RAVI M. ARABATTI, THANE V. ITO WD 3(2), THANE

ITA 8814/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3686 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-04-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 29-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARADAM
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Salary income; Speculation loss; Difference of opinion; Condonation of delay; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI B.R. BASKARAN, AM AND SHRI SANDEEP GOSA IN, JM ./ I.T.A. NO. 8814/MUM/2011 ( / ASSESSMENT YEAR: 2004-05) RAVI M. ARABATTI 1303/1304, A WING, NEELKANTH HEIGHTS, POKHRAN NO.2, THANE (W). / VS. INCOME TAX OFFICER, WARD 3(2), THANE. ./ ./PAN/GIR NO. ADKPA 8573F ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI JITENDRA SINGH / RESPONDENT BY : SHRI A.K. KARADAM / DATE OF HEARING : 17/12/2015 !'# / DATE OF PRONOUNCEMENT : 04/03/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- I, DATED 13/0 5/2011 FOR A.Y. 2004-05 WHEREBY CIT(A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF AO DATED 29.11.2005 ON THE GROUNDS OF APPE AL MENTIONED HEREIN BELOW. 2 ITA NO. 8814/MUM/2011 (A.Y. 2004-05) M/S. RAVI M. ARABATTI VS. ITO 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF PENALTY OF RS.89,057/- LEVIED U/S 271(1)(C ) OF THE INCOME-TAX ACT, 1961 BY THE ASSESSING OFFICER. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN TAKING INTO ACCOUNT THE FACTS OF THE CASE WHICH ARE NOT RELEVANT TO THE MATTER OF LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. THE APPELLANTS CRAVE LEAVE TO ADD, TO OR ALTER OR A MEND THE GROUNDS IN APPEAL AT THE TIME OF THE HEARING OF THE APPEAL OR AT ANY TIME PRIOR THERETO. 2. IT IS NOTICED THAT THERE WAS DELAY OF 103 DAYS I N FILING THE APPEAL BEFORE THE TRIBUNAL. AN APPLICATION DATED 9.1.2012 FOR CONDONA TION OF DELAY WAS FILED SUPPORTED WITH AN AFFIDAVIT. WE HAVE DULY CONSIDERE D THE SUBMISSIONS CONTAINED IN THE APPLICATION FOR SEEKING CONDONATION OF DELAY OF 103 DAYS IN FILING THE APPEAL AND AFTER EXAMINING THE SAME, WE ARE OF THE CONSIDE RED OPINION THAT THE EXPLANATION MENTIONED IN THE APPLICATION DISCLOSES SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITH IN TIME AND THEREFORE CONSIDERING T HE AFOREMENTIONED FACTS WHICH ARE SUPPORTED BY THE AFFIDAVIT, WE CONDONE THE DELA Y. EVEN OTHERWISE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUIS ITION VS. MST. KATJI (167 ITR 471) HAD ALREADY LAID DOWN THE PRINCIPLE FOR CONDON ATION OF DELAY, WHEREIN IT HAS BEEN SPECIFICALLY MENTIONED WHEN SUBSTANTIAL JUSTIC E AND TECHNICAL CONSIDERATION 3 ITA NO. 8814/MUM/2011 (A.Y. 2004-05) M/S. RAVI M. ARABATTI VS. ITO ARE PITTED, AGAINST EACH OTHER THEN CAUSE OF SUBSTA NTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF NON-DELIBERATE DELAY. BY RESPECTFUL LY FOLLOWING THE JUDGEMNET OF HONBLE SUPREME COURT AND CONSIDERING THE INTEREST OF JUSTICE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR DECIDING ON MERITS. 3. NOW, COMING TO THE MERITS OF THE CASE, THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT HAD NOT GOT HIS ACCOUNTS AUDITED U/S 44AB OF THE IT ACT, EVEN THOUGH, THE TURNOVER HAD EXCEEDED THE THRESHOLD LIMIT OF RS.40L ACS. FURTHER FINDING OF THE AO WAS THAT, THE APPELLANT WAS INTO THE BUSINESS OF TR ADING IN SHARES AND THE TURNOVER DURING THE YEAR RELEVANT TO THE AY WAS OF THE ORDE R OF RS.1,08,19,605/-. THE EXPLANATION ADVANCED TO THE AO FOR NOT HAVING GOT T HE BOOKS AUDITED IS THAT, HE WAS UNDER THE IMPRESSION THAT, THE BOOKS OF SPECULA TION LOSS WAS NOT REQUIRED TO BE AUDITED AND HENCE NO AUDITING WAS DONE. THE AO REJE CTED THE CONTENTION AND PROCEEDED TO LEVY THE PENALTY. ON APPEAL, THE CIT(A ), THANE DISMISSED THE APPEAL HOLDING THAT, THE APPEAL WAS FILED BELATEDLY, THE A SSESSEE THEN CARRIED THE MATTER TO THE HONBLE ITAT, VIDE ORDER DATED 09/04/08 (4613/M /07)HAVE SET ASIDE THE APPEAL TO THE FILE OF THE CIT(A). AND ULTIMATELY CIT(A) AF TER HEARING BOTH THE PARTIES HAD DISMISSED THE APPEAL VIDE ORDER DATED 13/05/2011. 4 ITA NO. 8814/MUM/2011 (A.Y. 2004-05) M/S. RAVI M. ARABATTI VS. ITO 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESS EE FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. GROUND NO. 1& 2 SINCE BOTH THE GROUND ARE INTER RELATED AND INTERCO NNECTED THEREFORE WE THOUGHT IT FIT TO DISPOSE OFF THE SAME TO THE PRESENT COMMON O RDER. 4.1 THE LD. AR REPRESENTING THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE WRITEEN SUBMISSION MADE BY HIM BEFORE THE CIT(A) AND FURTHE R STATED THAT THE AO WHO INITIATED SIMILAR PROCEEDING IN RESPECT OF A.Y. 200 3-04, HAD ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DROPPED THE PENALTY PROCEEDING BUT THE AO WHO PASSED THE ORDER IN RESPECT OF THE YEAR UNDER CONSI DERATION IS A DIFFERENT OFFICER, WHO HAD NOT ACCEPTED THE SAME EXPLANATION AND THIS IS DUE TO CHANGE OF OPINION THAT THE PRESENT ORDER OF PENALTY HAS BEEN PASSED. ALTHOUGH THE FACTS OF BOTH THE YEARS WERE IDENTICAL, THEREFORE THE AO SHOULD HAVE DROPPED THE PENALTY IN THIS RESPECT THE ASSESSEE RELIED UPON THE CASED TITLED WADIWALA & CO VS. CIT (2002) 120 TAXMAN 125 (MANGALORE) AND ITO VS. BINDRA BAN BOURI 191 (2001) 78 ITD 228 (ASR.). IN ADDITION THE APPELLANT ALSO PLACED R ELIANCE ON THE DECISION OF THE HONBLE ITAT, KOLKATAS DECISION RENDERED IN THE CA SE IN 44 ITD 669 (1993). IT WAS ALSO SUBMITTED BY THE LD. AR THAT THE AO AS WEL L AS THE CIT(A) OUGHT TO HAVE 5 ITA NO. 8814/MUM/2011 (A.Y. 2004-05) M/S. RAVI M. ARABATTI VS. ITO EXERCISED DISCRETION JUDICIOUSLY IN VIEW OF THE DEC ISION OF SUPREME COURT RENDERED IN THE CASE OF M/S HINDUSTAN STEEL LTD. 4.2 LD. AR SUBMITTED THAT HE HAS ALREADY DISCLOSED INCOME FROM SALARY AND OTHER SOURCES AND INCOME FROM SHARES BUSINESS. THE AO TREATED INCOME FROM SHARE BUSINESS AS SPECULATION ON THE BASIS OF MATERIAL FU RNISHED BY THE ASSESSEE HIMSELF. THE AO HAS NOT GATHERED ANY MATERIAL FROM OUTSIDE S OURCES. AS SUCH THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAD CONCEALED PARTICUL ARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF. IN ADDITION OUR ATT ENTION WAS ALSO DRAWN IN PARA 7.1 OF PENALTY ORDER PASSED BY AO WHEREIN IT HAS BEEN C ATEGORICALLY MENTIONED THAT THE ASSESSE HAS WRONGLY SET OFF SPECULATION LOSS OF RS. 2,81,872/- AGAINST SALARY INCOME AND HAS, THUS, FURNISHED INACCURATE PARTICULARS OF HIS INCOME. IN THIS RESPECT IT WAS SUBMITTED THAT THE AO HIMSELF HAS ADMITTED THAT THE RE WAS A MISTAKE IN CLAIMING SPECULATION LOSS AGAINST OTHER INCOME WHICH WAS NOT DELIBERATE AND AS SUCH THE ASSESSEE CANNOT BE PENALIZED FOR GENUINE MISTAKE. 5. ON THE OTHER HAND, LD. DR REPRESENTING THE REVEN UE RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES AND REQUESTED FOR DISMISSING THE APPEAL. 6 ITA NO. 8814/MUM/2011 (A.Y. 2004-05) M/S. RAVI M. ARABATTI VS. ITO 6. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. IT IS UNDISPUTED FACT THAT SIMILAR PROCEEDING FOR INITIAT ING PENALTY IN RESPECT OF ASSESSMENT YEAR 2003-04 WERE ALSO INITIATED AND THE EXPLANATION SUBMITTED BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION WAS ALSO SIMILAR FOR ASSESSMENT YEAR 2003-04 BUT THE AO HAD ACCEPTED THE EXPLANATION OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 AND DROP THE PENALTY PROCEEDING. IN TH IS RESPECT, WE HAVE ALSO PERUSED THE ORDERS PASSED BY THE AO WHEREIN IT HAS BEEN CATEGORICALLY MENTIONED BY THE AO THAT THE PENALTY PROCEEDINGS FOR ASSESSME NT YEAR 2003-04 HAS BEEN DROPPED. WE HAVE ALSO NOTICED THAT THE ASSESSEE HAD DISCLOSED ENTIRE INCOME FROM SALARY, INCOME FROM OTHER SOURCES AND INCOME FROM B USINESS HOWEVER, THE AO TREATED INCOME FROM SHARE BUSINESS AS SPECULATION O N THE BASIS OF MATERIAL FURNISHED BY THE ASSESSEE HIMSELF. THE A.O. HAS NOT GATHERED ANY MATERIAL FROM OUTSIDE SOURCES. AS SUCH IT CANNOT BE HELD THAT ASS ESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. IN T HE CASE OF SIR SHADILAL SUGAR MILLS IT HAS BEEN HELD BY HONBLE APEX COURT THAT THERE CAN BE HUNDRED ONE REASONS FOR OFFERING INCOME FOR TAXATION BUT IT WIL L NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY AND SUBSEQUENTLY IN ANOTHER LANDMARK JUDGEM ENT OF M/S HINDUSTAN STEEL LTD. THE HONBLE SUPREME COURT HAS ALSO HELD ON THE SAME POINTS. BESIDE ALL THE ABOVE FACTS WE ARE OF THE FIRM VIEW THAT IN A CASE WHERE THERE ARE TWO 7 ITA NO. 8814/MUM/2011 (A.Y. 2004-05) M/S. RAVI M. ARABATTI VS. ITO INTERPRETATIONS WHICH ARE POSSIBLE THAN THE INTERPR ETATION WHICH IS FAVOURABLE TO THE ASSESSEE WILL PREVAIL. THEREFORE FROM THE TOTALITY OF THE FACTS WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NOT CONCEALE D ANY INCOME OR FURNISHED INACCURATE PARTICULARS. MOREOVER, WE HAVE ALSO NOT ICED THAT THERE IS NO MATERIAL TO PROVE DELIBERATE CONCEALMENT ON THE PART OF THE A SSESSEE WHICH IS A PRE-REQUISITE FOR INITIATING PROCEEDINGS AGAINST THE APPELLANT. W E RELY UPON THE JUDGEMENT RENDERED BY THE HONBLE ORISSA HIGH COURT IN THE CA SE OF CIT VS. EX-CHIEF MINISTER BIJU PATNAIK (112 ITR 555), BAKSHI MOHD YU SUF & BAKSHI MOHD SHAFI VS. CIT 93 ITR (J& K) AND ADDL CIT VS. SADIQ ALI AN D BROS 92 ITR 276 (J&K). THEREFORE CONSIDERING THE PRINCIPLES OF EQUITY, NAT URAL JUSTICE, IT WILL BE FAIR AND REASONABLE IN THE CIRCUMSTANCES OF THE PRESENT CASE TO DROP THE PENALTY LEVIED U/S 271(1)(C) OF I.T. ACT, 1961. THIS GROUND OF APPEAL IS ALLOWED. 8. GROUND NO. 3 IS GENERAL IN NATURE AND NEEDS NO S EPARATE ADJUDICATION IN VIEW OF THE DECISION ON ABOVE GROUNDS. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. 8 ITA NO. 8814/MUM/2011 (A.Y. 2004-05) M/S. RAVI M. ARABATTI VS. ITO ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2016 SD/- SD/- ( B.R. BASKARAN ) (SANDEEP G O SAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED :04.03.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI