Prashant Pralhad Ashtekar, Pune V. ITO, Pune

ITA 881/PUN/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60025 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Search and seizure; Revised return
• Section: 133A; 153A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 881/PN/2010 (ASSTT. YEAR : 2003-04 ) PRASHANT PRALHAD ASHTEKAR ... APPELLANT 603, SADASHIV PETH, PUNE 411 030 PAN: AAPPA3064K V. ITO , CENTRAL II, PUNE RESPONDENT PMT BUILDING, SWARGATE, PUNE 411 037 ITA NO. 882/PN/2010 (ASSTT. YEAR : 2003-04 ) PRALHAD BABURAO ASHTEKAR APPELLANT 603, SADASHIV PETH, PUNE 411 030 PAN : AAPPA3063Q V. ITO, CENTRAL II, PUNE RESPONDENT PMT BUILDING, SWARGATE, PUNE 411 037 APPELLANT BY : SHRI. M.R. BHAGWAT RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING :09/2/12 DATE OF PRONOUNCEMENT : -3-12 ORDER PER I.C. SUDHIR, JM IN THESE APPEALS, THE ASSESSEE HAS QUESTIONED THE ACTION OF THE LD CIT(A) IN SUSTAINING THE PENALTY OF RS. 2,75,400/- IN CASE OF SHRI. P.P. ASHTEKAR AND RS. 5,57,500/- IN CASE OF SHRI P.B. AS HTEKAR LEVIED U/S. 271(1)( C ) OF THE ACT. 2. THE RELEVANT FACTS ARE THAT SEARCH AND SEIZURE A CTION U/S. 132 AND SURVEY U/S. 133A WERE CONDUCTED AT THE RESIDENTIAL AND BUSINESS ITA . NOS.881 & 882/PN/2010 PRASHANT P. ASHTEKAR ETC.,, A.Y. 2003-04 PAGE OF 7 2 PREMISES OF THE GROUP ON 26.10.2005. THE ASSESSEES REGULAR SOURCE OF INCOME IS FROM HOUSE PROPERTY AND SHARED PROPERTY F ROM M/S. V.N. ASHTEKAR. IN ITS ORIGINAL RETURN FILED U/S. 139 ON 30 TH MAY 2003, THE ASSESSEE SHRI. P.P. ASHTEKAR HAD SHOWN LONG TERM CA PITAL GAINS FROM THE SALE OF 8000 SHARES OF DATABASE FINANCE LTD., BUT, IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A, THE ENTIRE SALE PROCE EDS OF RS. 7,03,200/- HAS BEEN OFFERED UNDER THE HEAD SHORT TERM CAPITAL GAINS. THE A.O. OBSERVED THAT THE ABOVE ADDITIONAL INCOME HAS COME TO LIGHT ONLY AS A RESULT OF THE SEARCH ACTION. HE ACCORDINGLY INITIA TED PENALTY PROCEEDINGS U/S. 271(1)(C ) FOR THE CONCEALMENT OF INCOME AND H AS LEVIED PENALTY IN QUESTION, UPHELD BY THE LD CIT(A). 3. LIKEWISE IN THE CASE OF SHRI P.B. ASHTEKAR, THE ASSESSEE IN ITS ORIGINAL RETURN OF INCOME FILED U/S. 139 ON 30 TH MAY 2003 HAD SHOWN LONG TERM CAPITAL GAINS ON THE SALE OF 20,000 SHARES OF DATABASE FINANCE LTD. HOWEVER, IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A, THE ENTIRE PROCEEDS OF RS. 17,69,615/- HAS BEEN OFFERED AS INC OME UNDER THE HEAD SHORT TERM CAPITAL GAINS. THE A.O. HAS LEVIED PE NALTY U/S. 271(1)(C ) FOR THE CONCEALMENT OF INCOME. 4. THE LD CIT(A) HAS UPHELD THE PENALTY LEVIED ON T HE ABOVE ASSESSEES WITH THIS OBSERVATION THAT IF THE ORIGINA L RETURN COULD FORM THE BASIS FOR DETERMINING THE QUANTUM OF PENALTY IMPOSS IBLE ON RE- ASSESSMENT, THERE IS NO REASON WHY THE ORIGINAL RET URN SHOULD ALSO NOT FORM THE BASIS FOR DETERMINING THE DATE ON WHICH TH E CONCEALMENT WAS EFFECTED BY THE ASSESSEE. THE LD CIT(A) ACCORDINGL Y HELD THAT THE CONCEALMENT OF PARTICULARS OF INCOME WAS EFFECTED B Y THE ASSESSEE WHEN THE TAX PAYER FILED ORIGINAL RETURN OF INCOME. ITA . NOS.881 & 882/PN/2010 PRASHANT P. ASHTEKAR ETC.,, A.Y. 2003-04 PAGE OF 7 3 5. BEFORE THE TRIBUNAL, THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. IT WAS ASSERTED THA T THE ENTIRE ACTION OF ACCEPTING THE TRANSACTION OF THE SHORT TERM CAPITAL GAINS WERE VOLUNTARY AND SO MOTTO, WITHOUT GETTING DETECTED DURING SEARC H AND THEREFORE, FOR VARIOUS REASONS, THE PENALTY FOR THE CONCEALMENT IS NOT WARRANTED. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) DHANANJAY VILAS JADHAV VS. ITO, ITA NO. 417/PN/20 09 (A.Y. 2003-04), ORDER DATED 8 TH DECEMBER 2010. 2) CIT VS. HARSHAVARDHAN CHEMICALS & MINERALS LTD.,259 ITR 212 (RAJ.) 3) CIT VS. RELIANCE PETROPRODUCTS P. LTD., 322 ITR 15 8 (SC) 6. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW WITH THIS SUBMISSION THAT ONLY A FTER SEARCH SURVEY PROCEEDINGS, THE ASSESSEE CAME OUT WITH TRUE FACTS THAT PROFIT EARNED FROM THE SALES OF SHARES IN QUESTION WAS SHORT TERM CAPITAL GAINS AND NOT AS LONG TERM CAPITAL GAINS AS CLAIMED BY THEM I N THEIR ORIGINAL RETURNS OF INCOME FILED U/S. 139(1) OF THE ACT. TH US, THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PAR TICULARS THEREOF ON THEIR PART IS APPARENT TO ATTRACT THE PENAL PROVISIONS U/ S. 271(1)(C) AGAINST THEM. 7. HAVING GONE THROUGH THE DECISION OF PUNE BENCH IN THE CASE OF DHANANJAY VILAS JADHAV VS. ITO (SUPRA) RELIED UPON BY THE LD. A.R., WE FIND THAT UNDER ALMOST SIMILAR FACTS, THE TRIBUNAL HAS DELETED THE PENALTY LEVIED AND UPHELD BY THE AUTHORITIES BELOW WITH THI S OBSERVATION THAT THERE IS AN ELEMENT OF VOLUNTARY ACT ON THE PART OF THE ASSESSEE TO UNDO THE CLAIM MADE IN ORIGINAL RETURN AND THAT THE DEPA RTMENT HAS NOT BROUGHT OUT ANY INCRIMINATING MATERIAL TO DEMONSTRA TE THE IMPUGNED ITA . NOS.881 & 882/PN/2010 PRASHANT P. ASHTEKAR ETC.,, A.Y. 2003-04 PAGE OF 7 4 PENNY STOCK IN QUESTION WERE PURCHASED FOR CONVERTI NG THE UNACCOUNTED MONEY INTO ACCOUNTED MONEY. IN THAT CASE BEFORE T HE TRIBUNAL, THE ASSESSEE HAD FILED HIS ORIGINAL RETURN CONSISTING O F INCOME FROM LONG TERM CAPITAL GAIN ON ACCOUNT OF SALES OF SHARES. H E SUBSEQUENTLY FILED REVISED RETURN WHEREIN THE LONG TERM CAPITAL GAIN ORIGINALLY SHOWN WAS REVISED AS SHORT TERM CAPITAL GAIN. PROCEEDINGS U/ S. 148 WERE INITIATED AND ON THE BASIS OF ENQUIRIES CONDUCTED BY THE INVE STIGATION WING OF DEPARTMENT AND ENQUIRIES CONDUCTED BY THE A.O, IT W AS HELD THAT NO PURCHASE/SALE TRANSACTION OF SHARES IN RESPECT OF W HICH CAPITAL GAIN SHOWN BY THE ASSESSEE ACTUALLY TOOK PLACE AND THE DOCUMEN TARY EVIDENCE PRODUCED IN THIS REGARD WERE HELD TO BE FABRICATED. THE CLAIM OF RECEIPT OF CAPITAL GAIN WAS RETURNED AND SHORT TERM CAPITA L GAINS SHOWN BY THE ASSESSEE WAS ASSESSED AS INCOME FROM OTHER SOURCES AND PENALTY PROCEEDINGS U/S. 271(1)(C ) WERE INITIATED. PENAL TY WAS LEVIED AND UPHELD BY THE LD CIT(A). BEFORE THE TRIBUNAL, THE ASSESSEE CONTENDED THAT IMPUGNED TRANSACTIONS WERE EFFECTED THROUGH BA NKING CHANNELS AND THESE WERE DELIVERY BASED TRANSACTIONS OF THE PENN Y SHARES. IT WAS SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL HAS H ELD IN NUMBER OF CASES THAT SUCH GAINS HAVE TO BE TAXED AS SHORT TER M CAPITAL GAINS AND NOT AS INCOME FROM OTHER SOURCES. IT WAS SUBMITTED THAT THERE IS DISPUTE ON A TAXABILITY OF SUCH GAINS ON A PARTICULAR HEAD OF INCOME, THEREFORE, CONSIDERING THE DEBATABLE NATURE OF THE ISSUE AND FURNISHING OR DISCLOSURE OF RELEVANT INFORMATION IN THE REVISED RETURN OF I NCOME, PENALTY U/S. 271(1)(C ) IS NOT LEVIABLE. RELIANCE WAS PLACED IN THE CASES OF SANTOSH NARAYAN KAPUR, 115 TTJ (LUCK.) 402 AND PREMCHAND GA RG, 123 TTJ (DEL.)(TM) 433. CONSIDERING THE TOTALITY OF THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL HAS DELETED THE PENALTY L EVIED U/S. 271(1)(C ). ITA . NOS.881 & 882/PN/2010 PRASHANT P. ASHTEKAR ETC.,, A.Y. 2003-04 PAGE OF 7 5 8. CONTENTION OF THE LD. A.R. REMAINED THAT THE CAS ES OF THE PRESENT ASSESSEES ARE ON BETTER FOOTINGS IN COMPARISON TO T HE CASE OF DHANANJAY VILAS JADHAV VS. ITO (SUPRA). HE POINTED OUT THAT THE ASSESSEES HAD PURCHASED SHARES OF DATABASE FINANCE LTD. THROUGH T HE BROKER (IN CASE OF SHRI. P.P. ASHTEKAR 800 SHARES FOR RS. 9769/- AND 2 000 SHARES IN CASE OF SHRI. P.B. ASHTEKAR FOR RS. 25,400/-). THESE SHARE S WERE SHOWN AS INVESTMENT IN BALANCE SHEET DRAWN ON 31 ST MARCH 2002 ATTACHED AND FILED WITH THE RETURN OF INCOME FOR A.Y. 2002-03. THE AFORESAID FULLY PAID EQUITY SHARES OF DATABASE FINANCE LTD., ON THE FACE VALUE OF RS. 10/-EACH WERE SUB-DIVIDED INTO 8000 IN THE CASE OF SHRI. P.P . ASHTEKAR AND 20000 IN THE CASE OF SHRI.P.B. ASHTEKAR FULLY PAID EQUITY SHARES OF RUPEE 1/- EACH ON 30 TH AUGUST 2002. SUBSEQUENTLY, THE ASSESSEES SENT RE TURN OF THE SHARES HELD BY THEM IN PHYSICAL FORM TO THE CO MPANY FOR DEMATERIALIZATION AND ACCORDINGLY, THESE FULLY PAI D EQUITY SHARES OF RUPEE 1/- EACH OF DATABASE FINANCE LTD. WERE DEMATE RIALIZED ON 11.9.2002. AFTER DEMATERIALIZATION OF THE SHARES, THE ASSESSEES SOLD ALL THE SHARES ON 24.9.2002 THROUGH A BROKER ON BOMBAY STOCK EXCHANGE FOR A TOTAL SALE CONSIDERATION OF RS.7,03,200/- IN THE CASE OF SHRI P.P. ASHTEKAR AND THE ASSESSEE SHRI. P.B. ASHTEKAR SOLD ALL THE SHARES ON 23.9.2002 AND 30.9.2002 THROUGH A BROKER ON BOMBAY STOCK EXCHANGE FOR A TOTAL SALE CONSIDERATION OF RS. 17,69,815/-. THE SUBMISSION OF THE LD. A.R. REMAINED THAT IN CASE OF SHRI. P.P. ASHTEK AR, SHARES WERE HELD BY HIM FROM 20 TH APRIL 2001 TO 24.09.2002 AND IN CASE OF SHRI P.B. ASHTEKAR, THESE WERE HELD FROM 20 TH APRIL 2001 TO 23.9.2002 I.E. FOR A PERIOD MORE THAN 12 MONTHS. THE ASSESSEES IN THEIR ORIGINAL RE TURNS OF INCOME FILED ON 30 TH MAY 2003 FOR THE A.Y. 2003-04 DECLARED LONG TERM C APITAL GAINS IN CASE OF SHRI P.P. ASHTEKAR AFTER SET OFF OF ASSET S OF LONG TERM CAPITAL LOSS OF RS. 4,19,069/-. HE PAID TAX ON THE BALANCE CAPI TAL GAIN AT THE RATE OF ITA . NOS.881 & 882/PN/2010 PRASHANT P. ASHTEKAR ETC.,, A.Y. 2003-04 PAGE OF 7 6 10% AS PER PROVISIONS OF SEC. 112 OF THE ACT. SIMI LARLY, IN THE CASE OF SHRI. P.B. ASHTEKAR, AFTER SET OFF OF ASSETS, LONG TERM CAPITAL GAIN LOSS OF RS.16,14,129/-, HE PAID TAX ON THE BALANCE CAPITAL GAIN AT THE RATE OF 10% AS PER PROVISIONS OF SEC. 112 OF THE ACT. 9. ON 26.10.2005, THERE WAS SEARCH ACTION AT THE R ESIDENCE OF ASSESSEES. IN ANSWER TO QUERY RAISED BY THE LD. AD I REGARDING THE PURCHASE AND SALE OF SHARES, ALL THE DETAILS ALONG WITH PURCHASE AND SALE OF SHARE CONTRACT AND BILLS WERE FILED TO HIM. HOW EVER, IN RESPONSE TO NOTICE U/S. 153A, THE ASSESSEES FILED THEIR RETURN OF INCOME FOR THE YEAR OFFERING ENTIRE SALE PROCEEDS OF PAID SHARES OF DA TABASE FINANCE LTD. AS SHORT TERM CAPITAL GAIN FOR THE FOLLOWING REASONS. I) THE APPELLANT WAS NOT SURE OF GETTING THE THIRD PARTY CONFIRMATION, SUPPORT AND PERSONAL APPEARANCES (IF SUMMONED) OF THE BROKER FROM WHOM THE SHARES WERE PURCHASED IN APRIL 2001. II) TO AVOID LONG DRAWN AND EXPENSIVE LITIGATION III) TO BUY PEACE OF MIND IV) TO AVOID PENALTY PROCEEDINGS 10. FROM THE ORDERS OF THE AUTHORITIES BELOW, WE FI ND THAT THERE IS NO DISPUTE REGARDING THE PURCHASE AND SALES OF THE SH ARES. THE ONLY DISPUTE IS REGARDING THE DATE OF PURCHASE. THE ASSESSEES H AVE SHOWN ONE OF THE REASONS FOR DECLARING THE GAIN AS SHORT TERM CAPITA L GAIN IN THEIR RETURNS FILED U/S. 153A, DEVIATING FROM THEIR EARLIER DECLA RATION AS LONG TERM CAPITAL GAIN IN THEIR ORIGINAL RETURN FILED U/S. 13 9(1) OF THE ACT IS THAT THEY WERE NOT SURE OF GETTING THE THIRD PARTY CONFIRMAT ION, SUPPORT AND PERSONAL APPEARANCE OF THE BROKERS FROM WHOM THE SH ARES WERE PURCHASED IN APRIL 2001. THERE IS NOTHING ON RECOR D TO DOUBT SUCH EXPLANATION OF THE ASSESSEES FOR SHOWING THE GAIN AS SHORT TERM CAPITAL ITA . NOS.881 & 882/PN/2010 PRASHANT P. ASHTEKAR ETC.,, A.Y. 2003-04 PAGE OF 7 7 GAIN IN THEIR RETURN FILED U/S. 153A OF THE ACT TO ATTRACT PENAL PROVISION U/S. 271(1)(C ) OF THE ACT. UNDER THESE CIRCUMSTAN CES, IT CANNOT BE INFERRED BEYOND DOUBT THAT THE ASSESSEES HAD FURNIS HED INACCURATE PARTICULARS OF INCOME IN THEIR ORIGINAL RETURNS OF INCOME FILED U/S. 139 OF THE ACT DECLARING THE SALE PROCEEDS OF THE SHARES A S LONG TERM CAPITAL GAIN. WE THUS WHILE SETTING ASIDE THE ORDERS OF TH E AUTHORITIES BELOW, DIRECT THE A.O TO DELETE THE PENALTY OF RS. 2,75,40 0/- IN THE CASE OF SHRI P.P. ASHTEKAR AND RS. 5,56,500/- IN THE CASE OF SHR I P.B. ASHTEKAR U/S. 271(1)( C ) OF THE ACT. THE GROUNDS ARE THUS ALLO WED IN FAVOUR OF THE ASSESSEES. 11. IN RESULT, APPEALS ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28TH MARCH 2012. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 28TH MARCH, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CENTRAL, PUNE 4. THE CIT(A)-IV, PUNE 4. THE D.R. A BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE