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2015 (12) TMI 1238 - ITAT MUMBAI

2015 (12) TMI 1238 - ITAT MUMBAI - TMI - Penalty u/s. 271(1)(c) - AO was of the firm belief that the stock of shares was nothing but investment and the investment was made out of borrowed funds, thus disallowed the entire claim of expenditure and the income from business was assessed at Rs. Nil. - CIT(A) deleted the penalty - Held that:- Applying the ratio of the Hon'ble Supreme Court in the case of Reliance Petro Products [2010 (3) TMI 80 - SUPREME COURT ] on the facts of the present case as me .....

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the findings of the Ld. CIT(A). Appeal filed by the Revenue is accordingly dismissed. - Decided in favour of assessee. - ITA Nos. 2960 & 3028/Mum/2014 - Dated:- 28-10-2015 - N. K. Billaiya, AM And Amarjit Singh, JM For the Appellant : Shri A K Srivastava For the Respondent : Shri Jitendra Jain ORDER Per N K Billaiya, AM These are appeals by the Revenue against the very same order of the Ld. CIT(A)-18, Mumbai dated 25.2.2014 pertaining to assessment years 2009-10 and 2010-11. Since the First App .....

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6,30,28,304/- imposed u/s. 271(1)(c) of the Act. 3. The roots for the levy of penalty lie in the assessment order dated 29.11.2011 made u/s. 143(3) of the Act. The assessee company is engaged in the business of trading in shares and securities and providing financial services. While scrutinizing the return of income, the Assessing Officer noticed that the assessee company was holding opening and closing stock of ₹ 128,51,24,748/-. The AO further found that the stock in hand comprises of o .....

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simultaneously initiated penal proceedings u/s. 271(1)(c) of the Act. 3.1. Against this assessment order, the assessee preferred an appeal before the Ld. CIT(A) but without any success. The assessee finally accepted the order of the First Appellate Authority and no further appeal was filed. 3.2. With this factual matrix, the AO proceeded with the penal proceedings u/s. 271(1)(c) of the Act. The assessee was asked to explain why an order imposing a penalty on it should not be passed u/s. 271(1)( .....

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Processors 306 ITR 277 and Dilip Shroff 291 ITR 519, the AO concluded by levying minimum penalty of ₹ 6,30,28,304/-. 4. The assessee strongly agitated the matter before the Ld. CIT(A) and reiterated its contention. After considering the facts and the submissions, the First appellate authority posed a question to itself - Whether the assessee has concealed any particulars of income and submitted inaccurate particulars of income. The Ld. CIT(A) answered this question as under: "To answ .....

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om these facts, it is clear that the assessee has not concealed any particulars of income, but, in his view he has taken the trading of shares as business income which was duly reflected in the books of account and audited profit & loss account and balance sheet which were submitted along with the return of income, therefore, the assessee has not concealed any facts and submitted inaccurate particulars of income. The view of the A.0. by treating it as investment and not business income is co .....

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cause the disallowance made by the A.O. is confirmed in appeal does not mean that assessee has concealed its income. In the present case, he issue is that share trading is treated by the assessee as business income but A.O. has held it an investment and profit or loss will be taken under the head Capital Gain which means change of head of income. Thus , it is clearly a legal & debatable issue." 4.1. Having answered the question as mentioned hereinabove and drawing support from the decis .....

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case of Mak Data (P) Ltd Vs CIT 358 ITR 593. It is the say of the Ld. DR that the conduct of the assessee is a deliberate ploy to reduce the taxable income. 7. Per contra, the Ld. Counsel for the assessee reiterated what has been stated before the lower authorities. Once again, the Ld. Counsel heavily relied upon the decision of the Hon'ble Supreme Court in the case of Reliance Petro Products (supra). 8. We have heard the rival submissions and carefully considered the orders of the authoriti .....

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e holding of shares were considered under the head investment and accordingly all expenditures claimed by the assessee were disallowed. The major expenditure was in relation to the interest paid on borrowed capital utilized for the purchase of shares of that one company viz., Centrum Capital Ltd. The AO has levied the penalty holding that assessee has filed inaccurate particulars by not showing the shares under the head 'investment' and claiming business expenditures including interest o .....

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turn of income. On the date of filing of return of income, the assessee had an assessment order for A.Y. 2008-09 accepting assessee's claim of business of trading in shares and securities. Thus on the date of filing of return, the assessee was not aware of the possible view that might be taken by the AO during the course of the assessment proceedings. 8.2. Finally, the view taken by the AO simply changed the head of income i.e. from the head 'Profits and gains of business or profession&# .....

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in the case of Reliance Petro Products has clearly laid down the ratio "by any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars". The Hon'ble Supreme Court further observed "there can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would a .....

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