ITO 9(1)(3), MUMBAI V. EAST & WEST SECURITIES P.LTD, MUMBAI

ITA 4276/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8350 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 21-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Speculation loss; Wrong claim

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SANJAY GARG, JUDICIAL MEMBER . . , , ./ I.T.A. NO.4276 /MUM/2012 ( ! / ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER - 9(1)(3), ROOM NO. 224, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S EAST WEST SECURITIES PVT. LTD., 302/303, A.N. HOUSE, 31 ST ROAD, BANDRA (W), MUMBAI 400 050. ! ./ PAN : AAACE7577R ( !' / APPELLANT ) .. ( #$!' / RESPONDENT ) A PPELLANT BY SHRI PANKAJ KUMAR R E SPONDENT BY : SHRI HITEN VASANT % &' ( )* / DATE OF HEARING : 04-08-2014 +,-. ( )* / DATE OF PRONOUNCEMENT : 22-08-2014 [ / / O R D E R PER SANJAY GARG, JUDICIAL MEMBER : : , THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF LD.CIT(A) -19, MUMBAI DATED 12-4-12 WHEREBY HE DELE TED THE PENALTY OF RS. 1,07,23,480/- LEVIED BY THE A.O. U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE AS FOLLOWS. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES AND SHARE TRADING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS ORIGINALLY FILED B Y IT ON 19-11-2006 DECLARING TOTAL INCOME OF RS. 1,13,147/-. DURING TH E YEAR UNDER CONSIDERATION, THE ASSESSEE HAD EARNED INCOME OF RS . 3,18,58,231/- FROM ITA 4276/M/12 2 FUTURE AND OPTION TRANSACTIONS (DERIVATIVE TRADING) WHICH WAS SET OFF AGAINST THE BROUGHT FORWARD LOSS OF RS. 7,38,14,932/- PERTA INING TO A.Y. 2001-02. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A. O. OBSERVED THAT IN VIEW OF THE AMENDMENT INTRODUCED BY FINANCE ACT 2005 IN SECTION 73(4) OF THE ACT, REDUCING PERIOD AVAILABLE FOR CARRY FORWARD AND SET OFF OF SPECULATION LOSS TO FOUR YEARS AS AGAINST EIGHT YEARS, THE CLAIM OF THE ASSESSEE FOR SET OFF OF RS. 3,18,58,231/- WAS INCORRECT. THE A.O., THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE. HE ALSO INITIATED PENALTY AGAINST THE ASS ESSEE U/S 271(1)(C) OF THE ACT. THE A.O. HELD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY WAY OF MAKING WRONG CLAIM OF SET OFF OF S PECULATION LOSS AND HENCE IMPOSED PENALTY OF RS. 1,07,23,480/- U/S 271(1)(C) OF THE ACT BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE. IN THE MEANTIME, THE ASSESSEE PREFERRED APPEALS AGAINST QUANTUM ADDITION AND THE MATTER TRAVELLED UPTO THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 25-2-2011 P ASSED IN ITA NO. 866/MUM/2010 DELETED THE QUANTUM ADDITIONS. 3. THE LD. CIT(A) IN THE PENALTY APPEAL ACCEPTED TH E CONTENTION OF THE ASSESSEE THAT SINCE THE ITAT MUMBAI BENCH HAS DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DELETING THE QUANTUM ADDITIONS M ADE BY THE A.O. AND THE PENALTY WAS NOT SUSTAINABLE AND HENCE HE DELETED TH E PENALTY. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS PREFER RED THIS APPEAL BEFORE THE TRIBUNAL TAKING FOLLOWING GROUND OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE IT ACT BY MERELY SAYING THAT THE QUANTUM APPEAL WAS DECIDE D IN FAVOUR OF ASSESSEE BY ITAT AND WITHOUT APPRECIATING THE FACT THAT REVENUE HAS APPEALED BEFORE THE HONBLE HIGH COURT AGAINST THE SAID ORDER OF HONBLE ITAT FOR DELETING THE QUANTUM ADDITION. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 4. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) DELET ED THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT MERELY ON THE GROUND THAT THE ITAT HAS ITA 4276/M/12 3 DELETED THE QUANTUM ADDITIONS. HOWEVER, SINCE THE R EVENUE HAS APPEALED AGAINST THE SAID ORDER OF THE ITAT IN THE HONBLE H IGH COURT, THE DECISION OF THE LD. CIT(A) IS NOT JUSTIFIED AND IT IS THEREFORE A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN THE QUANTUM APPEAL HAS BEEN DECIDED IN FAVOUR OF THE AS SESSEE, THE CONSEQUENTIAL PENALTY WAS ALSO LIABLE TO BE DELETED . 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THE ADDITION MADE TO THE TOTAL INCOME OF T HE ASSESSEE ON ACCOUNT OF SPECULATION LOSS, IN RESPECT OF WHICH THE IMPUGNED PENALTY WAS IMPOSED, HAS ALREADY BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 25-02-2011. AS A RESULT OF THE DECISION OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE QUANTUM APPEAL, THE VERY BASIS OF IMPOSITION OF THE IMPUGNE D PENALTY U/S 271(1)(C) OF THE ACT NO MORE SURVIVES AND THE SAME THEREFORE IS LIABLE TO BE CANCELLED HAVING NO LEGS TO STAND. WE THEREFORE UPHOLD THE I MPUGNED ORDER OF THE LD. CIT(A) DELETING THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT AND DISMISS THIS APPEAL FILED BY THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 22-08 -2014. / ( +,-. % 0 1 23 , ( ' SD/- SD/- (N.K. BILLAIYA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER % ' MUMBAI ; 2 DATED 22-08-2014 [ ITA 4276/M/12 4 &.>../ RK , SR. PS #$ % &'() *#)!' / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT. 3. % ?) ( ) / THE CIT(A) 8,, MUMBAI 4. % ?) / CIT 48, MUMBAI 5. B&C #>)>DE , * DE. , % ' / DR, ITAT, MUMBAI E BENCH 6. F G' / GUARD FILE. #$ / BY ORDER, $B) #>) //TRUE COPY// +/, - ( DY./ASSTT. REGISTRAR) , % ' / ITAT, MUMBAI