ACIT, New Delhi V. Sh. Brij Mohan Labroo, New Delhi

ITA 749/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7271 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K K JAISWAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SMT SUCHITRA KAMBLE , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 749/DEL/2014 (ASSESSMENT YEAR: 2007 - 08 ) ACIT, CIRCLE - 24(1), NEW DELHI VS. BRIJ MOHAN LABROO, D - 1/54, VASANT VIHAR, NEW DELHI PAN:AAAPL8061E (APPELLANT) (RESPONDENT) ASSESSEE BY : REVENUE BY: SH. KK JAISWAL, DR DATE OF HEARING 13/07/ 2016 DATE OF PRONOUNCEMENT 08 / 09 /2016 O R D E R PER BENCH . 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XXII, NEW DELHI FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED AMOUNTING TO RS. 1 597166/ - U/S 271(1)(C) OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL WHO FILED ITS RETURN OF INCOME ON 13/11/2007 SHOWING TOTAL INCOME OF RS. 12651710/ - . ASSESSEE IS A DIRECTOR IN A COMPANY AND HAS SHOWN THE BUSINESS OF THE ASSESSEE A S TRADING IN SECURITY. DURING TH E YEAR ASSESSEE HAS EARNED INCOME FROM TRADING IN FUTURES AND OPTIONS ON SHARE MARKET AND ALSO ON SHORT TERM CAPITAL GAINS AND LONG - TERM CAPITAL GAIN ON SALE OF SHARES. WHEN ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT LD. ASSESSING OFFICER TREATED THE SH ORT - TERM GAIN ON SALE OF SHARES AMOUNTING TO RS. 4544997 AS INCOME FROM BUSINESS AND PROFESSION. FURTHER DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT WAS ALSO MADE OF RS. 250,254/ - . CONSEQUENTLY TOTAL INCOME WAS ASSESSED AT RS. 1 2901967/ - . THE LD . ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271 (1) (C) OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFICER ASSESSEE FILED APPEAL BEFORE LD. C IT APPEALS PAGE 2 OF 3 WHO CONFIRMED THE ADDITION MADE BY THE LD. ASSESSING OFFICER. CONSEQUEN TLY PENALTY PROCEEDINGS WERE FURTHER PERSUED BY LD. ASSESSING OFFICER AND FINAL PENALTY SHOW CAUSE NOTICE WAS ISSUED TO 06/03/2012. BEFORE THE ASSESSING OFFICER IT WAS SUBMITTED THAT THE LD. ASSESSING OFFICER HA S MERELY CHANGED THE HEAD OF SHORT TERM CAPIT AL GAINS AS BUSINESS INCOME AND THEREFORE THERE IS NO PENALTY WHICH CAN BE LEVIED ON THE ASSESSEE. IT WAS FURTHER CONTENDED THAT COMPLETE DETAILS OF THE PURCHASE AND SALE OF SHARES AND UNITS WERE DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS W ELL AS THE INCOME TAX RETURN FILED BY THE ASSESSEE AND IT IS ONLY THE CLAIM OF THE ASSESSEE WHICH IS NOT ACCEPTED BY THE LD. ASSESSING OFFICER WHICH HAS RESULTED INTO THE ADDITION MADE TO THE TAXABLE INCOME OF THE ASSESSEE. THEREFORE IT WAS CONTENDED THAT NO PENALTY COULD BE LEVIED. HOWEVER THE LD. ASSESSING OFFICER LEVIED A PENALTY OF RS. 1597166 / - APPLYING THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF ZOOM COMMUNICATIONS (P) LTD 327 ITR 510. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFICER ASSE SSEE PREFERRED APPEAL BEFORE LD. CIT APPEAL WHO DELETED THE PENALTY HOLDING THAT APPELLANT HAS FAITHFULLY DISCLOSE D ALL THE FACTS OF PURCHASE AND SALE OF SHARES AS WELL AS TRANSACTION MADE BY HIM IN FUTURE AND OPTIONS IN HIS RETURN OF INCOME AS WELL AS IN PROFIT AND LOSS ACCOUNT. THEREFORE RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT V RELIANCE PETRO PRODUCTS LTD 322 ITR 158 (SC) HE DELETED THE PENALTY. AGAINST THE ORDER OF THE LD. CIT APPEAL REVENUE IS IN APPEAL BEFORE US. 4. LD. DEPARTM ENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE LD. ASSESSING OFFICER AND STATED THAT WHEN THE ASSESSEE WAS TRADING IN SHARES HE SHOWED HIS INCOME AS CAPITAL GAINS AND THEREFORE THE PENALTY IS RIGHTLY LEVIED. 5. DESPITE NOTICE TO THE ASSESSEE, NONE APPEARED BEFORE US . THEREFORE THE ISSUE IS DECIDED ON MERITS. 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENT RAISED BY THE LD. DEPARTMENTAL REPRESENTATIVE AS WELL AS THE REASONS GIVEN BY THE LD. ASSESSING OFFICER FOR LEAV Y ING THE PENALTY AND REASONS GIVEN BY THE LD. CIT APPEAL FOR DELETING THE PENALTY. IN THE PRESENT CASE THE PENALTY IS LEVIED UNDER SECTION 271 (1 FOR THE REASON THAT ASSESSEE HAS SHOWN INCOME FROM SALE OF SHARES AS CAPITAL GAINS INSTEAD OF SHOWING IT AS INC OME FROM BUSINESS OF PROFESSION. IN THE PRESENT CASE LD. ASSESSING OFFICER HIMSELF RESTRICTED THE PROFITS ON SALE OF SHARES WHICH ARE HELD FOR MORE THAN 365 DAYS AS LONG TERM CAPITAL GAIN BUT PAGE 3 OF 3 DID NOT AGREE WITH THE CONTENTION ON SHORT TERM CAPITAL GAIN AND ASSESS ED THE SAME AS BUSINESS INCOME. THIS ITSELF SHOWS THAT WHETHER PROFITS ARISING ON SALE OF SHARES ARE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION OR AS CAPITAL GAIN IS A HIGHLY DEBATABLE ISSUE. HOWEVER THE LD. ASSESSING OFFICE R HAS LEVIED PENALTY ON THE SAID ADJUSTMENT OF HEAD OF INCOME DESPITE ASSESSEE DULY SHOWING IN THE BOOKS OF ACCOUNTS AS WELL AS IN THE RETURN OF INCOME COMPLETE DETAILS WITH RESPECT TO THE TRANSACTIONS OF SHARES. IT IS AN ESTABLISHED PRINCIPLE THAT WHEN IS SUE IS HIGHLY DEBATABLE AND ONE OF THE VIEW IS TAKEN BY THE ASSESSEE WHICH IS REJECTED BY THE REVENUE , IT CANNOT LEAD TO PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT AS ASSESSEE HAS NEITHER FURNISHED INACCURATE PARTICULARS OF INCOME OR HAS CONC EALED INCOME. THEREFORE IN THE PRESENT CASE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT APPEAL IN DELETING THE PENALTY UNDER SECTION 271 (1) ( C) OF RS. 1597166/ - . HENCE GROUND 1 OF THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT APPEAL F ILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 / 0 9 /2016. - S D / - - S D / - ( SUCHITRA KAMBLE ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 8 / 0 9 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI