ACE INDIA MEDICAL SYSTEM,JAIPUR vs. ACIT, KOTA

PER SHRI KUL BHARAT, JM.

This appeal by the Assessee is directed against the order of Ld. CIT (A),

Rawatbhata Road, Kota dated 14.03.2017 pertaining to assessment year 2008-09.

The Assessee has raised the following grounds of appeal:-

“1. That penalty order passed by Ld. AO in levying of penalty may please be declared as illegal and unjustified and without bringing any cogent material on record.

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scrutiny assessment and assessment under section 143(3) of the Income Tax Act,

1961 (hereinafter referred to as the Act) was framed vide order dated 30.12.2010.

While framing the assessment, the Assessing Officer also initiated penalty u/s

271(1)(b), 271(1)(c) for filing inaccurate particulars of income and thereby

concealing the true particulars of income. Further, the Assessing Officer vide order

dated 25/03/2014 imposed Penalty u/s 271(1)(c) of the Income Tax Act, 1961.

Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after

considering the submissions, partly allowed the appeal. The Ld. CIT(A) confirmed

the penalty on the addition, sustained by the Tribunal in quantum proceedings.

Aggrieved by this, the assessee is in further appeal before this Tribunal.

confirming the same.

3.1 Ld. Counsel for the assessee submitted that the authorities below were not

justified in giving the levy penalty and confirming the same. He contended that the

assessee has not furnished any inaccurate particulars of income and concealed

income. He submitted that penalty is levied in respect of the loss incurred in trading

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of shares treated as speculation loss on the basis that delivery of shares was not

taken. He submitted that under the identical facts, Co-ordinate Bench of this

Tribunal after considering the various case laws in the case of Dy. CIT vs. Shree

Ram Electrocast (P.) Ltd. (2017) TaxPub (DT) 2138 (Kol-Trib). Ld. Counsel for the

assessee also placed reliance on the Judgment of the Hon’ble Rajasthan High Court

in the case of CIT vs. Harshvardhan Chemicals & Minerals Ltd. (2003) 259 ITR 0212,

Ld. Counsel further placed reliance on the Judgment of the Hon’ble Supreme Court

in the case of CIT vs. Reliance Petroproducts (P.) Ltd. (2010) 322 ITR 158.

3.2 On the contrary, Ld. D/R opposed the submissions.

3.3 We have heard the rival contentions, perused the material available on

record. The Co-ordinate Bench under the identical facts, after considering various

decisions observed as under:-

“14. We have given a very careful consideration to the rival submissions. As submitted by the learned counsel for the assessee, the Tribunal vide its order dated 22-3-2013 passed in ITA No. 759/Kol/2011 has already accepted the genuineness of share trading loss shown by the assesese by upholding the finding recorded by the learned Commissioner (Appeals) that the same cannot be regarded as a bogus loss. By the said order, the Tribunal, however, has upheld the order of the learned Commissioner (Appeals) passed in the quantum proceedings whereby it confirmed the action of the assessing officer in treating the said share trading loss as deemed speculation loss as per section 73 of the Act and consequently not entitled for set off against other income of non-speculative nature. The question that requires our consideration and decision is whether the disallowance of assessee's claim for set off of share trading loss against other income by treating the same as speculation loss as per Explanation to section 73 of the Act will attract the penalty under section 271(1)(c). In this regard, we find that this issue is

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squarely covered in favour of the assessee by the various judicial pronouncements cited by the learned counsel for the assessee including those which have been relied upon by the learned Commissioner (Appeals) in his impugned order while cancelling the penalty imposed by the assessing officer under section 271(1)(c). In one of such cases, namely SPK Steels (P) Ltd. (Supra), it was held by the Hon'ble Madhya Pradesh High Court that penalty under section 271(1)(C), as not exigible in respect of disallowance of assessee's claim for set off of share trading loss by treating the same as speculative in nature as per Explanation to section 73 on the basis of preliminary details furnished by the assessee along with the return of income as the assessee could not be said to have filed inaccurate particulars or concealed particulars of his income, which was chargeable to tax. 15. In the case of Auric Investment & Securities Ltd. (supra) before the Hon'ble Delhi High Court, the claim of the assessee for set off of share trading loss against other income of non speculative nature was disallowed by the assessing officer by treating the same as the loss of speculative nature by invoking the Explanation to section 73. The assessing officer also imposed penalty under section 271(1)(c) on the ground that the assessee had furnished inaccurate particulars of income to the extent of making a wrong claim for set off of share trading loss against normal income. Hon'ble Delhi High Court, however, held that the penalty imposed by the assessing officer under section 271(1)(c) was not sustainable as mere treatment of business loss as speculation loss by the assessing officer did not automatically warrant inference of concealment of income and there was nothing on record to show that in furnishing its return of income, the assessee had either concealed its income or had furnished any inaccurate particulars of income. Similarly in the case of Bhartesh Jain (supra), the Hon'ble Delhi High Court held that mere treatment of business loss as speculation loss would not justify levy of penalty under section 271(1)(c). 16. As far as the decision of the Hon'ble Mumbai High Court in the case of Classic Credit Ltd. (supra) relied upon by the learned DR is concerned, the

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facts of the aforesaid decision were totally different. In that case certain item of expenditure were disallowed by the assessing officer on the allegation that the expenditure was not substantial by any evidence and that the claim was made only to defraud the revenue and this finding was confirmed in the quantum proceedings. These findings were the basis for imposing penalty. The Tribunal therefore came to the conclusion that the finding in the quantum proceedings justified the imposition of penalty. As we have already seen that in the present case there is neither allegation of the assessee attempting to defraud the revenue nor is there any allegation that the loss in question was not actually sustained by the assessee. In the circumstances the aforesaid decision is not of assistance to the plea of the revenue in this appeal. 17. Keeping in view the ratio of the judicial pronouncements relied upon by the learned counsel for the assessee, which decisions are squarely applicable in the present case, we find no infirmity in the impugned order of the learned Commissioner (Appeals) cancelling the penalty imposed by the assessing officer under section 271(1)(c) and upholding the same, we dismiss this appeal filed by the Revenue.”

The Co-ordinate Bench has followed the Judgment of Hon’ble Madhya Pradesh High

Court in the case of CIT vs. SPK Steels (P.) Ltd. (2004) 270 ITR 156, CIT vs.

Bhartesh Jain (2010) 323 ITR 358 (Del.), the facts are identical. The Revenue has

not distinguished these decisions. Therefore, respectfully following the same, we

hereby direct the AO to delete the penalty. Thus, grounds raised in this appeal are

allowed.

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Jaipur Dated:- 08/11/2017. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत