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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
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.
Brief facts are, the assessee company filed its return of income for the impugned assessment year on 29th September 2011, declaring
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).
The learned Commissioner (Appeals) after considering the submissions of the assessee and applying the ratio laid down in the 3 M/s. Nirmal Bang Securities Pvt. Ltd.
judicial precedents cited before him, deleted the penalty imposed under section 271(1)(c) of the Act.
Learned Departmental Representative relied upon the observations of the Assessing Officer and ground raised.
Learned Authorised Representative strongly relied upon the decision of the first appellate authority. Further, he submitted that the Assessing Officer has ultimately computed the tax liability under section 115JB of the Act, therefore, the penalty imposed under section 271(1)(c) of the Act in respect of an addition / disallowance made under the normal provisions cannot survive. For the aforesaid proposition, the learned Authorised Representative relied upon the CBDT circular no.25 of 2015 dated 31st December 2015.
We have heard rival submissions and perused material available on record. The facts emanating from record clearly reveal that the share trading loss claimed by the assessee has been treated as speculation loss by the Assessing Officer, hence, he disallowed set–off of such loss against income from non–speculation business. It is also evident that the Assessing Officer has imposed penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income. When the assessee has furnished full details of the loss arising out of share trading activities, it is not understood how it can be 4 M/s. Nirmal Bang Securities Pvt. Ltd.
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.
In the result, Revenue’s appeal is dismissed. Order pronounced in the open Court on 28.03.2018