S.P GANESAN,CHENNAI vs. ACIT, NON CORPORATE CIRCLE 10(1), CHENNAI

Both the appeals of the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals) - 12, Chennai, dated 27.11.2017 and pertain to assessment years 2007-08 and 2011-12, confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act'). Since common issue arises for consideration in both the appeals, we heard these appeals together and disposing of the same by this common order.

Shri C. Subramanian, the Ld. representative for the assessee, submitted that the assessee is a medical practitioner by profession. During the assessment years under consideration, according to the Ld. representative, the assessee claimed set off of losses in share trading against the professional income. The Assessing Officer, however, found that the transactions of purchase and sale of shares are speculative transactions without taking delivery of scrips. According to the Ld. representative, the assessee has furnished details of the transactions of sale and purchase of shares including trading in futures and options. The assessee set off losses suffered in the share trading against other income and offered the net income for taxation. Mere claim of set off of losses while filing the return of income, according to the Ld. representative, cannot be construed to be either furnishing inaccurate particulars or concealing any part of income. Therefore, according to the Ld. representative, the CIT(Appeals) is not justified in confirming the orders of the Assessing Officer.

On the contrary, Shri Guru Bashyam, the Ld. Departmental Representative, submitted that the assessee is engaged in speculative business in trading in futures and options through broker M/s Shreyas Stock Pvt. Ltd. According to the Ld. D.R., the assessee deliberately filed the return of income claiming set off of losses suffered in share trading against income from other source, therefore, the assessee has furnished inaccurate particulars of income. Since the assessee has furnished inaccurate particulars of income with regard to nature of share trading transactions, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the orders of the Assessing Officer. On a query from the Bench, the Ld. D.R. clarified that the assessee has furnished the entire details of share trading transactions including futures and options and claimed set off, therefore, the assessee has furnished inaccurate particulars of income.

We have considered the rival submissions on either side and perused the relevant material available on record. The assessee apart from being a medical practitioner, is also engaged in share trading. The assessee admittedly suffered losses and set off those losses suffered in trading in shares against other income. The Assessing Officer, however, disallowed the claim of the assessee on the ground that the transactions in purchase and sale of shares are speculative transactions, therefore, it cannot be set off. The question now arises for consideration is whether making of claim, namely, set off of losses suffered in share trading amounts to furnishing of inaccurate particulars of income or not?

We have carefully gone through the provisions of Section 271(1)(c) of the Act which reads as follows:-

The Assessing Officer may levy penalty if he is satisfied that the assessee has concealed particulars of income or furnished inaccurate particulars of such income. In this case, admittedly, the assessee has furnished the entire transaction details before the Assessing Officer. The assessee claims that the loss suffered in share trading has to be set off against the other income. It is not the case of the Revenue that the assessee has concealed any part of income. The claim of the Ld. D.R. is that making the claim of set off in respect of losses suffered in share trading amounts to furnishing inaccurate particulars of income.

The question arises for consideration is whether mere making a claim for set off of losses in share trading amounts to furnishing of inaccurate particulars of income? This issue was considered by the Apex Court in CIT Vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158. The Apex Court found that after furnishing entire details, making a claim in the return of income does not amount to furnishing inaccurate particulars or concealing any part of income. This Tribunal is of the considered opinion that if the assessee makes a claim after furnishing entire details, it is his personal opinion with regard to income-tax. There may be difference of opinion with regard to nature of transactions by the assessee at one end and opinion of Department at other end. This difference of opinion with regard to nature of transaction cannot be construed as furnishing inaccurate particulars of income as found by the Apex Court in Reliance Petroproducts (P) Ltd. (supra). In view of the above we are unable to uphold the orders of the authorities below. Accordingly, the orders of both the authorities below are set aside and penalty levied by the assessee for both the assessment years are deleted.

In the result, both the appeals filed by the assessee are allowed.