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TMI Blog2016 (8) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Hon’ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) has held that a mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. In view of the above discussion, we are of the considered opinion that this is not a fit case for levy of penalty. We therefore set aside the order of the CIT(A) and direct the AO to cancel the penalty levied u/s.271(1)(c) of the I.T. Act, 1961. The grounds raised by the assessee are accordingly allowed. - ITA Nos.512 to 515/PN/2015 - - - Dated:- 30-6-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Appellant : Shri Hari Krishan For The Respondent : Shri Anil Chaware ORDER PER R.K.PANDA, AM : The above 4 appeals filed by the assessee are directed against the separate orders dated 10-03-2015 of the CIT(A)-II, Nashik relating to Assessment Years 2000-01 2002-03 to 2004-05. Since common issue is involved in all these appeals, therefore, these appeals were heard together and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied for A.Yrs. 2002-03 to 2004-05 which are as under : A.Y. Penalty levied 2002-03 35,683/- 2003-04 1,69,573/- 2004-05 4,66,402/- 4. In appeal the Ld.CIT(A) upheld the penalty levied by the AO for all these years. 5. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 6. The Ld. Counsel for the assessee submitted that the assessee is a share broker who purchases and sells shares on behalf of its clients as well as doing own business. The company was incorporated in the year 1995 and is filing returns regularly. The method of accounting being followed is consistent and there is no change in the method of accounting and its presentation before the tax authorities. The Department has accepted the returns upto A.Y. 1999-2000 and in most of the cases orders have been passed u/s.143(3). In the A.Y. 2004-05 the AO deviated from his earlier stand and invoked the provisions of Explanation to section 73 of the Act and treated the share trading business of the assessee as speculative business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention of the Bench to such details for A.Y. 2002-03 and page 106 of the paper book for A.Y. 2003-04. He submitted that the AO has not pointed out what is the inaccurate particulars. 9. Referring to the decision of Hon ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 he submitted that the Hon ble Supreme Court in the said decision has held that a mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. He submitted that the assessee has disclosed all material particulars. Referring to the decision of Delhi Bench of the Tribunal in the case of S.R.J. Securities Ltd. Vs. ITO reported in 16 taxmann.com 90 he submitted that the Tribunal in the said decision has held that where quantum of loss on account of purchase and sale of share was undisputed and addition was made treating such loss as speculation loss no penalty can be levied u/s.271(1)(c) of the I.T. Act. He submitted that the Delhi Bench of the Tribunal has followed the decision of the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case is a Private Limited Company engaged in the business of share brokerage and share trading. The assessee is a sub-broker of Joindre Capital Services Ltd. The assessee was engaged in trading of the shares for the customers through the main brokers and earned commission income from the said transaction. Besides the assessee was also engaged in buying and selling of shares for itself on delivery basis. The said deliveries were taken through Demat account maintained with the brokers. The assessee company has not maintained separate books of account for the share transaction of the clients and of its own self and the establishment expenses were debited to profit and loss account and the income/loss was computed. We find the AO applying the provisions of Explanation to section 73(2) of the Act treated the share trading business of the assessee as speculation business. After deducting the various expenses between the speculative business and normal business, the AO determined the normal income and speculative income/loss. This bifurcation of the expenses by the AO has attained finality since the assessee has lost before the CIT(A) as well as before the Tribunal. The AO thereafter h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 34.99 lacs was also placed before the A.O. A perusal of the assessment order shows that the A.O. has invoked the provisions of Explanation to Section 73 of the Act to treat the loss incurred by the assessee on account of self trading in the shares to an extent of ₹ 37,40,568/- as speculative loss. A perusal of the reply as filed by the assessee in the course of assessment proceedings also explains the reasons given by the assessee for the non-applicability of Explanation to Section 73 of the Act. The fact that the assessee has incurred a loss is not disputed. The quantum of the loss is also not disputed. The only issue is whether the deeming provisions of Explanation to Section 73 of the Act hit the assessee in so far as the business loss as incurred by the assessee is treated as speculation loss for the purpose of computation of taxable income. A perusal of the decision of Hon'ble Jurisdictional High Court in the case of Auric Investments Securities P. Ltd. referred to supra, shows that the Hon'ble High Court had under similar circumstances where all the requisite information as required by the A.O. was furnished by the assessee and there is nothing on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding business' against 'other business income' and income from any other sources during the year under consideration. Since we have allowed the assessee's primary contention/ground, we do not consider it necessary to adjudicate the alternative contention raised by the assessee. Since the business of the assessee company is that of trading in shares, therefore, in view of the above decision of the Mumbai Bench of the Tribunal, the assessee is out of the purview of Explanation to section 73. Although the quantum addition has been sustained by the Tribunal, however, it is the settled law that the penalty proceedings are independent proceedings and the assessee always can raise new plea during the penalty proceedings. 17. The Hon ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (Supra) has held that a mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. 18. In view of the above discussion, we are of the considered opinion that this is not a fit case for levy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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