2017 (12) TMI 1341

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.... 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 Rs..14,97,82,556/-. In respect of loss on options and futures, the Tribunal sustained the disallowance at Rs..12,46,956/-. The Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act and passed order dated 28.03.2014 levying penalty of Rs..5,13,64,934/. Assessee preferred appeal before Ld.CIT(A) and the Ld.CIT(A) deleted the penalty against which the Revenue is in appeal before us. 3. Ld.DR vehemently supporting the order of the Assessing Officer in levying penalty u/s. 271(1)(c) of the Act on the disallowances made by the Assessing Officer. Ld.DR submits that assessee made a wrong claim by showing the speculation loss as business loss of the assessee, and therefore, the Assessing Officer has rightly held that the assessee furnished inaccurate....

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....aluation 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 Rs. 12,46,965/- towards loss in option and futures. During the course of assessment proceedings the appellant has accepted before the Assessing Officer that the loss on sale of commodity derivatives is speculation loss. 5.3 I find that the appellant has duly disclosed the above losses in its return of income. The appellant's claim of business loss treated by the Assessing Officer as speculative loss is different treatments followed by the appellant as well as Assessing Officer. 5.4 It is a settled legal position that 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. 5.5. In coming to a decision in this case, I find support in the following decisions of Hon'ble Supreme Court: ....

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....s 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. Administrator of the Estate of Late Mr. E.F. Dinshaw (218 Taxman 125) held that penalty for concealment of income, cannot be levied for claim being rejected by revenue, where full details were disclosed in return. That was the case in which the Appellant claimed that section 94(7) of the Act did not apply to its case since that provision refers to 'sale" whereas the Appellant's case was that of redemption. The Hon'ble Bombay High Court, followed the ratio laid down in the decision of Reliance Petroproducts (supra) and held that since the Appellant had given all the details and its claim was based on bona fide belief, penalty under section 271(1)(c) of the Act was not leviable. * Similarly, the....

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....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 had found about the loss from the profit and loss account filed by the assessee. The assessee relied upon the judgment of the Hon'ble Supreme Court delivered in the case of Reliance Petro Products Ltd.(322ITR158). It was further argued that there was no change in amount of total income which was a loss, that merely a change of treatment of loss did not tantamount to concealment of income/filing of inaccurate particulars. Assessee relied upon cases of Auric Investments and Securities Ltd.(310ITR121) and Bhartesh Jain(323ITR58) in its support. The FAA considered the submission of the assessee and the penalty order of the AO. He held that in the matter under appeal share trading loss were treated speculative losses, that only hea....