PHULCHAND SONS INVESTMENTS P.LTD,MUMBAI vs. DCIT CIR 2(2), MUMBAI

The present appeal has been preferred by the assessee against the order dated 28.05.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2005-06 agitating the confirmation of the levy of penalty under section 271(1)(c) of the Act.

At the outset, the Ld. A.R. of the assessee has stated that the penalty in this case has been levied by the lower authorities because of the invocation of deeming provisions of explanation to section 73 of the Income Tax Act, whereby, the loss incurred by the assessee from trading in shares has been treated as ‘speculative’ in nature. The Assessing Officer (hereinafter referred to as the AO) therefore disallowed the setting off of the same against the consultancy income of the assessee. He has submitted that the addition in this case has been made because of deeming fiction but not because of furnishing of inaccurate particulars of income or for concealment of income. He has 2 M/s. Pulchand Sons Investments Pvt. Ltd. further stressed that even while making the addition, the AO has wrongly calculated the consultancy income of the assessee and also the speculative income. He has further stated that even the speculative loss of the assessee has been allowed to be carried forward for the next year. He has stated that it is not a case of furnishing of inaccurate particulars of income or concealment of income.

The Ld. D.R., on the other hand, has relied upon the finding of the lower authorities.

After considering the submissions of the Ld. Representatives of the parties, we are of the view that it is not a case of furnishing of inaccurate particulars of income or concealment of income. Even the assessee has demonstrated that there is mistake in calculation of the speculative loss also. Nevertheless, in our view, it is not a case of furnishing of inaccurate particulars of income or concealment of income. The penalty levied by the lower authorities is ordered to be deleted.

In the result, the appeal of the assessee is hereby allowed. Order pronounced in the open court on 11.03.2016.