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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
Date of Hearing – 08.03.2018 Date of Order – 28.03.2018
O R D E R PER SAKTIJIT DEY, J.M.
This is an appeal by the Revenue against order dated 16th March 2016, passed by the learned Commissioner (Appeals)–9, Mumbai, deleting the penalty of ` 19,49,997, imposed under section 271(1)(c) Income-tax Act, 1961 (for short "the Act").
Brief facts are, the assessee a company is engaged in the business of investment, share broking and providing advisory services. In the assessment year under dispute, the assessee filed its return of income on 29th May 2009, declaring total income of ` 75,72,390.
2 M/s. Khandwala Securities Ltd. During the assessment proceeding, the Assessing Officer noticing that the assessee has claimed loss of ` 68,20,061, on account of share trading treated it as deemed speculation loss under section 73 of the Act and added back to the income of the assessee. While completing the assessment, the Assessing Officer also initiated proceedings for imposition of penalty under section 271(1)(c) alleging furnishing of inaccurate particulars of income by the assessee. Subsequently, the Assessing Officer issued a show cause notice under section 274 r/w section 271(1)(c) calling upon the assessee to explain why penalty under section 271(1)(c) shall not be imposed for furnishing inaccurate particulars of income in respect of claim of loss. Though, the assessee objected to initiation of proceedings under section 271(1)(c), however, the Assessing Officer rejecting the explanation of the assessee proceeded to impose penalty of ` 19,49,997 under section 271(1)(c). The assessee challenged the imposition of penalty before the first appellate authority.
The learned Commissioner (Appeals) after considering the submissions of the assessee in the light of the judicial precedent cited before him, came to the conclusion that penalty cannot be imposed on account of addition made of deemed speculation loss. Accordingly, he deleted the penalty.
3 M/s. Khandwala Securities Ltd. 4. When the appeal was called for hearing no one was present for assessee in spite of issuance of hearing notice through registered post with A.D. Therefore, we proceed to dispose–off the appeal ex–parte qua the assessee after hearing the learned Departmental Representative.
Heard the learned Departmental Representative and perused the material on record. Learned Departmental Representative fairly submitted that while considering the issue of disallowance of share trading loss in assessee’s appeal the Tribunal has restored the issue back to the file of the Assessing Officer for fresh adjudication. A copy of the order was also placed before the Bench.
As could be seen, the basis for imposition of penalty is the addition made by treating the loss from share trading as deemed speculation loss. However, it is evident on record that the assessee has furnished full particulars relating to the loss claimed and the addition made is on the basis of a different view entertained by the Assessing Officer with regard to the nature of loss. That being the case, the assessee cannot be charged with the offence of furnishing inaccurate particulars of income so as to invite levy of penalty under section 271(1)(c). In any case fo the matter, while deciding the assessee’s quantum appeal in ITA no.7677/Mum./2012, dated 17th March 2017, the Tribunal has restored the issue relating to the 4 M/s. Khandwala Securities Ltd. addition made on account of deemed speculation loss to the Assessing Officer for fresh adjudication. Thus, at present, the addition on the basis of which penalty under section 271(1)(c) of the Act was imposed no longer survives. As a natural corollary the penalty imposed on the basis of such addition also cannot survive. Accordingly, we uphold the order of the learned Commissioner (Appeals) in deleting the penalty imposed.
In the result, Revenue’s appeal is dismissed. Order pronounced in the open Court on 28.03.2018