADE BY THE AO WAS S USTAINED UP TO THE SUCH EXTENT, ENUMERATED ABOVE, THE ASSESSEE IS, THERE FORE, CLEARLY ATTRACTED BY THE PROVISIONS OF SECTION 271(1)(C) OF THE IT ACT, 1961. HENCE, I AM OF OPINION THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF ITS INCOME, AND IS, THEREFORE, LIABLE FO R PENALTY U/ S 271(1)(C) OF THE IT ACT, 1961. THE MAXIMUM AND MINI MUM PENALTY LEVIABLE U/ S 271(1)(C) OF THE IT ACT WORKS OUT TO R S. 10,82,982/- AND RS. 32,48,946/ - RESPECTIVELY. I AM, THEREFORE, LEVY A PEN ALTY OF RS. 10,82,982/- U/S 271(1) (C) OF THE INCOME TAX ACT , 1961, WHICH IS CALCULATED HEREUNDER: INCOME SOUGHT TO BE EVADED RS. 36,09,941/- TAX ON INCOME SOUGHT TO BE EVADED RS.10,82,982/- MINIMUM PENALTY @ 100% OF TAX RS. 10,82,982/- MAXIMUM PENALTY @ 300% OF TAX RS. 32,48,946/- 3. WE FIND THAT THE HONBLE TRIBUNAL VIDE ITS ORDER DATED 12 TH DECEMBER, 2014 HAS DISPOSED OF CROSS APPEALS FOR ASSESSMENT YEARS 2006-07 AND 2007-08. IN THE ASSESSEES APPEALS FOR THE ASSESSMENT YEAR 2006-07 GROUND NO. 2 READS AS UNDER:- 2. THAT THE CIT(A) ERRED IN HOLDING THAT THE G AIN OF RS. 36,09,941/- OUT OF THE TOTAL SHORT TERM CAPITAL GAIN FROM SALE OF SHARES WAS BUSINESS PROFIT 4. THE HONBLE TRIBUNAL VIDE PARA 8.3 AND 8. 4 HAD DECIDED THIS GROUND IN FAVOUR OF ASSESSEE VIDE PARA 8.3 AND 8.4 WHICH ARE REPRODU CED BELOW :- 8.3 WE NOW CONSIDER THE FINDINGS OF THE LD. CI T(A) WHEREIN HE HAS HELD THAT THE GAINS RECEIVED ON SHARES WHICH WERE HELD FOR A PERIOD OF LESS THAN 30 DAYS SHOULD BE ASSESSED AS INCOME FROM BUSINESS. THE MUMBAI H BENCH OF THE TRIBUNAL IN THE CASE OF MR. HITESH SATISHCHA NDRA DOSHI ETEMIA VS. JCIT IN ITA NO. 6497/MUM/2009 AND ITA 148/MUM/2010 FOR T HE ASSESSMENT YEAR ITA NO. 736/DEL/2012 DCIT VS. M/S. D REAMLAND BUILDTECH PVT. LTD.. 5 2003-04 AND OTHER APPEALS HAD AFTER CONSIDERING A N UMBER OF DECISIONS AT PAGE 15 HELD AS FOLLOWS. THEREFORE, THE BIFURCATION OF THE SHORT TERM CAPIT AL GAIN AND TREATING THE TRANSACTION AS INVESTMENT IN THE CASES WHERE TH E HOLDING PERIOD OF MORE THAN 30 DAYS AND AS BUSINESS TRANSACTION IN TH E CASE WHERE THE HOLDING PERIOD IS LESS THAN 30 DAY, IN OUR CONSIDER ED OPINION, IS NOT JUSTIFIED ON THE PART OF THE CIT(A). SINCE THERE CA NNOT BE A SINGLE CRITERIA FOR JUDGING THE TRANSACTION AS CAPITAL AS SET OR TRADING ASSET, THE CIT(A) ADOPTED ONLY HOLDING PERIOD AS A SOLE CR ITERIA FOR BIFURCATING THE TRANSACTIONS RELATING TO THE SHORT TERM CAPITAL GAIN, WHICH IS NEITHER PROPER AND NOR JUSTIFIED. 8.4 RESPECTFULLY FOLLOWING THE SAME WE HAVE TO N ECESSARILY DISLODGE THIS DIRECTION OF THE LD. CIT(APPEALS). WE HOLD THAT THE ENTIRE PROFITS FROM THE PURCHASE AND SALE OF SHARES HAVE TO BE ASSESSED UND ER THE HEAD CAPITAL GAINS. 5. FROM THE ABOVE FINDINGS OF HONBLE TRIBUNAL WE FIND THAT ASSESSE HAS BEEN GRANTED RELIEF IN THIS RESPECT AND THEREFORE THE PE NALTY IMPOSED BY AO DOES NOT SURVIVE. IN VIEW OF THE ABOVE THE APPEAL FILED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1.9.2015. SD/- SD/- (BEENA A PILLAI) (T.S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: THE 1.9. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR ITA NO. 736/DEL/2012 DCIT VS. M/S. D REAMLAND BUILDTECH PVT. LTD.. 6 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 17.8..2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 17.8.2 015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER