DCIT, Circle - 1, Kolkata, Kolkata V. M/s. Vrindavan Services Pvt. Ltd., Howrah

ITA 946/KOL/2010

• Counselvise Citation: 94623514 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 07-05-2010
• Court: TRIBUNAL
• Department Lawyers: R K SAHA LD
• Assessee Lawyers: AVIJIT DEY LD AR
• Keywords: Speculation loss; Wrong claim

Judgement Text

, C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C , CALCUTTA () BEFORE . ., , ,, , SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER. ! ! ! ! /AND ' ' ' ' # # # # $ % $ % $ % $ % &# &# &# &# , SHRI N.VIJAYKUMARAN, JUDICIAL MEMBER. !' !' !' !' / ITA NO. 946/ KOL/2010 (#) *+/ ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1,KOLKATA M/S. VRINDAVAN SERVICES PVT. LTD PAN: AAACV 8987C (-. / APPELLANT ) - # - - VERSUS -. (01-./ RESPONDENT ) -. 2 3 / FOR THE APPELLANT: '/ SHRI R.K.SAHA, LD. DR 01-. 2 3 / FOR THE RESPONDENT: '/ SHRI AVIJIT DEY, LD. AR &# 4 2 5 /DATE OF HEARING : 19-10-2011 6* 2 5 /DATE OF PRONOUNCEMENT:21-10-2011 7 / ORDER ' # $ % &# , , , , , , ,, , SHRI N. VIJAYA KUMARAN, JUDICIAL MEMBER THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE L EARNED COMMISSIONER OF INCOME-TAX (APPEALS)-1, KOLKATA. THE LD.COMMISSIONER DELETED THE PENALTY LEVIED U/S. 271(1)(C ) OF THE I.T.ACT61. THE ORDER IS DATED 09-01-2009 AND THE ASSESSMENT YEAR INVOLVED IS 2004-05. 2. GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT READ AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE LD. CIT(APPEALS) HAS ERRED IN DELETING THE PENALTY OF R S.45,17,358/- LEVIED U/S. 271(1)( C) OF THE IT ACT, 1961 WITHOUT ASSIGNI NG ANY REASON AND WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS MAD E A WRONG CLAIM IN THE RETURN BY SHOWING THE SPECULATION LOSS AS NORM AL BUSINESS LOSS AND ITA NO.946/KOL/2010-C--NVK 2 A.OS FINDING IN THE ASSESSMENT MADE U/S.143(3) OF THE ACT HAS BEEN UPHELD BY HONBLE ITAT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE LD. CIT(APPEALS) HAS ERRED IN LAW BY ACCEPTING ASSESS EES SUBMISSION WITHOUT APPRECIATING THE FACT OF THE CASE AND PROVI SION OF LAW THAT A CLAIM WHICH IS NOT BONAFIDE AND LEGALLY ALLOWABLE, AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE COORDINA TE BENCH IN THE CASE OF 2 TO 25 ACIT VS- MIS. FREE WINGS EXPORT LTD. IN ITA NO.1106 (KOL ) OF 2009 FOR AY 2001-02 DATED 21.08.2009, WHEREIN IT HAS BEEN HELD AS UNDER: 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT THE ISSUE U NDER CONSIDERATION IS COVERED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS : - (A) CIT VS. S.F. K. STEELS PVT. LTD. [270 I. T. R. 156 (MP)] B) CHANDRAPAL-BAGGA-VSITAT.[26I...LTR. 67R(IJ)] (C) ACIT VS. CUBE COMMUNICATION LTD. [ITA NO. 672/K OL/2009]. WE FIND THAT THE I.T.A.T, A BENCH, KOLKATA IN THE CASE OF ACIT VS. CUBE COMMUNICATION LTD. (SUPRA) CONSIDERED THE IDENTICAL SET OF FACTS. THE I.T.A.T AFTER RELYING UPON THE ABOVE TWO DECISIONS OF HON BLE MA DHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. S.P.K STEELS PVT.. LTD. (SUPRA) AND OF HON BLE RAJASTHAN HIGH COURT II THE CASE OF CHANCIRAPAL BAGGA VS. ITAT (SUPRA) H ELD AS UNDER :- 8. WE ARE OF THE CONSIDERED VIEW THAT THE FACTS OF THE CASE BEFORE US ARE SIMILAR TO THE FACTS CONSIDERED BY THE HON BLE MAD HYA PRADESH HIGH COURT IN THE CASE SPK STEELS PVT. LTD. (SUPRA). WE ALSO O BSERVE THAT THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CHANDRAPAL BAG GA (SUPRA) HAS ALSO HELD THAT IF THE ASSESSEE CLAIMED ANY EXEMPTION A FTER DISCLOSING THE RELEVANT BASIC FACTS AN UNDER IGNORANCE OF THE PROV ISIONS OF THE INCOME TAX ACT AND DID NOT OFFER THE AMOUNT FOR TAX, IN SUCH C ASES, PENALTY SHOULD NOT BE IMPOSED. IN THE SAID CASE, THE CLAIM FOR LONG-TERM CAPITAL GAIN IN RESPECT OF A TRANSACTION DISCLOSED IN THE RETURN OF INCOME WAS REJECTED AND BECAUSE OF THAT THE PENALTY PROCEEDING WIDER SECTION 271(1 )(C ) OF THE ACT WAS INITIATED. IT WAS HELD THAT REJECTION OF THE CLAIM DID NOT AMO UNT TO CONCEALMENT OF INCOME AS THE ASSESSEE DISCLOSED THE TRANSACTION IN THE RETURN OF INCOME. IT IS RELEVANT TO STATE THAT THE HON BLE APEX COURT HAS HELD IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD VS. - STATE OF UTTAR PRADESH & OTHERS [118 ITR 326] THAT THERE IS NO PRESUMPTION THAT EVERY P ERSON KNOWS THE- LAW. IT IS OFTEN SAID THAT EVERY ONE IS PRESUMED TO KNOW TH E LAW, BUT THAT IS NOT A ITA NO.946/KOL/2010-C--NVK 3 CORRECT STATEMENT : THERE IS NO SUCH MAXIM KNOWN TO THE LAW . IF WE APPLY THE SAID PROPOSITION OF THE HON BLE APEX COURT IN THE CONTEXT OF THE FACTS-OF THE CASE BEFORE US, THE ASSESSEE CLAIMED THE LOSS I N RESPECT OF ITS SHARES DEALING IN THE NORMAL COURSE. THE LOSS WAS DISALLOW ED BY-TREATING THE SAME AS SPECULATION LOSS ON ACCOUNT OF FICTION OF LAW AS PER EXPLANATION TO SECTION 73 OF THE INCOME TAX ACT. THEREFORE, WE HOLD THAT T HERE IS NO CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BECAUSE OF TREATING OF KISS AS SPECULATION LOSS ON THE BASIS O F THE FACTS DISCLOSED BY THE ASSCSSEE. HENCE, THE PENALTY ON THIS ACCOUNT UNDER SECTION 271 (1) (C) OF THE ACT IS NOT JUSTIFIED.. FURTHER, WE OBSERVE THAT THE A. 0. ESTIMATED 90% OF THE EXPENSES, AS CLAIMED BY THE ASSESSEE, RELATED TO SP ECULATION BUSINESS ND, THEREFORE, DISALLOWED THE SAME. WE ALSO HOLD THAT T HE DISALLOWANCE OF THE EXPENSES BY ITSELF ON ACCOUNT OF PRESUMED CONNECTIO N WITH SPECULATION LC4 S IS NOT A CONCEALMENT OF INCOME NOR FURNISHING OF WR ONG PARTICULARS OF INCONT4 BY THE ASSESSEE. HENCE, PENALTY UNDER SECTI ON 271 (I) (C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF EXPENSES IS ALSO NOT JUSTIFIED. SINCE THE FACTS IN THE ASSESSEE S CASE ARE IDENTIC AL, THE ABOVE DECISIONS OF HON BLE MADHYA PIADESH HIGH COURT, RAJASTHN HIGH COURT AS WELL AS I.T.A.T., KOLKATA BCH WOULD BE SQUARELY APPLICABLE IN THE CAS E OF THE ASSESSEE. WE, THEREFORE, - RESPECTFULLY RELYING UPON THE SAID DECISIONS UPHOLD THE ORDER OF THE C.IT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. RESPECTFULLY FOLLOWING THE DECISIONS OF THE TRIBUN A1 AND THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 174 (SC), WHEREIN THE HONBLE APEX COURT HAS HELD :- WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTERS DICTIONARY, THE WORD INACCURATE HAS BEEN DEFINED AS: NOT ACCURATE, NOT EXACT OR CORRECT ; NOT ACCORDING TO TRUTH ERRONEOUS AS AN INACCURATE STATEMENT, COPY OR TRA NSCRIPT . WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTI CULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEO US. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THA T ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRE CT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO Q UESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING ITA NO.946/KOL/2010-C--NVK 4 INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. IN VIEW OF THE GIVEN FACTS AND CIRCUMSTANCES WE UP HOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. 7 & 8 &# 9 : THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 21 -10-11 , ,, , SD/- SD/- - ( . ., ) ( S.V. MEHROTRA, ACCOUNTANT MEMBER) ( # $ % &# , ) ( N.VIJAYKUMARAN, JUDICIAL MEMBER ) ( (( (5 5 5 5) )) ) DATE: 21-10-11 7 2 0(($ ;$*< / COPY OF THE ORDER FORWARDED TO: 1. . -. / THE APPELLANT : DCIT,CIR-1, KOL, 7 TH FL., AAYKAR BHAWAN,KOL-69. 2 01-. / THE RESPONDENT- M/S. VRINDAVAN SERVICES PVT.LT D 66/1 A G.T RD. LILUAH, HOWRAH-711204. 3. (7# / THE CIT, 4. (7# ( )/ THE CIT(A), 5 . (9 0(# / DR, KOLKATA BENCH 6 . GUARD FILE . 1$ 0(/ TRUE COPY, 7#&/ BY ORDER, !% /ASSTT REGISTRAR *PRADIP* => (#?% (@