Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajpal Yadav, Vice- & Shri Rajesh Kumar]
ORDER
Per Shri Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax(Appeals)-6, Kolkata [hereinafter referred to as ‘CIT(A)’] dated 29.03.2019 for the assessment year 2015-16.
In ground no. 1, the assessee has assailed the order of Ld. CIT(A) confirming the penalty of Rs. 84,052/- as imposed by the AO u/s 271(1)(c ) of the Income Tax Act, 1961 (hereinafter referred to as the Act).
Facts in brief are that the assessee filed return of income declaring total income of Rs. 91,06,470/- on 01.08.2015. The case of the assessee was selected for scrutiny and assessment u/s 143(3) of the Act was framed vide order dated 15.12.2017 assessing the income at Rs. 96,50,520/- as against the returned income of Rs. 91.06,470/- by making the addition of Rs. 5,44,052/- on account of undisclosed short term capital gain on sale of securities. The assessee is an advocate and is deriving income from profession of advocacy . The AO noted on the basis of information/details available that the assessee has income from derivatives and securities transactions which were not disclosed in the return of income and accordingly the assessee was called upon to furnish the details thereof. On the perusal
Santosh Kumar Ray of details filed by the assessee, the AO noted that during the year, the assessee has made short term capital gain of Rs. 5,44,052/- on sale of securities and also incurred a loss of Rs. 22,57,094/- on derivative transactions. Accordingly ,the AO added the amount of short term capital gain to the income of the assessee in the assessment framed while rejecting the loss incurred in derivative transactions. The penalty proceedings u/s 271(1)(c) were initiated vide notice dated 15.12.2017 issued u/s 274 read with Section 271(1)(c ) of the Act which was issued in a standard format by mentioning both the limbs i.e. concealing of the income as well as furnishing inaccurate particulars of income thereby not striking off the limb which is irrelevant and thus the notice was issued in a mechanical manner. The said notice was complied with by the assessee by filing written submissions dated 13.01.2018 submitting that the assessee has suo moto disclosed during the assessment proceedings the short term capital gain of Rs. 5,44,052/- which was inadvertently omitted from being disclosed due to mistake on the part of the counsel of the assessee. However, the reply of the assessee did not find favour with the AO and he finally imposed the penalty of Rs. 84,055/- being 100% of penalty sought to be evaded which was also confirmed by the Ld. CIT(A) in the appellate proceeding by holding that penalty has been correctly levied by the AO on the undisclosed short term capital gain of Rs. 5,44,052/- .
After hearing the rival parties and perusing the material on records, we find that in this case in the quantum proceedings the Ld. CIT(A) has allowed the claim of the assessee in respect of loss from derivative transactions and consequently the AO has given a refund of more than 8 lakhs as submitted during the hearing by the assessee’s counsel. We have also perused the quantum appeal allowed by the first appellate authority wherein the claim of the assessee qua the loss of Rs. 22,57,094/- has been directed to be allowed to the AO by re-computing the total income after considering the said loss from derivative as business loss by holding that explanation to section 73 of the Act was not applicable to the facts of the case and thus the derivative loss was allowed as non-speculative business loss in accordance with the provision of Section 43(5) of the Act. Thus, we note that in the re-computation, the AO has considered the Santosh Kumar Ray net of short term capital gain and loss from derivative as business loss and thus the mechanism of computation of penalty u/s 271(1)(c ) of the Act fails as the overall income as assessed by the AO originally has further reduced meaning thereby that there has been no increase income. Therefore, we are not in concurrence with the conclusion drawn by the Ld. CIT(A) on the issue of imposition of penalty and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the penalty. Consequently the ground no. 1 is allowed.
The issue raised in ground no. 2 is qua the jurisdiction of the AO to impose penalty u/s 271(1)(c ) of the Act which was not argued at the time of hearing and therefore the ground no.2 is dismissed as not pressed.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 27th June, 2022