Dhananjay Vilas Jadhan, Pune v. ITO, Pune

ITA 417/PUN/2009 | 2003-2004
Pronouncement Date: 08-12-2010 | Result: Allowed

Appeal Details

RSA Number 41724514 RSA 2009
Assessee PAN ADSPJ8070A
Bench Pune
Appeal Number ITA 417/PUN/2009
Duration Of Justice 1 year(s) 8 month(s)
Appellant Dhananjay Vilas Jadhan, Pune
Respondent ITO, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 08-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 08-12-2010
Assessment Year 2003-2004
Appeal Filed On 08-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 417/PN/09 (ASSTT. YEAR 2003-04) DHANANJAY VILAS JADHAV 304 MOTI VILLA FATIMANAGAR PUNE- 411013 PAN NO. ADSPJ8070A .... APPELLANT VS. ITO WARD 1(3) PUNE . RESPONDENT APPELLANT BY : SHRI PRAMOD SHINGTE RESPONDENT BY : SHRI HARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)-I PUNE DATED 05-01-2009 FOR THE A.Y 2003-04 AND THE ONLY I SSUE RAISED IN THIS APPEAL IS AS UNDER:- THE COMMISSIONER OF INCOME TAX APPEALS-I HAS ERRED IN LAW & ON FACTS IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961. 2. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL BROUGH T TO OUR NOTICE THAT IT IS A CASE OF EARNING OF LONG TERM CAPITAL GAIN OUT OF SA LE OF PENNY STOCKS. FURTHER HE NARRATED STATING THAT ON HEARING THE MARKET NEWS THAT SUCH EARNINGS HAVE TO BE OFFERED BY MANY OTHERS IN THE MARKET AS SHORT TERM CAPIT AL GAINS TO AVOID THE LITIGATION WITH THE REVENUE THE ASSESSEE FILED THE REVISED RETURN WHICH HAPPENED TO BE BELATED RETURN DISCLOSING THE CORRECT PARTICULARS IN THE SAID RETURN. RELEVANT PARAS 3 4 AND 4.1 OF CIT(A) ARE AS UNDER:- 3. THE FACTS OF THE CASE AS PER RECORDS ARE THAT THE ASSESSEE HAS FILED HIS ORIGINAL RETURN CONSISTING OF INCOME FROM LONG TERM CAPI TAL GAIN OF RS. ITA NOS. 417/PN/09 A.Y. 2003-04 PAGE 2 OF 4 8 86 540/- ON ACCOUNT OF SALES OF SHARES. ASSESSEE S UBSEQUENTLY FILED REVISED RETURN WHEREIN THE LONG TERM CAPITAL GAIN ORIGINAL SHOWN WAS REVISED AS SHORT TERM CAPITAL GAIN. SUBSEQUENTLY PROCEEDINGS U/S. 148 WERE INITIATED IN CASE OF THE ASSESSEE REOPENING THE CASE. IN THE REASSESS MENT PROCEEDINGS ON THE BASIS OF ENQUIRIES CONDUCTED BY THE INVESTIGATION WI NG OF THE DEPARTMENT AND ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER IT WAS HELD THAT NO PURCHASE / SALE TRANSACTION OF SHARES IN RESPECT OF WHICH CAPITAL GAIN WAS SHOWN BY THE ASSESSEE ACTUALLY TOOK PLACE AND THE DOCUMENTARY EV IDENCE PRODUCED IN THIS REGARD WERE HELD TO BE FABRICATED. SINCE NO CAPITAL GAI NS AROSE OUT OF TRANSFER OF CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14 ) OF THE INCOME TAX ACT 1961 AS ASSESSEE IN THE INSTANT CASE DID NOT HOLD A NY SHARES IN REALITY THE CLAIM OF RECEIPT OF CAPITAL GAINS WAS REJECTED AND SH ORT TERM CAPITAL GAINS SHOWN BY THE ASSESSEE WAS ASSESSED AS INCOME FROM OT HER SOURCES AND PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED. 4. DURING THE PENALTY PROCEEDINGS IT WAS CONTENDED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT HE HAD VOLUNTARILY F ILED THE REVISED RETURN OFFERING THE LONG TERM CAPITAL GAINS AS ORIGINALLY CLA IMED AS SHORT TERM CAPITAL GAIN AND PAID TAXES AT THE NORMAL RATE. IT WAS CONTEN DED THAT SINCE THE GAIN ARISING OUT OF THE TRANSACTION IN SHARES WERE DULY REFLE CTED IN THE RETURN THERE WAS NO ELEMENT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS IN HIS CASE. 4.1 HOWEVER THE CONTENTIONS OF THE ASSESSEE WERE NO T ACCEPTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE REVISED RETURN FILED BY THE ASSESSEE WAS NOT VOLUNTARY BUT AS A RESULT OF THE INVESTIGATIO N CARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT. FURTHER IT WAS ALSO OBSERVED THAT THE REVISED RETURN FILED BY THE ASSESSEE WAS NOT VALID WI THIN THE MEANING OF SECTION 139(5) OF THE INCOME TAX ACT 1961. IT WAS OBSERVED THAT IN CASE OF ASSESSEE THE TRANSACTIONS IN SHARE WERE FOUND TO BE N ON-GENUINE AND THE DOCUMENTS PRODUCED IN SUPPORT OF SUCH TRANSACTION WERE FABRICATED FOR WHICH THE CAPITAL GAINS SHOWN BY THE ASSESSEE WERE TREATED AS INCOME FROM OTHER SOURCES. IT WAS ALSO STATED THAT THE ASSESSEE DID NO T FURNISH ANY NEW EVIDENCE IN THE PENALTY PROCEEDINGS TO SUBSTANTIATE THE DIFFERENT INTERPRETATION OF CAPITAL GAINS CLAIMED. IT WAS THUS CONCLUDED THAT THE ASSESSEE HAS DELIBERATELY CONCEALED THE PARTICULARS OF HIS REAL INCOME OF RS.8 02 545/- GIVING IT A COLOUR OF LONG CAPITAL GAI NS. ACCORDINGLY PENALTY OF RS. 1 72 547/- AT MINIMUM RATE WAS LEVIED U/S. 271(1 )(C). SUBSEQUENTLY THE A.O ISSUED THE NOTICE U/S 148 OF THE ACT TO REGULARIZE THE IMPUGNED BELATED REVISED RETURN OF INCOME AND ASSESSED THE SAID SHORT TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES . PENALTY PROCEEDING U/S 271(1) OF THE ACT WAS ALSO INITIATED AND LEVIED THE PENALTY AS NARRATED IN THE ABOVE PARA 4 OF THE IMPUGNED ORDER. 3. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL MENT IONED CONSIDERING THE FACT OF EFFECTING OF THE IMPUGNED TRANSACTIONS THROUG H BANKING CHANNELS AND DELIVERING BASED TRANSACTIONS OF THE PENNY SHARES THE PUNE BENCH OF THE TRIBUNAL HELD IN NUMBER OF CASES THAT SUCH GAINS HAVE TO BE T AXED AS SHORT TERM CAPITAL GAINS ONLY AND NOT AS INCOME FROM OTHER SOURCES. TAKIN G THE ARGUMENT FURTHER LD. ITA NOS. 417/PN/09 A.Y. 2003-04 PAGE 3 OF 4 COUNSEL STATED THAT THERE IS DISPUTE ON A TAXABILITY OF SUCH GAINS ON A PARTICULAR HEAD OF INCOME. THEREFORE CONSIDERING THE DEBATABLE NATURE OF THE ISSUE AND FURNISHING OR DISCLOSURE OF RELEVANT INFORMATION IN THE BELATED RE VISED RETURN OF INCOME THIS CASE SHOULD NOT BE A FIT CASE FOR INVOKING THE PROVIS IONS OF SEC. 271(1)(C) ACT. 4. ON THE OTHER HAND LD. DR FOR THE REVENUE ARGUED ST ATING THAT THIS IS A CASE OF PENNY STOCKS AND THE ASSESSEE ADMITTEDLY ENTERED INTO THE BOGUS AND PAPER TRANSACTIONS AND IT WAS THE WAY OF CONVERTING HIS UNA CCOUNTED MONEY INTO ACCOUNTED TRANSACTION BY PAYMENT TO MEAGER TAX. ASS ESSEE IS BENEFITED BY OFFERING THE SAME UNDER THE HEAD CAPITAL GAINS AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES . HE ALSO HIGHLIGHTED FURNISHING OF BELATED REVISED R ETURN WHICH MUST NOT BE TAKEN INTO COGNIZANCE AS IT IS INVALID ONE I N THE SIGHT OF THE LAW. AS PER THE REVENUE ONLY THE ORIGINAL RETURN OF INCOME EXISTS AND THE PARTICULARS FURNISHED IN THE SAID VALID RETURN MUST ONLY BE RECKONED. FURTHER LD. D R RELIED ON THE CITATIONS REPORTED IN 186 ITR 571 AND 222 ITR 496 AND 299 ITR 1 79. 5. DURING THE TIME OF REBUTTAL LD. COUNSEL MENTIONE D THAT THE ACT OF FILING THE REVISED RETURN WAS BELATEDLY SHOWED THE VOLUNTARY NATURE OF THE ASSESSEE IN COMING CLEAN BEFORE THE REVENUE. AS SUCH THE AO DID NOTHING TO GENERATE OR GARNER ANY INCRIMINATING EVIDENCES AGAINST THE ASSESSEE. RELYIN G ON THE PUNE BENCH DECISIONS IN THE CASES OF SANTOSH NARAIN KAPOOR 115 TTJ (LUCKNO W) 402 AND PREM CHAND GARG (DEL) (TM) 123 TTJ 433 LD. COUNSEL MENTIONED THAT ASSESSEES CASE IS NOT FIT CASE OVER LEVY OF PENALTY. 6. WE HAVE HEARD ABOVE MENTIONED FACTS AND THE ARGUME NTS FORWARDED BY BOTH THE PARTIES. WE HAVE ALSO PERUSED THE RATIO OF THE JUD GEMENT RELIED UPON BY THE COUNSEL THE CONCLUSION PART OF BOTH THE DECISIONS A RE AS FOLLOWS:- SANTOSH NARAIN KAPOOR 115 TTJ (LUCKNOW) 402- CONCLUSION: THERE BEING NO MATERIAL WITH AO AT THE TIME WHEN INCO ME WAS VOLUNTARILY SURRENDERED BY ASSESSEE BY ASSESSEE TO ESTA BLISHED THAT SUCH INCOME WAS CONCEALED INCOME OF ASSESSEE OR IN RESPECT OF WHICH ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME PENALTY UNDER S. 271 (1)(C) COULD NOT BE IMPOSED. PREM CHAND GARG (DEL) (TM) 123 TTJ 433- CONCLUSION: VOLUNTARY OFFER OF INCOME IN ORDER TO BUY PEACE AND AVO ID LITIGATION BEFORE TAKING UP ASSESSMENT BY THE A.O DE HORS ANY MATERIAL WITH THE A.O CANNOT AMOUNT TO CONCEALMENT; ASSESSEE HAVI NG SURRENDERED THE AMOUNT OF NRI GIFT ON A GENERAL QUERY RAISED BY AO ON THE CONDITION OF NOT INITIATING PENALTY PROCEEDINGS BEFORE ASSESSMENT WAS TAKEN UP AO COULD NOT ITA NOS. 417/PN/09 A.Y. 2003-04 PAGE 4 OF 4 HAVE IMPOSED PENALTY UNDER S. 271(1)(C) WHEN THERE WA S NO MATERIAL WITH THE AO TO ARRIVE AT SATISFACTION ABOUT CONCEALMENT. 7. CONSIDERING THE FACT THAT ASSESSEE CAME FORWARD TO UNDO THE CLAIM MADE IN THE ORIGINAL RETURN BY FILING THE BELATED RETURN OF INCO ME THE OFFER OF THE IMPUGNED GAINS UNDER THE HEAD SHORT TERM CAPITAL GAIN WHICH IS HELD BY THIS BENCH OF THE TRIBUNAL AS PROPER WE ARE OF THE OPINION THAT THE AS SESSEES CASE IS COVERED BY THE ABOVE REFERRED DECISIONS OF THE TRIBUNAL OF BOTH LUCKNO W AND DELHI BENCHES. IN ANY CASE THIS IS THE CASE WHERE ASSESSEE CAME FORWARD TO UNDO THE CLAIM MADE IN THE ORIGINAL RETURN AND IN THIS DECISION OF THE TRIBUNAL W E FIND THERE IS AN ELEMENT OF VOLUNTARY ACT ON PART OF THE ASSESSEE THOUGH IT IS DONE BELATEDLY. IN ANY CASE THE DEPARTMENT HAS NOT BROUGHT OUT ANY INCRIMINATING MATERI AL TO DEMONSTRATE THE IMPUGNED PENNY STOCKS IN QUESTION WERE PURCHASED FOR CONVERTING THE UNACCOUNTED MONEY INTO ACCOUNTED MONEY. ACCORDINGLY WE ARE OF T HE OPINION THIS IS NOT FIT CASE FOR LEVY OF PENALTY. 8. ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 08 TH DECEMBER 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH DECEMBER 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ITO WARD 1(3) PUNE 3. CIT(A)-I PUNE 4. CIT-I PUNE 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE