HARVESTDEAL SECURITIES P. LTD, MUMBAI V. ITO 4(1)(2), MUMBAI

ITA 1615/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88509 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 18-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JEETENDRA KUMAR
• Keywords: Speculation loss; Wrong claim
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BE NCH, MUMBAI , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO.1615/MUM/2013 ( ' ' ' ' / ASSESSMENT YEAR : 2007-08 M/S. HARVESTDEAL SECURITIES PVT. LTD., 3 RD FLOOR, SURYA MAHAL, NAGINDAS MASTER ROAD, FORT, MUMBAI-400 023 / VS. THE ITO, WARD 4(1)(2), MUMBAI ( % ./ ) ./ PAN/GIR NO. : AAACH 8152R ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: SHRI JEETENDRA KUMAR +,(* . - / RESPONDENT BY: SHRI VIJAY MEHTA . /0% / DATE OF HEARING :24.02.2015 12' . /0% / DATE OF PRONOUNCEMENT :27.02.2015 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-8, MUMBAI DT. 22.01.2013 PERTAINING TO A SSESSMENT YEAR 2007-08. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY MADE U/S. 271(1)(C) OF THE ACT. ITA NO. 1615/M/2013 2 3. THE ROOT FOR THE LEVY OF PENALTY LIE IN THE ASSE SSMENT ORDER DT. 21.12.2009 MADE U/S. 143(3) OF THE ACT. WHILE SCRU TINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSE SSEE HAS DEBITED SHARE TRADING AND OTHER LOSS AT RS. 4,90,13,303/- OUT OF WHICH LOSS OF RS. 4,97,62,744/- COMPRISES OF F &O LOSS AND SPECULATI ON LOSS. ON PERUSING THE BIFURCATION, THE AO NOTICED THAT THE LOSS OF RS . 32,91,021/- PERTAINS TO DAILY SQUARED UP LOSS WHICH WAS TREATED AS SPECULAT ION LOSS BY THE AO. THE AO DISMISSED THE CLAIM OF THE ASSESSEE THAT IT IS ALSO HAVING SHARE TRADING INCOME ON DELIVERY BASIS AND BEING A PRIVAT E LIMITED COMPANY, THE SAME SHOULD BE TREATED AS SPECULATIVE INCOME AND TH E SAME IF SET OFF AGAINST THE SPECULATIVE LOSS AS TAKEN BY THE AO, T HERE WILL BE STILL SPECULATION PROFIT. THE AO COMPLETED THE ASSESSMEN T BY TREATING DAILY SQUARED UP LOSS AS SPECULATION LOSS AND INITIATED P ENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FILING INACCURATE PARTICUL ARS OF INCOME. 4. DURING THE COURSE OF THE PENALTY PROCEEDINGS, TH E ASSESSEE CONTENDED THAT PENALTY CANNOT BE IMPOSED IF BUSINES S LOSS IS TREATED AS SPECULATION LOSS. FURTHER THERE IS NO TAX LIABILIT Y AND THERE IS NO LOSS OF REVENUE BY CHANGING THE HEAD FROM BUSINESS LOSS TO SPECULATION LOSS BECAUSE THE TOTAL CARRY FORWARD LOSSES ARE THE SAM E. THE CLAIM OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE AO. THE AO WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS WILLFULLY CLAIMED SPEC ULATION LOSS AS BUSINESS LOSS AND PROCEEDED BY LEVYING PENALTY U/S. 271(1)(C ) OF THE ACT AT RS. 15 LAKHS. 5. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. ITA NO. 1615/M/2013 3 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE AO HAS PROCEEDED BY TREATING THE LOSS AS SPECULATIVE LOSS BY APPLYING THE PROVISIONS OF SEC. 73 OF THE ACT. THIS ITSELF SHOW S THAT THE ACTION OF THE AO IS APPLYING THE DEEMING PROVISIONS OF SEC. 73 OF THE ACT WHICH DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS THE SAY OF THE LD. COUNSEL THAT IF THE NON DELIVERY BASED T RANSACTION SQUARED UP DURING THE DAY ITSELF IS TREATED AS A SPECULATIVE T RANSACTION RESULTING INTO SPECULATIVE LOSS, THEN TRANSACTIONS WHICH HAVE RESU LTED INTO PROFIT SHOULD ALSO BE TREATED AS SPECULATION PROFIT AND THE SPECU LATION LOSS COULD EASILY BE SET OFF AGAINST THE SAID SPECULATION PROFIT AS P ER PROVISIONS OF SEC. 73 OF THE ACT. THE LD. COUNSEL CONCLUDED BY SAYING THA T THE LEVY OF PENALTY IS BAD IN LAW. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECOR D. IN SO FAR AS THE LOSS OF RS. 32,91,021/- IS CONCERNED, THERE IS NO D ISPUTE THAT THIS IS A GENUINE LOSS SUFFERED BY THE ASSESSEE. THE ONLY POI NT OF DISPUTE IS THAT THE ASSESSEE HAS SUFFERED THIS LOSS ON DAILY TRANSACTIO NS WHICH WERE SQUARED UP DURING THE DAY ITSELF BY INVOKING THE PROVISIONS OF SEC. 73 OF THE ACT, THE AO HAS TREATED SUCH LOSSS AS SPECULATION LOSS. IN OUR CONSIDERATE OPINION, SUCH ACTION OF THE AO DOES NOT PROVE THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME. ON SIMILAR SET O F FACTS, THE CO ORDINATE BENCH IN ITA NO. 2598/M/2009 OBSERVED AS UNDER: WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RELEV ANT RECORD. WE NOTED THAT THE ASSESSEE DISCLOSED AND FU RNISHED RELEVANT PARTICULARS AND MATERIAL NECESSARY FOR THE ASSESSMENT. ITA NO. 1615/M/2013 4 THE AO HAS FRAMED THE ASSESSMENT BASED ON RECORD AV AILABLE AND FILED BY THE ASSESSEE. THEREFORE, THE DISALLOWANCE WAS MERELY, BY TREATING THE LOSS ON SALE OF SHARES AS SPECULATIVE LOSS INSTEAD OF BUSINESS LOSS CLAIMED BY THE ASSESSEE AND NOT ON TH E BASIS OF ANY BOGUS CLAIM OR FALSE CLAIM MADE BY THE ASSESSEE. WH EN THE ASSESSEE DISCLOSED ALL THE MATERIAL FACTS REGARDING THE SOURCE OF INCOME /LOSS THEN IT CANNOT BE SAID THAT THE ASSESS EE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE P ARTICULARS OF INCOME. THE ADDITION ON ACCOUNT OF TREATMENT OF LOS S BY APPLYING THE PROVISIONS OF SECTION 73 ITSELF SHOWS THAT THE DISALLOWANCE WAS MADE BY THE AO BY APPLYING THE DEEMING PROVISIONS, UNDER SECTION 73 WHICH DOES NOT AMOUNT TO CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 9. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE DECISION OF THE CO ORDINATE BENCH AND CONSIDERING THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. 322 ITR 158, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY, 2015 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 4 DATED : 27 TH FEBRUARY, 2015 . . ./ RJ , SR. PS ITA NO. 1615/M/2013 5 3 3 3 3 . .. . +/ +/ +/ +/ 5 '/ 5 '/ 5 '/ 5 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 +/ , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI