2018 (11) TMI 1850 - AT - Income Tax

Penalty u/s 271(1)(c) - loss suffered in share trading has to be set off against the other income - whether mere making a claim for set off of losses in share trading amounts to furnishing of inaccurate particulars of income? - HELD THAT - This issue was considered by the Apex Court in CIT Vs. Reliance Petroproducts (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT as found that after furnishing entire details making a claim in the return of income does not amount to furnishing inaccurate particulars or concealing any part of income. This Tribunal is of the considered opinion that if the assessee makes a claim after furnishing entire details it is his personal opinion with regard to income-tax. There may be difference of opinion with regard to nature of transactions by the assessee at one end and opinion of Department at other end. This difference of opinion with regard to nature of transaction cannot be construed as furnishing inaccurate particulars of income as found by the Apex Court in Reliance Petroproducts (P) Ltd. (supra). - penalty levied by the assessee for both the assessment years are deleted. - Decided in favour of assessee.

Summary

Issues:
Assessment of penalty under Section 271(1)(c) of the Income-tax Act, 1961 for assessment years 2007-08 and 2011-12 based on claim of set off of losses in share trading against professional income.

Analysis:
The judgment by the Appellate Tribunal ITAT Chennai involved two appeals by the assessee against orders confirming penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961. The core issue revolved around whether claiming set off of losses in share trading against professional income constitutes furnishing inaccurate particulars of income or concealing income. The assessee, a medical practitioner, argued that the losses were set off legitimately, providing transaction details, and contended that mere claim of set off does not imply inaccurate particulars. On the other hand, the Departmental Representative asserted that the assessee deliberately misrepresented income details by claiming set off, which led to inaccurate particulars. The Tribunal analyzed the case considering the nature of share trading transactions and the provisions of Section 271(1)(c) of the Act.

The Tribunal observed that the assessee, besides being a medical practitioner, was involved in share trading where losses were set off against other income. The Assessing Officer disallowed this set off, deeming the share transactions as speculative. The crucial question was whether claiming set off of losses in share trading amounted to furnishing inaccurate particulars of income. The Tribunal referred to Section 271(1)(c) of the Act, which penalizes concealment or furnishing inaccurate particulars of income. Notably, the Tribunal highlighted that the assessee had disclosed all transaction details to the Assessing Officer, indicating no concealment. The Tribunal also cited a Supreme Court ruling in CIT Vs. Reliance Petroproducts (P) Ltd., emphasizing that making a claim post disclosure does not constitute inaccurate particulars or concealment. The Tribunal concluded that a divergence in opinion between the assessee and the Department on the nature of transactions does not imply inaccurate particulars, aligning with the Supreme Court precedent.

Ultimately, the Tribunal set aside the orders of the lower authorities, ruling in favor of the assessee and deleting the penalties for both assessment years. The judgment emphasized that making a claim for set off after disclosing all details does not amount to furnishing inaccurate particulars of income. The appeals filed by the assessee were allowed, and the penalty levied was revoked.