RAJKUMARI AGARWAL, MUMBAI V. ITO 14(1)(4), MUMBAI

ITA 7624/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92690 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Speculation loss; Penny stocks

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO. 7624/MUM/2013 (ASSESSMENT YEAR: 2006 - 07 ) SMT. RAJKUMARI AGARWAL VS. INCOME TAX OFFICER - 14(1)(4) R. NO. 4, 2ND FLOOR 1/13, SHRI BHASKAR BHAVAN S.P. MARG, MUMBAI 400002 AYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN - AADPA3405G APPELLANT RESPONDENT APPELLANT BY: SHRI NISHIT GANDHI RESPONDENT BY: SHRI LOVE KUMAR DATE OF HEARING: 01.06. 2015 DATE OF PRONOUNCEMENT: 01.06.2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY CIT(A) - 25, MUMBAI AND IT PERTAINS TO A.Y. 2006 - 07. 2. THOUGH THE ASSESSEE RAISED SEVERAL GROUNDS UNDER DIFFERENT HEADS, AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED APPEAL IS WITH REGARD TO THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT, WHICH IN TURN IS BASED ON THE ORDER DATED 30.12.2011 PASSED BY THE AO WHEREIN HE OBSERVED THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE ARE SHAM AND MANIPULATED TRANSACTIONS AND ACCORDINGLY THE INCOME EARNED FROM THE SAID TRANSACTIONS, AMOUNTING TO ` 63,08,353/ - DESERVES TO BE TREATED AS INCOME OF THE ASSESSEE FROM OTHER SOURCES WHEREAS THE SAID ADDITION WAS SET ASIDE BY THE ITAT D BENCH, MUMBAI VIDE ORDER DATED 17 TH SEPTEMBER, 2014 (ITA NO. 6392/MUM/2012). THUS IT IS A NOT A FIT CASE FOR LEVY OF PENALTY. 3. THE LEARNED D.R. FAIRLY ADMITTED THAT THE ISSUE IS COVERED BY THE AFORECITED DECISION. ITA NO. 7624/MUM/2013 SMT. RAJKUMARI AGARWAL 2 4. FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE SHOWED PROFIT FROM SPECULATION AND ADJUSTED THE SAME AGAINST BROUGHT FORWARD LOSSES OF E ARLIER YEARS. THE AO CARRIED OUT INVESTIGATION TO ASCERTAIN THE GENUINENESS OF THE PURPORTED SPECULATIVE TRANSACTIONS AND NOTED THAT THE TRANSACTIONS OF PURCHASE AND SALE IN BULLION DONE BY THE ASSESSEE WAS PERFORMED BY THE COUNTER PARTY FROM THE SAME TERM INAL OF M/S. RIDDHI SIDDHI BULLIONS LTD. (RSBL) AND THUS HE CONCLUDED THAT ASSESSEE CARRIED OUT MERELY T W O TRANSACTIONS IN THE ENTIRE YEAR ON TWO DATES ONLY IN THE FAG END OF THE FINANCIAL YEAR, WHICH ARE ARRANGED TRANSACTIONS AND NOT GENUINE TRANSACTIONS. IN OTHER WORDS, THE AO CONCLUDED THAT THE SAID TRANSACTIONS ENTERED INTO BY THE ASSESSEE ARE SHAM AND MANIPULATED TRANSACTIONS AND THEREFORE THEY CANNOT BE SET OFF AND ON THE CONTRARY THEY SHOULD BE TREATED AS INCOME FROM OTHER SOURCES. IN THE FIRST ROUND OF LITIGATION THE MATTER WAS SET ASIDE BY THE ITAT BUT AGAIN THE ADDITION WAS REPEATED BY THE AO AND IN THE SECOND ROUND OF LITIGATION THE TRIBUNAL OBSERVED THAT ASSESSEE CARRIED OUT THE IMPUGNED TRANSACTIONS THRO UGH AN AUTHORISED BROKER IN A RECOGNISED S TOCK EXCHANGE AND UNLIKE PENNY STOCKS, WHERE THE PRICE MOVEMENT MIGHT BE CONTROLLED BY FEW INTERESTED PERSONS, IT IS UNLIKELY THAT THE PRICE MOVEMENT OF GOLD COULD BE CONTROLLED BY A FEW PERSONS AND HENCE IT IS UNLIKELY THAT THE STOCK BROKER M/S. RIDDHI SI DDHI BULLIONS LTD. COULD HAVE CONTROL OVER THE PRICE MOVEMENT OF GOLD. IN FACT ASSESSEE MADE A PROFIT OF ` 78.24 LAKHS IN THE FIRST TRANSACTION AND INCURRED A LOSS ` 15.15 LAKHS IN THE SECOND TRANSACTION AND THERE IS NO MATERIAL WITH THE AO TO SHOW THAT THE LOSS IS ALSO MANAGED BY THE ASSESSEE IN COLLUSION WITH THE STOCK BROKER, THAT TOO WHEN THEY WERE ONLINE TRANSACTIONS. IT WAS FURTHER NOTICED THAT THE TAX AUTHORITIES SIMPLY PLACED RELIANCE UPON THE STATEMENT GIVEN BY SHRI SHAILESH RANKA WITHOUT CROSS VERIF YING THE SAME AND WITHOUT BRINGING ANY MATERIAL ON RECORD TO ESTABLISH ITS VERACITY. IT WAS THUS CONCLUDED THAT REJECTION OF SPECULATION LOSS DECLARED BY THE ASSESSEE WAS MERELY BASED ON SURMISES AND SUSPICION, WHICH IS NOT PERMISSIBLE IN LAW. IN SUBSTANCE THE ADDITION, WHICH IS THE BASIS FOR LEVY OF PENALTY, NO LONGER SUBSISTS. ITA NO. 7624/MUM/2013 SMT. RAJKUMARI AGARWAL 3 5. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY, IN THE LIGHT OF THE FINDINGS OF THE ITAT (SUPRA) . WE, THEREFORE, ALLOW THE APP EAL FILED BY THE ASSESSEE AND CANCEL THE PENALTY LEVIED BY THE AO. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE, 2015. SD/ - SD/ - ( SANJAY ARORA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 1 ST JUNE, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 25 , MUMBAI 4. THE CIT 14 , MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.