WEALTH STOCK, MUMBAI V. ACIT 16(1), MUMBAI

ITA 6325/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3739 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 19-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Speculation loss; Avoidance of tax; Tax effect; Bonafide mistake; Speculative transactions
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI R.K.GUPTA, JM & SHRI D.KARUNAKARA RAO , AM ITA NO. 6325 /MUM/20 1 2 ( ASSESSMENT YEAR : 200 8 - 09 ) M/S WEA L TH STOCK, 16/B, LANDSEND CO - OP HSG. SOC., 29 - D, DOONGERSHI ROAD, WALKESHWAR, MUMBA I - 06 VS. ACIT 16(1), MUMBAI PAN NO. : AAAFW 8227 D ( APP ELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SMT. ARATI VISSANJI REVENUE BY : MR. PAVAN VED DATE OF HEARING : 21 ST MARCH , 2013 DATE OF PRONOUNCEMENT : 8 TH MAY, 2013 O R D E R PER SHRI R.K.GUPTA, JM : BY THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE ORDER PASSED BY THE LEARNED CIT(A) - 27, MUMBAI , WHO HAS CONFIRMED THE LEVY OF PENALTY MADE BY THE AO UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS. 45,22,399/ - . 2 . BRIE F FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS IN SHARES AND SECURITIES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING BUSINESS LOSS OF RS. 2,43,09,772 / - . IN THE ASSESSMENT ORD ER U/S. 143(3) OF THE ACT, THE AO HAS EXAMINED THE INCOME RETURNED AND DETERMINED THE BUSINESS LOSS AT RS. 1,1 0,04,683/ - AND SPECULATION LOSS AT RS. 1,33,05,089/ - . THE AO OBSERVED THAT THE AFORESAID SPECULATION LOSS CANNOT BE ALLOWED TO BE CLUBBED WITH REGUL AR BUSINESS LOSS. THUS THE ASSESSMENT MADE HAS THE EFFECT OF REDUCING THE LOSS DECLARED IN THE RETURN UNDER THE HEAD 'BUSINESS LOSS'. CONSEQUENTLY, THE AO LEVIED ITA NO . 6325/2012 2 PENALTY IN TERMS OF 'EXPLANATION 4 TO SECTI ON 271 (1)(C) OF THE ACT. THE AO. IN HIS PENALTY OR DER OBSERVED THAT IT IS ONLY AFTER TH E SCRUTINY ASSESSMENT PROCEEDING S, THE QUANTUM OF SPECULATION LOSS, WHICH WOULD OTHERWISE HAVE EFFECT OF TAXATION ON THE RE GULAR BUSINESS INCOME WAS IDENTI FIED. ACCORDING TO THE AO, EVEN THOUGH THERE IS NO CHANGE IN THE TOTAL ASSESSED LOSS, THE FACT THAT THE SPECULATION LOSS CAN ONLY BE SET OFF UNDER THE HEAD SPECULATION GAIN, REMAINS UNCHANGED. THE A.O. ALSO NOTED THAT THE AGGREGA TION OF THE SPECULATION LOSS WITH THE BUSINESS LOSS WAS INTENTIONAL AND THE ASSES S EE HAD NO T CARRIED OUT PROPER BIFURCATION OF THE LOSS VOLUNTARILY. ACCORDINGLY, THE AO HELD THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND ALSO F URNISHED INACCURATE PARTICULARS OF INCOME . 3 . DURING THE APPELLATE PROCEEDING BEFORE THE CIT(A), IT WAS SUBMITTED THAT THERE WAS ONLY AN ERROR IN BIFURCATION BETWEEN THE LOSSES WHILE FILING THE RETURN SINCE THE RETURNED LOSS AND THE ASSESSED LOSS REMAINS THE SAME, IT IS ALSO STATED THAT THE RETURNED LOSS WAS BASED ON AUDITED AC COUNTS WHICH HAVE BEEN ACCEPTED. IT WAS ALSO S UBMITTED THAT THE ASSESSEE HAD NOT RECEIVED THE GLOBAL ACCOUNT OF THE TRANSACTION FROM THE BROKER. ON RECEIPT OF THE SAME, THE ASSESSEE VOLUNTARILY SUBMITTED DETAILS VIDE THEIR LETTER DATED 19 - 10 - 2010 FILED BEFORE THE AO AND GAVE THE DETAILS OF SPECULATIVE AND THE REGULAR BUSINESS TRANSACTIONS SEPARATELY. AS SUCH THERE IS NO QUESTION OF FILING ANY INACCURATE PARTICULARS AND THERE WAS NO INTENTION TO DEFRAUD THE REVENUE SINCE THERE WAS NO RESULTANT TAX EFFECT. LEARNED CIT(A) AFTER ITA NO . 6325/2012 3 CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, FOUND THAT THE AO WAS CORRECT IN LEVYING THE PENALTY. LEARNED CIT(A) NOTED THAT THE COLUMNS RELATING TO COMPUTATION OF INCOME FROM BUSINESS OR PROFESSION, IN SCHEDULE B P IN FORM NO, ITR - 5 , PROVIDE FOR THE PROFIT/ LOSS FR OM NORMAL BUSINESS ACTIVITIES, PROFIT / LOSS FROM SPECULATIVE BUSINESS SEPARATELY. SIMILARLY, THE DETAILS REQUIRED TO BE FILLED IN SCHEDULE CYLA I.E. DETAILS OF INCOME AFTER SET OFF OF CURRENT YEAR LOSSES, ALSO REQUIRE THE BUSINESS LOSS OTHER THAN THE SPECUL ATIVE LOSS TO BE SHOWN SEPARATELY. IN THE END, SCHEDULE CFL I .E, DETAILS OF LOSSES TO BE CARRIED FORWARD TO FUTURE YEARS ALSO REQUIRE THE APPELLANT TO REPORT THEREIN THE LOSS UNDER EACH HEAD OF INCOME, WHEREIN LOSS FROM BUSINESS OTHER THAN LOSS FROM SPECUL ATIVE BUSINESS AND LOSS FROM SPECULATIVE BUSINESS S EPARATELY FOR EACH OF THE YEARS, WHICH THE ASSESSEE FAILED TO DO SO. THE CIT(A) FURTHER NOTED THAT IN P ROFIT AND L OSS A CCOUNT, WHICH WAS FORMING PART OF THE AUDITED ACCOUNTS, THERE IS NO BIFU RCATION OF SPE CULATIVE AND NON- SPECULATIVE TRANSACTIONS SEPARATELY THEREIN, IT IS ALSO NOTED THAT WHILE THE INTRA - DAY TRADING OF PURCHASE AND SALES ARE SHOWN AT NIL FOR THE CURRENT YEAR I.E. YEAR ENDING WITH 31 - 3 - 2008 IN THE PROFIT AND LOSS ACCOUNT, THE CORRESPONDING F IGURES FOR THE EARLIER UNDER THE HEAD PREVIOUS YEAR I.E. IN RESPECT OF EARLIER YEAR ENDING WITH 31 - 3 - 2007 ARE SHOWN SEPARATELY AT POSITIVE FIGURES. ACCORDINGLY, THE CIT(A) NOTED THAT THERE ARE NO INTRA - DAY TRADING REPORTED IN THE PROFIT AND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION WHEREAS SIMILAR DETAILS FOR THE EARLIER YEAR WERE DISCLOSED ITA NO . 6325/2012 4 THEREIN. THERE IS ALSO NO REFERENCE TO SUCH ACTIVITY OF THE CURRENT YEAR IN THE NOTES TO THE ACCOUNTS ATTACHED TO THE AUDITED ACCOUNTS. THE CIT(A) FURTHER NOTED TH AT WHILE THE AO CALLED FOR THE BREAK - UP OF BUSINESS TRANSACTIONS AND SPECULATIVE TRANSACTIONS OF THE ASSESSEES SHARE BUSINESS, THEN ONLY THE ASSESSEE HAS FILED DETAILS OF SPECULATIVE TRANSACTION. ACCORDINGLY, THE CIT(A) HELD THAT EXPLANATION FILED BY THE ASSESSEE IS NOT BONAFIDE AND, THEREFORE, THE AO WAS CORRECT IN HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME. THE DECISION OF THE HON BLE DELHI HIGH COURT RELIED UPON BY THE LEARNED AR IN THE CASE OF CIT VS. AURIC INVESTMENT & SECURITIES, REPORTED IN (2007) 142 DLT 368 , WAS FOUND DISTINGUISHABLE ON FACTS. ACCORDINGLY, HE CONFIRMED THE ORDER OF THE AO. 4 . NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . THE ARGUMENTS ADVANCED BEFORE THE LOWER AUTHORITIES WERE REITER ATED HERE BEFORE THE TRIBUNAL BY THE LEARNED AR OF THE ASSESSEE. ATTENTION OF THE BENCH WAS DRAWN ON PAGE 2 OF THE COMPILATION, WHERE COPY OF COMPUTATION OF INCOME IS PLACED. IT WAS SUBMITTED THAT THE LOSS DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE AO HIMSELF. THERE ARE ONLY DIFFERENCE IN BIFURCATION OF BUSINESS LOSS AND SPECULATION LOSS, OTHERWISE THERE IS NO DIFFERENCE, NEITHER THERE IS ANY DIFFERENCE IN QUANTUM OF LOSS OR OTHERWISE. INADVERTENTLY, THE ENTIRE LOSS WAS SHOWN UNDER THE HEAD BUSINESS LOSS BECAUSE THE CERTIFICATE FROM THE GLOBAL ACCOUNT OF THE TRANSACTION FROM THE BROKER WAS NOT RECEIVED AND AS SOON AS THE AO ASKED THE DETAIL OF LOSSES IMMEDIATELY CERTIFICATE WAS ITA NO . 6325/2012 5 OBTAINED AND THE DETAIL OF BUSINESS LOSS AND SPECULATION LOSS WAS FILED. T HE AO HAS ASSESSED THE LOSS AS IT IS, HOWEVER, BIFURCATED SEPARATELY I.E. BUSINESS LOSS AT RS. 1,10,04,683/ - AND SPECULATION LOSS AT RS. 1,33,05,089/ - . THE TOTAL LOSS IN THIS WAY WAS RS. 2,43,09,772/ - , WHICH WAS DECLARED BY THE ASSESSEE HAS ACCEPTED BY THE AO . IT WAS TOTALLY A BONAFIDE MISTAKE. IT WAS ALSO EXPLAINED THAT THAT THE ASSESSEE HAS NOT TAKEN ANY BENEFIT OF CLAIMING HIGHER BUSINESS LOSS AS THERE WAS NO BUSINESS INCOME DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSEE HAS NOT SET OFF ANY LO SS AGAINST THE BUSINESS INCOME. THE BUSINESS LOSS AS WELL AS SPECULATION LOSS HAS BEEN ALLOWED TO BE CARRIED FORWARD. EVEN THERE WAS NO INCOME IN SUBSEQUENT YEAR AGAINST WHICH THE ASSESSEE COULD HAVE GIVEN ANY BENEFIT ON ACCOUNT OF HIGHER SET OFF OF BUSINE SS LOSS. ACCORDINGLY, IT WAS SUBMITTED THAT THE PENALTY LEVIED BY THE AO, WHICH IS CONFIRMED BY THE CIT(A) IS NOT JU STIFIED. RELIANCE WAS PLACED ON THE DECISION OF PRICE WATERHOUSE COOPERS PVT. LTD. V. COMMISSIONER OF INCOME - TAX , REPORTED IN 348 ITR 306 AND THE DECISION OF THE HON BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. SANIA MIRZA , PASSED IN ITA NO.526/2011 VIDE JUDGMENT DATED 9 - 2 - 2012 . COPY OF THE SAME WAS ALSO FILED. 6 . PER CONTRA , LEARNED DR INVITED THE ATTENTION OF THE PENALTY ORDER A T PAGES 1 & 2 AND PAGE 21 OF THE PAPER BOOK. IT WAS FURTHER SUBMITTED THAT THE ACCOUNTS WERE AUDITED AND THERE SHOULD NOT BE ANY DOUBT IN RESPECT OF BUSINESS LOSS AND SPECULATION LOSS. THE ASSESSEE HAS CLAIMED ENTIRE LOSSES UNDER THE HEAD BUSINESS. IT WAS FURTHER SUBMITTED ITA NO . 6325/2012 6 THAT AS PER EXPLANATION 4 AND SUB - CLAUSE ABC, IT IS CLEAR CASE OF FILING INACCURATE PARTICULARS AND, THEREFORE, LEVY OF PENALTY WAS JUSTIFIED. RELIANCE WAS ALSO PLACED ON VARIOUS CASE LAWS I.E.IN THE CASE OF MOTIBHAI FULABHAI PATEL & CO, REPORTED IN 1970 AIR 829 ; CIT VS. ESCORTS FINANCE LTD., REPORTED IN (2010) 188 TAXMAN 87 (DELHI) AND F.C.AGARWAL VS. CIT, REPORTED IN (1976) 102 ITR 408 (GUJ) . IN RESPECT TO MISTAKE POINTED OUT IN THE ASSESSMENT ORDER THAT THE AO HAS QUANTIFIED THE SPECULA TION LOSS AT RS. 1,10,04,683/ - , WHEREAS THIS FIGURE WAS OF RS. 1,33,05,089/ - . LEARNED DR STATED THAT THIS MISTAKE OF THE AO IS A SUBSEQUENT MISTAKE AND THE MISTAKE IN THE ORDER OF THE AO CANNOT BE SAID THAT PENALTY IS NOT LEVIABLE. THIS WAS A BONAFIDE MISTAK E ON THE PART OF THE AO . 7 . LEARNED AR STATED THAT CLAUSE C OF EXPLANATION 4 IS IN REGARD TO THAT ANY BENEFIT HAS BEEN OBTAINED BY THE ASSESSEE WHICH WAS NOT ALLOWABLE AND ASSESSEE HAS NOT DERIVED ANY BENEFIT TILL TODAY ON ACCOUNT OF CLAIMING HIGHER BUSIN ESS LOSS. ACCORDINGLY, IT WAS SUBMITTED THAT THE CLAUSE C OF THE EXPLANATION 4 SUPPORTS THE CASE OF THE ASSESSEE. REGARDING THE CASE LAWS RELIED UPON BY THE LEARNED DR, IT WAS SUBMITTED BY THE LEARNED AR THAT ALL THESE CASES ARE IN RESPECT OF AVOIDANCE OF TAX AND IN THE PRESENT CASE THERE IS NO AVOIDANCE OF THE TAX AT ALL AS THE LOSS CLAIMED BY THE ASSESSEE WAS ALLOWED TO BE CARRIED FORWARD. IT WAS ALSO SUBMITTED THAT THIS IS ALSO NOT A CASE OF DEPARTMENT THAT ANY LOSS SHOWN BY THE ASSESSEE HAS BEEN CONVERT ED INTO THE PROFIT AND, THEREFORE, IT CAN BE SAID THAT THE ASSESSEE HAS FURNISHED ITA NO . 6325/2012 7 INACCURATE PARTICULARS. WHATEVER THE LOSS WAS SHOWN BY THE ASSESSEE, THE SAME HAS BEEN ACCEPTED AS THE ASSESSEE HAS NOT OBTAINED ANY BENEFIT DURING THE YEAR UNDER CONSIDERATI ON. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN THIS CASE. THIS IS UNDISPUTED FACT THAT THE A SSESSEE HAS NOT AVAILED ANY BENEFIT ON ACCOUNT OF BUSINESS LOSS OR SPECULATION LOSS DURING THE YEAR UNDER CONSIDERATION AS THERE WAS NO INCOME UNDER THE HEAD OF BUSINESS INCOME OR UNDER THE HEAD SPECULATION INCOME. THOUGH THE ASSESSEE HAS CLAIMED ENTIRE LO SS UNDER THE HEAD BUSINESS LOSS, HOWEVER, WHEN THE AO ASKED TO FILE THE DETAILS THEN IT WAS FOUND THAT CERTAIN PORTION OF LOSS RELATED TO SPECULATION LOSS. ACCORDINGLY, THE ASSESSEE FILED THE DETAIL OF BUSINESS LOSS, SPECULATION LOSS AND THESE DETAILS WERE ACCEPTED BY THE AO. WHATEVER THE BUSINESS LOSS WAS SHOWN, THAT WAS ACCEPTED AS BUSINESS LOSS AND WHATEVER THE SPECULATION LOSS WAS SHOWN, THAT WAS ACCEPTED AS SPECULATION LOSS AND WAS ALLOWED TO BE CARRIED FORWARD UNDER THE RESPECTIVE HEAD. IT IS FURTHER SEEN THAT EVEN THE ASSESSEE HAS NOT CLAIMED ANY BENEFIT IN SUBSEQUENT YEARS ON ACCOUNT OF BUSINESS LOSS OR SPECULATION LOSS AS STATED BY THE LEARNED AR. IT IS ALSO NOT A CASE OF THE DEPARTMENT THAT ANY INCOME SHOWN BY THE ASSESSEE HAS BEEN CHANGED OR LOSS SHOWN BY THE ASSESSEE HAS BEEN CONVERTED INTO PROFIT . WHATEVER THE LOSS WAS SHOWN BY THE ASSESSEE, THE SAME HAS BEEN ACCEPTED BY THE AO. ONLY ITA NO . 6325/2012 8 HEAD OF LOSS IS CHANGED AS PART OF THE LOSS RELATES TO BUSINESS LOSS AND PART OF THE LOSS RELATES TO SPECULATION L OSS. THEREFORE, WE ARE OF THE VIEW THAT ONLY ACCOUNT OF CHANGE OF HEAD OF LOSS, PENALTY AT LEAST IS NOT ALLOWABLE . THIS VIEW OF OURS FIND SUPPORT FROM THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. M/S BENNET COLEMAN & CO. LTD., PASSED IN INCOME TAX APPEAL (LOD) NO. 2117 OF 2012, VIDE JUDGMENT DATED 26 - 2 - 2013 . IN PARA 3 OF THIS JUDGMENT THE HON BLE HIGH COURT HAS OBSERVED AS UNDER : - 3. SO FAR AS QUESTION (II) IS CONCERNED, THE RESPONDENT - ASSESSEE HAD CLAIMED PREMIUM ON REDEMPTION OF DEBEN TURES AS INCOME FROM CAPITAL GAINS. WHEREAS THE ASSESSING OFFICER HELD THAT THE REDEMPTION OF DEBENTURES IS REVENUE RECEIPT ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE RESPONDENT - ASSESSEE DID NOT FILE ANY FURTHER APPEAL ON THE QUANTUM PROCEEDINGS. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE RESPONDENT - ASSESSEE. THE CIT(A) ALSO CONFIRMED THE LEVY OF PENALTY UPON THE RESPONDENT - ASSESSEE. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE RESPONDENT - ASSESSEE HAD DISCLOSED THAT THE AMOUNT RECEIVED AS PREMIUM ON REDEMPTION OF DEBENTURES IN ITS COMPUTATION OF INCOME. FURTHER, THE TRIBUNAL RECORDS TH AT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE RESPONDENT - ASSESSEE HAD CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME BY STATING INCORRECT FACTS. THE ASSESSING OFFICER CONSIDERED THE SAID PREMIUM RECEIVED ON REDEMPTION OF DEBENTURES TO BE TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES WHILE THE RESPONDENT - ASSESSEE CONSIDERED THE SAME TO BE TAXABLE UNDER THE HEAD CAPITAL GAINS. IN VIEW OF THE FACT THAT THERE IS ONLY A CHANGE OF HEAD OF INCOME AND IN THE ABSENCE OF ANY F ACTS THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE, THE TRIBUNAL DELETED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. THE REVENUE HAS NOT BEEN ABLE TO POINT OUT THAT THE FINDING OF THE TRIBUNAL IS PERVERSE. IN THESE CIRCUMSTANCES, WE SEE NO RE ASON TO ENTERTAIN THE PROPOSED QUESTION (II). THE ABOVE FINDING OF THE HON BLE JURISDICTIONAL HIGH COURT IS SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE AS IN THIS CASE ALSO AS THE ASSESSEE HAS SHOWN THE ENTIRE LOSS UNDER THE HEAD BUSINESS LOSS, ITA NO . 6325/2012 9 WHEREAS THE AO ON OBTAI N ING DETAILS OF LOSS, FOUND THAT THE PART OF THE LOSS IS ASSESSABLE UNDER THE HEAD BUSINESS LOSS AND PART OF THE LOSS IS ASSESSABLE UNDER THE HEAD SPECULATIVE LOSS, OTHERWISE THERE IS NO DIFFERENCE. THEREFORE, THIS WAS ONLY OF A BONA FIDE MISTAKE AS NO BENEFIT HAS BEEN DERIVED BY THE ASSESSEE, NEITHER THERE IS A CASE OF AVOIDANCE OF TAX. WE HAVE ALSO SEEN THE DECISION OF THE TRIBUNAL IN THE CASE OF AJAY SANGARI & CO. VS. ACIT, REPORTED IN (2011) TTJ 388 (CHD) AND NOTED THAT IN THAT CAS E THERE WAS A SURVEY AND CERTAIN PROFIT AND LOSS ACCOUNT WAS FOUND ON WHICH BASIS THE ASSESSEE SURRENDERED A SUM OF RS. 25 LAKHS AS ADDITIONAL INCOME. THE PENALTY WAS LEVIED BY THE AO, WHICH WAS CONFIRMED BY THE LEARNED CIT(A). THEREAFTER ON SECOND APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL HAS HELD THAT THOUGH THE ASSESSEE HAD FURNISHED AN EXPLANATION IN RESPECT OF THE ENTRIES IN THE PROVISIONAL TRADING AND PROFIT AND LOSS ACCOUNT, WHICH WAS SUBMITTED TO THE BANK FOR AVAILING CERTAIN CREDIT LIMITS, THE AO HA D FAILED TO POINT OUT ANY DISCREPANCY IN THE EXPLANATION FURNISHED BY THE ASSESSEE AND HAD PROCEEDED TO ASSESS THE INCOME IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE SURRENDER MADE BY THE ASSESSEE. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, THE O NLY ISSUE IS WHETHER THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT OR NOT. THEREAFTER THE TRIBUNAL BY FOLLOWING THE DECISION OF THE H O N BLE KARNATAKA HIGH COURT IN THE CASE OF T.P. INDRAKUMAR VS. ITO, REPORTED IN (2010) 322 ITR 454 AND IN THE CASE OF CIT VS. RAJIV GARG, REPORTED IN (2008) 175 TAXMAN 184 (P&H) , HELD THAT THERE WAS NO ITA NO . 6325/2012 10 MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE LEVY OF PENALTY WAS CANCELLED BY THE TRIBUNAL. WE HAVE ALSO SEEN T HE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF PRASANNA ENTERPRISES VS. CIT, REPORTED IN (2000) ITR 188 (KAR) AND FOUND THAT THIS DECISION ALSO SUPPORTS THE CASE OF THE ASSESSEE. WE FURTHER NOTED THAT IN THE CASE OF CIT VS. SANIA MIRZA, DECIDED IN ITA NO.526/2011, VIDE JUDGMENT DATED 9 - 2 - 2012 , THE HON BLE ANDHRA PRADESH HIGH COURT HAS HELD THAT THE LEVY OF PENALTY WAS NOT JUSTIFIED. IN THIS CASE ALSO THE FACTS WERE THAT THE ASSESSEE WAS A RENOWNED PROFESSIONAL TENNIS PLAYER. ALONG WITH HER RETUR N OF INCOME, A STATEMENT OF AFFAIRS WAS FILED. IT WAS FOUND THAT THE ASSESSEE HAS RECEIVED RS. 30,63,310/ - AWARD FROM THE GOVERNMENT, WHICH WAS NOT OFFERED FOR TAXATION. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(1). THEREAFTER ASSESSMENT WAS REOPENED A ND THE ASSESSEE WAS REQUIRED TO EXPLAIN THE AMOUNT OF RS. 30,63,310/ - AS TO WHY IT IS NOT TAXABLE. THE ASSESSEE VOLUNTARILY OFFERED RS. 30,63,310/ - FOR TAX. IT WAS STATED THAT DURING THE PENALTY PROCEEDING, THE AMOUNT WAS SHOWN IN THE CAPITAL ACCOUNT. THEREF ORE, PENALTY IS NOT LEVIABLE. HOWEVER, THE AO WAS NOT SATISFIED. ACCORDINGLY, HE LEVIED THE PENALTY OF RS. 10,14,582/ - ON THE GROUND THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF HER INCO ME AND CONCEALED THE INCOME. THIS VIEW OF THE AO WAS UPHEL D BY THE CIT(A) . ON FURTHER APPEAL, THE TRIBUNAL WAS OF THE VIEW THAT THE ASSESSEE HAD NOT ACTED IN A MALA FIDE MANNER AND IT COULD NOT BE SAID THAT HER ACTIONS WERE DELIBERATE. IT WAS IN FACT A BONA FIDE MISTAKE MADE ON HER ITA NO . 6325/2012 11 BEHALF BY HER ADVOCATE/CHARTERE D ACCOUNTANT AND THERE WAS NO CONCEALMENT OF INCOME BY HER NOR WAS THERE A FURNISHING OF INACCURATE PARTICULARS. ACCORDINGLY, THE PENALTY LEVIED BY THE AO WAS CANCELLED BY THE TRIBUNAL . THE ORDER OF THE TRIBUNAL WAS CONFIRMED BY THE HON BLE HIGH COURT. 9 . SIMILAR FACTS ARE INVOLVED IN THE PRESENT CASE AS IN THIS CASE ALSO ON BEING ASKED BY THE AO, THE ASSESSEE FILED TOTAL LOSS AND THE LOSS SHOWN BY THE ASSESSEE WAS ACCEPTED UNDER TWO HEADS, I.E. UNDER THE BUSINESS HEAD AND UNDER THE SPECULATIVE HEAD, OTHE RWISE, THERE IS NO DIFFERENCE IN THE TOTAL LOSS CLAIMED BY THE ASSESSEE. THIS CANNOT BE SAID THAT THERE WAS ANY MALAFIDE ON THE PART OF THE ASSESSEE BECAUSE THE ASSESSEE HAS NOT DERIVED ANY BENEFIT FOR CLAIMING HIGHER LOSS UNDER THE HEAD BUSINESS LOSS. WE HAVE ALSO GONE THROUGH THE DECISION RELIED BY THE LEARNED DR IN THE CASE OF MOTIBHAI FULABHAI PATEL & CO (SUPRA) , WHICH RELATES TO CENTRAL EXCISE ACT AND FOUND THAT THE FACTS OF THE CASE OF THE AFORESAID CASE ARE TOTALLY DIFFERENT FROM THE FACTS OF THE ASS ESSEE AS IN THIS CASE ONLY INTERPRETATION OF LAW HAS BEEN EXPLAINED AS IT HAS BEEN OBSERVED THAT , IT WAS NOT PERMISSIBLE FOR THE COLLECTOR TO CONFISCATE THE ENTIRE TOBACCO MIXTURE. AT THE SAME TIME NO PERSON CAN BE PERMITTED TO BENEFIT BY HIS WRONGFUL ACT . NO RULE OF LAW SHOULD BE SO INTERPRETED AS TO PERMIT OR ENCOURAGE ITS CIRCUMVENTION. IF BY THE WRONGFUL ACT OF A PART HE RENDERS IT IMPOSSIBLE FOR THE AUTHORITIES TO CONFISCATE UNDER RULE 40.. . IN OUR VIEW, THESE OBSERVATIONS OF THE HONBLE HIGH COU RT ARE SUPPORTIVE TO THE CASE OF THE ASSESSEE AS IN ITA NO . 6325/2012 12 THE PRESENT CASE NEITHER THERE IS MISREPRESENTATION, NOR IT CAN BE SAID THAT THERE IS ANY WRONGFUL ACT OF THE ASSESSEE. DUE TO BONAFIDE MISTAKE, THE ASSESSEE HAS SHOW THE ENTIRE LOSS UNDER THE HEAD BUSINE SS LOSS AND WHEN IT WAS FOUND THAT PART OF LOSS RELATES TO SPECULATIVE LOSS, IMMEDIATELY, THE DETAILS OF BUSINESS LOSS AS WELL AS SPECULATIVE LOSS WAS FILED AND THE AO HAS ACCEPTED ALSO. AS STATED EARLIER ALSO, NO BENEFIT HAS BEEN OBTAINED BY THE ASSESSEE FOR CLAIMING HIGHER BUSINESS LOSS DURING THE YEAR UNDER CONSIDERATION. WE HAVE ALSO CONSIDERED OTHER CASE LAWS RELIED UPON BY THE LEARNED DR AND FOUND THAT THOSE ARE IN RESPECT OF AVOIDANCE OF TAX AND THER EOF LEVY OF PENALTY. IN THE PRESENT CASE, NO SUCH F ACTS ARE INVOLVED AS THERE IS NO AVOIDANCE OF TAX. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT LEVY OF PENALTY WAS NOT JUSTIFY. ACCORDINGLY, WE C ANCEL THE LEVY OF PENALTY. 10 . IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF MAY . 2013 . SD/ - SD/ - ( D.KARUNAKARA RAO ) ( R.K.GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 08 /05/ 2013 . PKM , PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - X, MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBA I