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Income Tax Appellate Tribunal, MUMBAI BENCHES “F”, MUMBAI
Before: Shri Shailendra Kumar Yadav, & Shri Ramit Kochar
O R D E R Per Ramit Kochar, Accountant Member
The aforesaid five appeals have been filed by the assessee against separate order’s by the Commissioner of Income Tax (Appeals)-VIII, Mumbai,(Hereinafter called “the CIT(A)) for the assessment years 2005-06, 2006-07 and 2007-08 which includes two appeals against the penalty orders passed u/s. 271(1)(c) for assessment years 2005-06 and 2006-07 by the assessing officer as affirmed by the CIT(A). Since the issues involved in quantum are identical, we proceed to dispose of the appeals by this consolidated order.
2 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07
We shall first take up the appeal in for assessment year 2005-06 as the lead case . The grounds of appeal raised by the assessee in memo of appeal filed as well additional grounds raised are as under:
“ 1.a) On the facts and in the circumstances of the case and in law, the ld.
CIT(A) erred in confirming the addition of Rs.2,67,480/- made by the AO to the income of the appellant by way of disallowing interest paid by him. b) The ld. CIT(A) failed to appreciate that your appellant had advanced interest free loan out of interest free funds available with him. c) In reaching to the conclusion and confirming such addition, the ld.
CIT(A) omitted to consider relevant factors, considerations , principles and evidences while he was overwhelmed ,influenced and prejudiced by irrelevant considerations and factors.
2.a) On the facts and in the circumstances of the case and in law, the ld.
CIT(A) erred in confirming the addition of Rs.2,43,303/- made by the AO to the income of the Appellant treating the sale proceeds on sale of shares as unaccounted income and further erred in rejecting the claim of the Appellant in respect of Short Term Capital Gains of Rs.2.27,416/- on sale of shares. b) The ld. AO failed to appreciate that the purchase and sale of shares are genuine and supported by sufficient materials and evidences. c) In reaching to the conclusion and making such addition, the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while
3 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 he was overwhelmed , influenced and prejudiced by irrelevant considerations and factors.
3) On the facts and in the circumstances of the case and in law, the ld.
CIT(A) erred in confirming the addition of Rs.12,165 made by the AO to the income of the Appellant on account of commission paid@5% on sale consideration of shares on plea that such service charges are paid to operators.
4) The ld. CIT(A) erred in holding that the interest u/s 234A, 234A(3) and 234B is mandatory. The Appellant denies his liability for such interest.
5) The ld. CIT(A) erred in holding that the ground raised disputing initiation of penalty proceedings u/s 271(1)(c) is premature. The Appellant denies his liability for such penalty.”
The assessee has raised following additional grounds of appeal as under:
“On the facts and in the circumstances of the case and in law, the addition made are beyond the scope of provisions of Section 153A and hence invalid and the same ought to be deleted.”
3.The Brief facts of the case are that a search operations u/s. 132 of the Income Tax Act, 1961 (Hereinafter called “the Act”) was conducted at the residential/business premises of the Balaji Group of cases on 10.11.2006. The assessee, being one of the Directors of M/s. Preksha Exports Ltd. was , inter-alia , covered in the search operations and a notice u/s. 153A of the Act dated 08.08.2008 was duly served on the assessee by the Revenue. In response to the 4 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 said notice u/s 153A of the Act, the assessee filed return of income on 22.09.2008 declaring total income of Rs.7,89,740/- which was the same income as declared in the original return of income filed u/s 139 of the Act on 28th February 2006. The assessee is the proprietor of Khandelwal Sheet Processors, which is engaged in the business of trading in iron and steel apart from doing job work in the related field.
The assessee has raised an additional ground of appeal as detailed above which is taken up first by us. The assessee submitted that the additions made by the assessing officer in the assessment order dated 29th December 2008 passed u/s 143(3) of the Act read with Section 153A of the Act are beyond the scope of provisions of section 153A of the Act and hence additions made are invalid and the same ought to be deleted because the original assessment shall prevail as per scheme of the Act and the Revenue is precluded from making fresh assessment u/s 143(3) of the Act read with Section 153A of the Act except when the said fresh assessment so made is based on incriminating material found during the course of search and hence assessment order dated 29th December 2008 passed by Revenue u/s 143(3) of the Act read with Section 153A of the Act is bad in law, illegal and liable to be quashed as the same is passed by the assessing officer based on material available on record filed along with return of income and is not based on any incriminating material found during the course of search operations. The contention of the assessee is that his case are covered in assessee’s favour by the order of the Mumbai Tribunal in assessee’s own case in 1977 & 3896/Mum/2009 for assessment year 2001-02, 2002-03 & 2004-05 respectively whereby the Tribunal has set aside the orders of the CIT(A) and deleted the 5 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 additions made by the Revenue for the relevant assessment years under appeal on the findings that the said fresh assessments made u/s 143(3) read with Section 153A of the Act are not based on any incriminating material found during the course of search operations . The contention of the assessee is that search operations were conducted on 10.11.2006 and the original return of income was filed on 28th February 2006 by the assessee with Revenue and hence, the assessment u/s. 143(3) r.w.s 153A of the Act cannot be framed as the matter is covered by the above stated orders of the Mumbai Tribunal in the assessee’s favour as detailed above in assessee’s own case for preceding years. The legal contention of the assessee is considered by us and we have observed that the assessee has filed the original return of income u/s 139 of the Act on 28.02.2006 for the assessment year 2005-06 while the date of search is 10.11.2006. We find that no assessment has been framed u/s. 143(3) of the Act in original proceedings for the assessment year 2005-06 and also the time stipulated u/s. 143(2) of the Act for issue of notice for framing scrutiny assessment u/s 143(3) of the Act is one year from the end of the month in which the return of income is filed for assessment year 2005-06 i.e. up to 28.02.2007 which means that the Revenue has right to issue notice u/s 143(2) of Act till 28th February 2007 which has not expired on the date of search i.e. 10th November 2006. We find that still there was time available with Revenue for issue of notice u/s 143(2) of the Act for assessment year 2005-06 on the date of search i.e. 10.11.2006 , till 28th February 2007 and hence the assessment for the said assessment years has not abated and the Revenue has rightly proceeded to frame assessment u/s 143(3) of the Act read with Section 153A of the Act which ultimately
6 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 culminated in the orders of the assessing officer dated 29th December 2008 whose validity we uphold. Hence, the legal contention raised by the assessee in the additional ground that the revenue could not have framed assessment u/s. 143(3) r.w.s. 153A of the Act for assessment year 2005-06 and the additions made by Revenue are beyond the scope of provisions of Section 153A is not acceptable and respectfully rejected in view of our findings above.
Coming to the merits of the case , the assessee has raised ground no 1 in the memo of appeal filed whereby the assessee is aggrieved by the disallowance of Rs.2,67,480/- on account of interest paid by the assessee. The assessee has declared net profit of Rs.5,55,598/- from the proprietary concern M/s Khandelwal Sheet Processors. In the profit and loss account, the assessee has debited interest of Rs.5,66,399/-. The assessing officer noticed that the assessee has advanced loans of Rs.14,86,000/- to various parties without charging any interest. The assessing officer noted that the assessee is claiming interest on borrowed funds and on the other hand, the assessee has advanced loans without charging any interest.
The assessing officer called for the details about the working of the interest payable and why the proportionate disallowance be not made on granting interest free loans out of interest bearing loans raised by the assessee but no explanation was furnished by the assessee during the course of assessment proceedings. Hence, the assessing officer disallowed the interest of Rs.2,64,480/- on the interest free loans advanced to various parties on proportionate basis @18% on the interest free loans advanced by the assessee as the assessee has borrowed funds @18% rate of interest.
7 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07
Aggrieved, the assessee filed appeal before the CIT(A). Before the CIT(A), the assessee contended that he had its own funds to the tune of Rs.24,52,304/- as credit balance of the capital account and the interest free loans to the extent of Rs.14,86,000/- was granted as on 31.03.2005 and the assessee’s own funds are sufficient to cover interest free loans of Rs.14,86,000/- advanced by the assessee.
The assessee also contended that in past the Revenue has allowed the deduction of interest paid on borrowed funds and also the Revenue is not able to demonstrate that the assessee has diverted the interest bearing funds towards interest free advances made by the assessee rather the assessee submitted that it has mixed pool of funds which are own capital as well borrowed funds and it is not possible to trace the application of funds. The CIT(A) called for the remand report from the assessing officer. The assessing officer submitted that this figure of Rs.23,86,409/- is nothing but assessee’s own capital balance appearing in the individual balance sheet. Against this own capital, the assessee is having several assets such as residential flat, investment in shares, jewellery, PPF etc. . Thus, this own capital of the assessee of Rs.23,86,409/- cannot be co-related and attributed to the interest free advances of Rs.14,92,660/- appearing in the balance sheet of the proprietary concern of the assessee. The CIT(A) relying upon the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Abhishek Industries Ltd 286 ITR 1(P&H HC) held that it cannot be co-related that the assessee has advanced its own capital for granting interest free loans and, hence, rejected the contention of the assessee and affirmed the orders of the assessing officer on this ground.
Aggrieved by the orders of the CIT(A), the assessee is in appeal before us.
8 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07
The assessee contended that it has its own funds available to the tune of Rs.24,52,300/- as interest free funds as its capital on 31.03.2005 and there is a presumption that these interest free funds is available with the assessee and the assessee has granted interest free loans of Rs.14,86,000/- from these own funds and hence no disallowance of interest expenditure is called for. The assessee has placed reliance on the decision of Hon’ble Bombay High Court in the case of Reliance Utilities and Power Ltd 313 ITR 340(Bom.HC) . The assessee also contended that as capital of Rs.12,62,000/- as per balance sheet of the assessee firm as at 31st March 2005 is also available, so the total interest free own funds available with the assessee are to the tune of Rs.37,14,300/- and there is a presumption that assessee has granted interest free loans of Rs.14,86,000/- out of its own capital fund which is interest free and hence no dis-allowance of interest is called for.
9. The learned DR, on the other hand, contended that in the decision of Hon’ble Bombay High Court in the case of Reliance Utilities and Power Ltd. (supra) it was proved that the assessee has invested its own interest free funds towards granting of interest free advances/loans. This presumption of deployment of own funds for grant of interest free advances is a rebuttable presumption and in the instant case of the assessee , it could not be co-related that the assessee has utilised its own funds for grant of interest free advances. He further contended that interest free funds available with the assessee are already invested in other assets of the assessee as per the balance sheet submitted such as residential flat, shares, jewellery, PPF etc. and it cannot be said that the assessee has advanced its own
9 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 interest free funds for grant of interest free loan of Rs.14,86,000/-. He also contended that there is no commercial expediency shown by the assessee in granting of these loans and, therefore, the assessing officer has rightly disallowed the interest expenditure of Rs.2,64,480/-.
We have considered the rival submissions and have perused the material available on record and the case laws relied upon. We find that the Hon’ble Bombay High Court in the case of Reliance Utilities and Power Ltd. (supra) has held that if there are funds available both interest-free funds and also interest bearing loans taken by the assessee , then a presumption would arise that investments would be out of interest-free fund available with the assessee provided the interest- free funds are sufficient to grant the interest free loans. In the afore-stated case, there was a finding of fact recorded by the CIT(A) and the ITAT that the assessee has deployed its own funds towards the grant of interest free advances. The relevant extract from the judgment of Hon’ble Bombay High Court in Reliance Utilities and Power Limited(supra) is reproduced below :
“8. We have heard learned counsel for both the parties. In our opinion the very basis on which the revenue had sought to contend or argue their case that the shareholder funds to the tune of over Rs. 172 crores was utilised for the purpose of fixed assets in terms of the balance sheet as on 31st March, 1999, is fallacious. Firstly, we are not concerned with the balance sheet as of 31-3-1999. What would be relevant would be balance sheet as on 31-3-2000. Apart from that, the learned counsel has been unable to point out to us from the balance sheet that the balance sheet as on 31-3-1999 showed that the shareholders funds were utilized for the purpose of fixed assets. To our mind the profit and loss account and the balance sheet would not show whether shareholders funds have been utilised for investments. The argument has to be rejected on this count also.
Apart from that we have noted earlier that both in the order of the CIT (Appeals) as also the Appellate Tribunal, a clear finding is recorded that the assessee had interest- free funds of its own which had been generated in the course of the year commencing from 1-4-1999. Apart from that in terms of the balance sheet there was a further availability of Rs. 398.19 crores including Rs. 180 crores of share capital. In this context, in our opinion, the finding of fact recorded by CIT (Appeals) and ITAT as to availability of interest-free funds really cannot be faulted.
10 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07
10. If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. .............. The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT (Appeals) and ITAT.
Considering the above, in our opinion, there is no merit in this appeal which is accordingly dismissed.”
In the present case, the assessee has to bring on record by cogent material that assessee has both the funds available i.e. interest free funds and also interest bearing funds sufficient to meet the advancing of interest free advance of Rs.14,86,000/-, then there will arise a presumption that the assessee has utilized the interest free funds available to grant the interest free advance of Rs.14,86,000/- and the initial and primary onus is on the assessee which the assessee needs to discharge. The contention of the assessee that it has total owned funds of Rs.37,14,300/- as at 31st March 2005 also cannot be accepted as the perusal of the Balance Sheet reveals that the assessee own capital is Rs.24,52,304.38 as at 31st March 2005 in his individual Balance Sheet while the capital of Rs 12,62,047.23 as in his proprietary concern ’Khandelwal Sheet Processor’ as at 31st March 2005 is reflected in the heading ‘Investments’ in his individual Balance Sheet meaning thereby that the said capital of Rs.12,62,047.23 is invested out of the own capital of Rs.24,52,304.38 and other funds available with the assessee in his individual Balance Sheet and cannot be considered separately for computing the total own funds deployed by the assessee. A perusal of the balance sheet of the assessee reveals that the assessee has also made substantial investments in business assets
11 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 as well as residential flats, shares, jewellery, PPF etc apart from granting these interest free loans. In our view, the interest of justice will be best served if the matter is remanded to the file of the assessing officer for framing of the assessment afresh de-novo, whereby an opportunity will be given to the assessee in accordance with the principles of natural justice to bring on record cogent material to substantiate that he has utilized interest free funds for granting of these interest free loans or the said interest free loans are granted out of commercial expediency.
We order accordingly.
11. Ground no.2 of the appeal relates to the rejection of the claim of the assessee with respect of the short term capital gain of Rs.2,27,416/- on sale of share and confirming the addition of Rs.2,43,303/- on proceeds from sale of shares as unaccounted income.
The Brief facts of the case are that the assessee has declared ‘short term capital gain’ of Rs.2,27,416/- on the sale of shares of Stenly Credit. Ltd. for assessment year 2005-06. There was investigation carried by the Revenue as well as other law enforcing agencies, which revealed that various persons are beneficiaries of bogus capital gain on sale of certain shares and the intention behind this dubious exercise is to bring their unaccounted income in the mainstream books.
With respect to the sale and purchase of shares of Stenly Credit Limited, the assessee has submitted contract notes from the share broker Murari Lal Goenka before the assessing officer. Notices u/s. 133(6) of the Act were issued to the said broker Murari Lal Goenka at his Kolkata address and the said notices were returned back un-served. The assessing officer after considering the replies of the assessee
12 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 came to the conclusion that these alleged capital gain on sale of penny stock of Stenly Credit Limited is nothing but accommodation entries to enable the assessee to bring the unaccounted income into the books which in the opinion of the assessing officer was based on the reports of investigation wing of the Revenue who had conducted enquiries into the dealing of brokers who were engaged in the accommodation entries through these penny stocks where by un-accounted income is converted into the books as well the notices u/s 133(6) of the Act returned un- served and the assessee has not produced the said broker before the assessing officer for verification. In view of the above, the entire sale consideration of Rs.2,43,303/- declared in respect of the alleged sale of shares of Stenly Credit Limited is being added to the total income of the assessee as ‘income from other sources’ instead of income claimed as ‘short term capital gain’ .
Aggrieved , the assessee filed first appeal before the CIT(A) and contended that the short term capital gain of Rs.2,27,416/- is shown on the sale of shares of Stenly Credit Ltd. as per the statement of capital gain filed along with return of income filed with Revenue and the shares have been purchased through stock broker M/s. Murari Lal Goenka., and all other relevant documents were duly submitted before the assessing officer and the short term capital gain should be allowed to be tax as ‘short term capital gain’. The assessee submitted that the share broker attendance could have been enforced by Revenue by issuing summons u/s 131 of the Act or calling information u/s 133(6) of the Act for which powers are duly vested with the authorities under the Act and the assessee cannot be held liable for non-production of the share broker before the revenue authorities. However, the 13 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 CIT(A) rejected the contentions of the assessee holding that the assessee has failed to prove the genuineness of the transaction of purchase and sale of shares and the information has been received from the investigation wing that various persons are beneficiaries of bogus capital gain on sale of certain scripts known as penny stock and the intention behind such dubious exercise is to bring their unaccounted income into the mainstream books. The CIT(A) held that the assessee has routed both the sale and purchase transaction of shares Stenly Credit Limited through the Broker Murari Lal Goenka and it is the duty of the assessee to produce the broker for verification since the credit is appearing in the books of the assessee and hence, the onus is on the assessee to substantiate the genuineness of the transaction and the assessee failed to produce the said broker for verification before the authorities below and notices issued u/s 133(6) of the Act to said broker has returned un- served. Thus, the CIT(A) upheld the orders of the assessing officer in holding the ‘short term capital gain’ as ‘income from other sources’ .
Aggrieved, the assessee is in appeal before us.
The assessee reiterated its submissions as made before the authorities below and contended that the addition has been made by the revenue based on the newspaper reports and it has been presumed that the assessee has indulged in manipulation in penny stock towards the accommodation entries while there is no such cogent evidence before the Revenue in coming to the said conclusion and the ‘short term capital gain’ earned by the assessee is treated as ‘income from other sources’ based on surmises, conjectures and presumptions . The assessee submitted that there is no finding of fact that the assessee has received any 14 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 consideration out of books of accounts maintained by the assessee. The assessee drew our attention to the details submitted by the assessee regarding the ‘Short term capital gain’ in the return of income filed with the revenue and he further drew out attention to the brokers notes regarding sale and purchase of said shares which was made through the broker Murari Lal Goenka. The assessee also submitted that he had made payments through banking channels for purchase of shares of Stenly Credit Limited and similarly payment for sale of shares has been received through the banking channels. The assessee further submitted that he is also dealing in other shares apart from shares of Stenly Credit Ltd. Hence, the assessee reiterated that it is a genuine transaction and the ‘short term capital gain’ earned by the assessee of Rs 2,27,416/- on the sale of shares of Stenly Credit Limited cannot be treated as ‘income from other sources’.
The learned DR relied upon the orders of the authorities below.
We have considered the rival contentions and perused the material on record. We have observed that the additions have been made based upon the investigation report of the Investigation wing of the Income tax Department that some brokers in collusion with the investors are engaging in the manipulation of penny stocks whereby accommodation entries are arranged in manner whereby unaccounted income is brought into books. We have observed that the assessee has purchased 4500 shares of Stenly Credit Ltd. on 17.12.2004 for Rs.47,610.00 through the broker Murari Lal Goenka vide contract no 478/041217/3744 . We have observed that in the afore-stated broker’s contract note for purchase of shares of Stenly Credit Limited by the assessee, there is no mention of security transaction
15 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 tax(STT)/service tax which ought to have been charged by the broker from the assessee to be deposited with Government which are taxes levied by Government on share transactions which raises doubts about the credibility of said purchase contract note . While dealing in the same broker note of Morarilal Goenka for purchase of said share, which has been placed in the paper-book, the proof/evidence of payment having been made through cheques is not brought on record before us while in the submissions made by learned counsel he has stated that the payments has been made by bank and only copy of ledger account is produced while bank statement to that effect is not produced before us to reflect and substantiate that the payment for purchase of said shares have been made through banking channels ( while bank statement for other period are enclosed in paper book) which also caste suspicion on the entire modus operandi of this transaction on the touch stone of preponderance of probability. At the same time , we are also aware of the fact that merely on suspicion , no addition can be made by Revenue as suspicion cannot take place of proof. It is also observed that in the contract note of the same broker Murari Lal Goenka dated 15th March 2005 bearing number 538/050315/3744 for sale of 1500 shares of Stenly Credit Limited, there is a charge for securities transaction tax as well service tax and the assessee has received payment for sale of said shares by cheque which is duly credited in bank account of the assessee for which bank statement is also produced before us. The revenue has doubted this broker bill for purchase of shares of Stenly Credit Limited and treated the transaction for sale and purchase of shares of Stenly Credit Limited as accommodation entries to facilitate the channelizing of unaccounted money of 16 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07 the assessee into the mainstream. The revenue has also issued notice u/s. 133(6) of the Act to the share broker Mr. Murari Lal Goenka at his Kolkata address but the said notices were returned un-served. We, therefore, hold that the matter needs to be restored to the file of the assessing officer for proper examination and de-novo determination whereby the assessee will be required to bring on record cogent evidence to prove that these transactions of sale and purchase of share are not bogus transactions and these transactions are not merely accommodation entries to channelize the unaccounted money of the assessee into mainstream books.
Needless to say, the assessee will be given proper opportunity of being heard. We order accordingly.
Ground No.3 relates to the commission @5% on the sale consideration of shares of Stenly Credit Limited amounting to Rs.12,165/- being added as income of the assessee on the ground that these transactions of sale and purchase of penny stocks are merely accommodation entries to channelize un-accounted money into mainstream books of the assessee and the assessee has paid 5% in cash to the operators who have arranged these bogus capital gain on penny stocks. We have already dealt with ground no.2 dealing with the short term capital gain on sale of the shares of Stenly Credit Limited being treated as income from other sources and have restored the matter to the file of the assessing officer for proper examination and de-novo determination and as this ground is related to ground no.2, we dispose of this ground accordingly whereby the assessing officer will examine and decide this matter also afresh after giving proper opportunity of hearing to the assessee.
We order accordingly.
17 Vikram Khandelwal 5035, 3897/Mum/2009, 729& 726/Mum/2013 Assessment Years : 2005-06, 2006-07, 2007-08, 2005-06, 2006-07
The issue’s involved in appeal and ITA No. 3897/Mum/2009 for assessment year 2006-07 and 2007-08 are identical and our decision in 2005-06 as contained in preceding para’s of this order shall apply mutatis mutandis to the appeal for assessment year 2006-07 and 2007-08.
The assessee is also aggrieved by the imposition of penalty u/s 271(1)(c ) of the Act of Rs.2,43,303/- and Rs.25,83,990/- by the assessing officer as confirmed by the CIT(A) for assessment year 2005-06 and 2006-07 for which the assessee is in appeal before us vide and ITA No. 726/Mum/2013 for assessment years 2005-06 and 2006-07 respectively. The penalty has been levied based on the additions made in the quantum proceedings which we have dealt in detail in this order while adjudicating quantum appeals as detailed in preceding para’s of this order and have restored the quantum additions to the file of the assessing officer for de-novo determination. Since, we have set aside the orders of the assessing officer as affirmed by the CIT(A) in quantum proceedings, consequently the penalty levied by the assessing officer as confirmed by the CIT(A) shall not survive and hence, shall be adjudicated by the Revenue after deciding on quantum additions in de-novo proceedings. We order accordingly.
The appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on this day of 9th Oct. 2015.