ACIT 23(3), MUMBAI V. SHEHZEEN Z SIDDIQUE, MUMBAI

MA 220/MUM/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1864 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 27-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SENT H IL KUMARAN
• Assessee Lawyers: RAJESH SANGHAVI
• Keywords: Rectification of order; Question of law; Set aside
• Section: 271(1)(c)

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI SANDEEP GOSAIN (JM) M.A. NO. 220/MUM/2019 ARISING OUT OF I.T.A. NO. 6275 /MUM/ 201 6 (ASSESSMENT YEAR 20 14 - 15 ) ACIT - 23(3) (ERSTWHILE ACIT - 19(3) 104, 1 ST FLOOR MATRU M ANDIR TARDEO ROAD MUMBAI - 400 007. V S . SMT. SHEHZEEN Z. SIDDIQUE C/O. R. SANGHVI & CO. 104, RIZVI CHAMBERS - 2 JAIN MANDIR MARG OFF HILL ROAD, BANDRA (W) MUMBAI - 400 050. PAN : AIPPS8400D ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RAJESH SANGHAVI DEPARTMENT BY SHRI S. SENTHIL KUMARAN DATE OF HEARING 1 4 .6 . 201 9 DATE OF PRONOUNCEMENT 18 . 6 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : - BY WAY OF THIS MISCELLANEOUS APPLICATION REVENUE SEEKS RECTIFICATION OF MISTAKE APPARENT FROM RECORD IN TH E ORDER OF THIS TRIBUNAL IN ITA NO. 6275/MUM/2016 FOR A.Y. 2004 - 05 VIDE ORDER DATED 19.9.2018. 2. IN THE INCOME TAX APPEAL THE ISSUE WAS LEVY OF PENALTY U/S. 271(1)(C) OF THE A CT AMOUNTING TO RS. 35 LAKHS. THE ITAT HAS DELETED THE PENALTY BY OBSERVING AS UNDER : - 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSEE IN THIS CASE IS ENGAGED INTO THE PURCHASE AND SALE OF SHARES. THE ASSESSEE HAS OFFERED THE GAIN AS LONG TERM CAPITAL GAIN CHARGEABLE @ 10%. THE A. O., ON THE OTHER HAND, MADE CERTAIN ENQUIRIES AND CAME TO THE CONCLUSION THAT ON THE ECONOMIC AND FINANCIAL PARAMETER, THE HUGE GAIN WAS NOT JUSTIFIED. HENCE, QUOTING THE CASE LAWS ON THE SUBJECT OF PREPONDERANCE OF PROBABILITY, THE A.O. REJECTED THE CLAIM OF THE LONG TERM CAPITAL GAIN AND CHARGED THE SAME @ 30% AS INCOME FROM OTHER SOURCES AS UNDISCLOSED INCOME. IN THIS REGARD, 2 THE SUBMISSION OF THE ASSESSEE IS THAT ALL THE DOCUMENTS IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS WERE SUBMITTED. THE ASS ESSEE HAS DULY OFFERED THE GAIN TO TAX. HENCE, IT IS THE ASSESSEES SUBMISSION THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD, WE FIND IT GAINFUL TO REFER TO THE DECISION OF THE ITAT IN THE QUANTUM ADDITION WHEREIN WHILE CONFIRMING, THE ITAT HAD HELD THAT THE GENUINENESS OF THE TRANSACTION WAS NOT PROVED IF NOT ACTUALLY DISPROVED. 11. FROM THE ABOVE, IT IS CLEAR THAT NO DEFECT WAS FOUND IN THE DOCUMENTATION SUPPORTING THE TRANSACTION AND THE ITAT H AD GAVE A FINDING THAT THE ASSESSEES EXPLANATION WAS UNPROVED BUT NOT DISPROVED. IN IDENTICAL SITUATION, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF UPENDRA VS. MITHANI (SUPRA) HAS HELD THAT IN THESE CIRCUMSTANCES, THE PENALTY U/S. 271(1)(C) CANN OT BE IMPOSED. 12. WE FURTHER NOTE THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BENNETT COLEMAN & CO. LTD. (IN ITA NO. 2117/2012, VIDE ORDER DATED 26.02.2013) HAS HELD THAT NO PENALTY IS LEVIABLE WHERE THERE IS ONLY A CHANGE OF HEAD OF INCOME. THE A SSESSEE DESERVES TO SUCCEED ON THE TOUCH STONE OF THIS CASE LAW ALSO. ANOTHER PLEA OF THE LD. COUNSEL OF THE ASSESSEE IS THAT SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE QUANTUM ADDITION PURSUAN T TO THE ORDER OF THE ITAT. HENCE, THE ASSESSEES COUNSEL HAS PLACED RELIANCE UPON THE HON'BLE BOMBAY HIGH COURT DECISION IN THE CASE OF NAYAN BUILDERS (SUPRA) FOR THE PROPOSITION THAT WHEN SUBSTANTIAL QUESTION OF LAW IS ADMITTED, THE ISSUE BECOME DEBATABL E AND PENALTY U/S. 271(1)(C) CANNOT BE LEVIED. IN OUR CONSIDERED OPINION, THIS CASE LAW ALSO SUPPORTS THE PLEA OF THE LD. COUNSEL OF THE ASSESSEE THAT THE SUBSTANTIAL QUESTION OF LAW HAVING BEEN ALREADY ADMITTED BY THE HON'BLE JURISDICTIONAL HIGH COURT. 13. IN THE BACKGROUND OF THE ABOVE DISCUSSION AND PRECEDENT, WE FIND THAT IN THIS CASE THE PENALTY U/S. 271(1)(C) CANNOT BE SUSTAINED AS FIRSTLY THE ADDITION IS BASED UPON THE THEORY OF PREPONDERANCE OF PROBABILITY AND DEFECT IN THE DOCUMENTATION FOR CLAIM OF LONG TERM CAPITAL GAIN, PER SE HAVE NOT BEEN FOUND TO BE DEFECTIVE. THE ITAT IN FACT IN THE QUANTUM ADDITION HAS HELD THAT THE GENUINENESS OF THE TRANSACTION IS FAR FROM PROVED IF NOT ACTUALLY DISPROVED. HENCE, ON THE TOUCH STONE OF THE HON'BLE JURISDI CTIONAL HIGH COURT DECISION IN THE CASE OF UPENDRA VS. MITHANI (SUPRA) PENALTY U/S. 271(1)(C) IS NOT LEVIABLE. FURTHERMORE, AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BENNETT COLEMAN & CO. LTD. (SUPRA) MERE CHANGE OF HEAD OF INCOME FROM CAPITA L GAINS, INCOME FROM OTHER SOURCES CANNOT LEAD TO LEVY OF PENALTY U/S. 271(1)(C). SIMILARLY AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS (SUPRA) WHEN SUBSTANTIAL QUESTION OF LAW IS ADMITTED IN 3 THE QUANTUM APPEAL BY THE HON'BLE BOM BAY HIGH COURT, THE ISSUE BECOMES DEBATABLE AND PENALTY U/S. 271(1)(C) CANNOT BE LEVIED. 14. HENCE IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW, THE PENALTY LEVIED IN THIS CASE IS DIRECTED TO BE DELETED. 15. IN VIEW OF OUR ADJUDICATION ON THE ISSUE OF LEVY OF PENALTY IN FAVOUR OF THE ASSESSEE, THE ADJUDICATION ON OTHER ASPECT OF THE CHALLENGE SUBMITTED BY THE LD. COUNSEL OF THE ASSESSEE REGARDING NON SPECIFICATION OF THE CHARGE IN THE NOTICE U/S. 274 IS NOW OF ACADEMIC INTEREST. HENCE, WE ARE NOT ENGAGING INTO THE SAME. 16. IN THE RESULT, THE ASSESSEES APPEAL STAND ALLOWED . 3. NOW BY WAY OF THIS MISCELLANEOUS APPLICATION REVENUE CONTEND THAT THE DECISION OF THE TRIBUNAL CONTAIN MISTAKE AP PARENT FROM RECORD IN AS MUCH AS THE TRIBUNAL WHILE RELYING ON VARIOUS JUDICIAL DECISIONS HAS DELETED THE PENALTY, WHICH IS NOT JUSTIFIABLE IN THIS CASE. IT HAS BEEN SUBMITTED THAT THE TRIBUNAL HAD IGNORED THE FACT THAT THE ASSESSING OFFICER IN ASSESSMENT ORDER HAS FOUND WHOLE TRANSACTIONS TO BE PRE - STRUCTURED COLOURABLE TRANSACTION. FURTHER IT HAS BEEN SUBMITTED THAT IT IS NOT MERE CHANGE OF HEAD OF INCOME, DIFFERENT RATE OF TAXES WERE APPLICABLE AND IT WAS ATTEMPT TO INFUSE MONEY INTO ACCOUNT THROUGH FRAU DULENT PE N NY STOCK S @ 10% , WHICH WAS RIGHT L Y BROUGHT TO TAX @ 30% BY THE ASSESSING OFFICER. THAT ATTEMPT OF THE ASSESSEE FAILED AND THE AMOUNT WAS TREATED AS INCOME FROM OTHER SOURCES . IT HAS BEEN SUBMITTED THAT QUANTUM OF ADDITION IN ASSESSEES OWN CASE WAS CORRECTLY UPHELD BY THE ITAT, THEREFORE THE ITAT IS REQUESTED TO UPHOLD THE LEVY OF PENALTY. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ITAT HAS DELETED THE PENALTY BY PLACING RELIANCE UPON THE CATENA OF CASE LAWS. I T HAS NOT BEEN SUBMITTED BY THE REVENUE IN THE AFORESAID SUBMISSION AS TO HOW THOSE CASE LAWS ARE NOT APPLICABLE. THE TRIBUNAL IN ITS ORDER HAD ELABORATELY DEALT WITH THE REASONING FOR DELETING THE PENALTY. FURTHERMORE, CASE LAWS REFERRED BY ITAT DEALT WIT H VARIOUS ISSUE AND ON THE TOUCHSTONE OF WHICH PENALTY LEVIED WAS DELETED. NOW, BY WAY OF THIS MISCELLANEOUS APPLICATION REVENUE SEEKS REVIEW OF THE ORDER OF THE TRIBUNAL, WHICH IS NOT PERMISSIBLE IN 4 THE GARB OF RECTIFICATION OF MISTAKE U/S. 254(2) OF THE ACT. ACCORDINGLY, THIS MISCELLANEOUS APPLICATION FILED BY THE REVENUE STANDS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 18 . 6 . 201 9 . SD/ - SD/ - (SANDEEP GOSAIN ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI ; DATED : 18 / 6 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI