HASAN K. BHANJI, MUMBAI v. DC CENTRAL CIRCLE 5, MUMBAI

ITA 2905/MUM/2009 | 2001-2002
Pronouncement Date: 11-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 290519914 RSA 2009
Assessee PAN AABPB6646A
Bench Mumbai
Appeal Number ITA 2905/MUM/2009
Duration Of Justice 8 month(s) 5 day(s)
Appellant HASAN K. BHANJI, MUMBAI
Respondent DC CENTRAL CIRCLE 5, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 11-01-2010
Assessment Year 2001-2002
Appeal Filed On 06-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI R.S.SYAL AM AND SMT.ASHA VIJAYARAGHAVAN JM ITA NO.2905/MUM/2009 : ASST.YEAR 2001-2002 SHRI HASAN K.BHANJI 15B JIVESH TERRACES B.J.ROAD BAND STAND BANDRA (WEST) MUMBAI 400 050. PA NO.AABPB6646A. VS. THE DY.COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 5 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI S.K.PAHWA O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 6.4.2009 IN RELATION TO THE ASSESSMENT YEAR 2001-2002. 2. THE ONLY GRIEVANCE IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.3 27 866 IN RESPECT OF CAPITAL GAIN OF EARLIER Y EAR ACCOUNTED FOR IN THIS YEAR. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE CREDITED A SUM OF RS.3 27 866 IN ITS CAPITAL ACCOUNT IN THE INSTANT Y EAR REPRESENTING CAPITAL GAIN OF EARLIER YEAR. ON BEING CALLED UPON TO EXPLAIN THE R EASONS FOR SUCH TREATMENT THE ASSESSEE STATED THAT IT WAS A CAPITAL GAIN OF EARLI ER YEAR WHICH WAS NOT CREDITED TO THE PROFIT & LOSS ACCOUNT BUT INADVERTENTLY THE SAL E ENTIRE CONSIDERATION WAS CREDITED TO THE ACCOUNT OF RESPECTIVE SHARES AND MU TUAL FUNDS ALBEIT THE INCOME WAS OFFERED IN THE COMPUTATION OF TOTAL INCOME. IT WAS EXPLAINED THAT THE WRONG ENTRIES PASSED IN THE PRECEDING YEAR WERE RECTIFIED IN THIS YEAR BY CREDITING THE BALANCE AMOUNT TO THE PROPRIETORS CAPITAL ACCOUNT. THE ASS ESSING OFFICER MADE ADDITION U/S.68 ON THE GROUND THAT THE ASSESSEE HAD NOT FURN ISHED THE CAPITAL ACCOUNT FOR THE ASSESSMENT YEAR 2000-2001. THE LEARNED CIT(A) UPHEL D THE ADDITION. ITA NO.2905/MUM/2009 HASAN K.BHANJI. 2 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED FROM THE BALANCE SHEET OF THE ASSESSEE FOR ASSESSMENT YEAR 2000-2001 COPY PLACED AT PAGE 2 OF THE PAPER BOOK THAT THERE ARE CREDIT BALANCES IN CERTAIN SHARES ACCOUNT REFLECTED ON THE LIABILI TY SIDE OF THE BALANCE SHEET. APART FROM THAT THERE ARE CERTAIN SHARES ON THE ASSETS SI DE AS WELL. WHEN THE ASSESSEE SOLD THE SHARES AND MUTUAL FUNDS RESULTING INTO INCOME O F RS.7 12 862.49 THE DETAILS OF WHICH ARE AVAILABLE AT PAGE 8 OF THE PAPER BOOK IN ADVERTENTLY THE SALE CONSIDERATION WAS CREDITED TO THE ACCOUNT OF RESPEC TIVE SHARES OR MUTUAL FUND INSTEAD OF TRANSFERRING THE PROFIT ELEMENT FROM THE ACCOUNT OF SUCH SECURITIES TO THE PROFIT & LOSS ACCOUNT. HOWEVER IN THE COMPUTATION O F INCOME FOR ASSESSMENT YEAR 2000-2001 COPY PLACED AT PAGE 6 OF THE PAPER BOOK THE ASSESSEE REFLECTED SHORT TERM CAPITAL GAIN ON SALE OF SHARES AT RS.6 35 731. IT WAS IN THE CURRENT YEAR THAT THE MISTAKE CAME TO LIGHT ABOUT THE SHOWING OF CREDI T BALANCES IN CERTAIN SHARES ACCOUNT. ACCORDINGLY A JOURNAL ENTRY WAS PASSED BY DEBITING THE ACCOUNTS OF CERTAIN SHARES WHICH WERE EARLIER WRONGLY CREDITED REPRESENTING PROFIT ON SALE OF SHARES AND CREDITING THE ACCOUNT OF SHARES WITH THE AMOUNT OF LOSS SUFFERED IN THE EARLIER YEAR AND TRANSFERRING THE NET BALANCE AMOUN T OF RS.3 27 866 TO THE PROPRIETORS CAPITAL ACCOUNT. IT SHOWS THAT THE MI STAKE COMMITTED BY THE ASSESSEE IN REFLECTING THE WRONG ENTIRES IN THE PRECEDING YE AR WAS RECTIFIED IN THE CURRENT YEAR. AS SUCH THE TRANSFER OF THE BALANCE OF RS.3 2 7 866 TO THE PROPRIETORS CAPITAL ACCOUNT CANNOT CALL FOR ANY ADDITION IN THE CURRENT YEAR. 4. HOWEVER IT IS NOTED THAT AS AGAINST THE TO TAL CAPITAL GAIN EARNED BY THE ASSESSEE IN THE PRECEDING YEAR AT RS.7 12 862.49 O NLY A SUM OF RS.6 35 731 WAS OFFERED FOR TAXATION. ONE ITEM OF INCOME AMOUNTING TO RS.79 534.88 IN RESPECT OF TEMPLETON GROWTH REGULAR MUTUAL FUND WAS NOT OFFERE D FOR TAXATION. SH. VIJAY MEHTA THE LEARNED COUNSEL FOR THE ASSESSEE FAIRN ESS IS WHOSE HALLMARK DID NOT RAISE ANY OBJECTION TO THE TAXATION OF RS.79 534.8 8 IN THE CURRENT YEAR ALTHOUGH ITA NO.2905/MUM/2009 HASAN K.BHANJI. 3 ADMITTING THAT THE SAID AMOUNT OUGHT TO HAVE BEEN T AXED IN THE PRECEDING YEAR. IT WAS AGREED THAT SINCE TIME FOR TAKING ACTION U/S.14 7 OR 154 IN RELATION TO THE PRECEDING YEAR HAS ALREADY EXPIRED THE AMOUNT MAY BE TAXED IN THE CURRENT YEAR. IN THE GIVEN CIRCUMSTANCES WITH A VIEW TO PROTECT THE INTEREST OF REVENUE WE UPHOLD THE ADDITION TO THE EXTENT OF RS.79 534.88 A S REPRESENTING INCOME OF THE PRECEDING YEAR. THUS THE ADDITION SO MADE AND CONF IRMED IS DELETED PRO TANTO. 5. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF JANUARY 2010. SD/- SD/- (ASHA VIJAYARAGHAVAN) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 11 TH JANUARY 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) CENTRAL II MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI. ITA NO.2905/MUM/2009 HASAN K.BHANJI. 4 DATE INITIAL 1. DRAFT DICTATED ON 07.01.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 08.01.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. *