POLAR FINANCE LTD, MUMBAI v. ITO WD 1(2)(4), MUMBAI

ITA 7366/MUM/2010 | 2002-2003
Pronouncement Date: 03-10-2013 | Result: Allowed

Appeal Details

RSA Number 736619914 RSA 2010
Assessee PAN AAACP6120B
Bench Mumbai
Appeal Number ITA 7366/MUM/2010
Duration Of Justice 2 year(s) 11 month(s) 6 day(s)
Appellant POLAR FINANCE LTD, MUMBAI
Respondent ITO WD 1(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 03-10-2013
Date Of Final Hearing 03-10-2013
Next Hearing Date 03-10-2013
Assessment Year 2002-2003
Appeal Filed On 28-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI BEFORE SRI H.L. KARWA PRESIDENT AND SHRI N.K.BILL AIYA AM ./ I.T.A. NO. 7366/MUM/2010 ( / ASSESSMENT YEAR: 2002-03) M/S POLAR FINANCE LTD. 6 STADIUM HOUSE 81/83 VEER NARIMAN ROAD CHURCHGATE MUMBAI-400020 / VS. ITO WD-1(2)(4) AAYAKAR BHAVAN MUMBAI-400020 !' $ ./ PAN :AAACP6120B ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( ) / APPELLANT BY : SHRI NISHIT GANDHI &''% ( ) / RESPONDENT BY : SHRI SANJEEV JAIN ( *$ / DATE OF HEARING : 03/10/2013 + ( *$ / DATE OF PRONOUNCEMENT : 03/10/2013 -. / O R D E R PER N.K. BILLAIYA AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-2 MUMBAI DATED 11/08/2010 PERTAINING TO A. Y.2002-03. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE CIT(A) ERRED IN UPHOLDING THE LEVY OF PENALTY OF RS .2 48 705/- U/S. 271(1)(C) OF THE ACT. 3. IN THIS CASE THE RETURN OF INCOME WAS FILED ON 30/10/2002 DECLARING TOTAL LOSS AT RS.47 404/-. THE RETURN WAS PROCESSE D U/S 143(1) OF THE ACT. SUBSEQUENTLY IT CAME TO THE NOTICE OF THE AO THAT THE ASSESSEE HAS SHOWN SALE OF BONUS SHARES OF HOTEL RUGBY LTD. FOR RS.18 48 000/-. THE AO 2 ITA NO.7366/MUM/2010 POLAR FINANCE LTD.. FURTHER OBSERVED THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS AFTER INDEXATION; THE AO WAS OF THE FIRM BELIEF THAT COST OF ACQUISITION OF BONUS SHARES IS TO BE TAKEN AS ZERO THEREFORE THE ENTIR E SALE PROCEEDS SHOULD HAVE BEEN TAXED AS CAPITAL GAINS. ACCORDINGLY NOT ICE U/S.148 OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSE SSEE FILED A REVISED COMPUTATION OF INCOME ADMITTING ITS MISTAKE OF TAKI NG THE VALUE OF BONUS SHARES AS PER THE BALANCE-SHEET . IN ITS REVISED CO MPUTATION OF INCOME THE ASSESSEE SHOWED COST OF BONUS SHARES AS NIL AN D LONG TERM CAPITAL GAIN WAS COMPUTED AS AT RS.6 96 649/- WHICH WAS SET OFF TO THAT EXTENT AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS AND THE TOTAL INCOME WAS RETURNED AT A LOSS OF RS.47 404/- ASSESSMENT U/S 14 3(3) R.W.S. 147 OF THE ACT WAS ALSO COMPLETED AT THIS FIGURE. 4. HOWEVER THE AO INITIATED PENALTY PROCEEDINGS FO R FILING INACCURATE PARTICULARS OF INCOME . DURING THE PANEL PROCEEDING S ASSESSEE ONCE AGAIN SUBMITTED THAT IT HAS SOLD 6 16 000/- SHARES OF M/S HOTEL RUGBY LTD. AT THE RATE OF RS.3/-. THE TOTAL CONSIDERATIO N WAS 18 48 000/- IT WAS EXPLAINED THAT THE VALUE OF THIS SHARES APPEARED IN THE BALANCE-SHEET AT RS.1 54 00 000/-. IT WAS EXPLAINED THAT WHILE COMP UTING THE LONG TERM CAPITAL GAIN/LOSS INADVERTENTLY THE ASSESSEE TOOK THE COST FOR BONUS SHARES AS PER THE BOOK VALUE SHOWN IN THE BALANCE-S HEET INSTEAD OF SHOWING THE COST AS NIL. IT WAS CLAIMED THAT THE A SSESSEE HAD NO MALA FIDE INTENTION TO CONCEAL THE FACTS OR FILE INACCURATE P ARTICULARS AS THERE WAS SUBSTANTIAL BROUGHT FORWARDED LOSSES AND ASSESSEE W OULD NOT HAVE BENEFITED BY THE ALLEGED FILING OF INACCURATE PARTI CULARS. THE SUBMISSIONS MADE BY THE ASSESSEE WERE DISCARDED BY THE AO WHO W ENT ON LEVY OF PENALTY TO RS.2 48 705/-. 5. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) BU T WITHOUT ANY SUCCESS. 3 ITA NO.7366/MUM/2010 POLAR FINANCE LTD.. 6. BEFORE US THE COUNSEL FOR THE ASSESSEE REITERAT ED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. PER CONTRA THE LD. DR STRONGLY RELIED UPON THE FINDINGS OF THE CIT(A). 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LO WER AUTHORITIES AND THE MATERIAL EVIDENCE BROUGHT ON RECORD. IT IS AN UNDI SPUTED FACT THAT THE REVISED COMPUTATION OF INCOME HAS BEEN ACCEPTED BY THE AO WHILE COMPLETING THE ASSESSMENT PROCEEDINGS U/S 143(3) R. W.S. 147 OF THE ACT. IT IS ALSO AN UNDISPUTED FACT THAT ASSESSEE HAD SUB STANTIALL BROUGHT FORWARD UNABSORBED LONG TERM CAPITAL LOSSES. NO DO UBT THE ASSESSEE SHOULD HAVE TAKEN THE COST OF BONUS SHARES AS ZERO WHILE COMPUTING THE CAPITAL GAINS. HOWEVER THE FACTS ON RECORD SHOW T HAT THIS COULD HAVE BEEN AN INADVERTENT MISTAKE BECAUSE THE ASSESSEE CO ULD NOT HAVE BEEN BENEFITED BY CLAIMING LOSS INSTEAD OF SHOWING CAPIT AL GAINS FROM THE SALE OF BONUS SHARES BECAUSE IN THE REVISED COMPUTATION OF INCOME WHERE THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS FROM THE SALE OF BONUS SHARES THE SAID GAINS HAVE BEEN SET OFF AGAINST BROUGHT FO RWARDED LOSS. THE FACTS ON RECORD ALSO SHOW THAT EVEN AFTER THIS SET OFF TH ERE WERE SUBSTANTIAL LOSS WHICH WERE CARRIED FORWARD. THESE FACTS ON RECORD S HOW THAT THE MISTAKE OF THE ASSESSEE WAS A BONA FIDE MISTAKE AND THERE IS NO LOSS TO THE REVENUE WHATSOEVER . CONSIDERING ALL THESE FACTS IN TOTALITY IN OUR VIEW NO PENALTY IS LEVIABLE. WE ACCORDINGLY DIRECT THE AO TO DELETE THE PENALTY OF RS.2 48 705/- LEVIED U/S 271(1)(C) OF THE ACT. THE DR RELIED UPON THE DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF ZOOM COMMUNICATION 327 ITR 510 AND THE ASSESSEE HAS RELIED UPON TWO DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT O F BOMBAY . SINCE WE HAVE DELETED THE PENALTY ON THE PECULIAR FACTS OF T HE CASE THERE WAS NO NECESSITY TO DISCUSS THESE JUDICIAL DECISIONS. 4 ITA NO.7366/MUM/2010 POLAR FINANCE LTD.. 8. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/10/2013 -. ( + $ /- 03/10/2013 ( 0 SD/- (H.L.KARWA) SD/- (N.K.BILLAIYA) HONBLE PRESIDEN T ACCOUNTANT MEMBER MUMBAI; /- /DATED : 3 RD OCTOBER 2013. SHEKHAR. P.S. -. -. -. -. ( (( ( &*12 &*12 &*12 &*12 32 * 32 * 32 * 32 * / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 4 ( ) / THE CIT- MUMBAI. 4. 4 / CIT(A)- MUMBAI 5. 250 &* / DR ITAT MUMBAI 6. 06 7 / GUARD FILE. -. -. -. -. / BY ORDER '2* &* //TRUE COPY// 8 88 8 / 9 9 9 9 : : : : (DY./ASSTT. REGISTRAR) / ITAT MUMBAI