AMEET VIPIN DESAI, MUMBAI V. ITO - 24 (1)(1), MUMBAI

ITA 5026/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8984 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 30-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Speculation loss
• Section: 271(1)(c); 143(3); 27

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER, ITA NO.5026MUM/2018 ASSESSMENT YEAR: 2013-14 SHRI AMEET VIPIN DESAI, B-62/1237, VEERA DESAI ROAD, AZAD NAGAR ANDHERI (WEST), MUMBAI-400053 / VS. ITO - 24(1)(1), ROOM NO.605, 6 TH FLOOR, PIRAMAL CHAMBERS, LOWER PAREL, MUMBAI-400012 ( /ASSESSEE) ( / REVENUE) P.A. NO. AABPD4927G / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE LD CIT(A)-36, MUMBAI, DATED 01/06/2018 AND IT PERTAINS TO AY-2013 -14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- ! / ASSESSEE BY SHRI BHARAT KUMAR ! / REVENUE BY SMT. JOTHI LAKSMI NAYAK / DATE OF HEARING : 19/06/2019 / DATE OF ORDER: 28/06/2019 2 SHRI AMEET VIPIN DESAI 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN CONFIRMING IN PENALTY U/S 271(L)(C) OF RS. 1,41,620. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) ERRED IN CONFIRMING STAND OF A.O. WHERE LD. A.O. DI D NOT STRIKE OFF RELEVANT LIMB OF PENALTY IN PENALTY NOTICE ISSUED ON 29/12/2015. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) ERRED IN CONFIRMING STAND OF A.O. WHERE ASSESSEE CO MMITTED TECHNICAL MISTAKE DUE TO OVERSIGHT SYSTEM ERROR AND CLAIMED DOUBLE BENEFI T OF SPECULATION LOSS WHERE THIS SPECULATION LOSS IS NOT SET OFF IN SUBSEQUENT YEARS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) ERRED IN CONFIRMING STAND OF A.O WHERE THERE IS BON AFIDE HUMAN ERROR AND THERE IS NO INTENTION TO EVADE TAX AND EVEN AFTER THE ASSESS MENT THERE IS ONLY DEMAND RAISED OF RS. 2470 WHICH SHOWS THE CORRECT INTENTIO N OF ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF TRADING IN COMMODITY FUTURES AND COMMOD ITY DERIVATIVES FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 30/09/2013, D ECLARING TOTAL INCOME AT RS.10,65,330/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT (HEREINAFTER THE ACT) ON 29/12/2015 DETERMINING TOTAL INCOME AT RS.10,68,460/- AFTER MAKING ADDITIONS TOW ARDS SPECULATION LOSS OF RS.4,58,315/-. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, FOR FURNISHING OF INACCURATE PARTICULA RS OF INCOME AND CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY SHALL NOT BE LEVIED FOR EXCESSIVE CLAIM OF SPECULATION LOSS OF RS.4,58,315/-. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT HAS NEITHER FURNISHED INACCURATE PARTICULARS OF INCOME NOR CONC EALED PARTICULARS OF INCOME, BECAUSE, BY INADVERTENT MISTAKE, IT HAS DEBITED SPECULATION LOSS IN THE PROFIT AND LOSS ACCOUNT, EVEN THOUGH, THE SAME HAS BEEN SEPARATELY COMPUTED UNDER THE HEAD CAPITAL GAINS. FURTHER, RESULTANT LOSS HAS BEEN CARRIED FORWARD T O SUBSEQUENT YEARS, BECAUSE SPECULATION LOSS CANNOT BE ADJUSTED AGAINST ANY OTH ER INCOME. THE ASSESSEE FURTHER 3 SHRI AMEET VIPIN DESAI CONTENDED THAT THE SAID CLAIM IS ON ACCOUNT OF WRON G COMPUTATION MADE BY THE CONSULTANT WHO PREPARED THE INCOME TAX RETURN, THER EFORE THE SAME CANNOT BE CONSIDERED AS FURNISHING INACCURATE PARTICULARS OF INCOME WHICH ATTRACTS PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE AO, AFTER CONSIDE RING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO RELIED UPON THE DECISION OF HONOU RABLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS DHARMENDRA TEXTILE PROCESSORS (30 6 ITR 277)(SC) HELD THAT THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION FOR CL AIMING SPECULATION LOSS UNDER THE HEAD INCOME FROM BUSINESS, EVEN THOUGH, THE SAID LOSS HA S BEEN CARRIED FORWARD TO SUBSEQUENT YEARS, THEREFORE, HE OPINED THAT THE ASS ESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS.1,41,620/-, WHICH IS 100% TAX SOUGHT TO BE EVADED. 3. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE REITERA TED HIS SUBMISSIONS MADE BEFORE THE AO TO ARGUE THAT SPECULATION LOSS HAS BEEN DEBITED INTO PROFIT AND LOSS ACCOUNT BY INADVERTENT MISTAKES OF ACCOUNTANT WHO PREPARED INC OME TAX RETURN, BUT SUCH LOSS HAS NOT BEEN CLAIMED AS DEDUCTION AGAINST ANY OTHER INC OME FOR THE YEAR UNDER CONSIDERATION, THEREFORE, SAME CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. THE LD CIT(A), AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO RELIED UPON VARIOUS JUDICIAL PRECEDENCE INCLUDING T HE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ZOOM COMMUNICATION (P) LTD. REPORTED IN 327 ITR 510(DELHI) 4 SHRI AMEET VIPIN DESAI HELD THAT THE ASSESSEE HAS DELIBERATELY CLAIMED SPE CULATION LOSS IN THE PROFIT LOSS ACCOUNT WITHOUT ANY BASIS AND EXPLANATION FURNISHED BY HIM FOR MAKING SUCH CLAIM IS NOT BONA-FIDE, THEREFORE, EXPLANATION (1) TO SECTION 27 1(1)(C) OF THE ACT WOULD BE ATTRACTED AND HENCE THERE IS NO REASON TO INTERFERE WITH THE FINDINGS OF THE AO IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE LD CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE US. 6. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D CIT(A) WAS ERRED IN CONFIRMING PENALTY LEVIED U/S 271(1)(C) OF THE ACT, IN RESPECT OF SPECULATION LOSS OF RS.4,58,314 WITHOUT APPRECIATING THE FACT THAT THE SAID MISTAKE WAS BONA FIDE ERROR OF ACCOUNTANT WHO PREPARED INCOME TAX RETURN AS PER WHICH LOSS HAS BE EN DEBITED INTO THE HEAD PROFITS AND LOSS ACCOUNT AND ALSO SHOWN IN THE CAPITAL LOSS, BU T THE ASSESSEE DID NOT TAKE BENEFIT OF SUCH LOSS AND THERE IS NO REVENUE LOSS, THEREFORE, THE SAME CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME WHIC H ATTRACTS PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THIS REGARD, HE RELIED UPO N THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT L TD IN CIVIL APPEAL NO.6924 OF 2012. 7. THE LD. DR ON THE OTHER HAND, STRONGLY SUPPORTED ORDER OF THE LD. CIT(A) AND SUBMITTED THAT IT IS A CLEAR CASE OF DELIBERATE ATT EMPT TO CONCEAL PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME IN RESP ECT OF SPECULATION LOSS WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAS DEBITED SUCH LO SS INTO PROFIT AND LOSS ACCOUNT AND ALSO CLAIMED UNDER THE HEAD SHORT-TERM CAPITAL LOSS . HAD THE CASE WAS NOT SELECTED FOR 5 SHRI AMEET VIPIN DESAI SCRUTINY, THE SAME WOULD GO UNNOTICED. THEREFORE, T HERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT ASSESSEE IS NOT TAKING BENEFIT OF SUCH DOUBLE CLAIM OF SPECULATION LOSS AND HENCE, THE AO WAS RIGHT IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 8. WE HAVE HEARD BOTH PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS AN A DMITTED FACT THAT THE ASSESSEE HAS CLAIMED SPECULATION LOSS TWICE IN ITS FINANCIAL STA TEMENT. THE ASSESSEE HAS DEBITED SPECULATION LOSS INTO PROFIT & LOSS ACCOUNT AND CAR RIED FORWARD BUSINESS LOSS TO SUBSEQUENT YEARS. HE HAS ALSO CLAIMED SUCH LOSS UND ER THE HEAD SHORT-TERM CAPITAL LOSS AND CARRIED FORWARD THE SAME TO SUBSEQUENT YEARS. A LTHOUGH, THERE IS DOUBLE CLAIM IN RESPECT OF SPECULATION LOSS, BUT IT IS EVIDENT FROM THE FINANCIAL STATEMENT FILED FOR THE RELEVANT YEAR INCLUDING STATEMENT OF TOTAL INCOME, THE SAID LOSS HAS NOT BEEN SET OFF AGAINST ANY OTHER INCOME FOR THE YEAR. WHEN THE LOS S HAS NOT BEEN SET OFF AGAINST ANY OTHER INCOME WHICH RESULTS INTO REDUCTION OF INCOME FOR THE YEAR UNDER CONSIDERATION AND ALSO THE FACT THAT THE ASSESSEE HAS EXPLAINED SAID MISTAKES AND ATTRIBUTED IT TO THE ACCOUNTANT WHO PREPARED THE INCOME TAX RETURN, THER E IS NO REASON FOR THE AO TO DOUBT EXPLANATION OFFERED BY THE ASSESSEE THAT THE CLAIM WAS MADE ON BONA FIDES MISTAKE COMMITTED BY AN ACCOUNTANT WHICH WE ALL PRONE TO DO . WE FURTHER NOTED THAT WHEN THE ASSESSEE HAS EXPLAINED THE REASONS FOR MAKING A DOU BLE CLAIM IN RESPECT OF A SPECULATION LOSS AND ALSO MADE IT VERY CLEAR THAT S UCH LOSS HAS NOT BEEN SET OFF AGAINST ANY INCOME, THEN THE AO WAS ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN T HE MEANING OF SECTION 271(1)(C) OF THE 6 SHRI AMEET VIPIN DESAI ACT. THIS LEGAL PROPOSITION IS SUPPORTED BY THE DEC ISION OF THE HONOURABLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT LTD IN CIVIL APPEAL NO.6924 OF 2012, WHERE THE COURT HELD THAT WHEN THERE IS BONA FIDE MISTAKE IN THE CLAIM WHICH IS ON ACCOUNT OF HUMAN ERROR WHICH WE ALL PRONE TO DO IN NORMAL CIRC UMSTANCES, THE SAME CANNOT BE CONSIDERED AS FURNISHING OF INCORRECT PARTICULARS O F INCOME WHICH WARRANTS LEVY A PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THEREFORE, WE A RE OF THE CONSIDERED VIEW THAT THE LD AO AS WELL AS LD. CIT(A) WERE ERRED IN SUSTAINING P ENALTY LEVIED U/S 271(1)(C) OF THE ACT IN RESPECT OF SPECULATION LOSS, HENCE, WE DIRECT TH E AO TO DELETE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/06/2019. SD/- SD/- ( SAKTIJIT DEY ) (G. MANJUNATHA) '!# /JUDICIAL MEMBER $!# / ACCOUNTANT MEMBER MUMBAI; DATED : 28/06/2019 F{X~{T F{X~{T F{X~{T F{X~{T? P.S / /. .. %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT (RESPECTIVE ASSESSEE) 2. #$%!' / THE RESPONDENT. 3. &% &% ' ( ) / THE CIT, MUMBAI. 4. &% &% ' / CIT(A)- , MUMBAI, 5. )*+ % # , , &% % ,. , / DR, ITAT, MUMBAI 6. +/ 0 / GUARD FILE. ! / BY ORDER, /! (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI