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TMI Blog2017 (12) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 2009-10 in deleting the penalty levied u/s.271(1)(c) of the Act. 2. Briefly stated the facts are that, assessee which is engaged in the business of Finance, Investments, Derivatives, trading in Shares and Securities filed return of income on 19.09.2009 declaring loss of ₹.16,55,35,272/- and the assessment was completed on 28.11.2011 u/s.143(3) of the Act determining the income of the assessee at ₹.6,42,72,170/-. The Assessing Officer while completing the assessment treated business loss of ₹.22,83,15,459/- as loss from speculative business and also disallowed loss from options and futures treating it as speculative loss and initiated penalty proceedings u/s.271(1)(c) of the Act for furnishing inaccurate particulars and concealment of income. Assessee preferred appeal before the Ld.CIT(A) and the Ld.CIT(A) confirmed the disallowance. On further appeal to ITAT, ITAT sustained the action of the Assessing Officer in treating the loss in share trading as speculation loss. However, such loss was modified and restricted to ₹.14,97,82,556/-. In respect of loss on options and futures, the Tribunal sustained the disallowance at ₹.12,46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld.CIT(A) and also the Tribunal. Penalty was levied for furnishing of inaccurate particulars of income and concealment of income. Ld.CIT(A) deleted the penalty by considering various decisions of the Hon'ble Jurisdictional High Court observing as under: - 5.1 The main business of the appellant is dealing in shares. The appellant purchased shares at a time when market was at all time high. Due to market indices crashed the appellant suffered valuation loss of ₹ 22.83 crores. The appellant treated the loss as business loss and carried forward the same on the ground that the main business of the appellant is purchase/sale of shares and loss on account of valuation of stock of shares is part of the business loss of the appellant. The Assessing Officer, however, treated the loss on valuation of closing stock held as stock in trade as speculation loss and allowed it to be carried forward to be absorbed from the speculative profits, if any, in subsequent years. 5.2 During the year under consideration the appellant has claimed an amount of ₹ 12,46,965/- towards loss in option and futures. During the course of assessment proceedings the appellant has accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale of US- 64 units. the loss and resultant carry forward. Further, all details were disclosed in its return of income as is evident from the fact that the assessing officer gathered information about the carry forward loss and sale of units from return filed by the respondent- Appellant. The Tribunal held that from the aforesaid facts at the highest it can be said that the claim of the Appellant was not sustainable in law but there was no furnishing of inaccurate particulars or concealment of income on the part of the respondent-Appellant. Thus, the penalty was set aside. * Further, the Hon ble Bombay High Court in the case of Sesa Resources Ltd vs. ACIT (219 Taxman 92) held that where there was no dispute that the appellant disclosed all the facts and the appellant did not conceal any facts, and, further that based on the disclosed material, the appellant sought the deduction which was denied on the ground that it was not entitled to the same as a matter of law, the Hon'ble Tribunal was in error in holding that merely because the claim for deduction was denied the appellant is liable to pay a penalty. * The Hon'ble Bombay High Court in the case of DIT vs. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We also find that on similar circumstance the Hon'ble Delhi High Court in the case of CIT v. Auric Investment and Securities Ltd (supra) 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. Following this decision the Coordinate Bench in the case of ACIT v. M/s. Claridges Investments and finance P. Ltd (supra) held as under:- 3. The assessee preferred an appeal before the FAA and contended that the disallowance made by the AO had converted the business loss into speculative loss following the provision of explanation to section 73 of the Act, that the addition were made on account of application of deeming provisions and not on account of any concealment of any particular of income, that assessee had not suppressed any income or claimed any wrong expenditure, that at the time of filing of return the assessee had mentioned about the dealing with shares of other company, that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refer to the judgment of the Hon ble Delhi High Court Auric Investments and Securities Ltd. (supra) relied upon by the FAA in that matter the claim of business loss was disallowed and it was held that loss was to be assessed under the head speculative loss. The AO levied penalty u/s.271(1)(c) for concealment of particulars of income. When the matter traveled to the Hon ble High Court, it decided the issue as under: During the assessment proceedings for the assessment year 2001-02, the Assessing Officer found that the loss claimed by the assessee was speculative in nature to be adjusted against speculative income only and as the income was assessed at a loss, the loss shown by the assessee could not be adjusted. Therefore, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, and imposed penalty. The penalty was cancelled by the Commissioner of Income-tax (Appeals) and this was upheld by the Tribunal. . there was nothing on record to show that in furnishing its return of income, the assessee had either concealed its income or had furnished any inaccurate particulars of income. The mere treatment of the business loss as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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