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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM (A.Y:2008-09) Shri. Anup Laxmichand Anand, The Asst. Commissioner of Income 37/25, Marol Co. Op. Indl.Estae Tax, Saki Naka, Andheri East, Vs. 18(2), Mumbai. Piramal Mumbai-400069 Chambers, Lower Parel, Mumbai-400012 PAN No.AABPA0536E Appellant .. Respondent Assessee by .. Shri. Sameer Dalal, AR Revenue by .. Shri. B.S. Bist, DR Date of hearing .. 11-01-2017 Date of pronouncement .. 17-02-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT (A)-29, Mumbai in appeal No. CIT (A)-29/RG-18/48/11-12 dated 26-09-2013. The Assessment was framed by ACIT Circle-18(2), Mumbai for the A.Y. 2008-09 vide order dated 30-12- 2010 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). The penalty under dispute was levied by ACIT Circle-18(2) u/s 271 (1)(c) of the Act vide order dated 29-06-2011.
The only issue in this appeal is against the order of CIT(A) confirmed the levy of penalty u/s 271(1)(c) of the Act by the AO. For this assessee has raised following ground: - “The appeal is directed against the assessment orders passed under section 271 (1)(c) of Income-tax Act, 1961 by the Assistant Commissioner of Income-tax 18(2), Mumbai for A.Y.2008-2009. Following are the grounds of appeals:
The learned Commissioner of Income-tax, (Appeals) has wrongly upheld levy of penalty u/s.271(1)(c) of I. T. Act, 1961 by the learned Assessing Officer on the basis of deemed concealment of Rs.78,19,292.
The learned Commissioner of Income-tax, (Appeals) has wrongly upheld that appellant has furnished inaccurate particulars of income.”
Briefly stated facts are that the assessee is earning income from business, capital gains and other sources. The assessee filed original return of income and declared the income from shares as speculative income. Subsequently he revise the return of income claiming the same as F & O business. The AO during the assessment proceedings vide order sheet entries dated 27-12-2010 asked about the details of speculative income / loss and assessee replied that it has submitted the revised computation wherein, speculative loss shown is Rs.78,19,292/-. The AO allowed the speculative loss by observing as under: - During the course of hearing vide order sheet entry dated 27.12.20 10 A.R. was asked to give details of speculative income/ loss AR replied vide his letter dated 29.12.20 10 and submitted a revised computation which shows speculative loss of Rs.78,19,292/, short term capital gains of Rs. 2450626/- and income from other sources of Rs. 1721509/-. Therefore, the above discussed income is added to total income of the assessee for the A.Y. 2008-09. Speculative loss allowed to be carry forward is Rs.78,19,292/, Penalty proceedings it/s. 271(l)(c) of the l.T. Act. 1961 initiated separately.” The AO initiated penalty proceedings u /s 271(1)(c) of the Act for claim of speculative loss. The assessee referred the computation before CIT u/s 264 of the Act on 15-02-2012, whereby the CIT rejected the computation vide order dated 23-10- 2012. The assessee challenged this order of CIT u/s 264 of the Act before Hon’ble High Court, and Hon’ble High Court vide order dated 02-05-2014 restore the issue back to the file of the CIT. The CIT u/s 264 of the Act rejected the claim of the assessee by stating that the assessee has voluntarily claimed the loss as speculative loss and hence, this cannot be subject matter of revision u/s 264 of the Act. Against the order of CIT u/s 264 of the Act, the assessee is now in appeal before Hon’ble jurisdictional High Court and Hon’ble Jurisdictional High Court has admitted the Writ Petition No. 1777 of 2015 vide order dated 21-10-2015. In the meantime the AO levied the penalty in respect to the speculative loss of Rs. 7,19,292/-. For this AO observed as under: - Page 2 of 5
As such the assessee has furnished inaccurate particulars of income with regard to speculation toss of Rs.78,19,292/- which was treated as a trading loss with an intention to reduce the taxable income and tax thereon. As has been observed by the Hon. Apex Court in the case of Dharamendra Textile Processors 1295 ITR 244) that the object behind enactment of sec.271(1)(c) read with Explanations, indicates that the said section has been enacted to provide for a remedy for toss of revenue.
Aggrieved assessee preferred the appeal before CIT(A), who also confirmed the action of the AO. Aggrieved, now assessee is in second appeal before Tribunal.
We have heard the rival contentions and gone through the facts of the case. Before us the learned Counsel for the assessee argued that complete details in respect of claim of speculation loss was filed during the assessment proceedings. It was argued that the assessee has submitted global report and reconciliation thereof along with books of accounts and statements of account from the broker for loss in shares on F & O basis and also short term and long term capital gain in equity shares. It was claimed that the assessee has paid cost towards purchase of shares, security transaction tax, brokerage and service tax thereon and frequently settling accounts by making payments. The assessee claimed that the entire payment is made by cheque and receipt of payments of various accounts maintain with broker was through Demat Account. It was claimed that this speculation business claimed by assessee was revised and this was claimed as F & O loss and claimed the loss from the business income. The assessee claimed that the accounts of the assessee are audited u/s 44 AB of the Act and there are no inaccurate particulars of income furnished by assessee in the present case. The learned Counsel for the assessee filed paper book consisting of pages 1-40, wherein complete details of accounts and submissions of the assessee are given. The learned Counsel for the assessee drew our attention to the F & O transaction, where are given at pages 34-36 of assessee’s paper book. We also find that the Principal CIT is also not doubted the claim of business loss being F & O transaction. The relevant finding of CIT-18, while adjudicate the petition u/s 264 of the Act i.e. held in para 6 as under: - Page 3 of 5
I have carefully considered the submissions of the assessee and the facts and my observations are as follows – the assessee during the course of the scrutiny assessment accepted and withdraw the claim of losses pertaining to F&O transaction in derivatives. In his petition u/s 264, the AR claimed that he was not aware that another certificate regarding F&O and declared this loss as loss from speculation. In light of the fact that the books were audited and broker notes mentioning the F&O were available the claim of the appellant that he claimed the speculation loss by mistake is not tenable. It is clear that it was a voluntary act or the assessee which cannot be a subject matter of Revision u/s 264.
From the documents submitted clearly reveals that the assessee accepted the loss arising from transactions of sale and purchase of shares as F&O. The assessee has filed complete documentation and details. Even the assessee has also made STT payments and details of payments by cheque.
In view of the above given facts and circumstances, we are of the view that this is a highly debatable issue and there can be two opinions about the claim of this loss, whether it is speculation loss or it is F & O loss which can be claimed as business loss. In such circumstances and in the given facts of the case, we are of the view that this is not a fit case for levy of penalty u/s 271(1)(c) of the Act as the assessee has neither concealed the particulars of income nor furnish the inaccurate particulars of income. We reverse the orders of the lower authorities and allow the appeals of the assessee.
In the result, the appeal of assessee is allowed. Order pronounced in the open court on 17-02-2017.