DCIT 4(2)(1), MUMBAI vs. NIRMAL BANG SECURITIES P.LTD, MUMBAI

Date of Hearing – 07.03.2018 Date of Order – 28.03.2018

O R D E R PER SAKTIJIT DEY, J.M.

Aforesaid appeal of the Revenue is directed against order dated 28th March 2016, passed by the learned Commissioner (Appeals)–9, Mumbai, deleting the penalty of ` 23,77,064, imposed under section 271(1)(c) Income-tax Act, 1961 (for short "the Act") for the assessment year 2011–12.

2 M/s. Nirmal Bang Securities Pvt. Ltd. loss of ` 2,39,54,017. In the course of assessment proceedings, the Assessing Officer found that the assessee has claimed loss of ` 76,92,746 on share trading relating to delivery based transaction. The Assessing Officer being of the opinion that the loss arising from such transaction being of the nature of speculation loss called upon the assessee to explain why set–off of such loss against income from non– speculation business should not be disallowed. Though, the assessee objected to the proposed disallowance, however, the Assessing Officer rejecting the objection of the assessee disallowed the set–off of share trading loss amounting to ` 76,92,764 by treating it as speculation loss. On the basis of such disallowance, the Assessing Officer initiated proceedings for imposition of penalty under section 271(1)(c) alleging furnishing of inaccurate particulars of income by the assessee. After issuing a show cause notice under section 274 r/w section 271(1)(c) the Assessing Officer ultimately passed the order imposing penalty of ` 23,77,064 on the charge of furnishing of inaccurate particulars of income by the assessee. Being aggrieved of the penalty order so passed, the assessee is in appeal before the learned Commissioner (Appeals).

judicial precedents cited before him, deleted the penalty imposed under section 271(1)(c) of the Act.

alleged that the assessee furnished inaccurate particulars of income. Merely because the assessee claimed loss from share trading as normal business loss which in the opinion of the Assessing Officer is speculation loss, it will not lead to the conclusion that the assessee has furnished inaccurate particulars of income. Therefore, the learned Commissioner (Appeals) was justified in deleting the penalty imposed under section 271(1)(c). Even otherwise also, the penalty order passed by the Assessing Officer cannot survive because while giving effect to the order of the first appellate authority, the Assessing Officer has ultimately computed assessee’s tax liability under section 115JB of the Act, whereas, the addition / disallowance on the basis of which penalty under section 271(1)(c) has been imposed was made under the normal provisions of the Act. That being the case, as per the decision of the Hon'ble Delhi High Court referred to in CBDT Circular no.25 of 2015, dated 31st December 2015, as well as, as per the instructions of the said circular, the present appeal by the Department challenging the decision of the learned Commissioner (Appeals) is not maintainable. Accordingly, we uphold the order of the learned Commissioner (Appeals) by dismissing the grounds raised by the Revenue.

5 M/s. Nirmal Bang Securities Pvt. Ltd.