Delhi High Court
Commissioner Of Income Tax vs Bhartesh Jain on 6 April, 2010
Author: Badar Durrez Ahmed
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 06.04.2010
+ ITA 363/2010
COMMISSIONER OF INCOME TAX ... Appellant
- versus -
BHARTESH JAIN ..... Respondent
Advocates who appeared in this case:-
For the Appellant : Ms. Sonia Mathur with Mr. Sumit Kr.
Singh, Advs.
For the Respondent : Mr. K.R. Manjani, Adv.
CORAM:
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR. JUSTICE V.K. JAIN
1. Whether Reporters of local papers may be allowed
to see the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in Digest?
BADAR DURREZ AHMED, J (ORAL)
1. We have heard learned counsel for the parties.
2. The present appeal, preferred by the Revenue, is directed against the
order dated 30th April, 2009 passed by the Income Tax Appellate Tribunal,
in penalty proceedings relating to the Assessment Year 1994-95.
3. It may be pointed out at the outset that in so far as the quantum
proceedings are concerned, additions had been made by the Assessing
Officer on, inter alia, two aspects. The first being an addition on account of
Assessing Officer treating the business loss claimed by the Assessee as
speculation loss and the second addition was made in respect of two
amounts of Rs.4 lacs and Rs.19 lacs received by the Assessee, which the
Assessing Officer treated, as unexplained income of the Assessee under
Section 68 of the Income Tax Act, 1961. The said additions have been
confirmed by the Tribunal and the appeal preferred therefrom has been
dismissed by the High Court.
4. In the penalty proceedings under Section 271(1)(c) of the said act, the
Assessing Officer imposed a penalty of Rs.32,89,552/-. The penalty was
imposed on account of the aforesaid additions. The said penalty was
confirmed by the Commissioner of Income Tax (Appeals). However, in the
appeal preferred by the Assessee, the Income Tax Appellate Tribunal has
deleted the said penalty.
5. In so far as change of treatment from business loss as claimed by the
Assessee to speculation loss as determined by the Assessing Officer, the
Tribunal was of the view that a mere change of treatment of the said loss
would not amount to concealment under Section 271(1)(c) of the said Act.
The Tribunal placed reliance on the decision of this Court in the case of
Commissioner of Income Tax v. Auric Investments & Securities Ltd. : 310
ITR 121.
6. With regard to the amounts of Rs.4 lacs and 19 lacs, the Tribunal
examined the factual position and came to a conclusion on determination of
the facts that there was no concealment made out under Section 271 (1)(c) of
the said Act.
7. In so far as the amount of Rs.4 lacs is concerned, the Tribunal found
that it cannot be said that the explanation given by the Assessee was not
bona-fide and it also cannot be said that all the facts and material relating to
the same had not been disclosed by the Assessee. The Tribunal made this
observation in view of the facts that the party who had extended the amount
of Rs.4 lacs to the Assessee had accepted that the cheque in question had
been given by them. The only difference being that they maintained that it
was not given as loan, whereas the Assessee had shown it as a loan. It was
on this account that the Assessing Officer had made the quantum of addition.
However, the Tribunal felt this treatment by the Assessee did not warrant
penalty under Section 271(1)(c) of the said Act.
8. In so far as the addition of Rs.19 lacs under Section 68 of the said Act
is concerned, the Tribunal returned the following findings:
"Regarding addition of Rs.19 lacs under Section 68,
we find that as per the claim of the assessee, four
cheques were received by the assessee from M/s.
Sujata Securities Pvt. Ltd. totaling Rs.19 lacs. For
this loan also, the assessee has given loan
confirmation and in response to summon, Shri
Madhup Jain, Director of M/s. Sujata Securities Pvt.
Ltd. has appeared before the Assessing Officer and
in his statement recorded by the Assessing Officer,
he has confirmed that he has given loan to the
assessee but he has not taken any security. The
addition was made for the reason that this cheque of
Rs.19 lacs was given by M/s. Sujata Securities Pvt.
Ltd. to the assessee out of the fund of Rs.25 lacs said
to be received by that company from M/s. Model
Trading Co. Prop. Urmilla Batra and it is noted by
the Assessing Officer Shri Madhup Jain Director of
M/s. Sujata Securities Pvt. Ltd. has stated in his
statement that he does not remember the address of
M/s. Model Trading Co. which create serious doubt
about the genuineness. It is further found that in the
bank account of M/s. Model Trading Co. cash of
Rs.25 lacs was deposited. On this basis, the addition
made may be justified but it cannot be said that the
explanation of the assessee was not bona fide and
hence as discussed in the above paras regarding loan
of Rs. 4 lacs, for this loan of Rs.19 lacs also, the
Explanation-1 to section 271(1)(c) is not applicable
and hence for this loan also, the Assessing Officer is
doubting the source of source which cannot be the
basis for imposing penalty."
9. We find that in so far as the question of penalty relating to the change
of treatment from business loss to speculation loss is concerned, the Tribunal
has rightly applied the law as stated in CIT v. Auric Investments (Supra).
10. As regard the deletion of penalty in relation to the additions of Rs.4
lacs and 19 lacs in the quantum proceedings, we find that the Tribunal has
returned findings on facts and no substantial question of law arises for our
consideration in respect thereof.
11. The appeal is dismissed.
BADAR DURREZ AHMED, J
V.K. JAIN, J
APRIL 06, 2010
RB
