DCIT 4(2)(1), MUMBAI V. NIRMAL BANG SECURITIES P.LTD, MUMBAI

ITA 4562/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9695 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 01-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AARJU GARODIA
• Keywords: Speculation loss
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO .456 2 /MUM. /2016 ( ASSESSMENT YEAR : 20 11 12 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 4(2)(1), MUMBAI . APPELLANT V/S M/S. NIRMAL BANG SECURITIES PVT. LTD. 5 A, KHATAU BUILDING ALKESH DINESH MODI MARG FORT, MUMBAI 400 011 PAN AAACN7369L . RESPONDENT REVENUE BY : SHR I AARJU GARODIA ASSESSEE BY : SHRI ANANT PAI DATE OF HEARING 07.03.2018 DATE OF ORDER 28.03.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL OF THE REVENUE IS DIRECTED AGAINST ORDER DATED 28 TH MARCH 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 9, MUMBAI, DELETING THE PENALTY OF ` 23 , 77 , 064 , IMPOSED UNDER SECTION 271(1)(C) INCOME - TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 2011 12. 2 . BRIEF FACTS ARE, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29 TH SEPTEMBER 2011, DECLARING 2 M/S. NIRMAL BANG SECURITIES PVT. LTD. LOSS OF ` 2 ,3 9,54,017. I N THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED LOSS OF ` 76,92,746 ON SHARE TRADING RELATING TO DELIVERY BASED TRANSACTION. THE ASSESSING OFFICER BEING OF THE OPINION THAT THE LOSS ARISING FROM SUCH TRANSACTION BEING OF THE NATURE OF SPECULATION LOSS CALLED UPON THE ASSESSEE TO EXPLAIN WHY SET OFF OF SUCH LOSS AGAINST INCOME FROM NON SPECULATION BUSINESS SHOULD NOT BE DISALLOWED. THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE, HO WEVER, THE ASSESSING OFFICER REJECTING THE OBJECTION OF THE ASSESSEE DISALLOWED THE SET OFF OF SHARE TRADING LOSS AMOUNTING TO ` 76,92,764 BY TREATING IT AS SPECULATION LOSS. ON THE BASIS OF SUCH DISALLOWANCE, THE ASSESSING OFFICER INITIATED PROCEEDINGS FO R IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. AFTER ISSUING A SHOW CAUSE NOTICE UNDER SECTION 274 R/W SECTION 271(1)(C) THE ASSESSING OFFICER ULTIMATELY PASSED THE ORDER IMPOSING PE NALTY OF ` 23,77,064 ON THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. BEING AGGRIEVED OF THE PENALTY ORDER SO PASSED, THE ASSESSEE IS IN APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). 3 . THE LEARNED COMMISSIONER (APPEALS) A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND APPLYING THE RATIO LAID DOWN IN THE 3 M/S. NIRMAL BANG SECURITIES PVT. LTD. JUDICIAL PRECEDENTS CITED BEFORE HIM, DELETED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 4 . LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND GROUND RAISED. 5 . LEARNED AUTHORISED REPRESENTATIVE STRONGLY RELIED UPON THE DECISION OF THE FIRST APPELLATE AUTHORITY. FURTHER, HE SUBMITTED THAT THE ASSESSING OFFICER HAS ULTIMATELY COMPUTED THE TAX LIABILITY UNDER SECTION 115 JB OF THE ACT, THEREFORE, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF AN ADDITION / DISALLOWANCE MADE UNDER THE NORMAL PROVISIONS CANNOT SURVIVE. FOR THE AFORESAID PROPOSITION, THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE CBDT CIRCULAR NO.25 OF 2015 DATED 31 ST DECEMBER 2015. 6 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL AVAILABLE ON RECORD. THE FACTS EM ANA TING FROM RECORD CLEARLY REVEAL THAT THE SHARE TRADING LOSS CLAIMED BY THE ASSESSEE HAS BEEN TREATED AS SPECULATION LOSS BY THE ASSESSING OFFICER, HENCE, HE DISALLOWED SET OFF OF SUCH LOSS AGAINST INCOME FROM NON SPECULATION BUSINESS. IT IS ALSO EVIDENT TH AT THE ASSESSING OFFICER HAS IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME. WHEN THE ASSESSEE HAS FURNISHED FULL DETAILS OF THE LOSS ARISING OUT OF SHARE TRADING ACTIVITIES, IT IS NOT UNDERSTOOD H OW IT CAN BE 4 M/S. NIRMAL BANG SECURITIES PVT. LTD. ALLEGED THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME . M ERELY BECAUSE THE ASSESSEE CLAIMED LOSS FROM SHARE TRADING AS NORMAL BUSINESS LOSS WHICH IN THE OPINION OF THE ASSESSING OFFICER IS SPECULAT ION LOS S, IT WILL NOT LEAD TO T HE CONCLUSION THAT THE ASSESSEE HAS FURNISHED I NACCURATE PARTICULARS OF INCOME. T HEREFORE, THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C). EVEN OTHERWISE ALSO, THE PENALTY ORDER PASSED BY THE ASSESS ING OFFICER CANNOT SURVIVE BECAUSE WHILE GIVING EFFECT TO THE ORDER OF THE FIRST APPELLATE AUTHORITY, THE ASSESSING OFFICER HAS ULTIMATELY COMPUTED ASSESSEES TAX LIABILITY UNDER SECTION 115JB OF THE ACT , WHEREAS , THE ADDITION / DISALLOWANCE ON THE BASIS O F WHICH PENALTY UNDER SECTION 271(1)(C) HAS BEEN IMPOSED WAS MADE UNDER THE NORMAL PROVISIONS O F THE A CT. THAT BEING THE CASE, AS PER THE DECISION OF THE HON'BLE DELHI HIGH COURT REFERRED TO IN CBDT CIRCULAR NO.25 OF 2015, DATED 31 ST DECEMBER 2015, AS WELL AS, AS PER THE INSTRUCTIONS OF THE SAID CIRCULAR, THE PRESENT APPEAL BY THE DEPARTMENT CHALLENGING THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IS NOT MAINTAINABLE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS RAISED BY THE REVENUE. 5 M/S. NIRMAL BANG SECURITIES PVT. LTD. 7 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 28.03.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED : 28.03.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI .