TaxTMI 
TaxTMI 
2019 (4) TMI 511
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....nwarranted, unjustified and bad in law. 3.That thus the order so passed u/s 271 ( 1 ) ( C ) of the Act, is quite illegal, arbitrary, unwarranted, unjustified and bad in law. 4. That the appellant further craves leave, to add to alter and/ or to amend any of the aforesaid grounds of appeal as and when necessary. Assessment Year 2007-08 1. That the learned CIT (A) erred in confirming the penalty u/s 271 ( 1 ) ( C ) of the Act, Rs. 3,80,530/- is quite arbitrary, unwarranted, unjustified and bad in law. 2. That the learned CIT ( A ) not considered the facts properly and hence order so passed is quite illegal, arbitrary, unwarranted, unjustified and bad in law. 3.That thus the order so passed u/s 271 ( 1 ) ( C ) of the Act, is quite illegal, arbitrary, unwarranted, unjustified and bad in law. 4. That the appellant further craves leave, to add to alter and/ or to amend any of the aforesaid grounds of appeal as and when necessary. 3. As the issues raised and the facts in these two appeals are common, they are heard together and are being disposed off by this common order for the sake of convenience and brevity. 4. Briefl....
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....he Act by referring to the following common written submissions for both the years under appeal:- The transactions by issue of invoices by existing companies were effected in normal course of business and "mensera" cannot be laid at the doors of the appellant while claiming the loss as business loss. The Assessing Officer merely transferred the business loss to speculation loss and allowed the same as se off against speculation profit earned on sale of shares during the year itself. The difference between the returned income and assessed income remained at Rs, 1,71,176/- only i.e. disallowance u/s. 14A of the Act. There was full and true disclosure of entire facts and such loss was also supported and explained by documentary evidence. The A.O. incorrectly invoked the provisions of section 43(5) of the Act on the ground that there was no movement of goods. In the case of Sripal Satyapal Vs. ITO (2008) 217 CTR 337 (Raj) it was held that "Facts of taking the physical delivery of the goods by the assessee is not the test for determining the speculative transaction in terms of section 43(5) but the test is settlement of the transaction entered into by the assessee or on his behalf....
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....f wheat as a business loss without establishing anything about the movement of goods which shows that the transaction of purchase and sales of wheat is speculative in nature and provisions of Section 45(3) of the Act applies thereon and the loss arising from which transaction without delivery of goods falls under the category of speculation loss and the same can be adjusted/carry forward to be adjusted against speculative profit only. 11. As regards the transaction of purchase and sale of wheat revenue authorities have not pointed out any mistake, error or anomaly in the genuineness of the transaction with regard to the quantity of goods, amount of purchase and sale, details of the party with whom the transaction has been carried out. In nutshell assessee has not concealed any particulars relating to the alleged transaction for both the assessment years. 12. Now in the given facts and circumstances of the case where assessee's mensera 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. 13. We observe that the Co-ordinate Bench, Indore in the case of Krishna Soy....
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....the AO during the assessment proceedings treated the same as speculative nature and disallowed the same and consequently initiated penalty proceedings u/s 271(l)(c) and the same was deleted by the CIT(A)on the ground that it was a bonafide claim on the part of the assessee, considering these facts, the Hon'ble High Court has held that since all relevant particulars in respect of loss were correct and law in respect of said items was not very clear because there was divergent views of the Tribunals at relevant time and therefore no interference of impugned order was called for and the penalty is rightly deleted by the CIT(A) and confirmed by the ITAT. Since the facts of the present case are similar to that case, the ratio of the said decision is squarely applicable in the case of the. assessee. Further, the assessee has relied in the case of Jagdish R. Acharya v CIT 160/(Ahd)/2013, Co-ordinate Bench of Ahmadabad Tribunal, wherein the explanation offered regarding speculation loss was found to be only the change of income from one head to another head and where the assessee has disclosed all the material fact and the penalty u/s 271(l)(c) of the Act was not to be levied. ....