This Court, In Commissioner Of Income-Tax v. M/S Ganesan Builders Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 14.06.2007 Coram The Honourable Mr.Justice P.D.DINAKARANandThe Honourable Mr.Justice P.P.S.JANARTHANA RAJA Tax Case (Appeal) Nos.637 and 638 of 2007 Commissioner of Income-Tax-IChennai....Appellant /AppellantVs.M/s.Ganesan Builders Ltd.72-A, C.P.Ramaswamy Road,Mylapore, Chennai....Respondent/Respondent The above T.C.(Appeals) are preferred under Section 260A ofthe Income-Tax Act, 1961 against the common order of the Income TaxAppellate Tribunal, Chennai ‘A’ Bench, dated 14.7.2006 made in ITANos.1035 and 1036/Mds/2003 for the assessment year 1997-98 and1998-99, against the order of the Commissioner of Income Tax(Appeals II) made in ITA 279/2002-03/AIII and ITA 280/2002-2003 AIII dated 3.2.2003 against the order of Deputy Commissioner ofIncome Tax, Company Circle II (2) Chennai 34 made inPANGIR.No.GX018 97-98 and 98-99 dated 30.9.02. For Appellant: Mr.J.Narayanasamy ----------J U D G M E N T (Delivered by P.D.DINAKARAN, J.) The above tax case appeals are directed against the orders ofthe Income-tax Appellate Tribunal made in ITA Nos.1035 and1036/Mds/2003, dated 14.7.2006. 2.1. The Revenue is the appellant. The assessment yearsinvolved are 1997-98 and 1998-99. The assessee acquired sharesfrom M/s.Amaravathy Chemicals and claimed the dimunition in thevalue of shares as revenue loss. The Assessing Officer found thatthe assessee acquired the shares for the purpose of investment and https://hcservices.ecourts.gov.in/hcservices/ not for the purpose of stock-in-trade and hence, the dimunition inthe value of shares will only be capital in nature. Accordingly,the Assessing Officer holding that the assessee had wrongly claimeda notional capital loss as revenue loss and thereby reduced its taxliability, imposed penalty under Section 271(1)(c) of the Income-tax Act, 1961 for both the assessment years. 2.2. Aggrieved, the assessee preferred appeals before theCommissioner of Income-tax (Appeals), who, by orders dated3.2.2003, deleted the penalty holding that the assessee haddutifully disclosed the material facts and particulars of income inthe audit statements filed before the Assessing Officer and has notconcealed any income nor furnished inaccurate particulars ofincome. Against the said order of the Commissioner, the Revenuefiled appeals before the Income-tax Appellate Tribunal, which, byits common order dated 14.7.2006, upheld the order of theCommissioner of Income-tax (Appeals). 2.3. Aggrieved by the same, the Revenue has preferred theabove appeals raising the following substantial questions of law :"(i) Whether in the facts and circumstances of the case,the Tribunal had properly exercised its discretion andwas right in deleting the penalty imposed u/s 271(1)(c) ?(ii) Whether in the facts and circumstances of the case,the Tribunal was right in holding that the assessingofficer has to prove with evidence that there was adeliberate attempt to conceal income before he couldinvoke the provisions of sec.271(1)(c), ignoring theExplanation I to sec.271 ?" 3. Heard Mr.J.Narayanasamy, the learned standing counselappearing on behalf of the Revenue. 2.3. Aggrieved by the same, the Revenue has preferred theabove appeals raising the following substantial questions of law :"(i) Whether in the facts and circumstances of the case,the Tribunal had properly exercised its discretion andwas right in deleting the penalty imposed u/s 271(1)(c) ?(ii) Whether in the facts and circumstances of the case,the Tribunal was right in holding that the assessingofficer has to prove with evidence that there was adeliberate attempt to conceal income before he couldinvoke the provisions of sec.271(1)(c), ignoring theExplanation I to sec.271 ?" 3. Heard Mr.J.Narayanasamy, the learned standing counselappearing on behalf of the Revenue. 4. It is not in dispute that the assessee acquired shares andthat there was a dimunition in the value of shares acquired by theassessee. It is also not disputed that the assessee has debitedthe equal amount of dimunition in the value of shares in the Profitand Loss A/c. The assessee claimed the dimunition in the value ofshares as revenue loss. It is seen from the order of theCommissioner of Income-tax (Appeals) that the issue whether it is abusiness loss or not has already been decided against the assesseein a separate appeal. But, it is the concurrent finding of boththe authorities below that since the issue whether it is a businessloss or not has been decided against the assessee, it cannot beconcluded that the assessee had filed inaccurate particulars ofincome, because the assessee had dutifully disclosed the same inthe audit statements filed before the Assessing Officer.Accordingly, both the authorities below held that the case does notfall under furnishing of inaccurate particulars of income, as the assessee had disclosed the writing off of the investments in theaudit statements for both the assessment years and hence, levy ofpenalty under Section 271(1)(c) is not warranted. 5. This Court, in Commissioner of Income-tax v. P.Natarajan[(2004) 266 I.T.R. 219], while observing that the power to levypenalty under Section 271(1)(c) of the Act is discretionary andthat discretion vested in the Assessing Officer is subject toappeal and the appellate authorities is entitled to look into allthe facts of a given case and decide as to whether the penalty wasto be sustained or set aside, found that both the authorities belowhad examined all the facts and accepted the claim of the assesseetherein that his failure to file the return earlier was bona fideand hence, penalty was not on the facts of that case leviable andthus, upheld the orders of the authorities below holding that therewas no error in the application of law to the facts of the case. 6. Similarly, in the instant case, it is the concurrentfinding of the lower authorities that the assessee has notconcealed any particulars of income nor furnished inaccurateparticulars of income, as the assessee had disclosed the facts inthe audit statements furnished before the Assessing Officer.Hence, following the earlier decision of this Court in Commissionerof Income-tax v. P.Natarajan [(2004) 266 I.T.R. 219], cited supraas well as in view of the recent decision of the Apex Court inCommissioner of Income-tax Vs. P.Mohanakala (291 ITR 278),whereunder it is held that whenever there is a concurrent factualfinding by the authorities below, the same should be accepted andno interference should be called for by the High Court, we do notfind any error or legal infirmity in the order of the Tribunal soas to warrant interference. In view of the above, finding no substantial questions of lawarise for our consideration, the tax cases are dismissed.Consequently, M.P.No.1 of 2007 is also dismissed.sraSd/Asst.Registrar/true copy/Sub Asst.Registrar To 1.The Assistant Registrar,Income Tax Appellate TribunalBench "A", Chennai.Income Tax Appellate TribunalBench "A", Chennai. 2.The Commissioner of Income Tax (Appeals), Chennai.(Appeals), Chennai. In view of the above, finding no substantial questions of lawarise for our consideration, the tax cases are dismissed.Consequently, M.P.No.1 of 2007 is also dismissed.sraSd/Asst.Registrar/true copy/Sub Asst.Registrar To 1.The Assistant Registrar,Income Tax Appellate TribunalBench "A", Chennai.Income Tax Appellate TribunalBench "A", Chennai. 2.The Commissioner of Income Tax (Appeals), Chennai.(Appeals), Chennai. 3.The Deputy Commissioner of Income-tax, Company Circle-II(2), Chennai. 4. The Commissioner of Income Tax I, Chennai. + 1 cc to Mrs. Pushyasitaraman, Advocate SR No. 34822 MJ(CO)SR/3.7.2007 T.C.(A) Nos.637 and 638 of 2007