2017 (12) TMI 1341 - AT - Income Tax

Penalty levied u/s.271(1)(c) - assessee made a wrong claim by showing the speculation loss as business loss of the assessee - Held that - On similar circumstance the Hon ble Delhi High Court in the case of CIT v. Auric Investment and Securities Ltd (2007 (7) TMI 276 - DELHI HIGH COURT) held that there was nothing on record to show that on furnishing its return of income, the assessee had either concealed its income or had furnished any inaccurate particulars of income. The mere treatment of business loss as speculation loss by the Assessing Officer did not automatically warrant the inference of concealment of income. - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of penalty levied under Section 271(1)(c) of the Income Tax Act.
2. Treatment of business loss as speculative loss.
3. Disallowance of loss from options and futures.
4. Furnishing of inaccurate particulars and concealment of income.

Detailed Analysis:

1. Deletion of Penalty Levied Under Section 271(1)(c) of the Income Tax Act:
The primary issue in this case is the deletion of the penalty levied under Section 271(1)(c) of the Income Tax Act by the Learned Commissioner of Income Tax (Appeals) [Ld.CIT(A)]. The Revenue filed an appeal against the order of the Ld.CIT(A) dated 31st December 2015, which deleted the penalty imposed for the Assessment Year 2009-10. The penalty was initially levied by the Assessing Officer (AO) for furnishing inaccurate particulars and concealment of income.

2. Treatment of Business Loss as Speculative Loss:
The assessee, engaged in finance, investments, derivatives, and trading in shares and securities, filed a return declaring a loss of ?16,55,35,272/-. The AO completed the assessment determining the income at ?6,42,72,170/- by treating a business loss of ?22,83,15,459/- as speculative loss. This was confirmed by the Ld.CIT(A) and the ITAT, which modified and restricted the speculative loss to ?14,97,82,556/-. The AO initiated penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars and concealment of income.

3. Disallowance of Loss from Options and Futures:
The AO also disallowed the loss from options and futures, treating it as speculative loss, and initiated penalty proceedings. The ITAT sustained the disallowance at ?12,46,956/-. The Ld.CIT(A) deleted the penalty, which led to the Revenue's appeal.

4. Furnishing of Inaccurate Particulars and Concealment of Income:
The Ld.DR argued that the assessee made a wrong claim by showing the speculative loss as business loss, thereby furnishing inaccurate particulars and concealing income. Conversely, the assessee's counsel contended that all particulars were fully disclosed in the return and books of accounts, and the difference in opinion on the head under which the loss should be assessed does not attract penalty under Section 271(1)(c). The counsel relied on the Delhi High Court's decision in CIT v. Auric Investment and Securities Ltd. and the Coordinate Bench decision in ACIT v. M/s. Claridges Investments and Finance P. Ltd.

Judgment Summary:
The ITAT reviewed the rival submissions and the orders of the authorities below. It was noted that the AO assessed the business loss as speculation loss, confirmed by the Ld.CIT(A) and the Tribunal. The penalty was levied for furnishing inaccurate particulars and concealment of income. The Ld.CIT(A) deleted the penalty, citing various decisions of the Hon'ble Jurisdictional High Court, including:

- The Hon'ble Supreme Court in CIT vs. Reliance Petroproducts (P.) Ltd. held that disallowance based on different views does not amount to concealment or furnishing of inaccurate particulars.
- The Hon'ble Bombay High Court in CIT vs. Nalin P. Shah (HUF) and Sesa Resources Ltd vs. ACIT held that full disclosure in the return negates the basis for penalty.
- The Hon'ble Bombay High Court in DIT vs. Administrator of the Estate of Late Mr. E.F. Dinshaw and CIT vs. M/s. Aditya Birla Nova Limited held that penalty cannot be levied for claims rejected by revenue where full details were disclosed.

The ITAT found that in similar circumstances, the Delhi High Court in CIT v. Auric Investment and Securities Ltd. held that mere treatment of business loss as speculation loss does not warrant an inference of concealment of income. The Coordinate Bench in ACIT v. M/s. Claridges Investments and Finance P. Ltd. also supported this view.

The ITAT concluded that mere change of head of income should not result in automatic levy of concealment penalty. The details about the speculative loss were available on record, and the difference of opinion between the AO and the assessee about the head of income does not justify invoking penal provisions. Thus, the ITAT upheld the Ld.CIT(A)'s order deleting the penalty and dismissed the Revenue's appeal.

Conclusion:
The appeal of the Revenue was dismissed, and the order of the Ld.CIT(A) deleting the penalty levied under Section 271(1)(c) of the Income Tax Act was sustained. The judgment emphasized that full disclosure in the return and differences in opinion on the treatment of income do not constitute concealment or furnishing of inaccurate particulars warranting penalty.