Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: Shri Joginder Singh & Shri G Manjunatha
Date of hearing 05 -02-2018 Date of pronouncement -02-2018 O R D E R
Per G Manjunatha, AM :
This appeal filed by the assessee is directed against the order of CIT(A)-1, Mumbai dated 29-07-2013 and it pertains to AY 2006-07. The assessee has raised the following grounds of appeal:-
“1 The Learned Commissioner of Income tax (Appeals) - I, Mumbai ["Ld. CIT (A)"] erred in confirming the Assessing Officer's action to levy the penalty u/s.271(1)(c) amounting to Rs. 19,47,2407- on the point/ground where the profit on sale of shares has been treated as Business Income as against the appellant's claim of treating the same as Short Term Capital Gain.” The brief facts of the case are that the assessee company filed its 2. return of income for the assessment year 2006-07 on 30-03-2007 declaring total income of Rs.87,12,380. The assessment was completed
143(3) on 23-12-2008 determining total income at Rs.92,98,080 by making certain disallowances and also treating income offered under the head ‘Short term capital gain’ from sale of shares under the head ‘Income from business or profession’. Thereafter, the AO initiated penalty u/s 271(1)(c) for furnishing inaccurate particulars of income.
After considering relevant submissions of the assessee and also by relying on certain judicial precedents including the decision of Hon’ble Supreme Court in the case of Karam Chand Thappar & Bros Pvt Ltd CIT (1971) 83 ITR 899 (SC) observed that the assessee has furnished inaccurate particulars of income in respect of sale and purchase of shares and hence levied u/s 271(1)(c) of the Income-tax Act, 1961 of Rs.19,47,240.
Aggrieved by the penalty order, assessee preferred appeal before CIT(A). Before CIT(A), assessee filed elaborate written submissions and also relied upon certain judicial precedents. The CIT(A), after considering relevant submissions of the assessee observed that the assessee has failed to file any evidence to negate the observations made by the AO with regard to the declaration of income from purchase and sale of shares under the head ‘Short term capital gain’; therefore, he opined that the assessee has furnished inaccurate particulars of income so as to suppress the tax payable which attracts penal provisions u/s 271(1)(c) of the Act. With these observations, upheld penalty levied by AO. 4. None appeared on behal of the assessee. We have heard the Ld.DR and perused the material available on record. The AO levied penalty u/s 271(1)(c) in respect of income offered by the assessee from purchase and sale of shares under the head ‘short term capital gain’ by holding that the nature of transactions carried out by the assessee are in the nature of adventure in the nature of trade and commerce and resultant gain is assessable under the head ‘Income from business or profession’ whereas the assessee has intentionally declared income under the head ‘short term capital gain’ thereby furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Act.
It was the contention of the assessee before the lower authorities that it is in the business of investment in shares and debentures from the fund raised from shares but not in the business of purchase and sale of shares so as to treat surplus under the head ‘Income from business’.
The CIT(A), after considering relevant submissions of the assessee gave a categorical finding that the assessee intentionally and consciously misrepresented the nature of income and concealed the particulars of income so as to suppress the tax payable. Therefore, he opined that the assessee has willfully furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Act. The relevant portion of the order of CIT(A) is extracted below:-
“4.7 I have carefully considered the facts of the case, assessment order, penalty order u/s.271(l)(c) and submissions of the appellant. The facts of the. case show that the appellant has carried out sale purchase of shares on regular basis during the year, in large quantities and there is no alleged stock left which could be in the nature of investment holding. The shares sold and purchased during the year are also held for very short period and there is no aspect indicating the investment element in terms of law and fact. It is further seen that in this particular year the appellant has carried on business in all together different way in dealing with IPO shares "through the medium of thousands of fictitious / benami IPO applicants with each of the applications bgeing of small value i.e. below Rs.50,000/- so as to be eligible for allotment under the retails investment category/' The A.O. has detailed this aspect of business in his order, part of which has been reproduced above. There is no explanation forwarded by appellant before me so as to unprove the findings given by the A.O, in the relevant assessment order and penalty order under appeal before me. It emerges from the submissions and the records of therefore me that the activities of the appellant during the year are completely in the nature of trading in shares and the A.O, has rightly pointed such facts in detail as discussed above. 4.8 The levy of penalty u/s.271(l)(c) as also noted by A.O. and reproduced above is based on material facts and evidence. From the facts and circumstances of the case, it is clear that there has been an intentional and conscious effort on the part of the appellant to wrongly record, mis- represent the nature of income and conceal the particulars and the income both in the nature of investment transactions/income rather than trading in shares which is the actual position/fact. The A.O. has levied a penalty at 100% which is the minimum prescribed as per law in this behalf. In view of above discussion and for the reasons therein, the penalty levied by the A.O. is confirmed as per law and facts. Accordingly, ground Nos.1 of appeal is dismissed.”
Facts remain unchanged. The assessee did not appear before us to controvert the findings of facts recorded by the Ld.CIT(A). Therefore, we are of the considered view that the CIT(A) was right in confirming the penalty levied by the AO U/S 271(1)(c) of the Act in respect of treatment of income from purchase and sale of shares. We do not find any error in the order of CIT(A). Hence, we are inclined to uphold the findings of the CIT(A) and dismiss the appeal filed by the assessee.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 05th February, 2018.