ACIT - 14(2), MUMBAI vs. HITEN P. DALAL, MUMBAI

The present appeal has been filed by the Revenue against the order dated 17.04.2014 passed by CIT(A)-25, Mumbai wherein the penalty order passed u/s 271(1)(c) of the Act was deleted.

The brief facts of the case are that the assessee filed his return of income of Rs. 32,05,300/- on 30.09.2008 for AY-2008-09. The return was selected for scrutiny and in the assessment order the AO made an addition holding that profit earned/received from sale of share under PMS Scheme is business profit and cannot be termed as capital gain. Accordingly a profit of Rs. 1,87,15,072/- was treated as profit & gain of business or profession by AO and he also initiated penalty proceeding u/s. 271(1)(c) of the Act. The notice of penalty proceeding was served vide notice dated 09.12.2010. 3. The penalty order dated 22.03.2013 revealed that no response was filed by the assessee and the appeal filed by the assessee against the order of quantum was dismissed by the CIT(A) on 25.02.2010 and thus penalty order levying a penalty of Rs. 61,21,359/- was levied by the AO. 4. Against the penalty order dated 22.03.2013 the assessee filed an appeal before the CIT(A) wherein CIT(A) deleted the whole of the penalty in its order dated 17.04.2014 against which the present appeal is filed before us by the Revenue challenging the validity of order.

At the opening of the submission, AR of the assessee has submitted that against the order passed by Ld. CIT(A) in the quantum of proceedings the assessee filed appeal before this Tribunal which was registered as ITA No. 1068/Mum/2012. He further submitted that the Tribunal has allowed the appeal of the assessee by holding that the gain arising on sale of share is to be assessed as capital gain. Accordingly he submitted that the impugned penalty order will not survive against the assessee.

We have seen the order dated 30.10.2015 passed by co-ordinate bench of this Tribunal in wherein the gain arising on sale of share was directed to be treated as capital gain and not as a business income. Hence the ground on which the penalty order was passed no longer survive after order of the Tribunal passed in quantum assessment proceedings. Hence on these reason the decision of Ld. CIT(A) needs to be upheld. 7. Hence, we do not find any merit in the present appeal and the same is dismissed and the order passed by CIT(A) dated 17.04.2014 is upheld. 8. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 22/01/2016.