9911796707
TMI Blog2021 (5) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... he made addition of Rs. 27,63,30,230/- by invoking the explanation to provisions of section 73 of the Act being speculative loss on derivative transactions which cannot be set off against the business income. He also made addition of Rs. 4798/- u/s 14A r.w.r.8D and Rs. 33,000/- being expenses incurred at ROC for increasing authorized share capital. The Assessing Officer, thereafter, initiated penalty proceedings u/s 271(1)(c) of the Income Tax Act. Rejecting the various explanation given by the assessee and observing that the assessee has furnished inaccurate particulars of income to the extent of Rs. 27,63,35,028/-(27,63,30,230 + 4798), the Assessing Officer levied penalty of Rs. 9,39,26,270/- u/s 271(1)(c) of the Act being penalty @ 100% of the tax sought to be evaded. 3. In appeal, the learned CIT(A) canceled the penalty so levied by the Assessing Officer by observing as under:- 12. I have carefully gone through the facts of the case. I have also carefully perused the submissions and arguments of the assessee and its counsel during assessment and penalty stage. The undisputed facts of the case are that the assessee had incurred a loss of Rs. 27,63,30,230/- in share trading b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuineness of the transactions and the loss incurred had been accepted in the assessment proceedings. At the penalty stage also no doubts have been expressed by the assessing officer regarding genuineness of the transactions or the loss. It was also found that the assessee has been treating derivatives separately from the other share transactions. No fault had been observed by the auditors also in accounting and tax treatment given by the assessee to these transactions. Even during assessment proceedings and later appellate proceedings, the assessee had taken consistent stand that derivative were different from shares. Further, there is no allegation of any mis-representation of any fact at any stage by any authority. 15. Considering these facts and circumstances, it can be safely concluded that the assessee has disclosed and explained its transaction with full degree of openness and transparency. It is possible to hold a different view of the facts, but the facts themselves had remained undisputedly clear in this case. The assessee had disclosed its transactions transparently in the audited financial statements and before income tax authorities. 16. The next and main issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was merely a change in nature of otherwise genuine loss. It is now very well settled that no penalty can be levied merely for denial of claim made by the assessee. In CIT vs. Reliance Petro products Pvt. Ltd. 322 ITR 158 (SC) the Hon'ble Apex Court held that where information given is not found to be incorrect, assessee cannot be held guilty of furnishing inaccurate particulars of income for the purpose of levying penalty u/s 271(l)(c). Further, it was held that mere making a claim does not amount to furnishing inaccurate particulars. In the absence of finding that any details supplied by assessee is incorrect or false, penalty cannot be levied. Similarly, it is now a well settled proposition that no penalty can be levied merely for change in head of income. In this regard Hon'ble Bombay High Court in case of CIT vs. Bennett Coleman & Co. Ltd has held that penalty u/s 271(1) (c) cannot be imposed when there was no desire on part of assessee to hide or conceal the income but it was an inadvertent mistake on part of assessee and when there is only change of head of income no penalty could be imposed. 20. Having resolved the relevant issues arising in the matter, I now come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses otherwise. Considering all these facts and in view of decisions cited by the assessee and its counsel which cover the matter, the penalty on this disallowance is also deleted. 24. In the result, appeal of the assessee is allowed and penalty levied u/s 271(1)(c) is deleted." 4. Aggrieved with such order of the learned CIT(A), the Revenue is in appeal before the Tribunal. 5. The learned DR strongly challenged the order of the learned CIT(A) in deleting the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act. He submitted that the quantum addition was upheld by the learned CIT(A). Further, a perusal of the order clearly shows that levy of penalty u/s 271(1)(c) of the Act in the instant case is fully justified. He submitted that learned CIT(A) without giving any valid reason has deleted the penalty which is not justified under the facts and circumstances of the case. He accordingly submitted that the order of learned CIT(A) should be reversed and that of the Assessing Officer be restored. He also relied on various decisions. 6. The learned counsel for the assessee, on the other hands, heavily relied on the order of learned CIT(A) in cancelling the penalty levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of income. Therefore, on this count itself, the penalty proceedings initiated by the Assessing Officer being not in accordance with law has to be quashed. 10. The learned counsel for the assessee, referring to the decision of the Hon'ble Supreme Court in the case of PCTI vs Reliance Petro Products Pvt. Ltd. reported in 322 ITR 158 submitted that Hon'ble Supreme Court in the said decision has held that mere making of an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. Merely because the assessee claimed deduction which has not been accepted by the Revenue, the penalty u/s 271(1)(c) cannot be attracted. If the contention of the Revenue is accepted, the assessee would be liable for penalty u/s 271(1)(c) of the Act in every case where the claim made by the assessee is not accepted by the Assessing Officer for any reason. That is clearly not the intendment of the legislature. 10.1. Referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs Bhartesh Jain reported in 323 ITR 358, he submitted that Hon'ble Delhi High Court in the said decision has held that the penalty u/s 271(1)(c) was not leviable where the addition was made on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of Rs. 27,63,30,230/- being speculative loss on derivative transactions which according to him cannot be set off against business income and disallowance of Rs. 4,798/- u/s 14A r.w.r 8D(2)(iii) of the Rules. While doing so, the Assessing Officer held that the assessee has furnished inaccurate particulars of business income to the extent of Rs. 27,63,35,028/-. We find the learned CIT(A) deleted the penalty so levied by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. We do not find any infirmity in the order of the learned CIT(A) cancelling the penalty levied by the Assessing Officer on this issue. The Hon'ble Delhi High Court in the case of CIT vs Bhartesh Jain (supra) has held that penalty u/s 271(1)(c) of the Act was not leviable where the addition was made on account of treatment of business loss as speculation loss. The Hon'ble Delhi High Court in the case of CIT vs Auric Investment & Securities Ltd. (supra) has held that the assessee having submitted the requisite details of the share transactions during the course of assessment proceedings as required by the Assessing Officer, it cannot be said that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
