Shri Siddh Enterprise, Surat v. The ACIT.,Circle-5,, Surat

ITA 1130/AHD/2010 | 2006-2007
Pronouncement Date: 06-08-2010 | Result: Allowed

Appeal Details

RSA Number 113020514 RSA 2010
Bench Ahmedabad
Appeal Number ITA 1130/AHD/2010
Duration Of Justice 3 month(s) 24 day(s)
Appellant Shri Siddh Enterprise, Surat
Respondent The ACIT.,Circle-5,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 06-08-2010
Date Of Final Hearing 30-07-2010
Next Hearing Date 30-07-2010
Assessment Year 2006-2007
Appeal Filed On 12-04-2010
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MUKUL KUMAR SHRAWAT JM AND D.C.AGRAW AL AM SHRI SIDDH ENTERPRISE 1 ST FLOOR AMBER PALACE OPP. LIC QUARTERS TIMALIYAWAD NANPURA SURAT. VS. ASSTT. CIT CIRCLE-5 SURAT. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- NONE REVENUEBY:- SHRI K. MADHUSUDAN SR.DR O R D E R PER D. C. AGRAWAL ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST CO NFIRMATION OF LEVY OF PENALTY OF RS.1 14 973/- U/S 271(1)(C) OF THE AC T. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE FILED RE TURN OF INCOME ON 1.11.2006 DECLARING TOTAL INCOME AT RS.1 37 03 300/ -. THE ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) ON 14.11.2008 ON AN INCOME OF RS.1 40 94 072/- WHEREIN ADDITION OF RS.34 15 574/- WAS MADE ON ACCOUNT OF DIVIDEND STRIPPING U/S 94(7). THE AO INI TIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). IT WAS EXPLAIN ED TO THE AO VIDE ASSESSEES LETTER DATED 19.5.2009 THAT THE FIRM IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES AND HAS SHOWN T AXABLE INCOME OF RS.1.37 CRORES. THE ASSESSEE WAS UNDER THE IMPRESSI ON THAT THE PROVISIONS OF SECTION 94(7) ARE APPLICABLE WHEN THERE IS A CAL CULATION OF LONG-TERM OR ITA NO.1130/AHD/2010 ASST. YEAR :2006-07 2 SHORT-TERM CAPITAL GAINS. SINCE THE ASSESSEE WAS TR ADING IN SHARES IT THOUGHT THAT PROVISIONS OF SECTION 94(7) WOULD NOT BE APPLICABLE TO IT. THE ADDITION IS ONLY TECHNICAL AND DOES NOT INVITE PENA LTY PROCEEDINGS UNDER SECTION 271(1)(C). THE LD. AO WAS HOWEVER NOT SATI SFIED AND HE CONSIDERED THAT ASSESSEE HAS CONCEALED THE PARTICUL ARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME AND HE ACCORDINGLY LEVIED THE PENALTY OF RS.1 14 973/-. 3. THE LD. CIT(A) ALSO CONFIRMED THE PENALTY ON THE GROUND THAT ASSESSEE IS ALREADY IN THE BUSINESS FOR QUITE SOMET IME AND ASSESSEE HAVING HUGE TURNOVER IS EXPECTED TO BE IN FULL KNOWLEDGE O F LAW. SINCE THERE IS CHANGE IN LAW ASSESSEE IS EXPECTED TO KNOW THAT FAC T. 4. NONE APPEARED BEFORE US ON BEHALF OF THE ASSESSE E. WE HAVE CONSIDERED THE ARGUMENTS OF LD. DR. IN OUR CONSIDER ED VIEW PENALTY UNDER SECTION 271(1)(C) IN SUCH A CASE COULD NOT BE LEVIE D. ALL THE FACTS RELATING TO DIVIDEND STRIPPING ARE PLACED ON RECORDS. THE EX PLANATION FURNISHED BY THE ASSESSEE IS APPARENTLY BONA FIDE AND SUCH EXPLA NATION HAS NOT BEEN FOUND FALSE. THE CLAIM OF THE ASSESSEE THAT IT WAS IN THE BONA FIDE IMPRESSION THAT PROVISIONS OF SECTION 94(7) WOULD N OT BE APPLICABLE TO A TRADER IN SHARES CANNOT BE HELD AS UNREASONABLE. TH E PENALTY CANNOT BE LEVIED MERELY FOR MAKING A CLAIM WHICH IS NOT FOUND ACCEPTABLE. THERE IS NO ALLEGATION MADE EITHER BY THE AO OR BY LD. CIT(A ) THAT ASSESSEE HAS CONCEALED ANY PARTICULAR OF INCOME OR FURNISHED INA CCURATE PARTICULARS. THEREFORE PENALTY CANNOT BE LEVIED WITHIN THE MAIN PROVISIONS OF THE SECTION. FURTHER EXPLANATION HAS BEEN FURNISHED TH EREFORE CLAUSE OF EXPLANATION 1(A) TO SECTION 271(1)(C) CANNOT BE INV OKED. FURTHER ACCORDING TO THE EXPLANATION -1(B) THE AO HAS TO NE CESSARILY SATISFY ALL THE THREE INGREDIENTS. HE HAS TO SHOW THAT EXPLANAT ION FURNISHED BY THE 3 ASSESSEE IS NOT BONA FIDE HE HAS NOT DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT EXPLANATION FURNI SHED BY HIM IS NOT SUBSTANTIATED. SINCE THERE IS NO FINDING ON THESE T HREE INGREDIENTS EXPLANATION-1(B) ALSO CANNOT BE INVOKED. FURTHER AS PER DECISION OF HON. SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS 322 ITR 158 (SC) PENALTY U/S 271(1)(C) CANNOT BE LEVIED FOR MAKING U NSUSTAINABLE CLAIM. FOLLOWING THE ABOVE JUDGMENT WE CANCEL THE PENALTY AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 6/8/2010 SD/- SD/- (MUMUL KR. SHRAWAT) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R AHMEDABAD DATED : 6/8/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD