Shri Vallabhbhai M. Patel,, RAJKOT-GUJARAT v. The Income Tax Officer, Ward-5(2),, RAJKOT-GUJARAT

ITA 166/RJT/2015 | 2009-2010
Pronouncement Date: 26-10-2016 | Result: Allowed

Appeal Details

RSA Number 16624914 RSA 2015
Assessee PAN ACGPP8591H
Bench Rajkot
Appeal Number ITA 166/RJT/2015
Duration Of Justice 1 year(s) 5 month(s) 28 day(s)
Appellant Shri Vallabhbhai M. Patel,, RAJKOT-GUJARAT
Respondent The Income Tax Officer, Ward-5(2),, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 26-10-2016
Assessment Year 2009-2010
Appeal Filed On 28-04-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE: SHRI RAJPAL YADAV JUDICIAL MEMBER AND S H RI AMARJIT SINGH ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] SHRI VALLABHBHAI M. PATEL C/O. RAM ALLOY STEEL CORPORATION BHAKTINAGAR STATION PLOT RAJKOT PAN: ACGPP8591H (APPELLANT) VS THE ITO W ARD - 5(2) RAJKOT (RESPONDENT) REVENUE BY : S H RI AVINASH KUMAR SR. D . R. ASSESSEE BY: S H RI M.J. RANPURA A.R. DATE OF HEARING : 18 - 10 - 2 016 DATE OF PRONOUNCEM ENT : 26 - 10 - 2 016 / ORDER P ER : AMARJIT SINGH ACCOUNTANT MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2009 - 10 AR ISES FROM ORDER OF THE CIT(A) - 3 RAJKOT DATED 24 - 02 - 2015 IN APPEAL NO. CIT(A) - 3 / RJT/0483/12 - 13 IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX AC T 1961; IN SHORT THE ACT . I T A NO . 166 / RJT /20 15 A SSESSMENT YEAR 2009 - 10 I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 2 2. IN THIS CASE A RETURN OF INCOME SHOWING TOTAL INCOME OF RS. 11 74 132/ - WAS FILED ON 31 ST JULY 2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION OF AUDITED ACCOUNTS PROFIT AND LOSS ACCOUNT AND COMPUTATI ON OF TOTAL INCOME IT WAS FOUND THAT THE ASSESSEE HAD DEBITED SHARE TRANSFER AND ADMINISTRATIVE EXPENSE S OF RS. 8 91 973/ - IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER HAS FOUND THAT MOST OF THESE EXPENSES WERE CLAIMED AGAINST INCOME EARNED WHIC H WAS CONSIDERED AS EXEMPT INCOME U/S. 10(38) OF THE I T ACT PERTAINED TO LONG TERM CAPITAL GAIN OF SHARE TRANSACTION BUSINESS T HEREFORE THE ASSESSING OFFICER HAS QUESTIONED THE ASSESSEE ABOUT THESE TRANSACTIONS AND POINTED OUT WHY THE EXPENSES INC URRED ON THIS EXEMPT INCOME SHOULD NOT BE DISALLOWED . IN THIS CONNECTION THE ASSESSEE HAS FURNISHED THE WRITTEN SUBMISSION WHICH IS REPRODUCED AS UNDER: - 'IN CONNECTION TO YOUR HONORS SHOW CAUSE REGARDING EXPENSES CLAIM AGAINST LONG TERM EXEMPT INCOME FO R THAT AS PER AUDIT REPORT'S 18 EXPENSES OF RS. 8 91 973/ - INCLUDES ALL THE EXPENSES LIKE SCRUTINY TRANSACTION TAX SERVICE TAX BROKERAGE ETC. THE SAID EXPENSES ARE NOT ONLY FOR LONG TERM TRANSACTION BUT ALSO FOR SHORT TERM SALE AND INTRADAY TRANSACTION. WE HEREWITH ATTACHED COPY OF LEDGER FOR VERIFICATION FOR THAT. OUR CLARIFICATION REGARDING THAT IS GIVEN BELOW: SR. NO. EXPENSE NAME TOTAL EXPENSES CLAIM AGAINST LTCG CLAIM AGAINST STCG CLAIM AGAINST INTRADAY 1 STT 288848 189041 79875 19932 2 STAMP DUTY 23305 14821 6587 1897 3 T.O. CHARGE 10193 4247 4240 1706 I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 3 4 SERVICE TAX 58814 37662 16177 4975 5 BROKERAGE 449383 273325 1 76058 - 6 BROKERAGE 12530 - - 12530 TOTAL 843073 519096 - DEMAT EXPENSES OF RS. 30 900/ - WAS PAID DURING THE YEAR FOR SCRUTINY HOLDINGS. - AUDIT FEES OF RS. 5 000/ - WAS PAID TO AUDITOR. - SALARY OF RS. 12 000/ - PAID FOR DOING PAPER WORK OF SHARES. - LEGAL FEES RS. 1 000/ - WAS PAID FOR ADVOCATE. - BANK HAS DEDUCTED BANK CHARGES OF RS. 3 178/ - FOR BANKING TRANSACTIONS. ALL ABOVE GIVEN EXPENSES WAS MADE FOR SHARE TRADING HENCE WE REQUEST YOUR HONOR TO PLEASE DO NOT DISALLOWED THE ABOVE EXPENSE. PLEASE CONSIDER THE SAME. WE HAVE FURNISHED THE DETAILS AS ABOVE AS PER YOUR HONOR'S REQUIREME NT AND THE SAME WILL SATISFY YOUR HONOR. HOWEVER PLEASE ASK FOR FURTHER INFORMATION REQUIRES IF ANY'. 3. FROM THE INFORMATION FURNISHED BY THE ASSESSEE THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD INCURRED RS. 5 19 906/ - ON INCOME CLAIMED AS LONG TERM CAPITAL GAIN U/S. 10(38) OF THE ACT AND ACCORDINGLY HE DISALLOWED THIS AMOUNT AND INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE OF PENALTY THE ASSESSEE HAS REQUESTED FOR DROPPING OF PENALTY PROCE EDINGS STATING THAT ASSESSEE HAS NEITHER CONCEALED ANY PARTIC ULARS OF INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME ADDI TION/DISALLOWANCE MADE TO THE RETURNED INCOME ARE I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 4 WITHOUT PROPER APPRECIATION OF FACTS OF RECORD THEREFORE PENALTY PROCE EDINGS ARE REQUIRED TO BE DROPPED. T HE ASSESSEE HAS ALSO STATED THAT HE HAS CLARIFIED/EXPLAINED THE CLAIM OF SUCH EXPENSES /DEDUCTION AND ALSO QUOTED VARIOUS DECISIONS. THE ASSESSING OFFICER HAS NOT ACCEPTED ASSESSEE S EXPLANATION ON THE GROUND THAT ASSES SEE HAS NOT COME FORWARD AND HAS NOT DISCLOSED ANY FACT THEREFORE THE PLEA OF THE ASSESSEE IS REJECTED. THE ASSESSING OFFICER MADE RELIANCE IN THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND OTHERS VS. DHARMENDRA TEXTILE PROCESSO RS AND O T HER (2008) 306 227 (SC) AND LEVIED PENALTY OF RS. 2 39 331/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME UNDER THE PROVISION OF SECTION 271(1) (C) OF THE ACT. THEREAFTER THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER OF ASSESSING OFFICER BEF ORE THE LD. COMMISSIONER OF INCOME TAX(A) . THE ASSESSEE HAS MAINLY STATED THAT HE HAS MAINTAINED COMPOSITE BOOKS OF ACCOUNTS FOR ALL THE TRANSACTIONS NO BIFURCATION OF EXPENSES WAS MADE AS RELATED TO THE INCOME WHICH ARE EXEMPT BEING LONG TERM CAPITAL GA IN U/S. 10(38). THEN HE FURTHER SUBMITTED THAT IN THE CASE OF ASSESSMENT PROCEEDINGS AS DESIRED BY THE ASSESSING OFFICER AFTER DETAILED RE - CONCILIATION THE EXPENSES RELATED TO THE CLAIM OF LONG TERM CAPITAL GAIN WAS WORKED OUT TO THE AMOUNT OF RS. 5 19 096/ - . THE ASSESSEE FURTHER STATED THAT IN ORDER TO AVOID LITIGATION AND ALSO TO BUY PEACE OF MIND HE HAS NOT PREFERRED ANY APPEAL AGAINST THE DISALLOWANCE OF RS. 5 19 096/ - BY THE ASSESSING OFFICER. I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 5 4. THE ASSESSING OFFICER HAS ALSO FOUND ON VERIFICA TION OF AUDITED PROFIT AND LOSS ACCOUNT THAT ASSESSEE HAS INCURRED AN EXPENDITURE OF RS. 21 000/ - AS A N EXPENDITURE OF PERSONAL NATURE AND HE ACCORDINGLY DISALLOWED THOSE EXPENSES. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT ON VERIFICATION OF COMPUTATION OF TOTAL INCOME THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80G OF THE ACT OF RS. 1 30 4 59/ - ON TOTAL DONATION OF RS. 1 4 6 1 111/ - AND ALLOWABLE DEDUCTION BUT LIMITED TO 10% OF THE TOTAL INCOME AND HE DISALLOWED THE ADDITIONAL DEDUCTION CLAIMED BY THE ASSESS EE OF RS. 32 749/ - 5. THE ASSESSEE HAS STATED THAT AS REGARDS THE CLAIM OF EXPENSES OF RS. 21 000/ - OF PERSONAL NATURE AND DISALLOWANCE OF DEDUCTION U /S. 80G TO THE EXTENT OF RS. 32 749/ - BY THE ASSESSING OFFICER IS HAPPENED BECAUSE OF INADVERTENT MISTAKE OCCURRED BY THE AUTHORIZED REPRESENTATIVE WHILE PREPARING THE RETURN OF INCOME AND HE FURTHER STATED THAT ALL THE FACT S RELATED TO THESE EXPENSES ARE REFLECTED IN THE AUDITED ACCOUNTS. THE ASSESSEE ALSO STATED THAT ALL THE DETAILS OF PURCHASES/SALE S OF S HARE WERE PART AND PARCEL OF THE RETURN OF INCOME AND HE HAS FURNISHED ALL THE MATERIAL FACTS NECESSARY TO DETERMINE THE TOTAL INCOME. NOTHING WERE CONCEALED FROM THE EYES OF THE DEPARTMENT. HE STATED THAT ASSESSING OFFICER HAS NOT GIVEN FINDINGS THAT T HE DETAILS FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME IS INCORRECT OR ERRONEOUS OR FALSE. THE LD. COMMISSIONER OF INCOME TAX(A) DELETED THE PENALTY PROCEEDINGS IN THE CASE OF DISALLOWANCE OF RS. 21 000/ - ON THE GROUND OF PERSONAL NATURE AND DISALLO WANCE OF EXCESS DEDUCTION OF RS. 32 749/ - ON THE REASONING THAT THESE ARE I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 6 SIMPLY WRONG CLAIM AND NOT FALSE CLAIM MADE BY THE ASSESSEE. HOWEVER THE LD. COMMISSIONER OF INCOME TAX(A) HAS CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF D ISALLOWANCE OF RS. 5 19 096/ - FROM THE EXPENSES CLAIMED PERTAINING TO EXEMPT INCOME. IN THIS CONNECTION THE PART OF THE DECISION OF LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 5.3 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLA NT THE PENALTY AND THE ASSESSMENT ORDER. THE A.O. HAS HELD THAT THE APPELLANT HAS FILED INACCURATE PARTICULARS IN RESPECT OF EXPENSES ATTRIBUTABLE TO INCOME EXEMPT U/S. 10(38) PERSONAL EXPENSES AND DEDUCTION U/S.80G. AS REGARDS THE DISALLOWANCE OF RS.21 000/ - HOLDING THEM TO BE OF PERSONAL NATURE AND DISALLOWANCE OF EXCESS DEDUCTION OF RS.32 749/ - IT IS HELD THAT THESE ARE SIMPLY WRONG CLAIMS AND NOT FALSE CLAIMS MADE BY THE APPELLANT. THESE ISSUES ARE SQUARELY COVERED BY THE DECISION OF THE HON'BLE APEX COURT IN CASE OF CIT VS. RELIANCE PETRO - PRODUCT S (SUPRA). THESE TWO DISALLOWANCES DO NOT QUALIFY AS F ILING OF INACCURATE PARTICULARS OF INCOME AND NO PENALTY U/S.271(1 )(C) IS LEVIABLE ON THE SAME. THE FIRST ISSUE REQUIRES A MORE CLOSER LOOK. THE APPELLANT HAD MADE TRANSACTION TO THE TUNE OF RS.12.34 CRORES IN SHARES. THIS HAD RESULTED INTO LTCG & STCG. THE APPELLANT HAD CLAIMED THE INCOME FROM LTCG AS EXEMPT U/S. 10(38). THIS SHOWS THAT THE APPELLANT IS VERY WELL VERSED WITH THE PROVISIONS OF THE INCOME TAX ACT. THIS BEING THE CASE IT IS VERY REASONABLE TO EXPECT THAT THE APPELLANT WAS AWARE OF S.14A OF THE I. T. ACT WHICH HAD BEEN IN FORCE FROM THE F.Y. 2001 - 02. IT IS A VERY FUNDAMENTAL PROVISION WHICH CLEARLY STATES THAT NO DEDUCTION SHALL BE ALLOWED IN R ESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. THERE IS ABSOLUTELY NO AMBIGUITY ABOUT THE SAME. IT IS NOT THE ISSUE THAT THE APPELLANT HAD CLAIMED SOME EXPENDITURE IN RELATI ON TO SUCH EXEMPT INCOME AND THE A.O. HAD RECOMPUTE D IT UNDER THE PROVISIONS OF S.1 4A(2)/(3). IT IS THE CASE WHERE THE APPELLANT HAD SHOWN NO EXPENSES AS BEING ATTRIBUTABLE FOR EARNING THE INCOME EXEMPT U/S.10 (38). A PERSON WHO IS HAVING SUCH A VOLUME OF T RANSACTIONS IN SHARES WHICH OBVIOUSLY MUST HAVE BEEN THROUGH THE STOCK EXCHANGE AND WHO IS CLAIMING THE LTCG INCOME AS EXEMPT U/S. 10 (38) WOULD BE REASONABLY ASSUME TO KNOW ABOUT THE APPLICABILITY OF S.14A TO ITS CASE. IT IS VERY APPARENT THAT THE I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 7 APPELLA NT HAS TAKEN A CHANCE BY NOT SUO MOTO APPORTIONING EXPENSES RELATED TO THE EXEMPT INCOME AND DISALLOWING THEM. IF THIS CASE WAS NOT SELECTED FOR SCRUTINY THIS DISALLOWANCE WOULD NOT HAVE SEEN THE LIGHT OF THE DAY. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATIONS P. LTD. 327 ITR 510 HAS BEAUTIFULLY EXPLAINED THIS CONCEPT AS UNDER : - 'IN THE CASE OF RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA) THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF THE INTEREST CL AIMED AS A DEDUCTION UNDER SECTION 36(1) (IN) OF THE ACT WAS DELETED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) THOUGH IT WAS LATER RESTORED B Y THE TRIBUNAL TO THE ASSESSING OFFICER. THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL WAS ADMITTED BY THE HIGH COURT. IT WAS IN THESE CIRCUMSTANCES THAT THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS THEREOF. IN RECORDING THIS FINDING THE TRIBUNAL FELT THAT IF TWO VIEW S OF THE CLAIM OF THE ASSESSEE WERE POSSIBLE THE EXPLANATION OFFERED BY IT COULD NOT BE SAID TO BE FALSE. THIS HOWEVER IS NOT THE FACTUAL POSITION IN THE CASE BEFORE US. THE FACTS OF THE PRESENT CASE THUS ARE CLEARLY DISTINGUISHABLE. 19. IT IS TRUE THA T MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCOME OF THE ASSESSEE BUT IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDES BEING INCORRECT I N LAW IS MALA FIDE EXPLANATION 1 TO SECTION 271(1) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. 20. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME - TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSE E MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONA FIDE IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UND ER SECTION 271(L)(C) OF THE ACT. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY EVEN IF HE WAS NOT ACTING BONA FIDE WH ILE MAKING A CLAIM OF THIS NATURE THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS ASSESSEES TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND TH EY WOULD BE ASSESSED ON THE BASIS OF SELF - ASSESSMENT UNDER SECTION 143(1) - OF THE ACT AND EVEN IF THEIR CASE IS I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 8 SELECTED FOR SCRUTINY THEY CAN GET AWAY MERELY BY PAYING THE TAX WHICH IN ANY CASE WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PER SONS WHO MAKE CLAIMS OF THIS NATURE ACTUATED BY A MALA FIDE INTENTION TO EVADE TAX OTHENVISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT E FFECT WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE.............................................. AS REGARDS DEDUCTION ON ACCOUNT OF INCOME - TAX PAID BY THE ASSESSEE THE TRIBUNAL FELT THAT SINCE NO PERSON WOULD CLAIM THE SAME AS DEDUCTION TO EVADE PAYME NT OF TAX THE CLAIM MADE BY THE ASSESSEE WAS NOT MALA FIDE. IN THE ABSENCE OF THE ASSESSEE COMPANY TELLING THE ASSESSING OFFICER AS TO WHO COMMITTED THE OVERSIGHT RESULTING IN FAILURE TO ADD THIS AMOUNT WHILE COMPUTING THE INCOME OF THE ASSESSEE UNDER WH AT CIRCUMSTANCES THE OVERSIGHT OCCURRED AND WHY IT WAS NOT DETECTED BY THOSE WHO CHECKED THE INCOME - TAX RETURN BEFORE IT W AS FILED AND LATER BY THE AUDITORS OF THE ASSESSEE - COMPANY WE CANNOT ACCEPT: THE GENERAL VIEW TAKEN BY THE TRIBUNAL. IN OUR VIEW NO SUCH VIEW COULD HAVE REASONABLY BEEN TAKEN ON THE FACTS AND CIRCUMSTANCES PREVAILING IN THIS CASE AND THEREFORE THE DECISION OF THE TRIBUNAL IN THIS REGARD SUFFERS FROM THE VICE' OF PERVERSITY. WE CANNOT ACCEPT THE GENERAL PROPOSITION THAT NO PERSON WOU LD EVER CLAIM THE AMOUNT OF INCOME - TAX AS A DEDUCTION WITH A VIEW TO AVOID PAYMENT OF TAX. NO HARD AND FAST RULE IN THIS REGARD CAN BE LAID DOWN AND EVERY CASE WILL HAVE TO BE DECIDED CONSIDERING THE FACTS AND CIRCUMSTANCES IN WHICH SUCH A DEDUCTION IS CLA IMED COUPLED WITH AS TO WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE FOR MAKING THE CLAIM IS SHOWN TO BE BONAFIDE OR NOT. ' 5.4 THE RATIO DECIDENDI OF THIS CASE IS SQUARELY APPLICABLE TO THE PRESENT CASE. THE NON - APPORTIONMENT OF EXPENSES FOR EAR NING EXEMPT INCOME AMOUNTS TO A FALSE CLAIM MADE BY THE APPELLANT. THE PENALTY LEVIED ON THIS ACCOUNT IS CONFIRMED. 6. DURING THE PROCEEDINGS BEFORE US THE LEARNED COUNSEL STATED THAT THE LD. COMMISSIONER OF INCOME TAX(A) HAS CONFIRMED THE PENALTY WITH OUT ANY RELEVANT BASIS AND IT IS TOTALLY UNJUSTIFIED AND HE I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 9 ALSO PLACED RELIANCE ON THE DECISION OF (2016) 69 TAXMANN.COM 256 (GUJARAT) NAYAN C. SHAH VS. ITO. 7. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX(A). 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE INCURRED EXPENSES TO THE TUNE OF RS.8 43 073/ FOR STT CHARGES STAMP DUTY TO CHARGES SERVICE TAX BROKERAGE ETC.. THE ASSESSEE HAS INCURRED THESE EXP ENDITURE AS TOTAL EXPENSES PERTAINING TO LONG - TERM C APITAL GAIN SHORT - TERM CAPITAL I N TRADAY. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAS ALSO GIVEN THE BIFURCATION OF THESE EXPENDITURES STAT ING THAT AN AMOUNT OF RS.5 19 096 PERTAIN S TO THE EXPENSES INCURRED TOWARD LONG - TERM CAPITAL GAIN . WE ALSO NOTICED THAT THE AS SESSEE HAS MAINTAINED COMPOSITE BOOKS OF ACCOUNT FOR ALL THE TRANSACTION BECAUSE OF WHICH SEPARATE BIFURCATION OF THE EXPENSES COULD NOT BE MADE. ALL THESE EXPENSES WERE REC ORDED IN THE BOOKS OF ACCOUNTS WHICH WERE DULY AUDITED UNDER SECTION 44 AB OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDING AS REQUIRED BY THE AO THE ASSESSEE HAS DONE RECONCILIATION OF THE EXPENSES RELATED TO THE CLAIM OF LONG - TERM CAPITAL GAIN WHICH WA S WORKED OUT TO RS.5 19 096 AND AGREED FOR DISALLOW ANCE OF THESE EXPENSES OF RS.5 19 096. WE FIND THAT THE ASSESSEE HAS EXPLAINED ALL THE FACTS RELATING TO ADDITION AND THE EXPLANATION IN RESPECT OF COMMON NATURE OF EXPENSES ENTERED IN THE BOOKS OF ACCO UNTS DULY AUDITED U/S44AB I.T.A NO. 166 /RJT /20 15 A.Y. 2009 - 10 PAGE NO SHRI VALLABHBHA I M. PATEL VS. ITO 10 BECAUSE OF WHICH SEPARATE DISALLOWANCE COULD NOT BE MADE . I T IS APPARENT FROM THESE FACT THAT EXPLANATION OF THE ASSESSEE IS BONA FIDE AND ALL THESE FACTS RELATED TO THESE EXPENSES ARE REFLECTED IN THE AUDITED ACCOUNTS. IN VIE W OF THESE FACTS AND FINDING WE FIND THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE PENALTY LEVIED BY THE ASSESSING OFFICER THEREFORE WE ALLOW THE APPEAL OF THE ASSESSEE ORDER PR ONOUNCED IN THE OPEN C OUR T ON 26 - 10 - 201 6 SD/ - SD/ - (RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 26 /10 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT