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TMI Blog2019 (4) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... ra is not proved and there is no furnishing of inaccurate particulars of transactions, whether the penalty is leviable u/s 271(1)(c) of the Act needs to be adjudicated. In the case of Krishna Soya Product Pvt. Ltd vs. DCIT [2017 (9) TMI 1801 - ITAT INDORE] adjudicating the similar type of issue of levy of penalty u/s 271(1)(c) in respect of treating the loss on trading of commodity exchange treated as business loss but was held to be as speculative loss by the revenue authorities the penalty levied u/s 271(1)(c) was deleted by the Tribunal Levying the penalty u/s 271(1)(c) on the alleged transaction of purchase and sale of wheat because the assessee has bonafidely treated the loss as business loss and disclosed all necessary details relevant to the transaction in the books of accounts and further for the alleged transaction two divergent views were possible thereby the alleged loss could be treated as a business loss or speculation loss. Thus delete the penalty levied u/s 271(1)(c) - Decided in favour of assessee. - ITA No.652 & 653/Ind/2017 - - - Dated:- 4-4-2019 - Kul Bharat, Judicial Member And Manish Borad, Accountant Member For the Assessee : Shri P.D. Nagar, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed its Income Tax Return declaring income at ₹ 26,12,485/- and ₹ 34,11,875/- on 30.09.2009 respectively for Assessment years 2005-06 and 2007- 08. Subsequent to search notices u/s 153A r.w.s. 143(2) and 142(1) of the Act were issued and served upon the assessee. During the course of assessment proceedings various details filed by the assessee were examined. Disallowance was made u/s 14A of the Act and Ld. A.O also disallowed the loss on sale of wheat treating it to be a speculative loss. The alleged transactions were duly disclosed in the books of accounts and it was pleaded by the assessee that the claim of business loss is bonafide but Ld. A.O on observing that there is no physical delivery of goods in the transaction loss arising there from is a speculative loss falling under the provisions of Section 43(5) of the Act and can be set off only against as speculative profit. Subsequently Ld. A.O initiated the penalty proceedings u/s 271(1)(c)of the Act on the disallowance of loss. 5. In the instant two appeals the common issues raised relates to levy of penalty u/s 271(1)(c) of the Act by the Ld. A.O at ₹ 6,43,300/- and ₹ 3,85,530/- computed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if any payable by him, a sum which shall not be less than but which shall not exceed 3 times the amount of tax sought to be evaded by reason of the concealment of particulars of his income or furnishing of inaccurate particulars of such income. In the case of appellant because of treatment of business loss into speculation loss, there was no attempt to evade any tax by the appellant. see has disclosed all material facts In its return of income in respect of business loss incurred by the assessee and the explanation offered by him has not been found false. It is only change of income from one head to other head. There being change of opinion and being debatable issue, levy of penalty and confirmation thereof u/s. 271(l)(C) of the Act is wholly unjustified. Reliance is placed on following judgments:- i) Jagdish R. Acharya vs. ACIT. ITA No.160/Ahd/2013(Ahmedabad ITAT) ii) CIT vs. Aurica Investment Securities Ltd 310 ITR 121 (Del HC) (2009) iii) Krishna Soya Product Pvt. Ltd vs. DCIT, Indore ITA No.496/Ind/2015 order dated 28.09.2017 (Indore Bench) iv) CIT Navinchandra Co (2014) 42 Taxmann.com 28 (Guj) v) EID Perry India Ltd vs. CCT (2000) 117 STC 457 (SC) vi) D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 7. We have heard the rival submissions of both the parties and perused the material available on record. The perusal of the assessment order and the penalty order reveals that the AO has rejected the contention of the assessee that transactions entered into in respect of soya oil in the course of its business to guard against loss to future fluctuation in respect of its contract for actual delivery for holding of stock of goods manufactured by one more in the nature of speculative transaction. Therefore the business loss claimed was disallowed by the A.O and treating the same as speculative transaction u/s 43(5) of the Act. Thus, the perusal of the assessment order reveals that the AO has made disallowance of speculation loss on the basis of facts as disclosed by the assessee in the return of income and also during the assessment proceedings. We find that the assessee has furnished all relevant facts and merely because the AO has changed the head of loss from business loss to speculative los and allowed to carry forward of the same the penalty u/s 271(1)(c) could not be levied. Where the explanation is bonafide and all the facts relating to the same have been disclosed then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore we are of the considered view that the penalty is not sustainable in the law in the light of ratio laid down by Supreme Court in the case of CIT V Reliance Petro Products Pvt. Ltd (2010) 322 ITR 158 (SC)/189 Taxmann 322 (SC) wherein it was held that merely because the assessee has claimed the expenditure, which claim was not accepted by the revenue, the penalty u/s 271 (1) (c) of the Act cannot be attracted. Having considered the above facts and judicial pronouncements. the penalty levied at ₹ 5,10,000/- u/s 271(1)(c) of [he Act is therefore deleted. The Ground No.l 2 of the appeal are therefore allowed. 14. As the facts of the instant appeals are same to the facts in the case of Krishna Soya Product Pvt. Ltd vs. DCIT(supra) referred above, we respectfully following the same are of the considered opinion that both the lower authorities erred in levying the penalty u/s 271(1)(c) of the Act on the alleged transaction of purchase and sale of wheat because the assessee has bonafidely treated the loss as business loss and disclosed all necessary details relevant to the transaction in the books of accounts and further for the alleged transaction two divergent views were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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