DCIT CIR 3(1), MUMBAI V. EDELWEISS TRADING & HOLDING LTD, MUMBAI

ITA 4653/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9044 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Department
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 07-07-2014
• Court: TRIBUNAL
• Department Lawyers: M MURLI
• Assessee Lawyers: ARVIND SONDE
• Keywords: Speculation loss

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER ITA NO. 4653/M/2014 (AY 2008 - 2009 ) DCIT, CIRCLE 3(1), R.NO.607, AAYAKAR BHAVAN, MUMBAI 400 020. / VS. M/S. EDELWEISS TRADING & HOLDING LTD (FORMERLY KNOWN AS M/S. EDELWEISS COMMODITIES LTD), 14 TH FLOOR, EXPRESS TOWERS, NARIMAN POINT, MUMBAI 21. ./ PAN : AABCE3819M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M. MURLI, DR / RESPONDENT BY : SHRI ARVIND SONDE / DATE OF HEARING : 17.11 .2016 / DATE OF PRONOUNCEMENT : 13 .01.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 07.7.2014 IS AGAINST THE ORDER OF THE CIT (A) - 6, MUMBAI DATED 22.4.2014 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT (A) HAS ERRED IN DELETING OF THE PENALTY LEVIED ON THE ASSESSEE U/S 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE CLAIM OF EXPENSES PERTAINING TO SPECULATION TRANSACTION MAD E BY THE ASSESSEE WAS NOT ESTABLISHED AND THEREFORE WAS NOT ALLOWABLE AND MAKING SUCH CLAIM AMOUNTS TO THE FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 2. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BRIEFLY NARRATED THE FACTS OF THE CASE AND SUBMITTED THAT T HE PENALTY LEVIED ON THE ASSESSEE U/S 271(1)(C) OF THE ACT IS RELATABLE TO THE EXPENDITURE ATTRIBUTABLE TO THE SPECULATION LOSS REPORTED BY THE ASSESSEE IN THE RETURN OF INCOME. REVENUE AUTHORITIE S DISTURBED THE REVENUE EXPENSES BASED ON THE TURNOVER OF 5% OF THE EXPENDITURE ATTRIBUTABLE TO THE SPECULATION LOSS. AGREED TO THE ABOVE DISALLOWANCE ON AD - HOC BASIS CONSIDERING THE FACT THAT THE BENEFITS AVAILABLE TO THE ASSESSEE ON THE SAID ADDITIONS I N THE LATER 2 ASSESSMENT YEARS, CIT (A) DELETED THE PENALTY OF RS. 71,33,901/ - . CIT (A) IS OF THE VIEW THAT THE PENALTY IS UNSUSTAINABLE CONSIDERING THE AD - HOC NATURE OF THE DISALLOWANCE AND FURNISHING OF FULL DISCLOSURE IN THE RETURN OF INCOME. CIT (A) AL SO RELIED ON VARIOUS BINDING DECISIONS AND THE CONTENTS OF PARA 5.6 OF HIS ORDER ARE RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAID PARA 5.6 IS EXTRACTED AS UNDER: - 5.6. THE ABOVE DECISION OF THE JURISDICTIONAL ITAT APPLIES TO THE APPELLANTS CASE ALSO AS IN ITS CASE ALSO, THE ALLOCATION OF EXPENSES (THIS WAY OR THAT WAY) AND THEIR ALLOWABILITY ARE NOT IN DOUBT. THE ONLY DISPUTE IS WITH RESPECT TO THE YEAR IN WHICH THE ABOVE MENTIONED SPECULATION LOSS ALONG WITH EXPENSES AL LOCATED TOWARDS IT SHALL BE ALLOWED. IT HAS BEEN SPECIFICALLY POINTED OUT AND EXPLAINED BY THE APPELLANT THAT THESE EXPENSES HAVE BEEN SET OFF IN SUBSEQUENT YEAR AGAINST THE SPECULATION INCOME. IN VIEW OF THE ABOVE FACTS AND DECISION OF HONBLE ITAT, I A M OF THE VIEW THAT THE APPELLANT HAS NEITHER FURNISHED ANY INACCURATE PARTICULARS OF INCOME NOR CONCEALED ANY INCOME. THE DISALLOWANCES INCREASED BY THE AO HAVE BEEN SUBSEQUENTLY CLAIMED BY THE APPELLANT AND ALLOWED BY THE DEPARTMENT, WHICH CANNOT BY ANY STRETCH OF IMAGINATION, BE TERMED AS CONCEALMENT OF INCOME JUSTIFYING LEVY OF PENALTY. 3. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ABOVE DECISION OF THE CIT (A), WE ARE OF THE OPINION, CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE AND THIS IS MER ELY A CASE OF OPINION AND THE SAME IS NOT SUPPORTED BY ANY INCRIMINATING MATERIAL OR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. AOS DECISION ADOPTING 5% ON AD - HOC BASIS CANNOT BE CONSIDERED AS FIT ENOUGH FOR INVOKING THE PEN ALTY PROVISIONS. CONSIDERING THE SAME, THE CONCLUSIONS DRAWN BY THE CIT (A) IN THE ABOVE PARA 5.6 IS FAIR AND REASONABLE AND IT IS NOT A FIT CASE FOR LEVY OF PENALTY. WE ORDER ACCORDINGLY. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONO UNCE D IN THE OPEN COURT ON 1 3 T H JANUARY, 2017. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 13.01.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 3 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI