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M/s. Four Dimensions Securities (India) Ltd., 209-210, 2nd Floor, Arcadia Bldg. 195, Nariman Point, Mumbai-400 021 Vs. The ACIT, Range 4(1), Aayakar Bhavan, Mumbai-400 020
February, 27th 2015
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           ./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


    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-

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

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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