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IN THE INCOME TAX APPELLATE TRIBUNAL " F " BENCH, MUMBAI
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BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM
./I.T.A. Nos. 1466 & 1467/Mum/2013
( [ [ / Assessment Years : 2009-10 & 2007-08
M/s. Four Dimensions The ACIT, Range 4(1),
Securities (India) Ltd., Aayakar Bhavan,
209-210, 2 n d Floor, Mumbai-400 020
Arcadia Bldg. 195,
Nariman Point,
Mumbai-400 021
. / . /PAN/GIR No. : AAACF 1734F
( /Appellant) .. (× / Respondent)
/ Appellant by: ` Shri Vijay mehta
× /Respondent by : Shri Pawan Kukmar Beerla
/ Date of Hearing :26.2.2015
/Date of Pronouncement :26.2.2015
/ O R D E R
PER N.K. BILLAIYA, AM:
These two appeals by the assessee are preferred against two separate
orders of the Ld. CIT(A)-8, Mumbai dt. 13.12.12 &7.1.2013 respectively
pertaining to assessment years 2009-10 & 2007-08. Both these appeals
by the assessee have common ground, therefore, they were heard together
and disposed of by this common order for the sake of convenience.
2 ITA Nos.1466 & 1467/M/13
2. The common grievance in both the years is that the Ld. CIT(A)
erred in confirming the penalty levied by the AO u/s. 271(1)(c) of the
Act on the disallowance made u/s. 94(7) of the Act. The quantum of
disallowance and the quantum of penalty may differ.
3. While scrutinizing the return of income for the years under
consideration, the Assessing Officer noticed that dividend stripping u/s.
94(7) of the Act clearly apply on the facts of the case. After verification,
Rs. 16,40,149/- was disallowed in A.Y. 2007-08 and Rs. 14,33,110/- was
disallowed in A.Y. 2009-10. The penalty has been levied on these
disallowances u/s. 271(1)(c) of the Act.
4. When the matter was carried before the Ld. CIT(A), it so happened
that the Ld. CIT(A) decided the appeal for A.Y. 2009-10 first wherein the
Ld. CIT(A) confirmed the levy of penalty and while deciding the appeal
for A.Y. 2007-08, the Ld. CIT(A) followed his own order for A.Y. 2009-
10.
5. At the very outset, the Ld. Counsel for the assessee stated that on
identical ground of appeal for A.Y. 2006-07, the Tribunal in assessee's
own case in ITA No. 2542/M/2012 has deleted the penalty. The Ld.
Counsel placed the order of the Tribunal before us.
6. The Ld. Departmental Representative could not bring any
distinguishing decision in favour of the Revenue.
7. We have carefully perused the orders of the authorities below and
the decision of the Tribunal in ITA No. 2542/M/12 pertaining to
assessment year 2006-07. We find that the Tribunal had considered the
following ground vide ground No. 1 in A.Y. 2006-07.
3 ITA Nos.1466 & 1467/M/13
"On the facts and in the circumstances of the case and in
law, the Hon'ble CIT(A) erred in confirming the penalty levied by
the Ld. AO u/s. 271(1)(c) of the I.T. Act, 1961 amounting to Rs.
2,25,783/- on the disallowance made u/s. 94(7). The appellant
prays that the same may please be deleted."
8. While deciding the appeal at para-3 of its order, the Tribunal has
considered the decision in the case of City Group Global Markets India
Pvt. Ltd. in ITA No. 5352/M/09 and finally held as under:
"We have considered rival contentions and found that
assessee is a share broker and share trader and has offered a
total income of Rs.13,98,55,100. The said income includes profits
from share trading of Rs. 8,73,43,276/-. The profit has been
resulted from innumerable transactions of purchase & sales of
shares, including arbitrage, jobbing etc. During the year under
consideration, the assessee had missed out to disallow a meager
loss of Rs.6,70,776/- u/ s 94(7) of the Act, on account of dividend
stripping. Disallowance u/ s 94(7) depends upon cumulative
satisfaction of certain conditions prescribed in the Act. The same
has been remained to be applied by oversight and even the
auditors have failed to point it out. However at the time of
assessment proceedings, when the details of purchase and sale
of shares and units were called for in the course of ordinary
hearing, the assessee furnished complete particulars of
transactions. During these proceedings, the said mistake was
realized and the assessee agreed before the A.O. to disallow the
said amount. Since assessee has agreed for disallowance, no
show cause notice was issued by the A.O. in this regard. The
disallowance was made as per the working submitted by the
appellant, which has been accepted by the A.O. Also, against the
said disallowance, no appeal is filed by the assessee. It is a case
of an inadvertent mistake made by the assessee, and the
assessee agreed for disallowance at the time of assessment
proceedings. Accordingly, no penalty u/s.271(1)(c) of the Act was
warranted. Putting these facts to the proposition of law discussed
by coordinate bench in the case of City Group Global Markets
India Pvt. Ltd(supra), we do not find any merit in the penalty so
imposed by the AO u/s.271(1)(c) of the Act with respect to the
disallowance made under of Section 94(7) of the Act.
4 ITA Nos.1466 & 1467/M/13
Similar view has been taken by the ITAT Mumbai bench in
the case of Ramesh Damani, ITA No.1625/Mum/2012, dated 22-
8-2014. Respectfully following the judicial pronouncements as
discussed above, we do not find any merit in the imposition of
penalty addition made with reference to the provisions of Section
94(7).
9. Facts and issues being identical, respectfully following the decision
of the Co ordinate Bench, we set aside the orders of the Ld. CIT(A) for
both the years under consideration and direct the AO to delete the
penalty levied u/s. 271(1)(c) of the Act.
10. In the result, the appeals filed by the assessee are allowed.
Û 26.2.2015
Order pronounced in the Open Court at the time of hearing on 26th
February, 2015.
Sd/- Sd/-
(H.L. KARWA ) (N.K. BILLAIYA)
Ú¢/ PRESIDENT / ACCOUNTANT MEMBER
Mumbai; Dated 26th February, 2015
.../ RJ , Sr. PS
5 ITA Nos.1466 & 1467/M/13
/Copy of the Order forwarded to :
1. / The Appellant
2. × / The Respondent.
3. () / The CIT(A)-
4. / CIT
5. , ,
/ DR, ITAT, Mumbai
6. [ / Guard file.
/ BY ORDER,
× //True Copy//
/
(Dy./Asstt. Registrar)
, / ITAT, Mumbai
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