Smt. Kusum Mittal, Indore v. The Assistant Commissioner of Income Tax 1(1), Indore

ITA 527/IND/2010 | misc
Pronouncement Date: 28-09-2011 | Result: Allowed

Appeal Details

RSA Number 52722714 RSA 2010
Assessee PAN ADZPJ6450D
Bench Indore
Appeal Number ITA 527/IND/2010
Duration Of Justice 1 year(s) 1 month(s) 25 day(s)
Appellant Smt. Kusum Mittal, Indore
Respondent The Assistant Commissioner of Income Tax 1(1), Indore
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 28-09-2011
Assessment Year misc
Appeal Filed On 03-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH J.M. AND SHRI R.C.SHARM A A.M. PAN NO. : ADZPJ6450D I.T.A.NO. 526/IND/2010 A.Y. : 2006-07 SHRI ABHISHEK JHAVERI ACIT 39/1 SOUTH TUKOGANJ VS 1(1) INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : ABZPM1784D I.T.A.NO. 527/IND/2010 A.Y. : 2006-07 SMT. KUSUM MITTAL ACIT 401 CHETAK CENTRE VS 1(1) R.N.T. MARG INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI C.P. RAWKA F. C. A. RESPONDENT BY : SHRI ARUN DEWAN SR. DR DATE OF HEARING : 27-09-2011 DATE OF PRONOUNCEMENT : 28-09-2011 -: 2: - 2 O R D E R PER R. C. SHARMA A.M. THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 07.06.2010 FOR THE ASSESSMENT YEAR 2006-07 IN THE MATTER OF IMPOSITION OF PENALTY U/S 271(1)(C ) OF THE INCOME-TAX ACT 1961. 2. THE ASSESSEES ARE INDIVIDUAL DERIVING INCOME FROM SALARY CAPITAL GAINS AND DIVIDEND INCOME ON SHARES /MUTUAL FUNDS. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE DECLARED INCOME FROM PROPERTY AND TRADING IN SHARES. SHORT T ERM CAPITAL GAIN ON TRADING IN SHARES WAS DECLARED AT R S. 12 86 564/-. ON GOING THROUGH THE DETAILS OF TRANSA CTIONS THE AO NOTED THAT PART OF THE TRANSACTIONS IN SHARES WE RE AFFECTED WITHIN A SHORT PERIOD I.E. EVEN WITHIN 48 HOUSE. T HE AO THEREFORE NOTED THAT THE TRANSACTIONS WERE OF BUSI NESS NATURE. THE SUBMISSIONS MADE BY THE ASSESSEE DURING ASSESSM ENT PROCEEDINGS WERE NOT FOUND TENABLE BY THE AO. THE A O FINALLY HELD THAT THE INCOME EARNED FROM THE SALES MADE WIT HIN TWO DAYS OF THE PURCHASE OF SHARES WITHOUT PHYSICAL DEL IVERY OF THE -: 3: - 3 SHARE IS TO BE ASSESSED AS INCOME FROM BUSINESS INS TEAD FROM SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AN D ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT. BY THE IMP UGNED ORDER THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO AGAIN ST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND CONSIDERED RIVAL CONTENTIONS OF THE LD. A UTHORIZED REPRESENTATIVE AND LD. SENIOR D.R.. FROM THE RECORD WE FOUND THAT THE AO HAS ACCEPTED THE INCOME DECLARED BY THE ASSESSEE. HOWEVER NATURE OF INCOME SO OFFERED AS SHORT TERM CAPITAL GAIN WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE CHANGED THE HEAD OF INCOME TO BUSINESS INCOME. UNDE R THE PROVISIONS OF SECTION 271(1)(C) THE PREREQUISITE C ONDITION FOR INITIATION OF PENALTY IS THAT THERE SHOULD CONCEALM ENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. HOWEVER BOTH THE CONDITIONS ARE ABSENT IN THIS CAS E SINCE WHATEVER INCOME WAS DECLARED WAS ACCEPTED AND ASSES SEE DECLARED FULL DETAILS OF SHORT TERM CAPITAL GAINS I N SHARES WITH EACH SCRIPT PERIOD OF HOLDING ETC. THE TRANSACTION S WERE THROUGH ELECTRONICS SYSTEM AND ASSESSEE IS ALSO HAV ING A -: 4: - 4 DEMAT ACCOUNT WITH MARGIN PENAL. THE CONTENTION OF THE ASSESSEE WAS THAT SHARES WERE PURCHASED AS AN INVES TMENT AND ALSO ACCOUNTED FOR IN THE BOOKS AS INVESTMENT BUT THE SAME WERE TREATED AS STOCK IN TRADE BY THE ASSESSIN G OFFICER AND THEREFORE THE GAINS OVER SAME WAS TAXED UNDER THE HEAD OF BUSINESS INCOME. THIS IS NOT A CASE OF CONCEALME NT OF INCOME IT IS MERELY MATTER OF OPINION WHICH CANNOT CONSTITUTE BASIS FOR HOLDING THAT THE ASSESSEE HAS CONCEALED A NY INCOME. THE ISSUE WITH REGARD TO LEVY OF PENALTY ON ACCOUNT OF DISALLOWANCE OF CLAIM IS SQUARELY COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS 322 ITR 158 (S.C.) WHEREIN FOLLOWING WAS THE PRECI SE OBSERVATIONS :- BY ANY STRETCH OF IMAGINATION MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. ACCORDINGLY IT WAS HELD THAT DECLINE OF ASSESSEES CLAIM OF INTEREST AGAINST THE LOAN UTILIZED FOR MAKING INVESTMENT IN TAX FREE SECURITIES WILL NOT AMOUNT TO FURNISHING OF INACCU RATE PARTICULARS SO AS TO ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. HON'BLE SUPREME COURT IN THIS CASE AFTER CONSIDERING THE PROPOSITION OF LAW LAID DOWN IN THE -: 5: - 5 CASE OF DILIP N.SHROFF 291 ITR 519 (SC) AND DHARMENDER TEXTILE PROCESSORS 306 ITR 277 (SC) HELD AS UNDER:- A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 3. RECENTLY HON'BLE DELHI HIGH COURT IN THE CASE OF ARETIC INVESTMENT PVT.LTD. VIDE ORDER DATED 18.2.2010 IN ITA 264/2009 OBSERVED THAT WHERE THE -: 6: - 6 LOSS CLAIMED BY THE ASSESSEE ON ACCOUNT OF TRADING IN SHARES WAS NOT ACCEPTED BY THE AO AND WAS TREATED AS A SPECULATION LOSS IN TERMS OF EXPLANATION TO SECTION 73 OF THE ACT DID NOT AUTOMATICALLY RESULT IN THE INFERENCE OF CONCEALMENT OF INCOME JUSTIFYING IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. SIMILARLY IN THE CASE OF AURIC INVESTMENT & SECURI TIES LTD. 163 TAXMAN 533 IT WAS OBSERVED BY THE HON'BLE DELHI HIGH COURT THAT WHERE ASSESSEE HAS DECLARED HIS INCOME FROM BROKERAGE AND OTHER INCOME AGAINST WHICH IT HAD CLAIMED SHARE TRADING LOSS TH E AO FOUND THAT LOSS WAS SPECULATIVE IN NATURE AND COULD NOT BE ADJUSTED AGAINST ASSESSEES NORMAL INCOME ACCORDINGLY THE AO HELD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF MAKING A WRONG CLAIM OF SHARE TRADING LOS S AGAINST THE NORMAL INCOME AND IMPOSED PENALTY U/S 271(1)(C) OF THE ACT. THE HONBLE HIGH COURT HELD THAT MERE TREATMENT OF BUSINESS LOSS AS A SPECULATION LO SS BY THE AO DID NOT AUTOMATICALLY WARRANT INFERENCE O F CONCEALMENT OF INCOME ACCORDINGLY PENALTY WAS NOT LEVIABLE. 4. RECENTLY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. THE SHAHABAD COOP.SUGAR MILLS LIMITED (SUPRA) OBSERVED THAT WHERE THE -: 7: - 7 ASSESSEE IS FOUND TO HAVE MADE WRONG CLAIM U/S 80P AND WRONG CLAIM OF DEPRECIATION ON GUEST HOUSE MAKING A WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION IT WILL NOT CA LL FOR LEVY OF PENALTY U/S 271(1)(C). ACCORDINGLY ORDER OF THE ITAT CHANDIGARH BENCH DELETING PENALTY IMPOSED U/S 271(1)(C) WAS UPHELD BY THE HONBLE COURT. 5. HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. S.P.K.STEELS PVT.LTD. - 270 ITR 156 UPHE LD THE ORDER OF THE TRIBUNAL DELETING THE PENALTY U/S 271(1)(C) BY OBSERVING THAT ASSESSEE BEING ENGAGED IN THE BUSINESS OF COMMISSION AGENCY EXPLANATION T O SECTION 73 WAS APPLICABLE AND THUS LOSS ON ACCOUNT OF TRADING IN SHARES WAS DISALLOWED IT WAS HELD TH AT FOR SUCH DISALLOWANCE PENALTY U/S 271(1)(C) IS NOT LEVIABLE AS THE ASSESSEE HAS FILED PRELIMINARY DETA ILS ALONGWITH THE RETURN. 5. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERIT IN T HE ACTION OF THE LOWER AUTHORITIES FOR IMPOSITION OF P ENALTY U/S 271(1)(C) OF THE ACT. 6. FACTS IN I.T.A.NO. 527/IND/2010 ARE PARI MATERIA WHERE ALSO ASSESSEE WAS HAVING INCOME FORM SALARY PROPERTY -: 8: - 8 SHARE OF PROFIT FROM FIRM CAPITAL GAINS FROM SHARE S/MUTUAL FUNDS AND DIVIDEND INCOME. 7. IN VIEW OF THE DISCUSSION HELD HEREINABOVE WE DO N OT FIND ANY JUSTIFICATION FOR IMPOSITION OF PENALTY U/ S 271(1)(C) OF THE ACT FOR TREATING THE CAPITAL GAIN AS BUSINESS I NCOME. 8. IN THE RESULT BOTH THE APPEALS OF ASSESSEES ARE ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH SEPTEMBER 2011. CPU* 2829