ITO 23(3)(1), NAVI MUMBAI vs. ANJANA SINHA, NAVI MUMBAI

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ITA 4351/MUM/2014Status: DisposedITAT Mumbai04 February 2016AY 2007-085 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the transactions were duly disclosed and the shares were held as stock-in-trade, it was not a case of furnishing inaccurate particulars or concealment of income. Therefore, the deletion of penalty by the CIT(A) was justified.

What were the facts?

The Assessing Officer treated the assessee's long-term and short-term capital gains on shares as business income and levied penalty under Section 271(1)(c). The CIT(A) deleted the penalty.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when capital gains are treated as business income, but transactions are disclosed.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI

For Respondent: Shri Prakash Jhunjhunwala
Hearing: 04/02/2016

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 31/03/2014 of the Ld. First Appellate Authority, Mumbai, deleting the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act).

2.

During hearing of this appeal, Shri G.N. Makwana, ld. DR, defended the imposition of penalty by the Ld. Assessing Officer by contending that the ld. Commissioner of Income Tax (Appeals) deleted the penalty without valid reason.

1.

2.1. On the other hand, Shri Prakash Jhunjhunwala, ld. counsel for the assessee, defended the order of the Ld. Commissioner of Income Tax (Appeals) by contending that the impugned issue is covered by the decision from Hon’ble jurisidictional High Court in CIT vs Bennett Coleman & Company Ltd. 259 CTR 383 (Bom.) and the decision in CIT vs Vamchampigons & Agro Produce 284 ITR 408 (Del.). This factual matrix was not controverted by the Ld. DR. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee declared income of Rs.5,84,009/- in his return filed on 10/08/2007. The case of the assessee was selected for scrutiny. The ld. Assessing Officer framed assessment u/s 143(3) by treating exempted long term capital gain of Rs.39,76,007/- as business income and further treating the short term capital gain of Rs.11,384/- on shares as business income. On appeal, before the ld. Commissioner of Income Tax (Appeals), the assessment order was confirmed. The Assessing Officer issued penalty notice dated 16/02/2012 u/s 271(1)(c) and finally the penalty was imposed. The penalty order was carried in appeal before the Ld. Commissioner of Income Tax (Appeals), wherein, the written submissions, challenging the penalty, were filed and the same were considered. Finally, the penalty was deleted. The Revenue is in appeal before this Tribunal.

2.3. If the observation made in the assessment order, leading to addition made to the total income, penalty order, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, there is no dispute to the fact that the assessee is a salaried person also invested in shares and the gains were treated as long term as well as short term capital gains. As and when the assessee was dealing in derivatives i.e. future options, the said income is treated as business income, therefore, there is no question of furnishing of inaccurate particulars, more specifically when the details of transactions i.e. sales and purchases of shares and securities were duly disclosed in the return along with the details of expenses/deductions, thus, it is not a case, where it can be concluded that assessee concealed any information from the Department. The ratio laid down in Anant Overseas Pvt. Ltd. (2015) 54 taxman.com 211 (Del.),wherein the assessee was engaged in investment in shares and securities cum business of shares and securities declared short term capital gain, on sale of shares and the Ld. Assessing Officer held the transactions related to trading of shares as business income. Penalty u/s 271(1)(c) was imposed. Since, the transaction was duly declared and the shares was held in stock in trade, levy of penalty was held to be unjustified. Identical ratio was laid down in CIT vs Amit Jain (2013) 351 ITR 74 (Del.) ; 153 DTR 175 (Del.) ; 258 CTR 88 (Del.). The Hon’ble jurisdictional High Court in CIT vs Bennet Coleman & Company ltd. (supra), identically decided the issue in favour of the assessee. Identical ratio was laid down in CIT vs Vamchampigons & Agros Produce (2006) 284 ITR 408 (Del.) and ACIT vs Sudarshan Fiscal Services Pvt. Ltd. (2009) 28 CCH 497 (Mum. Trib.). It is noted that while filing the return, the assessee declared the necessary details and the same were examined by the Assessing Officer, therefore, at least, it can be said that the assessee neither furnished inaccurate particulars nor concealed its income, therefore, the ld. Commissioner of Income Tax (Appeals) rightly deleted the penalty. We affirm the same. Finally, the appeal of the Revenue is dismissed. This Order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 03/02/2016.

(G.S. Pannu) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER

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