SHRI KRANT NARAIN AGNANI, MUMBAI V. A.C.I.T. CIRCLE 4(3), MUMBAI

ITA 8401/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7957 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 12-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Sale consideration of property below Jantri Value; Speculation loss
• Section: 50C

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI , ! ! ! ! , ' ' ' ' BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : . : . : . : 8401 8401 8401 8401/ // / / // / 2011, * ! +! 2004-05 ITA NO. : 8401/MUM/2011 , AY 2004-05 SHRI KRANT NARAIN AGNANI, D-207, GASPAR ENCLAVE, DR. AMBEDKAR ROAD, BANDRA (WEST), MUMBAI -400 050 / .: PAN: AABPA 3528 L VS ACIT -4(3), MUMBAI /0 (APPELLANT) 12/0 (RESPONDENT) APPELLANT BY : SHRI HARI S RAHEJA RESPONDENT BY : SHRI MANVENDRA GOYAL *345 /DATE OF HEARING : 06-08-2014 67+ 345/ DATE OF PRONOUNCEMENT : 13-08-2014 8 8 8 8 O R D E R ! ! ! ! , . . . . . .. . PER VIVEK VARMA, J.M. : THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORD ER OF CIT(A) 9, MUMBAI, DATED 03.10.2011, WHEREIN, THE CIT(A) HAS S USTAINED THE PENALTY OF RS. 1,50,528/-, LEVIED BY THE AO U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961. 2. THE BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDI VIDUAL AND IN HIS RETURN OF INCOME, THE ASSESSEE OFFERED INCOME FROM BUSINESS & PROFESSION, CAPITAL GAINS & OTHER SOURCES. AT THE T IME OF ASSESSMENT PROCEEDINGS, THE AO MADE THE FOLLOWING DISALLOWANCE S: SR. NO. HEAD OF DISALLOWANCE AMT. OF DISALLOWANCE IN RS. (A) TRANSFERRING SPECULATION LOSS TO INDIVIDUAL PROFIT & LOSS ACCOUNT 1,57,896 (B) UNDER VALUATION OF SALE TRANSACTION AS PER PROVISIONS OF SECTION 50C 4,50,530 SHRI KRANT NARAIN AGNANI ITA NO. 8401/MUM/2011 2 3. BOTH THE DISALLOWANCES WERE NOT CONTESTED BY THE ASSESSEE IN APPEAL. THE AO, THEREFORE, PROCEEDED TO INITIATE PE NALTY PROCEEDINGS AND LEVIED THE PENALTY ON THE TAX, COMPUTED THEREON . 4. THE ASSESSEE APPROACHED THE CIT(A) ON BOTH THE A BOVE ISSUES IN PENALTY PROCEEDINGS, WHO SUSTAINED THE PENALTY AS L EVIED BY THE AO. 5. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 6. BEFORE US, THE AR SUBMITTED THAT IN SO FAR AS AD DITION OF RS. 1,57,896/- IS CONCERNED, THE ASSESSEE WAS HAVING TW O BUSINESSES, WHICH WAS WITH NSE AND THE OTHER BEING REGULAR BUSI NESS ACTIVITY AND MAINTAINING SEPARATE BOOKS OF ACCOUNT. IN THE YEAR UNDER CONSIDERATION THE ASSESSEE SUFFERED A LOSS IN SPECU LATION BUSINESS, WHICH SHOULD HAVE BEEN ADJUSTED AGAINST SPECULATION GAIN ONLY, BUT WHILE CONSOLIDATING, THE ASSESSEE ADJUSTED THIS SPE CULATION LOSS TO THE GAINS IN THE OTHER BUSINESS ACTIVITY OF THE ASSESSE E. THIS ERROR, WHEN CONFRONTED TO THE ASSESSEE, HE REDRAFTED THE ACCOUN TS AND ACCEPTED THE ERRORS AS NOTICED BY THE AO. THE AR SUBMITTED THAT THE ASSESSEE DID NOT HAVE ANY INTENTION TO PLACE INACCURATE PARTICUL ARS OR CONCEALMENT OF INCOME. THIS WAS EVIDENT FROM THE FACT THAT THE ASSESSEE DID NOT AGITATE THE SAME IN APPEAL AND PREFERRED TO PAY THE TAXES. 7. IN SO FAR AS ADDITION OF 50C WAS CONCERNED, THE AR POINTED OUT THAT THE PROVISION BECAME EFFECTIVE FROM 2003-04, A S, THAT OF THE ASSESSEE. SINCE THE PROVISIONS WERE NEW IN THE STAT UTE, THE SAME ESCAPED THE ATTENTION OF THE ASSESSEE. IN ANY CASE, IT WAS POINTED OUT THAT THE ADDITION WAS ON A PROVISION WHICH WAS BASE D ON DEEMING FICTION, WHERE THE PENALTY WAS NOT EXIGIBLE. 8. THE AR, THEREFORE, SUBMITTED THAT PENALTY SHOULD BE DELETED. SHRI KRANT NARAIN AGNANI ITA NO. 8401/MUM/2011 3 9. THE DR ON THE OTHER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 10. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED TH E ORDERS. IN SO FAR AS PENALTY LEVIED ON THE BASIS OF COMPUTATIO N U/S 50C IS CONCERNED, IS BASED ON A DEEMING FICTION AND BEING A NEW PROVISION THERE IS EVERY LIKELIHOOD THAT IT ESCAPED ATTENTION , MORE SO, THAT THE PROVISION NOT BEING SUBSTANTIVE. SINCE THERE WAS NO INTENTION AS SUCH EITHER TO FURNISH INACCURATE PARTICULARS OR ANY ATT EMPT TO CONCEAL THE INCOME, WE ARE SATISFIED, THAT PENALTY SHOULD NOT B E LEVIED. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) ON THE PEN ALTY OF RS. 4,30,530/- AND DIRECT THE AO TO DELETE THE PENALTY COMPUTED ON RS. 4,30,530/-. 11. IN SO FAR AS PENALTY ON ADDITION OF RS. 1,57,89 6/- IS CONCERNED, THE AR ADMITS THAT A MISTAKE WAS COMMITTED BY TRANS FERRING THE SPECULATION LOSS TO THE GAINS OF OTHER BUSINESS ACT IVITY, WHILE CONSOLIDATING THE ACCOUNTS AND THAT THE DISALLOWANC E WAS RIGHTLY MADE. THE AR SUBMITTED THAT A LENIENT VIEW MAY BE T AKEN. ON THE OTHER HAND, THE DR ALSO ACCEPTED THAT A LENIENT VIE W MAY BE TAKEN, LOOKING INTO THE SMALLNESS OF THE AMOUNT. SINCE THE AR HAS ADMITTED THE MISTAKE COMMITTED BY THE ASSESSEE AND BY NOT AG ITATING FURTHER IN QUANTUM PROCEEDINGS, WE ARE INSPIRED TO TAKE A LENI ENT VIEW IN THE CASE IN HAND ONLY LOOKING INTO THE SMALLNESS OF AMO UNT INVOLVED. 12. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A ) ON LEVY OF PENALTY ON THE ADDITION OF RS. 1,57,896/- AND DIRECT THE AO TO DELETE THE QUANTUM OF PENALTY COMPUTED ON RS. 1,57,896/-. SHRI KRANT NARAIN AGNANI ITA NO. 8401/MUM/2011 4 13. IN THE RESULT, THE APPEAL, AS FILED BY THE ASSE SSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST, 2014. SD/- SD/- ( ) ( ! ! ! !) (B R BASKARAN) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 13 TH AUGUST, 2014 14/ COPY TO:- 1) /0/ THE APPELLANT. 2) 12/0/ THE RESPONDENT. 3) THE CIT (A)-9, MUMBAI. 4) ; 4 , MUMBAI / THE CIT-4, MUMBAI. 5) <=14* , , THE D.R. A BENCH, MUMBAI. 6) =>!? COPY TO GUARD FILE. 8* / BY ORDER / / TRUE COPY / / [ @/AB , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *DEA* .*. * CHAVAN, SR. PS