ACIT, Central Circle - XXIII, Kolkata v. M/s. Malahar Dealers (P) Ltd., Hooghly

ITA 1156/KOL/2009 | 2001-2002
Pronouncement Date: 23-04-2010

Appeal Details

RSA Number 115623514 RSA 2009
Assessee PAN AACCM3364N
Bench Kolkata
Appeal Number ITA 1156/KOL/2009
Duration Of Justice 9 month(s) 20 day(s)
Appellant ACIT, Central Circle - XXIII, Kolkata
Respondent M/s. Malahar Dealers (P) Ltd., Hooghly
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 23-04-2010
Date Of Final Hearing 03-03-2010
Next Hearing Date 03-03-2010
Assessment Year 2001-2002
Appeal Filed On 03-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI JM & HONBLE SRI C . D. RAO AM] I.T.A. NO. 1156/KOL/2009 ASSESSMENT YEAR :2001-02 ASSISTANT COMMISSIONER OF INCOME-TAX -VS- M/S. MAL AHAR DEALERS (P) LTD. C.C-XXIII KOLKATA. (PA NO. AACCM 3364 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI B. R. PURAKAYASTHA RESPONDENT BY : SRI SUBASH AGARWAL O R D E R PER C. D. RAO AM THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE LD. CIT(A) KOLKATA DATED 24.04.2009 FOR ASSESSMENT YEA R 2001-02 ON THE FOLLOWING GROUND : WHETHER IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN CANCELLING THE PENALTY ORDER U/S. 271(1)(C) OF THE I. T. ACT PASSED BY AO WHEN THE ASSESSEE COMPANY HAS DELIBERATELY FURNISHED INACCUR ATE PARTICULARS OF INCOME TO REDUCE THE TAX LIABILITIES BY CLAIMING THE SHARE SPECULAT ION LOSS AS BUSINESS LOSS SINCE THE ASSESSEE WAS ENGAGED IN SHARE TRADING BUSINESS AND AS PER PROVISION OF SECTION 73 OF THE I. T. ACT SPECULATION LOSS WILL BE SET OFF AGA INST SPECULATION PROFIT ONLY. 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE TH E COORDINATE BENCH IN THE CASE OF ACIT VS- M/S. FREE WINGS EXPORT LTD. IN ITA NO.110 6 (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 MATERIAL 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.P.K. STEELS PVT. LTD. [27O I.T.R. 156 (MP)] (B) CHANDRAPAL BAGGA VS. ITAT [261 LT.R. 67 RAJ)] (C) ACIT VS. CUBE COMMUNICATION LTD. [ITA NO.672/K OL/2009]. WE FIND THAT THE I.T.A.T. A BENCH KOLKATA IN TH E CASE OF ACIT VS. CUBE COMMUNICATION LTD. (SUPRA) CONSIDERED THE IDENTICAL SET OF FACTS. THE LT.A.T. AFTER RELYING UPON THE ABOVE TWO DECISIONS OF HONBLE MAD HYA PRADESH HIGH COURT IN THE CASE OF CIT VS. S.P.K. STEELS PVT. LTD. (SUPRA) AND OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHANCIRAPAL BAGGA VS. ITAT (SUPRA) HELD 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 HONBLE MADHYA PRADE SH HIGH COURT IN THE CASE F SPK STEELS PVT. LTD. (SUPRA). WE ALSO OBSERVE THAT THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHANDRAPAL BAGGA (SUPRA) HAS A LSO HELD THAT IF THE ASSESSEE CLAIMED ANY EXEMPTION AFTER DISCLOSING THE RELEVANT BASIC FACTS AND UNDER IGNORANCE OF THE PROVISIONS OF THE INCOME TAX ACT AND DID NOT OFFER THAT 2 AMOUNT FOR TAX IN SUCH CASES PENALTY SHOULD NOT B E IMPOSED. IN THE SAID CASE THE CLAIM FOR LONG-TERM CAPITAL GAIN IN RESPE CT OF A TRANSACTION DISCLOSED IN THE RETURN OF INCOME WAS REJECTED AND BECAUSE OF TH AT THE PENALTY PROCEEDING UNDER SECTION 271(1 )(C) OF THE ACT WAS INITIATED. IT WAS HELD THAT REJECTION OF THE CLAIM DID NOT AMOUNT TO CONCEALMENT OF INCOME AS TH E ASSESSEE DISCLOSED THE TRANSACTION IN THE RETURN OF INCOME. IT IS RELEVANT TO STATE THAT THE HONBLE APEX COURT HAS HELD IN THE CASE OF MOTILAL PADAMPAT SUGA R MILLS CO. LTD. VS.- STATE OF UTTAR PRADESH & OTHERS [118 ITR 326] THAT THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. IT IS OFTEN SAID THAT E VERY ONE IS PRESUMED TO KNOW THE LAW BUT THAT IS NOT A CORRECT STATEMENT : THER E IS NO SUCH MAXIM KNOWN TO THE LAW. IF WE APPLY THE SAID PROPOSITION OF THE HONB LE APEX COURT IN THE CONTEXT OF THE FACTS OF THE CASE BEFORE US THE ASSESSEE CL AIMED THE LOSS IN RESPECT OF ITS SHARES DEALING IN THE NORMAL COURSE. THE LOSS WAS D ISALLOWED BY TREATING THE SAME AS SPECULATION LOSS ON ACCOUNT OF FICTION OF L AW AS PER EXPLANATION TO SECTION 73 OF THE INCOME TAX ACT. THEREFORE WE HOL D THAT THERE IS NO CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BECAUSE OF TREATING OF KISS AS SPECULATION LOSS ON THE BASIS OF THE FACTS DISCLOSED BY THE ASSCSSEE. HENCE THE PENALTY ON THIS ACCOUNT UNDER SECTION 271(L)(C) OF THE ACT IS NOT JUSTIFIED. FURTHER WE OBSERVE THAT THE A.O. ESTIMATED 90% OF THE EXPENSES AS CLAIMED BY THE ASSESSEE RELATED TO SP ECULATION BUSINESS AND THEREFORE DISALLOWED THE SAME. WE ALSO HOLD THAT T HE DISALLOWANCE OF THE EXPENSES BY ITSELF ON ACCOUNT OF PRESUMED CONNECTIO N WITH SPECULATION LOSS IS NOT A CONCEALMENT OF INCOME NOR FURNISHING OF WRONG PARTICULARS OF INCOME BY THE ASSESSEE. HENCE PENALTY UNDER SECTION 271(I)(C ) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF EXPENSES IS ALSO NOT JUSTIFIED. SINCE THE FACTS IN THE ASSESSEES CASE ARE IDENTICA L THE ABOVE DECISIONS OF HONBLE MADHYA PRADESH HIGH COURT RAJASTHAN HIGH COURT AS WELL AS J.T.A.T. KOLKATA BENCH WOULD BE SQUARELY APPLICABLE IN THE CASE OF THE ASS ESSEE. WE THEREFORE RESPECTFULLY RELYING UPON THE SAID DECISIONS UPHOLD THE ORDER OF THE C.I.T.(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E TRIBUNAL WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 3. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 4. ORDER IS PRONOUNCED IN THE OPEN COURT ON 23.4.10 SD/- SD/- (D. K. TYAGI) (C. D. RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23RD APRIL 2010 COPY FORWARDED TO THE :- 1) ACIT CC-XXIII KOLKATA. 2) M/S. MALAHAR DEALERS (P) LTD. 28 K. C. DEY LAN E RISHRA HOOGHLY-712248 3) CIT(A) KOLKATA. 4) CIT KOLKATA.. 5) D. R. ITAT KOLKATA. (TRUE COPY) BY ORDER DEPUTY REGISTRAR JD. (SR. P.S.) I.T.A.T. KOLKATA