2017 (3) TMI 1698 - AT - Income Tax

Levy of penalty u/s.271(1)(c) - CIT-A treating the sale of investment in commodities as speculation income under the head profits and gains from business/profession and profit on sale of Mutual Fund as business income - Held that - AO has stated that the purchase and sale of shares in commodity were made on the very same date without delivery. This finding of the Assessing Officer has not been controverted by the assessee by bringing any positive material on record. If the argument of the assessee is to be accepted that the assessee was an investor and not a trader then no investor would sale the shares on the very same date of the purchase or within 2 to 3 days of the purchase. No good and justifiable reason to interfere with the order of the CIT(A) which is hereby confirmed and the ground of appeal of the assessee is dismissed. Addition as agricultural income - Held that - Assessee has brought no positive material on record to controvert the findings of the Assessing Officer as well as the CIT(A). No reason to interfere in the order of the CIT(A) which is hereby confirmed and ground of appeal of the assessee is dismissed. Levy of penalty u/s.271(1)(c) - Held that - The facts of the case before the Hon ble Supreme Court in the case of SSA s. Emarld Meadows 2016 (8) TMI 1145 - SUPREME COURT and therefore the decision of Hon ble Supreme Court squarely applies to the case of the assessee. Hence respectfully following the same cancel the levy of penalty u/s.271(1)(c) and allow the ground of appeal of the assessee.

Summary

Issues:
1. Confirmation of levy of penalty u/s.271(1)(c) for the assessment year 2010-11.
2. Confirmation of addition as speculation income, income from mutual fund, and agricultural income for the assessment year 2010-11.

Issue 1: Confirmation of levy of penalty u/s.271(1)(c)
The Appellate Tribunal considered the appeal filed by the assessee against the order of CIT(A) confirming the penalty of &8377; 5,69,730/- u/s.271(1)(c) of the Act. The assessee argued that the penalty notice did not specify whether it was for furnishing inaccurate particulars or for concealment of income. Citing a Supreme Court judgment, the assessee contended that this omission rendered the penalty order liable for cancellation. The Departmental Representative did not challenge this submission. The Tribunal noted that the facts were undisputed, and the penalty was imposed without specifying the nature of the violation. Relying on the Supreme Court decision, the Tribunal canceled the penalty, allowing the ground of appeal of the assessee.

Issue 2: Confirmation of addition as speculation income, income from mutual fund, and agricultural income
In the assessment for the year 2010-11, the Assessing Officer treated the short term capital gain as speculation income due to same-day purchase and sale of shares without delivery. The CIT(A) upheld this treatment, categorizing the profits accordingly. The assessee contended that they were investors, not traders, and the gains should be short term capital gains. However, the Tribunal found that the assessee failed to provide evidence supporting their claim, and the nature of transactions indicated speculation income. Therefore, the CIT(A)'s decision was confirmed, and the appeal ground was dismissed. Regarding the addition of agricultural income, the Assessing Officer questioned the timing of sales in relation to the lease agreement for agricultural land. The CIT(A) affirmed the addition, considering the income unexplained. The Tribunal found no new evidence presented by the assessee to challenge the findings, leading to the confirmation of the CIT(A)'s decision and dismissal of the appeal ground.

In conclusion, the Tribunal allowed the appeal in ITA No.363/CTK/2015 concerning the penalty levy, canceling the penalty. However, the appeal in ITA No.364/CTK/2015 challenging the additions as speculation income and agricultural income was dismissed, upholding the decisions of the lower authorities.