IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NOS. 6388 & 6399/MUM/2014 (ASSESSMENT YEARS: 2004-05 & 2005-06) ACIT, CIR.47, MUMBAI VS M/S ASHOK APPARELS PVT LTD PML PREMISES, 462, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI-13 PAN : AABCA1436E (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M.V. RAJGURU RESPONDENT BY SHRI SHOLKA SHAH DATE OF HEARING : 07-12-2016 DATE OF ORDER : 15 -12-2016 O R D E R PER ASHWANI TANEJA, AM: THESE APPEALS HAVE BEEN FILED AGAINST THE COMMON O RDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-38, MUMBAI [IN SHORT, CIT(A)] DATED 25-07-2014 AGAINST THE PENALTY ORDERS PASSED BY THE AO U/S 271(1)(C) FOR THE ASSESSMENT YEARS 2004-05 AND 2005 -06, ON THE FOLLOWING COMMON GROUNDS OF APPEAL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO. THE HON'BLE BOMBAY HIGH COURT HELD THAT THE LOSSES INCU RRED ON DERIVATIVE TRANSACTION TO BE TREATED AS SPECULATIVE LOSSES IN TERMS OF SECTION 43(5) OF THE INCOME TAX ACT. ' 2 I.T.A. NO.6398 & 6399/MUM/2014 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO AS BY CLAIMING A LOSS, WHICH IS NOT OTHERWISE ALLOWABLE T O BE SET OFF AGAINST REGULAR BUSINESS INCOME, THE ASSESSEE HAS S UBMITTED INACCURATE PARTICULARS OF INCOME FOR PURPOSE OF TAX EVASION.' 2. IT IS NOTED THAT IN BOTH THE APPEALS PENALTY WAS LE VIED ON DISALLOWANCE OF LOSS INCURRED ON DERIVATIVE TRANSAC TION BY TREATING THE SAME AS SPECULATIVE LOSSES IN TERMS OF SECTION 43(5 ) OF THE ACT. ON APPEAL, THE LD. CIT(A) DELETED THE PENALTY. 3. DURING THE COURSE OF HEARING, IT WAS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL OF THE ASSESSEE THAT IN THE QUANTUM APPEAL, THE DISALLOWANCE HAS BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 2 6-07-2013 IN ITA NOS 6936 -6938/MUM/2011. THE LD. DR DID NOT DISPUTE TH E SUBMISSION OF THE ASSESSEE. 4. WE HAVE GONE THROUGH THE ORDERS PASSED BY LOWER AUT HORITIES AS WELL AS THE ORDER OF THE TRIBUNAL PASSED IN QUANTUM APPEALS. IT IS NOTED FROM THE ORDER OF THE TRIBUNAL THAT THE DISALLOWANC E MADE BY THE AO OF THE IMPUGNED LOSS HAS BEEN DELETED BY THE TRIBUNAL. UNDER THESE CIRCUMSTANCES, NO BASIS SURVIVES TO CONTINUE WITH T HE PENALTY SINCE PENALTY WAS LEVIED ONLY ON THE IMPUGNED LOSS. THUS , ORDER OF LD CIT(A) IN DELETING THE PENALTY IN BOTH THE ASSESSMENT YEARS I S HEREBY UPHELD. 5. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DIS MISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF THE HEARING. SD/- SD/- (MAHAVIR SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 15 TH DECEMBER, 2016 PK/- 3 I.T.A. NO.6398 & 6399/MUM/2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , A-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES