D.C.I.T. CEN.CIR.39, MUMBAI V. VIRENDRA JAIN, MUMBAI

ITA 1462/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79365 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transactions in derivatives; Speculation loss; Wrong claim

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 1462/M/2012 ( AY: 200 6 - 20 07 ) ACIT, CENTRAL CIRCLE - 39, R.NO.32(1), GROUND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. SHRI VIRENDRA JAIN, 82, MAKER CHAMBERS III, NARIMAN POINT, MUMBAI - 21. ./ PAN : AABPJ 1882 E ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI VIJAY MEHTA / REVENUE BY : SHRI RAJENDRA KUMAR, DR / DATE OF HEARING :22.5 .2014 / DATE OF PRONOUNCEMENT :04.7 .2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 2.3.2012 IS AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 16.12.2011 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) WAS JUSTIFIED IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT WHEN IT IS CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME AS ASSESSEE HAS NOT TAKEN DUE CARE AT T IME OF FILING ORIGINAL RETURN OF INCOME AND HENCE, CASE IS COVERED BY THE DECISION OF THE SUPREME COURT IN THE CASE OF CEMENT MARKETING COMPANY OF INDIA LTD 124 ITR 1. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) WAS JUSTIFIED IN HOLDING THE MISTAKE OF ASSESSEE IN SHOWING EXCESSIVE SPECULATION LOSS OF RS. 34,67,286 IN RETURN OF INCOME IS BONA FIDE ACT AND HENCE PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. 3. BRIEFLY STATED RELEVANT FACTS OF THIS CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 1,00,85,394 / - . IN THE RETURN OF INCOME, ASSESSEE DISCLOSED INCOME ON TRADING OF FEATURES & OPTIONS (F&O) AND THE SAME IS SET OFF AGAINST THE BROUGHT FORWARD LOSSES FOR THE AY 2 001 - 2002 AMOUNTING TO RS. 2 4,55,30,494/ - . SUCH SET OFF LOSSES WAS NOT ALLOWED BY THE AO IN VIEW OF THE AMENDED PROVISIONS OF SECTION 73 OF THE IT ACT. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) DISMISSED THE APPEAL. HOWEVER, ITAT ALLOWED THE APPEAL OF THE ASSESSEE VIDE ITA NO.1009/M/2010, DATED 31.5.2010 AND DIRECTED THE AO TO ALLOW THE SET OFF AS CLAIMED BY THE ASSESSEE. AO FRAMED THE ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. HOWEVER, THE AO INITIATED THE PENALTY PROCEEDINGS AND LEVIED THE PENALTY OF RS. 11,67,090/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME VIDE THE ORDER DATED 7.12.2010. DURING THE PROCEEDINGS, AO GATHERED THE DETAILS RELATING TO THE SPECUL ATION ACTIVITIES, PROFIT AND LOSSES. BEFORE HIM, ASSESSEE MADE WRITTEN SUBMISSIONS. ON PERUSAL OF THE SAME AO NOTICED THAT IT CONTAINS THE FACT OF ASSESSEE GETTING RELIEF IN THE FIRST AND SECOND APPELLATE PROCEEDINGS AND IN PARA 2 HE RELIED ON CERTAIN DE CISIONS AGAINST LEVYING OF PENALTY. CIT (A) CONSIDERED THE SAID REPLY AND PERUSED THE FIGURES AND FOUND DIRECTION BY THE TRIBUNAL FOR ALLOWING SET OFF WHICH IS RESTRICTED TO 4,20,63,208/ - OF THE SPECULATION BUSINESS ONLY AGAINST THE CLAIM OF RS. 4,55,30,4 94/ - , WHICH IS CLAIMED IN THE RETURN. AO CAME TO THE CONCLUSION THAT ASSESSEE MADE A WRONG CLAIM OF SET OFF OF SPECULATION BUSINESS LOSS TO THE TUNE OF RS. 34,67,286/ - , WHICH IS THE SUBJECT MATTER OF PENALTY IN THE PRESENT APPEAL. IT IS THE FINDING OF TH E AO THAT THE CLAIM OF SET OFF OF THE SPECULATION LOSS IS NOT BONA FIDE CLAIM. IN THIS REGARD, IN THE SECOND ROUND, CIT (A) DELETED THE PENALTY FOR THE REASONS GIVEN IN PARA 2.4 OF THE IMPUGNED ORDER. IN THE SAID PARA, CIT (A) DISCUSSED THE FACT THAT THE SAID AMOUNT HAS ACCRUED INTO THE RETURNS UNDER THE BONA FIDE BELIEF THAT THE ASSESSEE ADMITTED BEFORE THE AO BY SUBMITTING CORRECT FIGURES AND CLAIMED RS.4,20,63,208/ - AND NOT OF RS. 4,55,30,494/ - AS CLAIMED IN THE RETURN. 2.4..THUS, THE ASSESSEE HA S NOT CONCEALED ANY INCOME NOR SUBMITTED INACCURATE PARTICULARS EXCEPT THE BONA FIDE MISTAKE. I HAVE PERUSED THE SUBMISSIONS OF THE APPELLANT AND ARGUMENTS OF THE AO. IT IS CLEAR THAT THE ISSUE INVOLVED WAS SETTING OFF OF SPECULATION LOSS OF AY 2001 - 2002 AGAINST THE SPECULATION PROFIT OF AY 2006 - 2007 WHICH IS DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE, NO PENALTY IS LEVIABLE. HOWEVER, THERE WAS AN EXCESS CLAIM OF RS. 34,67,286/ - IN THE RETURN WHICH WAS RECTIFIED BY THE ASSESSEE BY SUBMITTING THE CORRE CT FIGURE OF RS. 4,20,63,208/ - WHICH IS A BONA FIDE MISTAKE. MOREOVER, THE DECISION OF HONBLE COURTS RELIED UPON BY THE APPELLANT SQUARELY COVERS THIS ISSUE, THE GIST OF WHICH IS REPRODUCED AS UNDER: 1. MRS MANINDER SIDHE VS. ACIT (ITA NO.489/2010) 2. KAMAL KI SHORE SWAMI VS. ITO (ITAT JODHPUR) 85 TTJ 206 3. GUJRAT CREDIT CORP LTD VS. ACIT 3 KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES AND THE DECISION OF THE HONBLE COURTS, IT IS HELD THAT THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOME AND ALSO NOT SUBMITTE D INACCURATE PARTICULARS. THE MISTAKE WAS BONA FIDE WHICH WAS RECTIFIED BY GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. THEREFORE, THE PENALTY LEVIED BY THE AO IS NOT SUSTAINABLE, HENCE, DELETED. THE GROUND OF APPEAL IS ALLOWED. 5. THUS, FROM THE ABOVE IT IS EVIDENT THAT THE INCREASE OF CLAIM OF LOSS TO THE TUNE OF RS. 34,67,286/ - IS THE AREA OF DISPUTE AND THE SAME WAS RECTIFIED BY THE ASSESSEE AND THE CORRECT FIGURES WERE CLAIMED IN THE PROCEEDINGS WHILE GIVING EFFECT TO THE ORDERS OF THE TRIBUNAL. SO FAR AS THE LEGALITY OF THE ISSUE IS CONCERNED, IN PRINCIPLE, ASSESSEE IS ENTITLED TO THE CLAIM OF SET OFF OF LOSSES AGAINST THE INCOME. BUT THE ONLY ERROR IS WITH REGARD TO THE CORRECTNESS OF THE FIGURES WHICH WAS SUBSEQUENTLY RECTIF IED AND IT IS THE CLAIM OF THE ASSESSEE THAT IT IS A BONA FIDE ERROR. AO HAS NOT BROUGHT ANYTHING ON RECORD TO DEMONSTRATE THAT THE SAME IS MALA FIDE CLAIM. UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE DECISION GIVEN BY THE CIT (A) IS FAIR A ND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON 04 TH JULY , 2014. SD/ - SD/ - ( I.P. BA NSAL ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 04 TH JULY, 2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 4 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI