Vijay Kumar Narshi, F-1, 101, Nemi Nagar, Vaishali Nagar, Jaipur, Jaipur V. ITO Ward-7(3), Jaipur, Ward-7(3), Jaipur

ITA 850/JPR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0352 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 10-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J. C. KULHARI
• Keywords: Bonafide belief
• Section: 44AB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 850/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2015-16 VIJAY KUMAR NARSHI, F-1, 101, NEMI NAGAR, VAISHALI NAGAR, JAIPUR CUKE VS. ITO, WARD 7(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABKPN6454A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ROHAN SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J. C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 22/08/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 02/09/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-3, JAIPUR DATED 12.04.2019 CONFIRMING THE LEVY OF PENA LTY U/S 271A OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A SALARIED EMPLOYEE AND DURING THE YEAR UNDER CONSIDERATION, H E HAS MADE TRANSACTIONS OF SALE AND PURCHASE OF SHARES ON BSE/NSE WITHOUT TAKING DELIVERY EXCEPT IN FEW SCRIPTS AND HAS RECORDED TOTAL TURNOVER OF RS. 3,15,64,474/- ON WHICH THE ASSESSEE HAS INCURRED NET LOSS OF RS. 2,69,556/-. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F URNISH COMPLETE DETAILS SUCH AS COPY OF THE DEMAT ACCOUNT, COPY OF THE LEDG ER WITH BROKER, SETTLEMENT SUMMARY REPORT, SCRIPT WISE SUMMARY REPORT, BANK ST ATEMENT ETC. WITH EXPLANATION. IN RESPONSE, THE ASSESSEE FILED THE DE TAILS AND DOCUMENTS SO CALLED FOR BY THE ASSESSING OFFICER WHICH WERE EXAM INED BY THE ASSESSING ITA NO. 850/JP/2019 VIJAY KUMAR NARSHI, JAIPUR V S. ITO, WARD 7(3), JAIPUR 2 OFFICER. GIVEN THAT THE ASSESSEE HAS NOT COMPLIED WITH PROVISION OF SECTION 44AB OF THE ACT, THE LOSS WORKED OUT ON THE SHARE T RADING WAS HOWEVER NOT ACCEPTED AND ALLOWED BY THE ASSESSING OFFICER AND P ENALTY PROCEEDINGS U/S 271A WERE INITIATED FOR NON-MAINTENANCE OF BOOKS OF ACCOUNTS BY WAY OF SHOW- CAUSE NOTICE DATED 29.09.2017. 3. DURING THE COURSE OF PENALTY PROCEEDINGS, THE AS SESSEE SUBMITTED THAT HE HAS BEEN ENGAGED IN THE INVESTMENT ACTIVITY AND ALL THE DOCUMENTS IN RELATION TO INVESTMENT MADE IN THE SHARES AND SECUR ITIES HAS BEEN MAINTAINED AND PROVIDED DURING THE COURSE OF ASSESSMENT PROCEE DINGS. AS PER SECTION 44AA OF THE ACT, THE ASSESSEE SHOULD KEEP AND MAINT AIN SUCH BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AS MAY ENABLE THE ASSE SSING OFFICER TO COMPUTE HIS TOTAL INCOME. SINCE ALL THE DOCUMENTS FOR THESE TRANSACTIONS HAD ALREADY BEEN PRODUCED AND ASSESSMENT HAD ALSO BEEN COMPLETE D, RELEVANT RECORD AND DETAILS HAD BEEN KEPT BY THE ASSESSEE AND NO PENALT Y SHOULD BE IMPOSED ON THE ASSESSEE. HOWEVER, THE SUBMISSION SO FILED BY T HE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER FOR THE REASON THAT THE ASSESSEE WAS LIABLE TO MAINTAIN BOOKS OF ACCOUNTS AS PER PROVISION OF S ECTION 44AA OF THE ACT AND HE FAILED TO DO SO AND THEREFORE, PENALTY OF RS 25, 000 U/S 271A OF THE ACT WAS LEVIED ON THE ASSESSEE. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT HIS TRANSACTIONS IN SHARES WERE NOT FOR BUSINESS PURPOSE BUT WERE UNDERTAKEN ONLY FOR INVESTMENT PUR POSES. FURTHER, THE ASSESSEE HAS NEITHER APPLIED FOR MEMBERSHIP OF ANY STOCK EXCHANGE, NOR OBTAINED ANY FRANCHISE RIGHTS OF ANY OF THE BIG DEA LERS. HE HAS ALSO NOT OPTED FOR TERMINALS. ALL THESE DEMONSTRATE THAT AT NO POI NT OF TIME, THE ASSESSEE HAD AN INTENTION OF DOING BUSINESS IN SHARES. ON THE OT HER HAND, LIKE AN INVESTOR, THE ASSESSEE SOLELY RELIED ON THE ADVICE OF THE BRO KERS, ALTHOUGH SUBSEQUENTLY ITA NO. 850/JP/2019 VIJAY KUMAR NARSHI, JAIPUR V S. ITO, WARD 7(3), JAIPUR 3 IT RESULTED INTO LOSS. IT WAS ACCORDINGLY SUBMITTED THAT WHERE THE TRANSACTIONS WERE IN NATURE OF INVESTMENTS, THERE IS NO REQUIREM ENT TO MAINTAIN BOOKS OF ACCOUNTS AS PER THE PROVISIONS OF SECTION 44AA OF T HE ACT. HOWEVER, THE SUBMISSION SO FILED WERE NOT FOUND ACCEPTABLE TO TH E LD. CIT(A) FOR THE REASONS THAT THE ASSESSEE HAD FAILED TO MAINTAIN THE BOOKS OF ACCOUNT WITHOUT ANY GENUINE CAUSE AND PENALTY SO LEVIED U/S 271A WAS CO NFIRMED. AGAINST THE SAID FINDING, THE ASSESSEE IS NOW IN APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING, THE LD. AR REITER ATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE SUBMITTED THA T THE ASSESSEE IS A SALARIED INDIVIDUAL AND HE HAD CARRIED OUT THE ACTIVITIES AS PURE INVESTMENTS ACTIVITIES AND NOT AS TRADING ACTIVITIES AND THEREFORE, THE AS SESSEE WAS UNDER THE BONAFIDE BELIEF THAT THERE WAS NO REQUIREMENT TO MA INTAIN BOOKS OF ACCOUNTS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE ONCE CAME T O KNOW OF THE LEGAL POSITION THAT HE IS REQUIRED TO MAINTAIN BOOKS OF A CCOUNTS, IN THE SUBSEQUENT YEARS, HE HAS STARTED MAINTAINING BOOKS OF ACCOUNTS AND GETTING THE SAME AUDITED AND IN SUPPORT, THE AUDIT REPORT IN FORM 3C B FOR SUBSEQUENT FINANCIAL YEARS WERE PLACED ON THE RECORD. IT WAS ACCORDINGLY SUBMITTED THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT HE WAS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AND IN VIEW OF THE PROVISION OF S ECTION 273 OF THE ACT, THE PENALTY SO LEVIED BY THE AO MAY BE DIRECTED TO BE D ELETED. 6. PER CONTRA, THE LD. DR SUBMITTED THAT FINDING O F THE LOWER AUTHORITIES. HE SUBMITTED THAT IT IS A CLEAR CASE OF NON MAINTEN ANCE OF BOOKS OF ACCOUNTS WHICH IS REQUIRED TO BE MAINTAINED U/S 44AA OF THE ACT AS THE TURNOVER OF THE ASSESSSEE FROM SHARE TRADING TRANSACTIONS EXCEEDS T HE PRESCRIBED THRESHOLD. HE ACCORDINGLY SUBMITTED THAT THE PENALTY PROVISIONS W HICH ARE BASICALLY DETERRENT PROVISIONS SHOULD BE APPLIED STRICTLY IN THE PRESEN T CASE AND NO RELAXATION SHOULD BE PROVIDED TO THE ASSESSEE. ITA NO. 850/JP/2019 VIJAY KUMAR NARSHI, JAIPUR V S. ITO, WARD 7(3), JAIPUR 4 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS SUCH AS COPY OF THE DEMAT ACCOUNT, COPY OF THE LEDGER WITH BROKER, SETTLEMENT SUMMARY REPORT, SCRIPT WISE SUMMARY REPORT, BANK STATEMENT ETC. WITH EXPLA NATION. IN RESPONSE, THE ASSESSEE FILED THE DETAILS AND DOCUMENTS SO CALLED FOR BY THE ASSESSING OFFICER WHICH WERE DULY EXAMINED BY THE ASSESSING OFFICER. FURTHER, WE FIND THAT THERE ARE NO SPECIFIED BOOKS OF ACCOUNTS WHICH HAVE BEEN PRESCRIBED IN RESPECT OF SHARE TRANSACTIONS SO UNDERTAKEN BY THE ASSESSEE. GIVEN THAT THE ASSESSEE HAS IN SUBSTANCE COMPLIED WITH THE REQUIREMENTS OF PROD UCTION OF DOCUMENTS IN SUPPORT OF ITS SHARE TRANSACTIONS AND GIVEN THAT NO ADVERSE FINDING HAS BEEN RECORDED BY THE ASSESSING OFFICER IN TERMS OF ANY S PECIFIC DOCUMENTATION NOT SO PRODUCED BY THE ASSESSEE AND THE RETURNED INCOME HA S BEEN ACCEPTED, WE FIND THAT GIVEN THE PECULIAR FACT AND CIRCUMSTANCES OF T HE CASE, IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271A AND THE SAME IS DIRECTED T O BE DELETED. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/09/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/09/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- VIJAY KUMAR NARSHI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD-7(3), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 850/JP/2019 VIJAY KUMAR NARSHI, JAIPUR V S. ITO, WARD 7(3), JAIPUR 5 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 850/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR