SUNIL G, BIYANI, MUMBAI v. ACIT CEN CIR-47, MUMBAI

ITA 3985/MUM/2008 | 2005-2006
Pronouncement Date: 07-05-2010 | Result: Allowed

Appeal Details

RSA Number 398519914 RSA 2008
Assessee PAN AAEPB3654R
Bench Mumbai
Appeal Number ITA 3985/MUM/2008
Duration Of Justice 1 year(s) 11 month(s) 2 day(s)
Appellant SUNIL G, BIYANI, MUMBAI
Respondent ACIT CEN CIR-47, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 07-05-2010
Date Of Final Hearing 28-10-2009
Next Hearing Date 28-10-2009
Assessment Year 2005-2006
Appeal Filed On 05-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.V. EASWAR SR. VICE PRESIDENT & SHRI R.K.PANDA AM I.T.A. NO. 3985/MUM/2008 (ASSESSMENT YEAR 2005-06) SHRI SUNIL G. BIYANI 86 MIRZA STREET VENKATESH BHAVAN 4 TH FLOOR MUMBAI-400 003 PAN:AAEPB3654R VS. ACIT CENTRAL CIR.-47 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020 APPELLANT RESPONDENT APPELLANT BY : SHRI MADHUR AGARWAL RESPONDENT BY : SHRI A.K. ATRI ORDER DATE OF HEARING: 27.04.2010 DATE OF ORDER: 07.05.2010 PER R.K.PANDA AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 31 ST MARCH 2008 OF THE CIT(A) CENTRAL-III MUMBAI RELA TING TO ASSESSMENT YEAR 2005- 06. 2. THE ASSESSEE IN HIS VARIOUS GROUNDS OF APPEAL HAS C HALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE PENALTY OF RS.4 20 824 LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME-TAX ACT 1961 (THE ACT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE HAD PURCHASED 1000 SHARES OF INFOSYS TECHNOLOGIES LTD. (CUM BONUS) ON 29 TH JUNE 2004 AND HAD RECEIVED 3000 BONUS SHARES DECLARED BY THE SAID COM PANY IN THE RATIO OF 3:1. THE ASSESSEE SOLD OUT THE ORIGINALLY PURCHASED 1000 SHARES AND TRANSFERRED 3000 BONUS SHARES RECEIVED IN THE NAME OF HIS RELATIVE S MT. EKTA BIYANI ON LOAN BASIS. THESE TRANSACTIONS HAVE DULY BEEN REFLECTED IN THE DEMAT ACCOUNT OF THE ASSESSEE WITH STOCK HOLDING CORPORATION OF INDIA. HOWEVER SMT. EKTA BIYANI SOLD OUT THE 3000 SHARES AND ALSO TRANSFERRED THE ENTIRE SALE PR OCEEDS TO THE ASSESSEE. THE ASSESSEE FILED COPIES OF CONTRACT NOTE/ BILL FOR PU RCHASE OF 1000 SHARES AS WELL AS ITA NO. 3985/MUM/2008 SHRI SUNIL G. BIYANI =================== 2 THE SALE OF 3000 SHARES BY SMT. EKTA BIYANI. HOWEV ER THE ASSESSEE HAD NEITHER TAKEN INTO CONSIDERATION THE SALE PROCEEDS IN THE C OMPUTATION OF SHORT TERM CAPITAL LOSS NOR DISCLOSED IN ANY OTHER MANNER. T HE ASSESSING OFFICER THEREFORE RECOMPUTED THE SHORT TERM CAPITAL LOSS ON THE TRANS ACTION RELATING TO 4000 SHARES OF M/S. INFOSYS TECHNOLOGIES LTD. AND ACCORDINGLY D ETERMINED THE SHORT TERM CAPITAL GAIN AT RS.13 240 AS AGAINST THE CARRY FORW ARD OF SHORT TERM CAPITAL LOSS OF RS.41 30 043. 4. THE ASSESSING OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. IT WAS EXPLAINED BY THE ASSE SSEE THAT DUE TO OVERSIGHT AND IN A HURRY FOR FILING THE RETURN OF INCOME ON TIME AND NEGLIGENCE ON HIS PART THE MISTAKE WAS COMMITTED. HOWEVER THE ASSESSING OFFI CER WAS NOT SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE ON THE GROU ND THAT THE ASSESSEE HAS NOT SUO MOTO FILED ANY REVISED RETURN OF INCOME INCORPO RATING THE CORRECT CARRY FORWARD OF SHORT TERM CAPITAL LOSS. SINCE THE CON CEALMENT WAS DETECTED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER LEVIED PENALTY OF RS.4 20 824 BEING 100% OF TAX SOUGHT TO BE EVADED. 5. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER. IT WAS FURTHER SUBMI TTED THAT THE ASSESSEE UPON REALISING HIS MISTAKE ON HIS OWN AND VOLUNTARILY P OINTED OUT AND ACCEPTED THIS LAPSE DURING THE ASSESSMENT PROCEEDINGS. IT WAS SU BMITTED THAT THE ASSESSEE HAS NOT SET OFF SHORT TERM CAPITAL LOSS AGAINST THE I NCOME. FURTHER IT WAS ALSO SUBMITTED THAT THE HIGH VALUE TRANSACTION WAS THROU GH REGULAR AND DISCLOSED DEMAT AND BANK ACCOUNT AND THEREFORE IT IS ONLY TH ROUGH INADVERTENCY THIS AMOUNT IN QUESTION WAS NOT TAKEN INTO CONSIDERATION WHILE COMPUTING THE LONG TERM CAPITAL GAIN. IT WAS ACCORDINGLY ARGUED THAT PENALTY U/S. 271(1)(C) OF THE ACT IS NOT LEVIABLE. 6. HOWEVER THE CIT(A) WAS NOT CONVINCED WITH THE ARGU MENTS ADVANCED BY THE ASSESSEE. HE CALLED FOR THE ASSESSMENT RECORDS AND EXAMINED THE SAME AND FOUND THAT THERE IS NO DOCUMENT ON RECORD TO SUBSTA NTIATE THE CLAIM OF THE ASSESSEE THAT HE HAD VOLUNTARILY POINTED OUT THE MI STAKE AND FILED A WORKING OF THE CAPITAL GAIN BEFORE IT WAS DETECTED BY THE ASSE SSING OFFICER. HE OBSERVED THAT ITA NO. 3985/MUM/2008 SHRI SUNIL G. BIYANI =================== 3 IT WAS ONLY AFTER THE REQUISITION FOR COPY OF BANK STATEMENT AND A DETAILED WORKING OF CAPITAL GAIN THAT THE ASSESSEE FILED THE REWORKED COMPUTATION OF CAPITAL GAIN ALONG WITH HIS BANK STATEMENT AS WELL AS THAT OF SMT. EKTA BIYANI. HE FURTHER OBSERVED THAT THE ASSESSEE HAD NOT MADE ANY ACCOUNTING ENTRY FOR THE LOAN OF 3000 BONUS SHARES GIVEN TO SMT. EKTA BIYANI . SUBSEQUENTLY ON RECEIPT OF THE SALE PROCEEDS OF THE ABOVE SHARES THE SAME WAS TREATED BY THE ASSESSEE AS A LOAN FROM SMT. EKTA BIYANI WHEN IN FACT THE SAME W AS ACTUALLY REPAYMENT OF LOAN OF 3000 SHARES WHICH WERE MUCH LATER CLOSED BY A CO NTRA ENTRY. THEREFORE THE MISTAKE WAS NOT THROUGH OVERSIGHT BUT A RESULT OF C ONSCIOUS DECISION THAT NO ENTRY WAS MADE IN THE BOOKS OF ACCOUNT OF THE BONUS SHARES GIVEN AS LOAN. WRONG ENTRY OF RS.42 08 238 AS LOAN FROM SMT. EKTA BIYANI WAS MADE WHEN IN FACT RS.42 08 238 WAS REPAYMENT OF LOAN TAKEN BUT N OT ENTERED. HE ACCORDINGLY UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER. 7. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE REI TERATED THE SAME SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER AN D THE CIT(A) AND FURTHER SUBMITTED THAT THE ASSESSEE HAS DISCLOSED THE ENTIR E FACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS ACCEPTED THIS LAPSE ON THE PART OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. REFERRING TO TH E DECISION OF THE TRIBUNAL IN THE CASE OF THE BROTHER OF THE ASSESSEE SHRI RAKESH G. BIYANI VIDE I.T.A. NO. 3987/MUM/2008 ORDER DATED 26 TH FEBRUARY 2010 FOR THE SAME ASSESSMENT YEAR HE SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMS TANCES THE TRIBUNAL HAS DELETED THE PENALTY LEVIED U/S. 271(1)(C) OF THE AC T. HE SUBMITTED THAT THIS BEING A COVERED MATTER THE PENALTY LEVIED BY THE ASSESSIN G OFFICER AND UPHELD BY THE CIT(A) SHOULD BE CANCELLED. 8. THE LEARNED DR ON THE OTHER HAND HEAVILY RELIED O N THE ORDER OF THE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONS IDERED THE DECISION OF THE TRIBUNAL IN THE CASE OF THE BROTHER OF THE ASSESSE E. WE FIND UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL AFTER CONSIDERING T HE PROVISIONS OF SECTION ITA NO. 3985/MUM/2008 SHRI SUNIL G. BIYANI =================== 4 271(1)(C) THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE CEMENT MARKETING CO. OF INDIA LTD. (124 ITR 15) THE DECIS ION OF THE PUNJAB &HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJIG GARG & OTHE RS REPORTED IN 313 ITR 266 THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F DHARMENDRA TEXTILES REPORTED IN 306 ITR 277 AND VARIOUS OTHER DECISIONS HAS CANCELLED THE PENALTY LEVIED U/S. 271(1)(C) BY HOLDING AS UNDER: 6.7 IN THE LIGHT OF ABOVE DISCUSSION IF WE CONSIDE R THE FACTS OF THE CASE UNDER CONSIDERATION. THE ASSESSEE TRANSFERRED 3000 SHARES TO RELATIVE I.E. SMT. BIYANI ON LOAN. THE ASSESSEE FILED HIS RETURN OF INCOME ON THE BASIS OF ONLY HIS DEMAT ACCOUNT WHERE IN ONLY 1000 SHARES WERE SOLD. SMT. BIYANI HAD SOLD THESE 3000 SHARES THROUGH HER DEMAT ACCOUNT WHICH SHOWS THE BONAFIDE OF THE ASSESSEE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON PRESUMPT ION THAT THE 3000 SHARES GIVEN TO SMT. BIYANI WAS ON LOAN. THIS EXPL ANATION OF THE ASSESSEE HAS NOT FOUND FALSE BY THE AO. SMT. BIYAN I SOLD SHARES THROUGH HER DEMAT ACCOUNT AND SALE PROCEEDS WERE GI VEN TO THE ASSESSEE WHICH ADJUSTED AGAINST THE LOAN. THE ASS ESSEE ON HIS OWN AND VOLUNTARILY POINTED OUT AND ACCEPTED THIS LAPSE DURING THE ASSESSMENT PROCEEDINGS. WE THEREFORE FIND THAT TH E ASSESSEE HAS SURRENDERED THE AMOUNT OF INCOME BEFORE RECORDING S ATISFACTION WHICH REQUIRED UNDER SECTION 271 OF THE ACT. THE A O HIMSELF ACCEPTED THE SURRENDER OF INCOME AND NO FURTHER INVESTIGATION/EXAMINATION WERE MADE. WE THEREFORE OF THE CONSIDERED VIEW THAT PENAL PROVISIONS UNDER THE CIR CUMSTANCES OF THE CASE ARE NOT APPLICABLE WE ACCORDINGLY CANCEL PENA LTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 10. SINCE THE FACTS OF THE CASE ARE IDENTICAL TO THAT O F THE BROTHER OF THE ASSESSEE SHRI RAKESH G. BIYANI AND SINCE THE TRIBU NAL HAS ALREADY CANCELLED THE PENALTY THEREFORE RESPECTFULLY FOLLOWING THE DEC ISION OF THE TRIBUNAL IN THE CASE OF RAKESH G. BIYANI (SUPRA) WE HOLD THAT PENALTY U /S. 271(1)(C) OF THE ACT IS NOT LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE IMPU GNED CASE. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND THE PENALTY LEVIE D U/S. 271(1)(C) OF THE ACT IS CANCELLED. 11. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ON 7 TH MAY 2010 SD/- (R.V. EASWAR) SR. VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI DATED 7 TH MAY 2010 ITA NO. 3985/MUM/2008 SHRI SUNIL G. BIYANI =================== 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CENTRAL-III MUMBAI 4. THE CIT CENTRAL-IV MUMBAI 5. THE DR E BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI TPRAO