ACIT RG 21(2), MUMBAI v. GANGADHARAN MOHAN, MUMBAI

ITA 1114/MUM/2010 | 2006-2007
Pronouncement Date: 08-12-2010 | Result: Dismissed

Appeal Details

RSA Number 111419914 RSA 2010
Assessee PAN ACQPG2928A
Bench Mumbai
Appeal Number ITA 1114/MUM/2010
Duration Of Justice 9 month(s) 27 day(s)
Appellant ACIT RG 21(2), MUMBAI
Respondent GANGADHARAN MOHAN, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 08-12-2010
Assessment Year 2006-2007
Appeal Filed On 11-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G BEFORE SHRI D.K. AGARWAL JUDICIAL MEMBER AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER. ITA NO.1114/MUM/10 (ASSESSMENT YEAR : 2006-07) ASST. COMMISSIONER OF INCOME TAX CIRCLE 21(2) MUMBAI. VS. SHRI GANGADHARAN MOHAN 74 TOWER B KALPATARU RESIDENCY SION (EAST) MUMBAI-400 022. PAN ACQPG2928A APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.K. NAYAK. RESPONDENT BY : SHRI DEVDATTA S. MAINKAR. O R D E R PER D.K. AGARWAL : THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DT.13.11.2009 PASSED BY THE LEARNED CIT(A) FOR THE ASST. YEAR 2006-07 DELETING THE PENALTY OF RS.54 50 200 IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 (THE ACT). 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL IS CARRYING ON THE BUSINESS OF TRADING IN SHARES STOCK FUTURE AND OPTIONS AND COMMODITIES. HE FILED RETURN DECLARING A TOTAL LOS S OF RS.1 91 24 870. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT ITA NO.1114/MUM//09 - 2 - THE ASSESSEE DECLARED PROFIT ON TRADING IN SHARES A ND STOCK AT RS.11 91 515 AND THE SAID PROFIT HAS BEEN SET OFF AGAINST LOSS IN TR ADING IN SHARES AND STOCK AT RS.2 03 41 762. THE A.O. FURTHER OBSERVED THAT AN A MENDMENT WAS BROUGHT UNDER SECTION 43(5)(D) IN ACCORDANCE WITH AN ELIGIB LE TRANSACTION IN RESPECT OF TRADING DERIVATIVES CARRIED OUT IN A RECOGNIZED STOC K EXCHANGE SHALL NOT TO BE DEEMED TO BE A SPECULATIVE TRANSACTION. THE ASSESSI NG OFFICER FURTHER NOTED THAT SAID PROVISION BECAME EFFECTIVE FROM THE DATE WITH CBDT NOTIFIED THE EXCHANGE THROUGH WHICH SUCH TRANSACTIONS HAS BEEN CAR RIED OUT. THE NOTIFICATION HAS BEEN ISSUED BY THE CBDT RECOGNIZIN G THE STOCK EXCHANGE WHERE THE ASSESSEE HAS TRANSACTED IS EFFECTIVE FROM 25.1.2006 AND ACCORDINGLY THE ASSESSING OFFICER WAS OF THE VIEW THAT TILL 25. 1.2006 ALL TRANSACTIONS IN F & O HAVE TO BE ADMITTED AS SPECULATIVE IN NATURE. ACCOR DINGLY THE ASSESSING OFFICER HELD THAT LOSS OF RS.1 63 58 485 INCURRED ON F & O TRANSACTION UPTO 25.1.2006 IS A SPECULATIVE LOSS WHICH CAN BE SET OF F ONLY AGAINST PROFITS FROM SPECULATIVE IN FUTURE. THE ASSESSING OFFICER TREATED THE BALANCE LOSS OF RS.39 83 277 AS BUSINESS LOSS AND AFTER ADJUSTING THE PROFIT ON TRADING IN SHARES AND STOCK AMOUNTING TO RS.11 91 515 THE ASSE SSING OFFICER DETERMINED THE LOSS AT RS.27 91 762 AND ACCORDINGLY COMPLETED THE ASSESSMENT AT A LOSS OF RS.27 91 762 VIDE ORDER DT.29.12.2008 PASSED UNDER S ECTION 143(3) OF THE ACT. ITA NO.1114/MUM//09 - 3 - ON APPEAL THE LEARNED CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER TO TREAT THE LOSS OF RS.1 63 58 485 AS SPECULATIVE LOSS TO BE SET OFF ONLY AGAINST PROFITS FROM SPECULATIVE TRANSACTIONS IN FUTURE. ON FUR THER APPEAL BEFORE THE TRIBUNAL THE TRIBUNAL WHILE RELYING ON THE DECISION IN THE CASE OF G K ANAND BROS BUILDWELL (P) LTD VS. ITO 34 SOT 439 (DEL) ALLOWED THE ASSESSEES APPEAL. IN THE MEANTIME PRIOR TO THE ORDER PASSED BY THE T RIBUNAL (SUPRA) THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEES SUBMISSION LEVIED THE PENALTY OF RS.54 50 200 ON THE DISALLOWANCE OF LOSS OF RS.1 63 58 485 VIDE ORDER DT.24.6.2009 PASSED UNDER SECTION 271(1)(C) OF THE ACT. ON APPEAL THE LEARNED CIT(A) ON THE ASSESSEES CONTENTION THAT HE WAS UNDER THE BONA FIDE BELIEF THAT THE SECTION WAS OPERATIVE FROM 1.4.2006 DELETED THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT( A) THE REVENUE IS IN APPEAL BEFORE US CHALLENGING THE DELETION OF PENALT Y IMPOSED BY THE ASSESSING OFFICER. 4. AT THE TIME OF HEARING THE LEARNED DEPARTME NTAL REPRESENTATIVE SUPPORTS THE ORDER BY THE ASSESSING OFFICER. ITA NO.1114/MUM//09 - 4 - 5. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITS THAT SINCE THE TRIBUNAL IN ASSESSEES OWN CASE IN QUANTUM APPEAL HAS TREATED THE LOSS AS BUSINESS LOSS AND NOT LOSS IN SPECULATIVE BUSI NESS THEREFORE THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE AND THE LEA RNED CIT(A) WAS FULLY JUSTIFIED IN DELETING THE SAME. HE ALSO PLACED ON R ECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL. 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVA L PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THER E IS NO DISPUTE THAT THE TRIBUNAL IN QUANTUM APPEAL WHILE RELYING ON THE DECISIO N IN THE CASEOF G.K. ANAND BROS. BUILDWELL (P) LTD VS. ITO 34 SOT 439 (DEL) HA S TREATED THE SAID LOSS OF RS.1 63 58 485 AS LOSS INCURRED AS A BUSINESS LOSS AN D NOT LOSS IN SPECULATIVE BUSINESS AND HAS ALLOWED THE ASSESSEES APPEAL. VIR TUALLY THE BASIS FOR IMPOSITION OF LEVY OF PENALTY UNDER SECTION 271(1)(C ) IS NOT APPLICABLE. HENCE SUCH IS THE POSITION THE IMPOSITION OF PENALTY IS NOT IN ACCORDANCE WITH THE LAW. HENCE WE ARE INCLINED TO UPHOLD THE ORDER OF THE LE ARNED CIT(A) IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER. THE GROUN DS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. ITA NO.1114/MUM//09 - 5 - 7. IN THE RESULT THE REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 8-12-2010. SD/- SD/- (PRAMOD KUMAR) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DT.8-12-2010. * GPR COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE ITAT MUMBAI. BY ORDER DY./ASST.REGISTRAR ITAT MUMBAI ITA NO.1114/MUM//09 - 6 - DATE INIT IALS 1. DRAFT DICTATED ON 2.11.2010 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER 4. DRAFT DISCUSSED & APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SR.PS/PS 18.11.2010 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER.