SHRI RAJENDRA KUMAR TONGIA ,BHILWARA vs. ITO, WARD-3, BHILWARA

आदेश / O R D E R

Manoj Kumar Aggarwal (Accountant Member): - 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2014-15 contest the order of Ld. Commissioner of Income-Tax-(Appeals), Ajmer, [in short referred to as ‘CIT(A)’],

2 ITA No.485/Jodh/2018 Shri Rajendra Kumar Tongia Assessment Year: 2014-15 Appeal No.26/2017-2018 dated 17/09/2018 in confirming penalty u/s 271B for Rs.74,022/-. 2.1 Facts leading to the same are that an assessment was framed for the year under consideration u/s. 143(3) on 21/12/2016. The assessee filed its return of income at Rs.5.48 Lacs which consisted of salary income of Rs.3.19 Lacs whereas the balance was interest income from fixed deposits. During assessment proceedings, it transpired that the assessee sold shares on delivery basis for Rs.148.04 Lacs whereas sale of shares otherwise than by actual delivery was Rs.598.10 Lacs. Keeping in view the said turnover, Ld. AO opined that the assessee was obligated to maintain books of accounts and get them audited as per the provisions of Sec.44AB of the Act. 2.2 In defense, the assessee submitted that it being a salaried bank employee invested surplus funds in shares and securities as investment and not as business. The investment was not to carry out any business but only in the nature of capital investment. It incurred net loss of Rs.0.74 Lacs on non-delivery based transactions whereas the short-term capital loss on delivery based transactions was Rs.2.37 Lacs. Since the same could not be set-off from salaried income, the loss was not claimed in the return of income. Therefore, capital investment was not in the nature of business but assessable under the head capital gains. 2.3 However, disregarding the same, Ld AO maintained that the assessee was obligated to maintain books of accounts and get them audited u/s 44AB of the Act. The failure to do so would attract

3 ITA No.485/Jodh/2018 Shri Rajendra Kumar Tongia Assessment Year: 2014-15 penalty u/s 271B. Accordingly, penalty proceedings were initiated against the assessee. 2.4 During penalty proceedings, the assessee reiterated that investment were capital investment and not in the nature of business. However, not convinced Ld. AO levied a penalty of Rs.1.50 Lacs u/s 271B vide penalty order dated 29/03/2017. 3. Aggrieved, the assessee assailed the penalty, however with partial success, before Ld.CIT(A) vide impugned order dated 17/09/2018 wherein Ld. CIT(A) restricted the penalty to Rs.74,022/-, being 0.5% of sale turnover of Rs.148.04 Lacs on delivery based transactions. Still Aggrieved, the assessee is in further appeal before us. 4. Upon careful consideration, we find that the assessee was employed with a Bank and his primary source of income was salary income. The surplus funds were invested in shares & securities with a view to earn gains. There is nothing on record which would suggest that borrowed funds were used to carry out the transactions in a business-like manner. The assessee, all along, has maintained that the investments were capital investment and the gains / losses arising there-from were assessable under the head capital gains. In such a case, there would be a bona fide belief for the assessee to not to maintain books of accounts and get them audited under law since the said requirement would arise only in case the share transactions was the business of the assessee. From the assessment order, it is quire discernible that Ld. AO has not computed any income / losses under the Business Head and

4 ITA No.485/Jodh/2018 Shri Rajendra Kumar Tongia Assessment Year: 2014-15 accepted the position maintained by the assessee. Therefore, on the facts and circumstances, there would be no justification for levy of impugned penalty against the assessee. Therefore, we are inclined to delete the same. We order so. 5. The appeal stands allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.

Sd/- Sd/- (Sandeep Gosain) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member

मुंबई Mumbai; िदनांकDated : 21/12/2020 Sr.PS:-Jaisy Varghese आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.

आदेशानुसार/ BY ORDER,

उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, जोधपुर / ITAT, Jodhpur.