NIRAV SHIRISH MODY, MUMBAI v. ACIT CEN CIR-8, MUMBAI

ITA 5239/MUM/2009 | 2004-2005
Pronouncement Date: 09-07-2010 | Result: Allowed

Appeal Details

RSA Number 523919914 RSA 2009
Bench Mumbai
Appeal Number ITA 5239/MUM/2009
Duration Of Justice 9 month(s) 25 day(s)
Appellant NIRAV SHIRISH MODY, MUMBAI
Respondent ACIT CEN CIR-8, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 09-07-2010
Date Of Final Hearing 06-07-2010
Next Hearing Date 06-07-2010
Assessment Year 2004-2005
Appeal Filed On 14-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI N.V.VASUDEVAN JM ITA NOS.5253 5254 & 5255/MUM/09 : ASST.YEARS 2005 -06 2006-07 & 2007-08 M/S.UNIQUE PHARMACEUTICALS LAB. LTD. 83 B & C SHETH GOVINDRAO SMRUTI DR.ANNIE BESANT ROAD WORLI MUMBAI 400 018. PA NO.AAACH0744J. VS. THE ASSTT.COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 8 MUMBAI. (APPELLANT) (RESPONDENT) ITA NOS.5251 & 5252/MUM/2009 : ASST.YEARS 2002-200 3 & 2004-2005 SMT.ANSUYA JYOTINDRA MODY 7 AVILLION LITTLE GIBBS ROAD MUMBAI 400 006. PA NO.AAGPM6879D. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 8 MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.5239/MUM/2009 : ASST.YEAR 2004-2005 SHRI NIRAV SHIRISH MODY 83 B & C SHETH GOVINDRAO SMRUTI DR.ANNIE BESANT ROAD WORLI MUMBAI 400 018. PA NO.AELPM9316E. VS. THE ASSTT.COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 8 MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.5241/MUM/2009 : ASST.YEAR 2004-2005 SHRI PRANABH DINESH MODY 83 B & C SHETH GOVINDRAO SMRUTI DR.ANNIE BESANT ROAD WORLI MUMBAI 400 018. PA NO.AACPM9192P. VS. THE ASSTT.COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 8 MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.5250/MUM/2009 : ASST.YEAR 2002-2003 SMT.SEJAL PRANABH MODY 83 B & C SHETH GOVINDRAO SMRUTI DR.ANNIE BESANT ROAD WORLI MUMBAI 400 018. PA NO.AELPM9318L. VS. THE ASSTT.COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 8 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.R.RAIYANI RESPONDENT BY : SHRI R.M.TIWARI O R D E R PER BENCH : THIS BATCH OF EIGHT APPEALS RELATING TO FIVE DIFFE RENT BUT CONNECTED ASSESSEES IS DIRECTED AGAINST THE ORDERS PASSED BY THE COMMIS SIONER OF INCOME-TAX (APPEALS) UPHOLDING THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT IN RELATION TO THE ITA NO.5253/MUM/2009 & ORS. M/S.UNIQUE PHARMACEUTICALS LAB. LTD. & ORS. 2 ASSESSMENT YEARS RELATING TO ASSESSMENT YEARS 2002- 2003 2004-2005 2005-2006 2006-2007 AND 2007-2008. SINCE ALL THESE APPEALS AR E BASED ON IDENTICAL FACTS AND COMMON GROUNDS OF APPEAL WE ARE THEREFORE PROCE EDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2. WE ARE TAKING UP THE CASE OF SMT.ANSUYA JYOTINDR A MODY FOR ASSESSMENT YEAR 2002-2003. A SEARCH ACTION WAS TAKEN U/S.132(1 ) OF THE ACT IN THE CASE OF M/S.J.B. CHEMICALS AND PHARMACEUTICALS LIMITED ITS GROUP CONCERNS DIRECTORS AND RELATIVES OF DIRECTORS AND SOME KEY EMPLOYEES ON 10 .1.2007. THE ASSESSEE IS PART OF THIS GROUP AND HENCE WAS COVERED IN THE SEARCH A CTION. A NOTICE U/S.153A WAS ISSUED REQUIRING THE ASSESSEE TO FILE RETURN. IN RE SPONSE TO THAT SHE FILED RETURN DECLARING TOTAL INCOME OF RS.7 93 710 BEING THE S AME FIGURE AT WHICH THE RETURN WAS ORIGINALLY FILED ON 24.10.2002. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE PROVISIONS OF SECTION 94(7) WERE ATTRACTED IN RESPECT OF SHORT TERM CAPITAL LOSS OF RS.2 48 52 7 ARISING FROM UNITS OF PRUDENTIAL ICICI INCOME. DIVIDEND IN THIS CASE WAS RS.2 25 934 . INVOKING THE PROVISIONS OF SECTION 94(7) THE ASSESSING OFFICER REDUCED THE AM OUNT OF SHORT CAPITAL LOSS TO THE EXTENT OF DIVIDEND RECEIVED WHICH RESULTED INTO I NCREASE IN TOTAL INCOME BY RS.2 25 934. 3. PENALTY PROCEEDINGS WERE INITIATED U/S.2 71(1)(C) AGAINST THIS DISALLOWANCE OF LOSS AS PER THE PROVISIONS OF SECTION 94(7). TH E ASSESSEE CLAIMED THAT THE MISTAKE WAS UNINTENTIONAL AND OUT OF IGNORANCE OF L AW. HE RELIED ON CERTAIN JUDGEMENTS WHICH DID NOT FIND FAVOUR WITH THE ASS ESSING OFFICER WHO CAME TO THE CONCLUSION THAT PENALTY U/S.271(1)(C) WAS EXIGI BLE. RESULTANTLY A PENALTY OF RS.69 135 WAS IMPOSED U/S 271(1) AT THE MINIMUM RA TE OF 100% OF TAX EVADED. THE ASSESSEE FAILED TO CONVINCE THE LEARNED CIT(A) TO FALL IN LINE WITH HER ARGUMENTS. CONSEQUENTLY THE PENALTY ORDER WAS UPHEL D. ITA NO.5253/MUM/2009 & ORS. M/S.UNIQUE PHARMACEUTICALS LAB. LTD. & ORS. 3 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. PENALTY HAS BEEN IMPOSED AND CONFIRMED ONLY WITH REFERENCE TO DISALLOWANCE MADE UNDER SECTION 94(7) OF THE ACT WHICH HAS BEEN INSERTED BY THE FINANCE ACT 2001 WITH EFFECT FROM 1.4.2002. ACCORD ING TO THIS SECTION WHERE ANY PERSON BUYS OR ACQUIRES ANY SECURITIES OR UNIT WITH IN A PERIOD OF THREE MONTHS PRIOR TO THE RECORD DATE AND SUCH PERSON SELLS OR TRANSFE RS SUCH SECURITIES WITHIN A PERIOD OF THREE MONTHS AFTER SUCH DATE OR SUCH UNIT WITHIN A PERIOD OF NINE MONTHS AFTER SUCH DATE AND FURTHER THE DIVIDEND OR INCOME ON SU CH SECURITIES OR UNIT RECEIVED OR RECEIVABLE BY SUCH PERSON IS EXEMPT THEN THE LOSS IF ANY ARISING TO HIM ON ACCOUNT OF SUCH PURCHASE AND SALE OF SECURITIES OR UNIT TO THE EXTENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF DIVIDEND OR INCOME RECEIVED OR RECEIVABLE ON SUCH SECURITIES OR UNIT SHALL BE IGNORED FOR THE PURPOSES OF COMPU TING HIS INCOME CHARGEABLE TO TAX. PRIOR TO THIS INSERTION ANY EXEMPT INCOME AR ISING FROM THE SUCH UNITS OR SECURITIES HAS BEEN HELD TO BE NOT ADJUSTABLE AGAIN ST LOSS FROM SALE OF UNITS AND SECURITIES AS PER THE JUDGEMENT OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS. WALLFORT SHARE & STOCK BROKERS LTD. [(2009) 310 ITR 421 (BOM.)]. 5. IT IS AN UNDISPUTED FACT THAT THE ADDIT ION SO MADE U/S.143(3) WAS NOT CHALLENGED BY THE ASSESSEE BEFORE THE APPELLATE AUT HORITIES. WE DO NOT FIND ANY FORCE IN THE SUBMISSION OF THE LD. DR THAT PENALTY SHOULD BE UPHELD AS THE ASSESSEE DID NOT CONSIDER IT APPROPRIATE TO FILE APPEAL AGAI NST THE ADDITION IN QUANTUM. THERE IS NO DEARTH OF JUDGEMENTS TO THE EFFECT THAT THE C ONFIRMATION OF ADDITION IN QUANTUM PROCEEDINGS OR NON-FILING OF THE APPEAL AGA INST ORDER U/S.143(3) DOES NOT AUTOMATICALLY LEAD TO IMPOSITION OF PENALTY U/S.271 (1)(C). BOTH THESE PROCEEDINGS ARE DISTINCT AND SEPARATE FROM EACH OTHER. DESPITE THE FACT THAT AN ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL OR THE ASSESSEE DID NOT A GITATE THE ADDITION BEFORE THE APPELLATE FORUMS THERE ARE NO FETTERS ON THE POWER S OF THE ASSESSEE TO CONTEST THAT ITA NO.5253/MUM/2009 & ORS. M/S.UNIQUE PHARMACEUTICALS LAB. LTD. & ORS. 4 NO PENALTY BE IMPOSED DUE TO LACK OF THE NECESSARY INGREDIENTS OF SECTION 271(1)(C). 6. HERE IS A CASE IN WHICH THE ASSESSEE FILED RE TURN VOLUNTARILY DECLARING ALL NECESSARY PARTICULARS QUA THESE TRANSACTIONS CLAIMING THE SHORT TERM CAPITAL LOSS OF RS.2.48 LAKHS WITHOUT REDUCING IT WITH THE AMOUNT O F DIVIDEND INCOME AT RS.2.25 LAKHS. THE CASE OF THE ASSESSEE IS THAT THE SECURIT IES IN QUESTION WERE SOLD JUST ONE DAY AFTER THE PERIOD OF THREE MONTHS FROM THE RECOR D DATE. WE FIND THAT THE ASSESSEE MADE COMPLETE DISCLOSURE OF THE TRANSACTIONS AND MA DE A CLAIM WHICH WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. NOW THE QUESTION ARISES WHETHER IN THESE CIRCUMSTANCES PENALTY U/S.271(1)(C) WILL BE I MPOSED. RECENTLY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [(2010) 32 2 ITR 158 (SC)] HAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WOULD NOT ATTRACT PENALTY U/S.271(1 )(C). THE HONBLE SUPREME COURT IN THIS JUDGEMENT ALSO CONSIDERED THE EARLIER JUDGE MENTS IN UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS [(2008) 306 ITR 277 ( SC)] AND UNION OF INDIA VS. RAJASTHAN SPG. & WVG. MILLS [(2010) 1 GSTR 66 (SC)] . FROM HERE IT FOLLOWS THAT WHEN THE ASSESSEE FURNISHES ALL THE PARTICULARS IN HIS RETURN WHICH HAVE NOT FOUND TO BE INACCURATE NO PENALTY CAN BE IMPOSED U/S.271(1) (C) NOTWITHSTANDING THE FACT THAT THE CLAIM MADE IN THE RETURN IS NOT ACCEPTED BY THE AO. THE FACTS PREVAILING BEFORE US ARE COVERED BY THE RATIO OF RELIANCE PETROPRODUCTS PVT. LTD.(SUPRA) INASMUCH AS THE ASSESSEE HEREIN ALSO FURNISHED ALL THE PARTICULARS IN RETURN AND MADE A CLAIM ON THE FACE OF IT WHICH WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. MERE REJECTION OF CLAIM WHEN SEEN IN CONJU NCTION WITH THE FACT THAT THERE WAS COMPLETE DISCLOSURE OF ALL NECESSARY PARTICULAR S COUPLED WITH THE HONEST OPINION THAT THE AMOUNT OF DIVIDEND IS NOT DEDUCTIB LE FROM THE SHORT TERM CAPITAL LOSS CANNOT IN OUR CONSIDERED OPINION CALL FOR THE IMPOSITION OF PENALTY UNDER THIS SECTION. WE THEREFORE ORDER FOR THE DELETION OF P ENALTY U/S 271(1). ITA NO.5253/MUM/2009 & ORS. M/S.UNIQUE PHARMACEUTICALS LAB. LTD. & ORS. 5 7. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS A ND CIRCUMSTANCES OF OTHER APPEALS ARE MUTATIS MUTANDIS SIMILAR TO THOSE CONSIDERED HEREINABOVE. FOLLOWING THE VIEW TAKEN IN THE AFORE DISCUSSED CASE WE ORD ER FOR THE DELETION OF PENALTY IN OTHER CASES. 8. IN THE RESULT ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED ON THIS 9 TH DAY OF JULY 2010. SD/- SD/- (N.V.VASUDEVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 9 TH JULY 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 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.