Shri Amar Mukesh Shah, Surendranagar V. The Dy.CIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 56/AHD/2011

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3172 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 24-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: PRITESH L SHAH
• Keywords: Business income; Search and seizure; Salary income; Document seized; Difference of opinion; Validity of assessment; Documents seized; Change of opinion; Futures and options; Speculative transactions
• Section: 153A; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA , JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER ./ ITSS NO. 56 / AHD /201 1 AND ITSS NO.149&150/AHD/2013 / ASSTT. YEAR S : 20 0 5 - 20 06 AND 2006 - 2007 AMAR MUKESH SHAH, TANKI CHOWK, OPP. CLOTH MARKET,SURRENDRANAGAR P AN : AQEPS9060L VS . DY.CIT, , CENTRAL CIRCLE - 1(1) , AHMEDABAD (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI PRITESH L. SHAH , AR REVENUE BY : SMT VIBHA BHALL A, DR / DATE OF HEARING : 31 / 03 / 201 7 / DATE OF PRONOUNCEMENT: 12 / 04 /201 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THESE THREE APPEAL S BY A SSESSEE OF WHICH ONE IS AGAINST THE QUANTUM ADDITION FOR A.Y.2005 - 06 AND THE OTHER TWO APPEALS FOR A.Y S.2005 - 06 AND 2006 - 07 RELATES TO PENALTY IMPOSED U/S.271(1)(C) OF THE INCOME TAX ACT,1961 (HEREIN AFTER REFERRED TO AS A CT). QUANTUM A PPEAL BEARING NO.56/AHD/2011 FOR A .Y.2005 - 06 IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) - I AHMEDABAD (IN SHORT, LD.CIT(A)) DATED 22 / 11 /201 0, ARISING OUT OF ORDER OUT OF ORDER U/S.153A(1) (B) R.W.S. 153C R.W.S.143(3) OF THE ACT, FRAMED ON 29/12/2009 BY DCIT, CENTRAL CIRCLE - 1(1) AHMEDABAD. OTHER TWO APPEALS BEARING NO.149&150/AHD/2013 FOR A.Y S .2005 - 06 AND 2006 - 07 ARE AGAINST THE ORDER OF LD. CIT(A) OF EVEN DATED 25/03/2012 ARISING OUT OF ORDER ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 2 U/S.271(1)(C) OF THE ACT, EVEN DATED 28/03/2012 , FRAMED BY ACIT, CEN TRAL CIRCLE - 1(1) AHMEDABAD. AS ALL THESE THREE APPEALS RELAT ES TO THE SAME ASSESSEE AND ISSUES ARE COMMON AS APPRAISE D BY BOTH THE PARTIES , WE HAVE H EARD THEM TOGETHER AND ARE BEING DISPOSED OF F B Y THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. 2. WE FIRST TAKE, QUANTUM APPEAL FOR A.Y.2005 - 0 6, WHEREIN ASSESSE E HAS RAISED TWO GROUNDS FIRSTLY, CHALLENGING THE VALIDITY OF ASSESSMENT ORDER US/153C OF THE A CT AND SECONDLY, AGAINST THE ORDER OF LD.CIT (A) UPHOLDING THE ACTION OF LEARNED ASSESSING OFFICER (IN SHORT LD.AO) CONSIDERING SHORT TERM CAPITAL GAIN OF RS. 60 ,80,911/ - AS BUSINESS INCOME. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORDS ARE THAT ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SHARE TRADING. SEARCH AND SEIZURE OP ERATION WAS CONDUC TED ON KUNWARJ I GROUP O N 25/03/2008. ON VERIFICATION OF VARIOUS SEIZED DOCUMENTS FROM BUSINESS PREMISES OF K UNVARJI COMMODITIES BROKERS PVT. LTD . IT WAS NOTICED THAT A NNEXURE S A - 64 AND A - 65 CONTAINS COMPUTER DATA WHICH INCLUDES DOCUMENTS BELONGING TO M R.AMAR MUKESH KUMAR SHAH. BASED ON THESE SEIZED DATA, PROCEEDINGS U/S.153C R.W.S 153A OF THE ACT, WER E INITIATED BY ISSUING NOTICE ON 16/09/2009 WHICH WAS DULY SERVED UPON THE ASSESSE E. IN COMPLIANCE TO THE NOTICE U /S.153C OF THE ACT, ASSESSEE F ILED RETURN OF INCOME ON 27/10/2009 DECLARING TOTAL INCOME OF RS.77,99,300/ - DURING THE COURSE OF ASSESSMENT PROCEEDINGS LEARNED ASSESSING OFFICERS MAIN FOCUS WAS ON TWO ISSUES PERTAINING TO MISUSE OF THE FACILITY OF CLIENT CODE MODIFICATION AND PROFIT FROM SHARE TRANSACTIONS W HETHER TO BE TREATED AS BUSINESS INCOME OR SHORT TERM CAPITAL GAIN . NECESSARY REPLY WAS FURNISHED BY THE ASSESSEE TO SHOW THAT THERE WAS NO MISUSE OF FACILITY OF C LIENT CODE ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 3 MODIFICATION AND THE PROFIT FROM SHARE TRANSACTION IS SHORT TERM CAPITAL GAIN. BUT THE REPLY OF THE ASSESSEE COULD NOT CONVINCED THE LD.AO AND HE WENT AHEAD COMPLETING THE ASSESSMENT MAKING ADDITION OF RS.20,73,540/ - ON ACC OUNT OF SUPPRESSED PROFIT MADE BY MODIFYING CLIENT CODE AND TREATING THE GAIN ON SHARE OF RS.60, 80,911/ - AS BUSINESS INCOME AS AGAINST SHORT TERM CAP ITAL GAIN SHOWN BY THE ASSESSEE. I NCOME ASSESSED AT RS.99,25,850/ - 4. IN APPEAL BEFORE LD.CIT(A) ASSESSEE PARTLY SUCCEEDED AS LD.CIT(A) HELD THE PROCEEDINGS U/S.153C OF ACT, AS VALID, DELETED THE ADDITIONS ON ACCOUNT OF SUPPRESSED PROFIT AND CONFIRM ED THE GAIN FROM SALE OF PROFIT AT RS.60,80,911/ - AS BUSINESS INCOME. 5. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE TRIBUNAL. A SSESSEE IS CHALLENGING THE VALIDITY OF THE PROCEEDINGS U/S.153C OF THE ACT, AND ALSO ORDER OF LD.CIT(A) TREATING SHORT TERM CAPITAL GAIN FROM SALE OF EQUITY SHARES AS BUSINESS INCOME. 6. AS REGARD GROUND NO.1 CHALLENGING THE PROCEEDINGS U/S.153C OF THE ACT, WE OBSERVE THAT DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE LD.CIT(A) ASSESSEE SUBMITTED THAT THERE WAS NO COMMUNICATION FROM THE SIDE OF LD.AO THAT HO W THE SEIZED DOCUMENTS BELONGED TO THE APPELLANT AND ALSO WHAT WAS CONTAINED IN THE S E ANNEXURES . HOWEVER, LD.CIT(A) WAS OF THE CONFIRMED VIEW THAT IN THE SEIZED MATERIAL THERE WERE DOCUMENTS WHICH BE LONG TO THE ASSESSEE AND THERE WAS SUFFICIENT COMPLIANCE TO THE PROVISIONS U/S.153C OF THE ACT, AND HE DID NOT FIND ANY MERIT IN THE GROUND OF APPEAL CHALLENGING THE VALIDITY OF THE PROCEEDING AND ACCORDINGLY UPHELD THE LEGALITY OF THE PROCEEDINGS INITIAT ED U/S.153C OF THE ACT. WE HAVE PERUS ED THE PROVISIONS U/S.153C OF THE ACT. ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 4 IT CONTEMPLATES THAT PROCEEDINGS U/S.153C OF THE ACT, CAN BE INITIATED WHEN ASSESSING OFFICER IS SATISFIED THAT ; A) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, SEIZED OR REQUISITIONED, BELONG TO; OR B) ANY BOOKS OF ACCOUNTS OR DOCUMENTS, SEIZED OR REQUISITIONED, PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINED THEREIN, RELATES TO, 6.1 IN THE LIGH T OF ABOVE PROVISIONS ON EXAMINING THE FACTS OF THE CAS E. W E NOTICE THAT IN THE SEIZED DOCUMENTS FOUND FROM THE PREMISES OF KUNVARJI COMMODITIES BROKERS PVT. LTD. WHEREIN SEARCH WAS INITIATED ON 25/03/2008, IT WAS CONCLUDED BY THE DEPARTMENT THAT CERTAIN ANNEXURES NO.64 AND 65 CONTAINED DOCUMENTS OF THE APPELL ANT. WE FURTHER NOTICE THAT ASSESSEE HIMSELF ACCEPT THESE FACTS AS REVEALED IN ITS SUBMISSION BEFORE LD.CIT(A) APPEARING IN PARA 4 OF CIT ORDER WHICH READS AS THERE WERE IDENTITY PROOF S AND ADDRESS PROOF PROVIDED TO THE BROKER AS PART OF KYC FORM FOR O PENING THE ACCOUNT WHICH CANNOT BE MADE BASIS FOR INVOKING THE REOPENING PROCEEDINGS. THE REGULAR BOOKS OF ACCOUNTS OF THE BROKER CONTAIN REGULAR ACCOUNT OF THE APPELLANT AND THERE IS NO INCRIMINATING RECORDS FOUND 6.2 THE ABOVE SUBMISSION OF ASSESSEE BEFORE LD.CIT(A) SHOWS THAT THAT TH ERE WERE CERTAIN DOCUMENTS BELONG ING TO THE ASSESSEE WHICH WERE FOUND AT THE PREMISES OF SEARCH PARTY AND IT WAS SUFFICIENT FOR LD.AO TO INITIATE THE PROCEEDINGS. 6. 3 WE ARE TH EREFORE, OF THE VIEW THAT THE LD .CIT(A) HAS R IGHTLY UPHELD THE LEGALITY OF THE PROCEEDINGS INITIATED U/S.153C OF THE ACT. WE FIND NO REASON TO ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 5 INTERFERE IN THE FINDINGS OF LD.CIT(A), AND ACCORDINGLY, DISMISS THIS GROUND OF THE ASSESSEE. 7. NOW W E TAKE UP GROUND NO.2 RAISED BY THE ASSESSEE AGAINST THE OR DER OF LD.CIT(A) UPHOLDING THE ACTION OF ASSESSING OFFICER OF CONSI DERING RS,60,80,911/ - AS BUSINESS INCOME AS AGAINST SHORT TE R M CAPITAL GAIN IN THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD.AO HAS OBSERVED THAT ASSESSEE WAS EARNING SALARY IN COME DURING A.YS.2002 - 03 TO 2004 - 05 . AS REGARDS TO SHARE TRANSACTIONS THEY WERE VERY LITTLE IN A.Y S .2002 - 03 AND 2003 - 04. I N A.Y.2004 - 05 ALSO THERE WERE HARDLY 10 TO 12 TRANSACTIONS. HOWEVER, IN A.Y. 2005 - 06 THESE FIGURES WENT ASTRONOMICAL LEADIN G TO PURCHASES OF RS.9.6 CRORES AND SALES RS.8.96 CRORES. A SSESSEE WAS HAVING A MEAGER CAPITAL OF RS.7,14,975/ - BUT IT TOOK UNSECURED LOAN FROM VARIOUS PERSONS AS A RESULT OF WHICH ASSESSEE WAS ABLE TO ACHIEVE TURNOVER OF RS. 8.96 CRORES AND CLOSING STOCK OF SHARES STOOD AT RS.1.37 CRORES. DURING THIS YEAR ASSESEE ALSO EARNED INCOME FROM SPECULATIVE TRANSACTIONS OF E QUITY SHARES, FUTURE AND OPTION , PROFIT FROM FORWARD MARKET TRANSACTION(FUTURE AND DERIVATIVES). ACCORDINGLY LD.A O TOOK A VIEW THAT ALLEGED GAIN OF RS.60,80,911/ - IS BUSINESS INCOME AND NOT SHORT TERM CAPITAL GAIN. 8. AGGRIEVED , ASSESSEE WENT IN APPEAL BEFORE LD.CIT(A) WHO ALSO CONFIRMED THE ACTION OF LD.AO BY FOLLOWING THE DECISION OF CO - ORDINATE BE N CH IN THE CASE OF SHRI SUGAMCHAND C.SHAH IN ITA NO.3554/AHD/2008 WHEREIN IT WA S HELD THAT IF THE SHARES ARE HE LD FOR LESS THAN 30 DAYS THAN THE GAIN ARISING FROM THEIR SALES SHOULD BE TREATED AS BUSINESS INCOME. ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 6 9. AGGRIEVED , ASSESSEE IS NOW IN APPEAL BEFORE TRIBUNAL, LD .COUNSEL REITERATED THE SUBMISSION MADE BEFORE THE LD.CIT(A) AND FURTHER ADDED THAT ASSESSEE IS MAINTAINING SEPARATE DETAILS OF SPECULATIVE TRANSAC TIONS, FUTURE AND OPTIONS TRADING ACCOUNT, INDIVIDUAL DETAILS OF PURCHASES AND SALES OF EQUITY SHARE . IT WA S FURTHER SUBMITTED THAT IN THE ORIGINAL ASSESSMENT U/S.143(3) OF THE ACT, DATED 28/12/2006 THE LD. AO H AS ALSO ACCEPTED THE ALLEGED GAIN AS SHORT TERM CAPITAL GAIN. IN ORDER TO SUPPORT THIS CONTENTION LD.COUNSEL PLACED RELIANCE UPON VARIOUS DECISIONS AND JUDGMENTS PLACED IN THE PAPER BOOKS 10 . ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LOWER AUTHORITIES. 11 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US AND GONE THROUGH THE VARIOUS JUDGMENTS AND DECISIONS RELIED UPON BY LD.COUNSEL. THE ISSUE RAISED IN THIS GROUND RELATES TO GAIN FROM SALE OF EQUITY SHARES OF RS.60 , 80,911/ - WHICH WAS CLAIM ED AS SHORT TERM CA PITAL GAIN BY THE ASSESSEE BUT WAS ASSESSED AS BUS INESS INCOME BY LD.AO AND HIS ACTION WAS C ONFIRMED BY LD.CIT(A). THE LD.COUNSEL HAD REFERRED IN LIGHT ON VARIOUS JUDGMENTS AND DECISION WHICH RELATED TO ISSU ES DEALING WITH PROFIT FROM SALE OF EQUITY SHARES TO BE TREATED A S BUSINESS INCOME OR CAPITAL GAIN. IN OUR UNDERSTANDING THERE ARE PLENTY OF JUDGMENTS AND DECISIONS ON THIS TYPES OF ISSUE S BUT THE DECISION IS BASED ON FACTS OF THE PARTICULAR CASE WHICH VARIES FROM CASE TO CASE. LET US EXAMINE THE FACTS OF THE PRESENT CASE WHICH ARE AS FOLLOWS : A) ASSESSE IS ENGAGED I N THE BUSINESS O F SHARE TRADING WHICH IS CONFIRM ED FROM TAX AUDIT REPORT U/S. 44AB OF THE ACT . ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 7 B) ASSESSEE EARNED GROSS PROFIT OF RS.2 3 , 0 6 , 335 FROM FUTURES AND OPTIONS TRANSACTIONS AND THERE WAS NO OPENING AND CLOSING STOCK IN THIS TRADING ACCOUNT ( PAGE 119 OF PAPER BOOK ) . C) ASSESS EE HAS SHOWN TRADING OF SHARE AT PAGE 120 OF PAPER BOOK SHOWING PURCHASE OF 9.6 CRORES , SALE OF 8.96 C RORES AND CLOSING STOCK AT RS.1.38 C RORES AND THE BALANCE AMOU N T IS PROFIT WITHOUT PAYING STT AT RS.13,11,377/ - AND REMAINING AMOUNT OF GROSS PROFIT AT RS .60,27,906/ - D) I N THE BALANCE SHEET AS ON 31/03/2015 PLACED AT PAGE 122 OF THE PAPER BOOK A SSESEE HAS CLEARLY MENTIONED INVESTMENT IN SHARES AT RS.2,25,000/ - AND HAVE SHOWN CLOSING STOCK OF EQUITY SHARES AS STOCK IN TRADE UNDER THE HEAD C URRENT ASSETS AT RS.1,37,52,725/ - . E) ASSESSEE S OPENING CAPITAL IS RS.7,14,975/ - WHEREAS CLOSING BA LANCE OF UNSECURED LOAN AS PER A UDITED BALANCE SHEET AS ON 31/03/2005 IS SHOWN AT RS.1,05,14,393/ - THESE UNSECURED LOAN ARE APART FROM THOSE UNSECURED LOAN WHICH WERE SQUARED OFF DURING THE YEAR. SOME OF SUCH SQUARED OFF UNSECURED LOAN ACCOUNT AS APPEARING ON PAGE 117 AND 118 OF THE TAX AUDIT REPORT INCLUDES DOSHI ENTERPRISE RS.1,26,00,637/ - G.P. TRADING COMPANY RS.20,51,480/ - , KEKUL COTTON COMPANY, RS.31,02,630/ - , MEHUL LAVJIBHAI MEHTA RS.81,34,338/ - . F) AS FAR AS NOS. OF TRANSACTION ARE CONCERNED , WE NOTICE FROM PERUSAL OF PAPER BOOK D ATED 02/12/2015 THAT AS SESSEE HAS ENTERED INTO AROUND 2000 TRANSACTIONS RELATING TO 431 COMPANIES . 12. IN THE LIGHT OF ABOVE FACTS IT IS VERY CLEAR THAT ASSESSEE HAS ENTERED INTO REGULA R TRANSACTIONS OF PURCHASE AND SALE OF EQUITY SHARES AND HAS HIMSELF SHOWN IMPUGNED TRANSACTIONS AMOUNT A S BUSINESS IN NATURE, UNSOLD EQUITY SHARES HAVE BEEN S H OWN AS CLOSING STOCK, FUN D S HAVE BEEN BORROWED FOR PURCHASING THE SHARES AND COMMON BOOK S OF AC COUNTS HAVE BEEN MAINTAINED . WE ALSO OBSERVE THAT THERE IS NO SEPARATE DEMAT ACCOUNT MAINTAINED TO JUSTIFY THE CONTENTION OF THE LD. COUNSEL OF MAINTAINING SEPARATE DETAILS OF EQUITY SHARES HELD AS STOCK IN TRADE AND INVESTMENT . ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 8 13 . WE ALSO OBSERVE THAT SCALE OF ACTIVITIES IS CONTINUOUS AND DAILY AND THE AVERAGE HOLDING PERIOD IS VERY LOW . THE HONBLE APEX COURT IN THE CASE OF CIT VS ASSOCIATED INDUSTRIAL DEVELOPMENT AND COMPANY (1971) 82 ITR, 556 HAS HELD THAT THE MULTIPLICITY OF THE TRANSACTIONS OCCURRING SUCCESSIVELY OVER THE YEARS SUPPORTED THE DEPARTMENTAL STAND THAT THE ASESSEE HAD CEASED TO BE AN INVESTOR AND HAS BECOME A DEALER 13.1 WE ALSO OBSERVE THAT THAT MOTIVE OF ASSESSEE IS TO MAXIMIZE ITS PROFITS AND NOT THE INVESTMENT , AS CAN BE SEEN FROM THE REGULAR TRANSACTIONS ENTERED. INTENTION TO HOLD THE SHARE FOR LONGER PERIO D AND ENJOYING THE BENEFIT OF OWNER SHIP OF TH E ASSESSEE IS MISSING. I N THE CASE OF G. VENKATA SWAMI NAIDU & CO. VS. CIT(1959) 35 ITR 595 HONBLE APEX COURT H AS DISCUSSED THE TEST OF INTENSION AND HAS HELD THAT IN CASES WHERE THE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSIVELY WITH THE INTENTION OF RESALE AT A PROFIT AND THE PURCHASER HAS NO INTENSION OF HOLDING THE PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING IT OR USING IT, THE PRESENCE OF SUCH INTENSION IS A RELEVANT FACTOR AND UNLESS IT IS OFF - SET BY THE PRESENCE OF OTHER FACTOR, IT WOULD RAISE A STRON G PRESUMPTION THAT TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. 13.2 WE ARE THEREFORE OF THE VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE , ACCOUNT ING TREATMENT OF SHARE TRANSACTIONS IN TH E REGULAR BOOK OF ACCOUNTS AND PRESENTATION IN AUDITED FINANCIAL STATEMENT, MULTIPLICITY OF TRANSACTIONS, ELEMENT OF BORROWED FUNDS, ASSESSEES REGULAR DEALING IN FUTURE AND OPTION MARKET AND SPECULATIVE TRANSACTIONS , THE ALLEGED GAIN FROM S A LE OF EQUITY SHARES OF RS.60,80,9 11/ - HAS BEEN RIGHTLY HELD AS BUSINESS INCOME BY LD.CIT(A) CONFIRMING THE ACTION OF LD.AO ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 9 13.3 IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED . 14 . NOW WE TAKE UP ITA NO.149 & 150/AHD/2013 FOR A.YS 2005 - 06 AND 2006 - 07 RELATING TO PENALTY IMPOSED U/S.271(1)(C) OF THE ACT, AT RS.12,16,182/ - AND RS.11,10,796/ - WHICH HAVE BEEN LEVIED IN PURSUANT TO ORDER OF LD.CIT(A) CO NFIRMING THE ACTION OF LD.AO TREATING SHORT TERM CAPITAL GAIN FROM EQUITY SHARES AS BUSINESS INCOME. 15 . WE WILL TAKE UP FACTS OF A.Y.2005 - 06 FOR ADJUDICATING THE ISSUE AND WILL APPLY RESULT THEREOF TO A.Y.2006 - 2007 ALSO AS THE FACTS AND ISSUES ARE COMM ON FOR BOTH THE YEARS . LD .AO TREATED THE GAIN FOR SALE OF EQUITY SHARES AT RS.60,80,911/ - AS BUSINESS INCOME AS AGAINST SHORT TERM CAPITAL GAIN SHOWN BY TH E ASSESSEE. LD.CIT(A) CONFIRMED THE ACTION OF LD.AO . P ENALTY PROCEEDINGS WERE INIT IATED AND IN THE IMPUGNED ORDER LD. AO TOOK A VIEW THAT ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS OF INCOME BY ALLEGED LY SHOWING BUSINESS INCOME AS SHORT TERM CAPITAL GAIN IN ORDER TO GET BENEFIT OF LOWER TAX RATES APPLICABLE ON SHORT TERM CAPITAL GAIN AND THEREFORE ASSESSEE IS LIABLE TO PAY PENALTY U/S.271(1)(C) OF THE ACT, OF RS,12,16,182/ - . APPEAL AGAINST THE ORDER OF LD.AO U/S .271(1)(C) OF THE ACT, BUT COULD NOT BRING ANY RELIEF TO ASSESSEE AS PENALTY WAS CONFIRMED BY LD.CIT(A) . 16 . AGGRIEVED , ASSESSEE IS NO W IN APPEAL BEFORE THE TRIBUNAL. LD. COUNSEL SUBMITTED THAT NO PENALTY SHOULD HAVE BEEN LEVIED AS ASSESSEE HAD SUBMITTED ALL DETAILS OF SHARES PURCHASE AND SALE S AND IT WAS REGULARLY SHOWING SHORT TERM CAPITAL GAIN FROM SHARE TRANSACTION IN EARLIER YEAR S AND WAS UNABLE TO FORSEE THE PROBABLE DECISION OF THE ASSESSING AUTHORITY. LD. COUNSEL ALSO SUBMITTED THA T IT WAS A BONA FI D E CLAIM OF PAYING TAX ON THE SHORT TERM CAPITAL GAIN AND ALSO ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 10 THERE HAS NOT BEEN ANY CHANGE IN THE QUANTIFICATION OF THE PROFIT FROM SHARE TRANSACTIONS . I T IS MERELY A CHANGE OF OPINION BY THE ASSESSING AUTHORITY TO TREAT THE SA ME AS BUSINESS INCOME. 17 . ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LOWER AUTHORITIES. 18 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFOR E US. ASSESSEE IS AGGRIEVED WITH THE IMPOSITION OF PENALTY AT RS.12,16,182/ - U/S.271(1)(C) OF THE ACT BY LD.AO WHICH IS FURTHER CONFIRMED BY LD.CIT(A). WE OBSERVE THAT ASSESSE IS AN INDIVIDUAL EARNING INCOME FROM SALARY AND PROFIT FROM SHARE TRANS ACTIONS. IN THE ASSESSMENT YEARS PRECEEDING THE YEAR UNDER APPEAL, ASSESSEE ENTERED INTO VERY FEW TRANSACTIONS AND GAIN FROM PURCHASE/ SALES OF SHARES WAS SHOWN AS SHORT TERM CAPITAL GAIN . IN THE YEAR UNDER APPEAL , ASSESSE FOLLOWING THE SAME CONSISTENCY HAS SHOWN BUSINESS INCOME FOR PROFIT FROM FORWARD MARKET TRANSACTIONS AND SHORT TERM CAPITAL GAIN FOR EQUITY SHARES TRANSACTIONS. WE ALSO OBSERVE THAT LD.AO WHILE FRAMING THE ASSESSMENT U/S.143(3) OF TH E ACT, DATED 28/12/2006 FOR A.Y. 2005 - 06 PLACED AT 127 TO 130 OF THE PAPER BOOKS HAS ACCEPTED THE CLAIM OF ASSESSEE SHOWING SHORT TER M CAPITAL GAIN FROM SALE OF SHARES. IT WAS ONLY IN THE ASSESSMENT PROCEEDINGS U/S.153A(1)(B) R.W.S153C R.W.S143(3) OF T HE ACT, THAT THE LD.AO CHANGED HIS OPINION AND WITHOUT FIND ING ANY ERROR IN CALCULATION OF PR OFIT FROM SHARE TRANSACTIONS , CHANGE G THE HEAD OF INCOME AND TAX ED GAIN OF RS.60,80,911/ - AS BUSINESS INCOME. QUESTION HERE ARISES IS WH ETHER IN THESE GIVEN FACTS ASSESSEE IS L IABLE FOR PENALTY U/S.271(1)(C) ? IN OUR OPINION FOR THE PURPOSE IMPOSING PENALTY U/S.271(1)(C) OF THE ACT, EI THER THE ASSESSEE H AS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. BUT ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 11 NOW IN THE GIVEN FACTS BOTH THESE CONDITIONS ARE NOT FULFILLED AS THE INCOME SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING AUTHORIT Y WITHOUT FINDING ANY ERROR IN ITS AMOUNT AND SECONDLY, AS REGARDS TO FURNISHING OF IN ACCURA TE PARTICULARS OF INCOME, AT THE TIME OF FILLING INCOME TAX RETURN ASSESSEE HAS SHOWN PARTICULARS OF EACH ALLEGED SHARE TRANSACTIONS CLAIMING THEM TO BE TAXABLE AS SHORT T ERM CAPITAL GAIN. T HIS ACTION OF ASSESSEE FIND S FAVOUR OF REVENUE AUTHORITIES IN THE FIRST ROUND OF ASSESSMENT PROCEEDINGS AND IT WAS ONLY IN THE SECOND ROUND , POST SEARCH PROCEEDINGS THAT THE INCOME OF RS.60,80,911/ - HAS BEEN TREATED A S BUSINESS INCOME. WE ARE FURTHE R OF THE VIEW THAT JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT, AHMEDABAD VS. RELIANCE PETROPRODUET (P) LIMITED (322 ITR 158) IS SQUARELY APPLICABLE ON THE FACTS OF THE ASSESSEE AS THE HONBLE APEX COURT IN THE SAID JUDGEMENT HAS HELD THAT THE MEA NING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE APPELLANT CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULAR S. HONBLE COURT FURTHER HELD THAT THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE APPELLANT, BECAUSE THAT IS THE ONLY DOCUMENTS WHERE THE APPELLANT CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. 19 . RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE APEX COURT AND IN VIEW OF OUR DISCUSSIONS MADE ABOVE WE ARE OF THE CONSIDERED OPINION THAT ASSESSEE SHOULD NOT HAVE BEEN VISITED BY PENA LTY U/S.271(1)(C) OF THE ACT, FOR MERELY TREATING THE SHORT TERM CAPITAL GAIN FROM EQUITY SHARES AS BUSINESS INCOME WHEN THE ALLEGED INCOME AND DETAILS ARE NOT DISPUTED. WE THEREFORE DELETE THE PENALTY U/S.271(1)(C) OF THE ACT, FOR A.Y. 2005 - 06. AS FAR AS A.Y. 2006 - 07 IS ITA(SS ) NO.56 /AHD/2011 AND 149 &150/AHD/2013 ASSTT. YEARS 2005 - 06 AND 2006 - 07 12 CONCERNED , AS THE FACTS AND ISSUES REMAIN SAME AS THAT OF A.Y.2005 - 06, WE THEREFORE DELETE THE PENALTY OF RS.11,10,796/ - IMPOSED U/S.271(1)(C) OF THE ACT. 19 . IN THE RESULT , ASSESSEE S APPEAL ON QUANTUM ISSUE BEARING NO. 56/AHD/2011 FOR A.Y.2005 - 06 IS DISMISSED AND OTHER TWO APPEALS OF THE ASSESEE BEARING NO.149&150/AHD/2013 RELATING TO PENALTY U/S.271(1) (C) OF THE ACT ARE ALLOWED. ORDER PRONOUN CED IN THE COURT ON 12 TH APRIL , 2017 AT AHMEDABAD. SD/ - SD/ - ( S.S.GODARA ) JUDICIAL MEMBER TRUE COPY (MANISH BORA D ) ACCOUNTANT MEMBER A HMEDABAD; DATED 12 / 04 /2017 MANISH / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .