IN THE HIGH COURT OF DELHI AT NEW DELHI
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ITA 389/2013
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MR RAHUL MISHRA ..... Appellant
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Through Mr. M.S. Syali, Sr. Advocate with
Mr. Badri Nath, Advocate.
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versus
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COMMISSIONER OF INCOME TAX VIII NEW DELHI
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..... Respondent
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Through Mr. Mayank Negi, Advocate.
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CORAM:
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HON'BLE MR. JUSTICE SANJIV KHANNA
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HON'BLE MR. JUSTICE SANJEEV SACHDEVA
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O R D E R
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03.09.2013
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This appeal under Section 260A of the Income Tax Act (Act, for
short) impugns order dated 18th January, 2013 passed by the Income Tax
Appellate Tribunal (tribunal, for short) confirming penalty for
concealment under Section 271(1)(c) on two accounts:-
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(i) Failure to disclose short term capital gains of Rs.3,91,66,758/- on
sale of land/property in the original return filed on 31.10.2007.
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(ii) False or bogus claim of short term capital loss of Rs.4,52,00,000/-
on sale of shares which was set off to reduce the long term capital gains
of Rs.4,42,98,700/- on sale of shares in the original return filed on
31.10.2007.
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2. The original return filed on 31st October, 2007 was revised by a
return filed electronically on 7th April, 2008. In this revised return
appellant accepted that the claim for business loss was erroneous.
Appellant withdrew claim on short term capital loss on sale of shares.
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3. The appellant accepts and admits that in the original return filed on 31.10.2007, income from short term capital gain on sale of property
was not disclosed. In the revised return filed electronically on 7th
April, 2008, the appellant disclosed short term capital gains of
Rs.3,91,66,758/- on sale of property.
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4. The contention of the appellant is that the revised return was
filed voluntarily and prior to detection of any concealment. However,
this contention of the appellant has been rejected by the authorities and
the tribunal by citing valid and cogent reasons. They have recorded that
the revised return was filed as an after effect and consequent to notice
dated 18th February, 2008 under Section 131(1A) of the Act by Deputy
Director, Income Tax (Investigation), to the appellant to furnish the
following details:
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(i) Brief note on assessee?s sources of income;
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(ii) Details of assessee?s bank accounts along with the copy of bank
statement of all bank accounts from 1.4.2006 till date i.e. February 18,
2008, the date of summons;
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(iii) Copy of latest income tax return filed by the assessee along with
all its annexures;
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(iv) Details showing the use of cash withdrawn and source of cash
deposits in account No.0005108768050 with IndusInd Bank, Barakhamaba
Road, New Delhi for the period 1.4.2006 till February 18, 2008 and
similar details in respect of other bank accounts maintained by the
assessee. (Sale consideration of the property at Noida was deposited in
IndusInd Bank, Barakhamba Road, New Delhi).
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5. The factual finding recorded by the authorities and the Tribunal
that the revised return was filed after investigation was initiated
following issue of notice under Section 131(1A) of the Act dated 18th
February, 2008, is justified and cannot be termed as perverse.
Admittedly notice under Section 131(1A) of the Act dated 18th February,
2008 had already been issued and the appellant was aware that
investigations were being made. The authorities and tribunal have
highlighted that this had compelled and was instrumental in the appellant
assessee filing the revised return, which is a cogent and sound
reasoning. We do not think that the said findings, factual as they are,
require interference in an appeal under Section 260A of the Act..
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6. The Tribunal and the authorities have rejected the contention of
the appellant that failure to disclose short term capital gains on sale
of property or claim of short term capital loss was a fault or failure of
the Chartered Accountant. The said finding is again based upon sound and
good reasoning. It is eventually clear that the appellant had sold a
property at Noida for consideration of Rs.4,82,70,500/-. The said
property was purchased for Rs. 91,03,743/-, and the appellant had earned
short term capital gain of Rs.3,91,66,757/-. This transaction or income
was not shown in the original return filed on 31st October, 2007 and this
fact/income was concealed. The amount involved is substantial and could
not have escaped notice of the appellant. Tax payable on the said gain
was significant. Interestingly, the appellant had shown short term
capital gain of Rs.3,91,66,757/- on sale of shares in the same return but
had excluded gain on sale of land. It is difficult to accept that this
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concealment was a fault of the Chartered Accountant and the appellant was unaware that short term capital gains on sale of plot had not been
disclosed in the return and taxed. This gain is a matter of fact and
not a matter of legal opinion. Contention of the appellant and attempt
to put the blame on the Chartered Accountant is not acceptable, it is an
afterthought and an excuse.
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7. The penalty order records that the so called short term capital
loss on sale of shares was not bonafide and had been deliberately booked
to set off and not pay tax short term capital gain. The appellant
assessee did not justify the shoddy transactions which were emphasized
and set out in the order of penalty dated 26.05.2010 under Section 271
(1)(c) of the Act. In the penalty order, it is recorded as under:-
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?In his original return, the assessee has claimed short term loss of
Rs.4,52,00,000/- on sale of shares and has set off this loss from the
long term capital gain arisen to him from sale of shares of M/s.
Karamchand Domestic Products Ltd. During the F.Y. 2006-07 relevant to
the A.Y. 2007-08, the assessee has sold shares of M/s. Karamchand
Domestic Products Ltd. and earned long term capital gain of
Rs.4,42,98,700/- duly shown in the original as well as revised return.
Besides, the assessee also made the following sale/purchase transactions
during the months of Feb/March, 2007 (A.Y. 2007-08):-
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Name of the company
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Date of sale
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Amount
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Date of purchase
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Amount
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Loss
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K.G. Invest P. Ltd.
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22.03.2007
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300000
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09.02.2007
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5000000
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4700000
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V.P. Realtors P. Ltd.
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20/26.03.2007
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3000000
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Feb/March, 2007
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30000000
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27000000
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SKB Tradex P. Ltd.
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23.03.2007
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450000
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Feb/March, 2007
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4500000
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4050000
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Sainik Cement P. Ltd.
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23.03.2007
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300000
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05.03.2007
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5000000
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4700000
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Ex-servicemen Blackgold Transport P. Ltd.
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24/26.03.2007
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250000
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08.03.2007
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2500000
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2250000
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Jaipur Golden Infrastructure Developer P. Ltd.
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24.03.2007
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187500
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08.03.2007
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3000000
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2812500
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Total loss
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45512500
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By making the above transaction the assessee had booked short term loss
of Rs.4,55,12,500/- and claimed Rs.4,52,00,000/- in the original return
to nullified the long term capital gain arisen from sale of the shares of
M/s Karamchand Domestic Products Ltd. During the pendency of enquiry the
assesseee has revised his return wherein he withdraws the aforesaid short
term capital loss. By doing so it is implied that he accepted the bogus
nature of the share transactions as tabulated above which means the
aforesaid companies must have returned cash to the assessee. It is thus
clear that the revision of return by assessee is not on account of
omission and the revised return was filed only after the enquiries in his
case were initiated by the Investigation Wing by issuing summons U/s
131(1A) of the Income-tax Act, 1961 on 18.02.2008. The revision of the
return therefore, cannot give a benefit of omission. Satisfaction was
recorded in the assessment order and on the basis thereof penalty
proceedings U/s 271(1)(c) of the Income Tax Act, 1961 for concealment of
income as aforesaid and furnishing inaccurate particulars within the
meaning of explanation 1 to Sub-section (1) of the section 271(1)(c) of
the Income Tax Act, 1961 were initiated.?
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8. The said order of the assessing officer has been affirmed by the
first appellate authority and the tribunal. The tribunal has
specifically underscored and highlighted the short time span between
purchase of shares and sale of shares and mammoth difference in the
purchase price and sale price. It is obvious that the appellant was
unable to justify this difference and the transactions which were booked
as short term capital loss and, therefore, had surrendered the claim in
the revised return.
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9. The onus to explain the said conduct was bonafide, lay solely upon
the appellant as per mandate of explanation 1 to Section 271(1)(c). The
onus could have been discharged by placing facts and proving why and for
reason the short term capital gains was not disclosed and by justifying
and explaining why in the original return short term capital loss on
sale of shares was claimed. The appellant did not render any rational
and weighty explanation or produce any material or evidence to validate
his conduct except attributing and blaming the Chartered Accountant and
stating that the revised return was filed before detection of
concealment. After examining the factual matrix, the Tribunal has
rejected the said contentions and has held that the appellant has been
unable to explain that his conduct was bonafide.
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10. In view of the factual findings recorded by the Tribunal affirming the view taken by the Assessing Officer and the CIT (Appeals), we are of
the opinion that no substantial question of law arises for consideration.
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11. We clarify that the appellant assessee has not challenged the
penalty imposed under Section 271(1)(c) on addition of Rs.1,89,793/-
towards house tax and Rs.46,890/- on account of personal travel expenses.
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12. The appeal is dismissed in limine.
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SANJIV KHANNA, J
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SANJEEV SACHDEVA, J
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SEPTEMBER 03, 2013
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Kkb/st
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$ 12
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