KIRTI MILIND RANKA,PUNE vs. INCOME TAX OFFICER, PUNE

Brief facts of the case are that the assessee is in individual and e-filed return of income for A.Y. 2016-17 on 29/07/2016 declaring total income of Rs. 5,15,710/-. In the original return, the assessee reported speculation loss at Rs.81,21,392/- and short term capital loss at Rs. 33,25,597/-. Subsequently, upon advice from the CPC assessee got the accounts audited, as turnover has exceeded Rs. 1.00 crore. The revised return was filed by the Tax Consultant, who consolidated both types of losses and shown them as speculation loss at Rs.1,14,61,428/-. In the scrutiny proceedings carried out u/s.143(3) of the Act after duly serving valid notices, Ld.AO accepted the returned income. However, Ld.AO initiated penalty proceedings u/s. 271(1)(c) of the Act for excess claim of speculation loss of Rs. 33,40,036/-. Subsequently, penalty proceedings were initiated by issuing notice u/s. 274 of the Act and finally, penalty order framed on 16/03/2022 levying penalty of Rs. 8,51,835/- on account of furnishing inaccurate particulars of income under the head „speculation loss‟ to the extent of Rs. 33,40,036/-.

Aggrieved, assessee challenged the penalty order before the Ld.CIT(A), but Ld.CIT(A) without dealing with the case on 3 ITA.No.2176/PUN./2024 (Kirti Milind Ranka) merits, dismissed the appeal being barred by limitation. Now, the assessee is in appeal before this Tribunal.

Learned counsel for the assessee raised two fold arguments, firstly challenging the validity of the penalty order being barred by limitation, and secondly on merits, he contended that due to inadvertent mistake of the Tax Consultant, the wrong figures have been punched in the return and there is no malafide intention of the assessee to claim excess speculation loss.

On the other hand, ld. Ld. Departmental Representative (DR) supported the orders of both the lower authorities.

We have heard rival contentions and perused the records placed before us. So far as legal issue raised by the learned counsel for the assessee challenging the validity of penalty order being barred by limitation, he requested for not pressing this legal ground and therefore same is dismissed as not pressed.

So far as merits of the case are concerned, we find that the assessee during the year, has incurred two types of losses, namely speculation loss of Rs. 81,21,392/- and short term capital loss of Rs. 33,25,597/-. These two losses were separately shown in the original return and all the particulars pertaining thereto were furnished in the income tax return. Subsequently, on receiving notice from CPC, the assessee got

We on going through the records, find that the assessee has furnished particulars of losses under the heads „speculation loss‟ and „short term capital loss‟ in the original return, but due to inadvertent mistake at the end of the Tax Consultant, the consolidated figure has been shown under the head „speculation loss‟. It is not a case of malafide intention of the assessee on furnishing inaccurate particulars of income to evade taxes. There is a complete absence of mens rea of evading taxes. Under these given facts and circumstances, we are of the view that section 271(1)(c) of the Act should not have been invoked by Ld.AO and should have sympathetically considered the facts giving rise to such clerical mistake and claim of wrong speculation loss. We, accordingly, set aside the impugned order and delete the penalty levied u/s.271(1)(c) of 5 ITA.No.2176/PUN./2024 (Kirti Milind Ranka) the Act at Rs. 8,51,835/- and allow the grounds of appeal raised by the assessee on merits.

In the result, appeal of the Assessee is partly allowed as per terms indicated herein above.