Pr. Commissioner Of Income Tax-06 v. Moderate Leasing And Capital Services Pvt. Ltd

$~5 *IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision:15[th]November, 2016 +ITA 721/2016 & CM No.39118/2016 PR. COMMISSIONER OF INCOME TAX-06 ..... Appellant Through:Mr. Rahul Choudhary, SeniorStanding Counsel and Mr. Udit Jain,Advocate. Versus MODERATE LEASING AND CAPITAL SERVICES PVT. LTD. ..... Respondent Through:None. CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE NAJMI WAZIRI S. RAVINDRA BHAT, J.(Oral) 1.The question of law urged by the Revenue is whether in thecircumstances of the case the direction to delete the penalty imposed wasjustified? 2.The assessee had claimed business loss for Assessment Year (‘AY’)2004-05 in respect of a transaction i.e., sale of shares., which was disallowedby the Assessing Officer (‘AO’), who observed that the stocks were held asinvestments, therefore, it should have been treated as capital loss. TheCommissioner of Income Tax (Appeals) [‘CIT (Appeals)’] by order dated 02.01.2009 set aside the AO’s order dated 31.03.2008; the Income TaxAppellate Tribunal (‘ITAT’) confirmed the same by the impugned orderdated 04.01.2016. 3.This Court entertained an appeal under Section 260A of the IncomeTax Act, 1961 (for short ‘the Act’) and remanded the matter for freshadjudication to the Tribunal, which then held that the loss had to be treatedin the capital side and claim for its being business loss was unwarranted.The penalty proceedings were, therefore, drawn and the adjudication noticewas confirmed by the AO.The CIT (Appeals) was of the opinion thatassessment proceedings, since the assessee had originally succeeded, it wasonly upon fresh consideration by the High Court that the assessee had facedthe adverse finding, which resulted in penalty, which was not justified. 4.The Revenue urges that the impugned order is contrary to theExplanation 1 to Section 271(1) (c) of the Act. It is stated that since theassessee was aware all along about the true nature of the account andinvestment which had been treated as part of the capital assets, the lossreport as of ‘business loss’ amounted to projection of false facts. 5.This Court has considered the materials carefully. It is evident that inthe quantification proceedings, both the Appellate Commissioner and theITAT granted relief to the assessee.It is only at the intercession of thisCourt that the matter was remitted for reconsideration and it was held thatloss was capital in nature and could not be treated as having occurred intrade. The ITAT noticed that since the assessee had succeeded both beforethe CIT (Appeals) and ITAT in the quantification proceedings, penalty wasnot justified. 6.We do not find any substantial error in its reasoning warranting any intervention by this Court. 7.The appeal alongwith pending application is, therefore, dismissed. S. RAVINDRA BHAT, J. NOVEMBER 15, 2016 sb NAJMI WAZIRI, J.