Varren Financial Services Limited v. Commissioner Of Income Tax, Patiala

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH **** I.T.A. No.94 of 2012 (O&M) Date of Decision:24.01.2013 Varren Financial Services Limited Vs. .....Appellant Commissioner of Income Tax, Patiala .....Respondent CORAM:- HON'BLE MR. JUSTICE HEMANT GUPTAHON'BLE MS. JUSTICE RITU BAHRI Present:-Mr. Ravi Shankar, Advocate for the appellant. Ms. Savita Saxena, Advocate for the respondent. HEMANT GUPTA, J.(Oral) The present appeal under Section 260-A of the Income Tax Act,1961 arises out of an order passed by the Income Tax Appellate Tribunal,Chandigarh Bench `B', Chandigarh (for short “the Tribunal”) on 31.10.2011,whereby an appeal of the assessee imposing penalty under Section 271(1)(C)(iii) was dismissed. The assessee has raised the following substantialquestions of law:- “A.Whether in the facts and circumstances of the case, theTribunal was justified in upholding the penalty withoutappreciating the fact that addition had been made on notionalbasis by presuming the sale as per rate quoted on the date ofsale ignoring the actual sale consideration received by theassessee and paid by the purchaser, which presumption may bevalid for making addition but not for penalty ignoring the wellsettled law that penalty proceedings are different fromquantum and quantum addition cannot be the basis of imposingpenalty as held by the Hon'ble SC in AnantharamVeerasinghaiah & Co. Vs. CIT 123 ITR 457 (SC)?B.Whether the impugned order passed by ITAT upholding order of AO and CIT(A) confirming penalty, under the facts andcircumstances of the case, is perverse being based on noevidence and influenced with extraneous considerations?” We have heard learned counsel for the parties and find no meritin the present appeal. The appellant has transferred majority of his shares toa firm, which is closely connected with the appellant at a lower rate vis-a-vis rate prevalent in the stock exchange on the relevant date. TheCommissioner of Income Tax has held that the loss emanating from suchdeliberately chosen transaction of sale of shares is a false loss. The findingrecorded by the Commissioner of Income Tax stands affirmed by theTribunal. The learned Tribunal recorded the following findings:- “The assessee filed false and spurious explanation by stating that thesale of bulk shares is attributable to the lower rate and consequentloss. Such explanation of the assessee appears not only to bespecious but also an example of falsity. The assessee intentionallychoose to sell such shares at lower rate to the connected concern,with a purpose to claim false excessive loss. The conduct of theassessee is discernible clearly from the irrefutable facts of the saidtransaction. It is not a mere case of innocent and bonafide claim ofloss made by the assessee. It is also not a case of mere disallowanceof loss by the AO. It is a case of false claim of excessive loss madeby the assessee, though supported specious and spurious contentions.In view of the false claim, the present case squarely falls within thepurview of Section 271(1)(c)(iii) & Explanation I thereto.” Since the transaction of sale of the shares by the appellant and purchased by the connected firm of the appellant has been made at a pricewhich is lower than the prevalent price at the stock exchange, the findingrecorded by the Tribunal that it is a deliberate loss shown by the appellant isa finding of fact. Such finding cannot be said to be suffering from anyillegality or raising any question of law. I.T.A. No.94 of 2012 (O&M) Learned counsel for the appellant has referred to a judgment ofthis Court reported as CIT Vs. Sangrur Vanspati Mills Limited 303 ITR53 to contend that for levy of penalty, there should be conclusive evidencethat the assessee has concealed the particulars of income. Since the transaction of sale of the shares by the appellant and purchased by the connected firm of the appellant has been made at a pricewhich is lower than the prevalent price at the stock exchange, the findingrecorded by the Tribunal that it is a deliberate loss shown by the appellant isa finding of fact. Such finding cannot be said to be suffering from anyillegality or raising any question of law. I.T.A. No.94 of 2012 (O&M) Learned counsel for the appellant has referred to a judgment ofthis Court reported as CIT Vs. Sangrur Vanspati Mills Limited 303 ITR53 to contend that for levy of penalty, there should be conclusive evidencethat the assessee has concealed the particulars of income. We find that in fact the tests specified therein are whollysatisfied in the present case. It is proved that the appellant has concealedthe particulars of his income by giving inflated losses. Such finding of factdoes not give rise to any substantial question of law. Dismissed. ( HEMANT GUPTA ) JUDGE January 24, 2013renu/Vimal ( RITU BAHRI ) JUDGE