ANJU HALDIA, Jaipur V. DCIT, Jaipur

ITA 883/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5494 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 20-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: M L BORAD SHRI DHIRAJ BORAD

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NOS. 883, 884 & 885/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06, 2007-08 & 2008-09 SMT. ANJU HALDIA W/O SHRI BHANU HALDIA AB-188, NIRMAN NAGAR, AJMER ROAD, JAIPUR CUKE VS. THE ITO WARD- - 2(4) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAKPH 9233 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI M.L. BORAD, ADVOCATE SHRI DHIRAJ BORAD, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05/01/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11 /02/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAI NST SEPARATE ORDERS OF THE LD. CIT(A), ALWAR DATED 24-09-2013 FOR THE ASSESSMENT YEARS 2005-06, 2007-08 AND 2008-09 CHALLENGING THE IMPOS ITION OF PENALTY U/S 271B OF THE ACT OF RS. 1.00 LAC IN RESPECT OF EACH ASSESSMENT YEAR MENTIONED ABOVE. ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 2 2.1 BRIEF FACTS OF THE CASE ARE THAT IN ALL THESE Y EARS ASSESSEE CARRIED ON BUSINESS OF SPECULATIVE TRANSACTIONS IN COMMODITIES THROUGH NCDEX WHERE NO DELIVERY IS GIVEN/ TAKEN FOR THE COMMODITI ES TRADED. IT IS CONTENDED THAT THE SPECULATIVE TRANSACTIONS THROUGH NCDEX ARE IN THE NATURE OF ONLY FORWARD / FUTURE TRANSACTIONS OF COM MODITIES LIKE GOLD, SILVER ETC. IS DONE WITHOUT DELIVERY. IN EFFECT ONL Y PROFIT / LOSS ACCRUES FROM SPECULATIVE TRANSACTIONS WHICH IS ACCOUNTED FO R I.E. CREDITED/ DEBITED IN THE ACCOUNTS. THE TOTAL AMOUNT OF PROFIT FROM SP ECULATIVE TRANSACTION IS RS. 1,02,757/- FOR A.Y. 2005-06, RS. 97,941.11 FOR A.Y. 2007-08 AND RS. 2,68,554.07 FOR A.Y. 2008-09 RESPECTIVELY. THE ACCO UNTS OF THE ASSESSEE FROM SPECULATIVE BUSINESS WERE NOT AUDITED U/S 44AB OF THE ACT, CONSEQUENTLY THE RETURNS OF INCOME WERE FILED WITHO UT ANNEXING AUDIT REPORTS. THE ASSESSMENT WAS COMPLETED BY ACCEPTING SPECULATIVE INCOME DECLARED IN RESPECTIVE RETURNS. THE AO HOWEVER WAS OF THE VIEW THAT ACCOUNTS SHOULD HAVE BEEN AUDITED U/S 44AB AND INIT IATED PENALTY PROCEEDINGS U/S 271B OF THE ACT WHERE THE ASSESSEE FILED DETAILED SUBMISSIONS REPLYING AS UNDER:- ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 3 (I) THE TRANSACTIONS OF COMMODITIES THROUGH NCDEX DO NOT INVOLVE ANY DELIVERY. THEREFORE, THE ENTIRE NOTIONA L VALUE CANNOT BE TREATED AS A PART OF TURNOVER. (II) THE WORD TURNOVER IS NOT DEFINED IN THE I.T. ACT AND THE DEFINITION THEREOF IS GIVEN IN SCHEDULE VI, PART II , ITEM 31)(A) OF COMPANIES ACT AND IT IS AS UNDER:- THE TURNOVER, THAT IS, THE AGGREGATE AMOUNT FOR WHICH SALES ARE EFFECTED BY THE COMPANY, GIVING THE AMOUNT OF SALES IN RESPECT OF EACH CLASS OF GOODS DEALT W ITH BY THE COMPANY AND INDICATING THE QUANTITIES OF SUCH SALES FOR EACH CLASS SEPARATELY. BESIDES, THE DEFINITION OF TURNOVER IN CENTRAL SAL ES TAX WAS RELIED ON. (III) RELIANCE WAS PLACED ON VARIOUS JUDGEMENTS. NOT SATISFIED WITH THE REPLY, LD. AO IMPOSED PENALT Y OF RS. 1.00 LAC IN EACH ASSESSMENT YEAR. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHEREIN THE LD. CIT(A) CONFIRMED THE PENALTIES HOLDING THAT THE PRO VISIONS OF SECTION 44AB OF THE ACT, USE THE WORDS TOTAL SALES, TUR NOVER OR GROSS RECEIPTS WHICH ARE OF WIDE AMPLITUDE AND COVER THE TRANSACTI ON VALUE ON NCDEX AND NOT ONLY THE PROFIT/LOSS THERE FROM. THE LD. CI T(A) RELIED ON THE ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 4 DECISION OF ITAT LUCKNOW BENCH IN THE ASSESSEE OF D CIT VS. GOPAL KRISHAN BUILDERS 272 ITR (AT) 1 FOR THE PROPOSITION THAT SCOPE OF THE WORDS GROSS RECEIPTS WAS WIDE AND THE IMPOSITIO N OF PENALTY WAS CONFIRMED. 2.3 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS AS UN DER:- (I) THERE BEING NO DELIVERY OF MOVABLE PROPERTY, T HE OWNERSHIP IN GOODS TRANSACTED THROUGH NCDEX IS NOT PASSED FRO M BUYER TO SELLER, THEREFORE, THERE IS NO ELEMENT OF SALES INVOLVED A S PER SALE OF GOODS ACT. (II) THESE TRANSACTIONS CANNOT BE HELD AS TURNOVER IN GENERAL PARLANCE OR IN VIEW OF THE DEFINITION OF WORD TURNO VER PROVIDED IN INDIAN COMPANIES ACT. (III) THE GROSS RECEIPTS OF NCDEX ARE UNDISPUTEDLY BELOW RS. 40 LACS. THEREFORE, TRANSACTIONS IN QUESTIONS ARE NOT UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT (IV) THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT ASSESSEE HAVING RECEIVED ONLY SPECULATIVE PROFIT OR INCURRED SPECUL ATIVE LOSS, IT WAS NOT LIABLE FOR AUDITED THE ACCOUNT AS THE TURNOVER DID NOT EXCEED RS. 40 LACS IN ALL THESE ASSESSMENT YEARS. THE BONA FIDE BELIEF IS BASED ON LEGITIMATE CONSIDERATIONS. ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 5 (V) RELIANCE WAS PLACED OF ITAT PUNE BENCH DATED 2 2-11-2012 IN THE ASSESSEE OF BANWARI SITARAM PASARI HUF VS. ACIT (ITA NO. 1489(PUNE) OF 2011 FOR THE ASSESSMENT YEAR 2006-07) WHEREIN THE ORDER OF ITAT MUMBAI BENCH IN THE CASE OF GROWMOR EXPORTS LTD. VS. ASSTT. COMMISSIONER (2001) 78 ITD 95 WAS FOLLOWED BY ITAT PUNE BENCH DELETING THE PENALTY U/S 271B, HOLDING SUCH TRANSAC TION TO BE NOT TURNOVER IN TERMS OF SEC. 44AB AS UNDER:- 7. IN THE PRESENT CASE ALSO, THE TRANSACTION OF BUYING AND SELLING OF COMMODITIES IS A SPECULATIVE ACTIVITY WHERE THE PHYSICAL DELIVERY IS TAKEN OR GIVEN AND I N THIS VIEW OF THE MATTER, FOLLOWING THE PARITY OF REASONING GI VEN IN THE CASE OF GROWMORE EXPORTS LTD. (SUPRA), HEREIN ALSO, WE ARE INCLINED TO HOLD THAT THERE WAS NO TURNOVER CONSTIT UTED IN THE AMOUNT OF RS. 1,86,66,488/- FOR THE PURPOSE OF CONS IDERING THE LIABILITY OF ASSESSEE TO GET THE ACCOUNTS AUDIT ED U/S 44AB OF THE ACT AND HENCE, THERE WAS NO REQUIREMENT TO G ET THE ACCOUNTS AUDITED U/S 44AB OF THE ACT. THUS THE PENA LTY U/S 271B IMPOSED BY THE ASSESSING OFFICER IS HEREBY DIR ECTED TO BE DELETED. 2.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW AND CONTENDS THAT THE LATEST DECISION OF ITAT BOMBAY BE NCH DATED 29 TH JAN. ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 6 2014 IN THE CASE ANAHAITA NALIN SHAH VS. DCIT (ITA NO. 7972/MUM/2010 FOR THE ASSESSMENT YEAR 2004-05), 149 ITD 0171 SHOULD BE ADOPTED WHEREIN IT HAS BEEN HELD AS UNDER: - 7. UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAD ENTERED INTO SPECULATIVE BUSINESS OF T HE SHARES THAT THE TRANSACTIONS ENTERED INTO BY HER WERE MORE THAN THE PRESCRIBED MONETARY LIMIT AS ENVISAGED BY THE PROVI SIONS OF SECTION 44AB OF THE ACT, THAT NO BONAFIDE REASONS W ERE FURNISHED BY THE ASSESSEE, FOR NOT ATTENDING THE BO OKS OF ACCOUNT AUDITED, BEFORE THE AO OR THE FAA . WE ARE OF THE OPINION THAT WORDS TOTAL TURNOVER INDICATE THE AGG REGATE PRICE OF THE COMMODITIES RECEIVED BY AN ASSESSEE'S DURING THE COURSE OF HIS TRADING OR BUSINESS ACTIVITIES. I T DOES NOT DIFFERENTIATE BETWEEN COMMODITIES SOLD UNDER THE HE AD SPECULATIVE BUSINESS / NORMAL BUSINESS. TRANSFER OF IMMOVABLE OR MOVABLE PROPERTY BY WAY OF INVESTMENT IS NOT INCLUDED BY THE PROVISIONS OF SECTION 44AB OF THE A CT. PROVISIONS OF THE ACT ARE CLEAR THAT ALL REVENUE RE CEIPTS ARE COVERED BY THE WORDS TURNOVER , WHEREVER CAPITAL RE CEIPTS ARE NOT TO BE CONSIDERED A PART OF THE TURNOVER FO R THE PURPOSE OF THE SAID SECTION. IN OTHER WORDS, RECEIP TS WHICH ARE NOT RELATABLE TO BUSINESS AND MAY FALL UNDER TH E EXPRESSION INCOME TO BE SUBJECTED TO TAX AS INCOME FROM SOURCES DO NOT FORM PART OF TOTAL TURNOVER. CONSID ERING THE PRINCIPLES GOVERNING THE IMPOSITION OF PENALTY U/S 271B AND ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 7 THE FACTS OF THE CASE WE ARE OF THE OPINION THAT AO WAS JUSTIFIED IN LEVYING PENALTY FOR NOT HER BOOKS OF A CCOUNT AUDITED. WE FIND THAT THE CASES RELIED UPON BY THE A.R. ARE NOT RELEVANT TO DECIDE THE ISSUE AS THE FACTS OF TH E CASE ARE TOTALLY DIFFERENT. SECONDLY, WHILE DECIDING THE CAS E AT THAT POINT OF TIME TRIBUNAL DID NOT HAVE THE BENEFIT OF THE DECISION OF THE HON'BLE HIGH COURT OF RAJASTHAN DELIVERED IN THE CASE OF BAJARANG OIL MILLS (SUPRA). SO, CONFIRMING THE ORDER OF THE FAA , WE DECIDE THE EFFECTIVE GROUND OF APPE AL AGAINST THE ASSESSEE. 2.5 THE LD. COUNSEL FOR THE ASSESSEE IN REPLY CONTE NDS THAT ITAT MUMBAI BENCH WHILE PASSING THE ABOVE REFERRED JUDGM ENT HAS FAILED TO CONSIDER THE DECISIONS OF COORDINATE BENCHES I.E. I TAT PUNE BENCH IN THE CASE OF BANWARI SITARAM PASARI HUF VS. ACIT AN D ITAT MUMBAI BENCH IN THE CASE OF GROWMOR EXPORTS LTD. VS. ASSTT . COMMISSIONER (SUPRA) WHICH WERE ALREADY PUBLISHED DECISIONS. THE REFORE, THE JUDGEMENT OF ITAT MUMABI BENCH IN THE CASE OF ANAHAITA NALIN SHAH VS. DCIT (SUPRA) IS PER INCURIAM. BESIDES WHEN TWO VIEWS ARE POSSIBLE ON ANY ISSUE THEN THE VIEW WHICH IS IN FAVOUR OF THE ASSESSEE SH OULD BE ADOPTED. THE LD. AR OF THE ASSESSEE RELIED ON FOLLOWING DECISION S. ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 8 (1) CIT VS. VEGETABLE PRODUCTS LTD. (1973), 88 IT R 192 (SC) (2) CIT VS. VATIKA TOWNSHIP (P) LTD. (2014) 367 I TR 466 (SC) 2.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS AS MENTIONED ABOVE A RE NOT CONTROVERTED AND ONLY THE ISSUE WHICH REMAINS TO BE DECIDED IS W HETHER THE ASSESSEE'S SPECULATIVE TRANSACTION ON NCDEX CAN BE CONSIDERED AS ACTUAL TRANSACTION LIABLE FOR PROVISION OF AUDIT U/S 44AB READ WITH SECTION 271B OR THEY ARE MERE SPECULATIVE PROFIT AND TRANSACTION VALUE AND THE ENTIRE NOTIONAL TRANSACTION VALUE CANNOT BE TREATED AS TUR NOVER OF THE ASSESSEE. ITAT PUNE BENCH IN THE CASE BANWARI SITARAM PASARI HUF VS. ACIT AND GROWMOR EXPORTS LTD. VS. ASSTT. COMMISSIONER (SUPRA ) HAVE HELD THAT THE NOTIONAL VALUE OF SUCH SPECULATIVE TRANSACTIONS CAN NOT BE HELD AS TURNOVER AS THE ASSESSEE IS ELIGIBLE ONLY TO INCOME OR LOSS AND DELIVERY OF THE COMMODITIES IS NOT EXCHANGED. I FIND FORCE IN THE C ONTENTIONS OF THE LD. AR OF THE ASSESSEE THAT ITAT MUMBAI BENCH IN THE CA SE OF ANAHAITA NALIN SHAH VS. DCIT (SUPRA) HAS NOT CONSIDERED THES E TWO PUBLISHED DECISIONS IN THE CASES OF ITAT PUNE BENCH IN THE CA SE BANWARI SITARAM PASARI HUF VS. ACIT AND GROWMOR EXPORTS LTD. VS. AS STT.COMMISSIONER (SUPRA). THE CONTENTION OF THE LD. AR OF THE ASSESS EE IS THAT WHEN THERE ARE TWO VIEWS ON SAME ISSUE, THE ISSUE FAVORABLE TO THE ASSESSEE SHOULD BE ITA NO. 883/JP/2013 SMT. ANJU HALDIA VS. ITO WARD- 2(4), JAIPUR . 9 CONSIDERED FOR WHICH THE LD. AR OF THE ASSESSEE REL IED ON THE DECISIONS OF HONBLE APEX COURT IN THE CASES OF CIT VS. VEGETABL E PRODUCTS LTD. AND CIT VS. VATIKA TOWNSHIP (P) LTD. (SUPRA). IN VIEW T HEREOF, THE APPEALS OF THE ASSESSEE ARE ALLOWED. 3.0 IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 / 02 /2016 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 /02/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. ANJU HALDIA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2(4), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 883/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR