Jindal Global Finance & Investment Ltd, v. ITO Ward 4 (2),

ITA 2968/DEL/2007 | 1996-1997
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 296820114 RSA 2007
Bench Delhi
Appeal Number ITA 2968/DEL/2007
Duration Of Justice 2 year(s) 7 month(s) 7 day(s)
Appellant Jindal Global Finance & Investment Ltd,
Respondent ITO Ward 4 (2),
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 22-01-2010
Date Of Final Hearing 05-01-2010
Next Hearing Date 05-01-2010
Assessment Year 1996-1997
Appeal Filed On 14-06-2007
Judgment Text
I.T.A. NO.2968/D/2007 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI D.R. SINGH AND SHRI R.C. SHARMA ITA NO.2968/D/07 ASSESSMENT YEAR : 1996-97 M/S JINDAL GLOBAL FINANCE & INVESTMENT VS. IN COME-TAX OFFICER LIMITED 40 HANUMAN LANE NEW DELHI WARD-4( 2) NEW DELHI NEW DELHI PAN NO.AAACJ0780D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI VED JAIN & RANO JAIN CA S RESPONDENT BY : MRS. PARTIMA KAUSHIK DR O R D E R PER R.C. SHARMA AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A) DATED 22.03.2007 FOR THE ASSESSMENT YEAR 1996-97 IN THE MATTER OF ASSESSMENT FRAMED UNDER SECTION 271(1)(C) OF THE I.T. ACT WHE REIN THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED CIT(A) LEVYING PENALTY U/S 271(1)(C) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN REJECTING THE CONTENTION OF THE ASSESSEE T HAT THE ORDER LEVYING PENALTY U/S 271(1)(C) IS BAD IN LAW & LIABL E TO BE QUASHED AS THE SAME IS BARRED BY LIMITATION UNDER T HE INCOME TAX ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN REJECTING THE CONTENTION OF THE ASSESSEE T HAT THE ORDER PASSED U/S 271(1)(C) IS UNTENABLE IN THE EYE OF LAW AS NO I.T.A. NO.2968/D/2007 2 SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REGARDING CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AS SESSING OFFICER IN HOLDING THAT THE PENALTY IS LEVIABLE DES PITE THE FACT THAT THE APPELLANT AHS SUBMITTED EXPLANATION IN SUP PORT OF ITS CONTENTION THAT THERE IS NEITHER CONCEALMENT NOR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. (II) THAT THE PENALTY HAS BEEN LEVIED DESPITE THE F ACT THAT THE CLAIM MADE BY THE APPELLANT WAS BONAFIDE AND THAT A LL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED AND AS SUCH NO PENALTY CAN BE LEVIED EVEN UNDER EXPLANATION-1 TO S ECTION 271(1)(C) OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN HOLDING THAT THE ASSESSEE HAS FILED INACCURATE PART ICULARS OR CONCEALED INCOME IN RESPECT OF LOSS OF RS.5 82 350/ - INCURRED ON SALE OF SHARES OF M/S WHITEPIN TIE-UP LTD. & M/S JINDAL DRILLING & INDUSTRIES LTD. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN IGNORING THE CONTENTION OF THE APPELLANT T HAT PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND AS SUCH THE CLAIM IN RESPECT OF LOSS INCURRED ON SALE OF SHARES OF M/S WHITEPIN TIE-UP LTD. & M/S JINDAL DRILLING & INDUST RIES LTD. NEED TO BE EXAMINED AGAIN OF THE LIGHT OF THE MATER IAL AND EXPLANATION BEING PRODUCED AND REFERRED TO BY THE A PPELLANT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT ASSESSEE HAS FILED A RETURN DECLARIN G LOSS OF RS.5.86 LAKHS WHICH WAS ASSESSED AT INCOME OF RS.11 947/- U/S 143 (3). IN THE COURSE OF ASSESSMENT THE AO DISALLOWED LOSS OF RS. 5 82 350/- INCURRED ON SALE OF SHARES OF M/S WHITEPIN TIE-UP L TD. AND JINDAL DRILLING & INDUSTRIES LTD. IN RESPECT OF THESE DIS ALLOWANCES THE AO I.T.A. NO.2968/D/2007 3 INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AND PEN ALTY OF RS.2 67 881/- WAS LEVIED FOR FILING INACCURATE PART ICULARS OF INCOME. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING THAT SINCE DISALLOWANCE OF LOSS WAS CONFI RMED BY THE APPELLATE AUTHORITIES LEVY OF PENALTY U/S 271(1)(C ) WAS JUSTIFIED. AGGRIEVED BY THIS ORDER OF CIT(A) THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND THAT ASSESSEE HAS PURCHASED 1 LAKH SHARES OF M/S WHITEPI N TIE-UP LTD. ON 18.1.2005 AT AN ISSUE PRICE OF RS.10/- AND SOLD TH EM ON 28.2.1996 FOR RS.5 LAKHS. SINCE THE SHARES SO PURCHASED WERE NOT EARNING ANY DIVIDEND INCOME IN ITS BUSINESS ACUMEN THE ASSESSE E COMPANY THOUGHT IT FIT TO SELL THESE SHARES. HOWEVER THE AO WAS OF THE OPINION THAT SHARES CANNOT BE SOLD AT LOSS. HOWEVER NO MA TERIAL IN SUPPORT OF ITS CONCLUSION THAT ASSESSEE HAS SOLD ITS SHARES AT RS.10/- WAS NOT BROUGHT ON RECORD SO AS TO DISALLOW THE LOSS OF RS. 5/- PER SHARE INCURRED ON ITS SALE. SO FAR AS DISALLOWANCE OF LO SS IS CONCERNED SINCE THE MATERIAL HAS ALREADY BEEN ACQUIRED WE ARE INCL INED TO GO ON THE MERITS OF THE DISALLOWANCE BUT SO FAR AS PENALTY U/ S 271(1)(C) IS I.T.A. NO.2968/D/2007 4 CONCERNED THE SAME CANNOT BE LEVIED UNLESS THERE I S FAILURE ON THE PART OF THE ASSESSEE TO FURNISH INACCURATE PARTICULARS O F INCOME. THE ASSESSEE HAS FURNISHED ACCURATE PARTICULARS OF INCO ME AND NOTHING WAS BROUGHT ON RECORD BY THE AO FOR REACHING TO THE CON CLUSION THAT ASSESSEE WAS IN RECEIPT OF AMOUNT MORE THAN WHAT WA S STATED AS A SALE CONSIDERATION. FURTHER THE JUSTIFICATION SUBMITTE D TO THE ASSESSEE TO THE EFFECT THAT SHARES OF THE PRIVATE LIMITED COMPA NY WHICH WERE NOT QUOTED ON THE STOCK EXCHANGE WERE SOLD AT RS.5/- PE R SHARE BECAUSE OF THE FACT THAT NO DIVIDEND WAS BEING PAID BY THIS CO MPANY THEREFORE THERE WAS NO REASON FOR KEEPING THE FUNDS INVOLVED FOR SUCH SHARES. ACCORDINGLY THE EXPLANATION FURNISHED BY THE ASSES SEE WAS NEITHER FOUND TO BE FALSE AND THE SAME WAS ALSO NOT UNPROVE D BY THE AO. WE THEREFORE DO NOT FIND ANY MERIT FOR LEVY OF PENALTY IN RESPECT OF THE TRANSACTION DULY SUPPORTED BY DOCUMENTARY EVIDENCE AND TO CONTROVERT THE SAME THE AO HAS NOT BROUGHT ANY CONTRARY MATER IAL ON RECORD MUCH LESS TO SAY ANY COGENT MATERIAL. MERELY ON TH E PRESUMPTION THE DISALLOWANCE WAS MADE WHICH DID NOT WARRANT ANY LEV Y OF PENALTY U/S 271(1)(C). 4. THE ASSESSEE HAS ALSO FURNISHED DETAILS OF SHARE S PURCHASED AND SOLD AS WELL AS CONFIRMATION FROM M/S WHITEPIN TIE- UP LTD. TO THE I.T.A. NO.2968/D/2007 5 EFFECT THAT THE 10 000 NUMBER OF SHARES BEARING DIS TINCTIVE NO.250201 TO 350200 WERE TRANSFERRED ON 10.9.1996 FROM JINDAL DRILLING & INDUSTRIES LTD. TO FUELS. COPY OF MINUTES OF THE DIRECTOR FOR SALE OF THESE SHARES WAS ALSO PLACED B EFORE THE LOWER AUTHORITIES AND NOTHING WRONG WAS FOUND IN ALL THES E DOCUMENTARY EVIDENCES SUPPORTING SALE OF SHARES AT LOSS. 5. THE ASSESSEE HAS ALSO PURCHASED 8 235 SHARES OF JINDAL DRILLING & INDUSTRIES LTD. FOR RS.14.67 LAKHS AT THE RATES R ANGING BETWEEN RS.150/- TO RS.210/- PER SHARE. THESE SHARES WERE SOLD BY THE ASSESSEE ON 1.3.1996 FOR RS.9 05 850/- AT THE RATE OF RS.110/- PER SHARE. THUS A LOSS OF RS.82 350/- WAS INCURRED ON SALE OF SHARES OF JINDAL DRILLING & INDUSTRIES LTD. WHICH WAS DISALLO WED BY THE AO ON THE PLEA THAT SHARES WERE SOLD AT RS.110/- WHICH WA S LOWER THAN THE SALE PRICE OF RS.120/- QUOTED AT THE DELHI STOCK EX CHANGE ON THE DATE OF SALE I.E. 1.3.1996. WE FOUND THAT THESE SHARES WERE QUOTED AT THE STOCK EXCHANGE. THERE IS ALWAYS VARIATION IN THE P RICE OF SHARES AT THE STOCK EXCHANGE AND VARIATION OF 8 TO 10% IS QUITE R EASONABLE. THE STOCK EXCHANGE GIVES THE AVERAGE PRICE AT WHICH SHA RES ARE TRANSACTED ON A PARTICULAR DATE. THIS AVERAGE IS OF THE HIGHE ST AND LOWEST PRICE AT WHICH SHARES ARE BEING TRANSACTED. HOWEVER IT CAN NOT BE INFERRED THAT I.T.A. NO.2968/D/2007 6 SHARES SOLD ON A PARTICULAR DATE WILL ALWAYS FETCH THE HIGHEST PRICE. SINCE THERE WAS A VARIATION OF 8 TO 9% BETWEEN THE PRICE AT WHICH SHARES WERE ACTUALLY SOLD AND THE AVERAGE PRICE QUO TED BY THE STOCK EXCHANGE IT CANNOT REACH TO THE CONCLUSION THAT AS SESSEE HAS ACTUALLY FETCHED PRICE HIGHER THAN THE AVERAGE PRICE QUOTED AT THE STOCK EXCHANGE. THUS IT CANNOT BE SAID TO BE A FIT CASE FOR LEVY OF PENALTY SINCE NO CONTRARY MATERIAL WAS BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE THAT ASSESSEE WAS IN RECEIPT OF SALE R EALIZATION HIGHER THAN WHAT WAS STATED AT AN AVERAGE PRICE QUOTED AT THE S TOCK EXCHANGE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN THE COURT ON 22-01-2010. SD/- SD/- ( D.R. SINGH ) ( R.C. SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :22-01-2010. NS : COPY FORWARDED TO : - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY DY. REGISTRAR I.T.A. NO.2968/D/2007 7