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2009 (12) TMI 619 - AT - Income TaxPenalty u/s 271(1)(c) - concealment of income - Levy of penalty under deeming provisions of the Explanation to section 73 -Business loss as incurred by the assessee is treated as speculation loss for the purpose of computation of taxable income. - Held that - Reliance placed on decision of hon ble jurisdictional High Court in the case of Auric Investment & Securities Ltd. (2007 -TMI - 32807 - DELHI HIGH COURT), shows where all the requisite information as required by the Assessing Officer was furnished by the assessee and there is nothing on record to show that in furnishing its return of income the assessee has concealed his income or furnished any inaccurate particulars of such income, just on account of the treatment of business loss as speculation loss by the Assessing Officer does not automatically warrant the inference of concealment of income.we are of the view that the penalty levied under section 271(1)(c) of the Act is not exigible.
Issues:
Penalty under section 271(1)(c) of the Act for treating loss on share trading as speculation loss. Analysis: The appeal was against the penalty levied under section 271(1)(c) of the Act for treating the loss on share trading as speculation loss. The assessee, a company engaged in trading shares and earning brokerage, claimed a net loss of Rs. 34,99,611 in the profit and loss account. The Assessing Officer invoked the Explanation to section 73 of the Act, treating the loss as speculation loss. The assessee contended that the loss was on a delivery basis and should be adjusted against business income, not hit by the Explanation. The dispute led to penalty proceedings. The assessee argued that the issue of speculation loss versus business loss was debatable, no concealment or inaccurate particulars were involved, and reliance was placed on relevant court decisions. The Departmental representative argued that the Explanation to section 73 was clear, with no bona fide explanation from the assessee. The Assessing Officer's decision and the Commissioner of Income-tax (Appeals)' confirmation of the penalty were supported. However, upon review, the Tribunal found that all details of share transactions were provided by the assessee, including audit reports and trial balances. The Assessing Officer's application of the Explanation to section 73 was based on self-trading in shares. The Tribunal noted that the assessee's explanations were consistent, the loss amount was undisputed, and the issue revolved around the deeming provisions of the Explanation. Referring to a relevant High Court decision, the Tribunal concluded that mere treatment of business loss as speculation loss does not imply concealment of income if all required information is disclosed. The Tribunal found the facts similar to the referenced case and held that the penalty was not justified. Consequently, the penalty levied by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) was deleted, and the appeal of the assessee was partly allowed.
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