DCIT, Faridabad v. M/s Sucon India Ltd, Faridabad

ITA 4418/DEL/2016 | 2009-2010
Pronouncement Date: 27-05-2021 | Result: Dismissed

Appeal Details

RSA Number 441820114 RSA 2016
Assessee PAN AAGCS9603L
Bench Delhi
Appeal Number ITA 4418/DEL/2016
Duration Of Justice 4 year(s) 9 month(s) 15 day(s)
Appellant DCIT, Faridabad
Respondent M/s Sucon India Ltd, Faridabad
Appeal Type Income Tax Appeal
Pronouncement Date 27-05-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 27-05-2021
Assessment Year 2009-2010
Appeal Filed On 12-08-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI R.K. PANDA ACCOUNTANT MEMBER AND SHRI KULDIP SINGH JUDICIAL MEMBER ITA NO.4418/DEL/2016 ASSESSMENT YE AR : 2009-10 DY. COMMISSIONER OF INCOME TAX CIRCLE-II BLOCK-B CGO COMPLEX NH-IV FARIDABAD VS. M/S SUCON INDIA LTD. FF-9 VISHNU PALACE SECTOR-20B AJRONDA MOD. FARIDABAD PAN-AAGCS9603L (APPELLANT) (RESPONDENT) APPELLANT BY : SH. H.K.CHOUDHARY CIT - DR RESPONDENT BY : DR. RAKESH GUPTA ADV. & SHRI SOMIL AGGARWAL ADV. DATE OF HEARING : 20.05.2021 DATE OF PRONOUNCEMENT : 27.05.2021 ORDER PER R.K. PANDA AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE OR DER DATED 09.06.2016 OF THE LEARNED CIT(A) FARIDABAD RELATING TO ASS ESSMENT YEAR 2009-10. THE REVENUE IN ITS ONLY EFFECTIVE GROUND OF APPE AL HAS CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN CANCELLING THE PENALTY OF RS.9 39 26 270/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSINESS OF TRADING IN SHARES & SECURITIES AND WORKS CONTRACT ASSIGNMENTS IT FILED ITS RETURN OF INCOME ON 21.09.2009 DECLA RING LOSS OF RS.(-)25 94 45 470/-. THE ASSESSING OFFICER COMPLETED THE ASS ESSMENT U/S ITA NO.4418/DEL/2016 2 143(3) OF THE ACT ON 29.12.2011 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.1 59 42 600/- WHEREIN HE MADE ADDITION OF RS.27 63 30 23 0/- BY INVOKING THE EXPLANATION TO PROVISIONS OF SECTION 73 OF THE ACT BEING SPECULATIVE LOSS ON DERIVATIVE TRANSACTIONS WHICH CANNOT B E SET OFF AGAINST THE BUSINESS INCOME. HE ALSO MADE ADDITION OF RS.4798/- U/ S 14A R.W.R.8D AND RS.33 000/- BEING EXPENSES INCURRED AT ROC FOR INCRE ASING AUTHORIZED SHARE CAPITAL. THE ASSESSING OFFICER THEREAFTER INITIATED PENA LTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.27 63 35 028/-(27 63 30 230 + 4798) THE ASSESSING OFFICER LEVIED PENALTY OF RS. 9 39 26 270/- U/S 271(1)(C) OF THE ACT BEING PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. 3. IN APPEAL THE LEARNED CIT(A) CANCELED THE PENALTY SO LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER:- 12. I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE. I HAVE ALSO CAREFULLY PERUSED THE SUBMISSIONS AND ARGUMENTS OF THE ASSESSEE AND ITS COUNSEL DURING ASSESSMENT AND PENALTY STAGE . THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAD INCURRED A LOSS OF RS. 27 63 30 230/- IN SHARE TRADING BUSINES S CARRIED ON AT NSE AND BSE AND MOST OF IT WAS ON ACCOUNT OF TRADIN G IN DERIVATIVES. THE IMPUGNED TRANSACTIONS/ LOSSES HAVE BEEN SEPARAT ELY DISCLOSED IN THE AUDITED P & L A/C FILED BY THE ASSESSEE AND ACC EPTED BY THE ASSESSING OFFICER. THERE IS NO DISPUTE ABOUT THE FA CTS OR FIGURES OF THE CASE OR MANNER OF THEIR DISCLOSURE. IN THE COMPUTAT ION THE ASSESSEE HAD SET OFF A PART OF THIS LOSS AGAINST THE OTHER B USINESS INCOME AND HAD CARRIED FORWARD THE BALANCE NET LOSS OF RS. 25 94 45 470/-. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OF FICER APPLIED PROVISIONS OF EXPLANATION TO SECTION 73 AND HELD TH ESE LOSSES AS SPECULATIVE AND DENIED THE SETOFF. ACCORDINGLY THE ASSESSING OFFICER COMPUTED NET INCOME OF RS. 1 59 42 600/- FOR THE YE AR AND INCREASED THE CARRY FORWARD LOSS TO RS. 27 63 30 230/- AGAINS T THE CLAIM OF RS. 25 94 45 470/-. IN PENALTY ORDER THE ASSESSING OFFI CER HAD REITERATED THE FACTS MENTIONED IN ASSESSMENT ORDER. IT IS STAT ED THEREIN THAT BY CLAIMING SET OFF THE ASSESSEE HAD TRIED TO AVOID D UE TAXES ON POSITIVE NON-SPECULATIVE INCOME. THE PENALTY U/S 271(L)(C) O F THE ACT WAS ITA NO.4418/DEL/2016 3 THUS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME ON THE COMPLETE LOSS OF RS. 27 63 30 230/- I.E. INCLUDIN G BOTH THE AMOUNT OF LOSS SETOFF AGAINST INCOME AS WELL AS THE LOSS W HICH IS NOT SETOFF. 13. IT IS PERTINENT TO MENTION HERE THAT THE APPE AL OF THE ASSESSEE IN THE QUANTUM PROCEEDINGS HAD BEEN DISMISSED BY MY PR EDECESSOR BY ORDER DATED 12/06/2013 HOLDING THE IMPUGNED TRANSA CTIONS TO BE SPECULATIVE. THEREFORE DETERMINATION OF NATURE OF TRANSACTIONS IS NOT IN ISSUE BEFORE ME. THE ONLY QUESTION TO BE DECIDED HERE IS WHETHER IN THESE CIRCUMSTANCES PENALTY CAN BE LEVIED ON THE AS SESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE QU ESTION CAN BE ANSWERED ONLY AFTER CONSIDERING VARIOUS ISSUES INVO LVED IN THE MATTER. 14. AT THE OUTSET IT IS NECESSARY TO DETERMINE WHE THER THE CLAIM OF THE ASSESSEE WAS DUE TO ANY MIS-APPRECIATION OF THE FACTS AND LAW OR MISREPRESENTATION THEREOF. I HAVE GONE THROUGH THE BALANCE SHEET P & L A/C AND THEIR ANNEXURES FILED BY THE APPELLANT IN THE PAPER BOOK. IT WAS FOUND THAT THE ASSESSEE HAS DULY DISCLOSED A LL THE TRANSACTION THEREIN. FROM THE RECORDS IT IS OBSERVED THAT ALL THE INFORMATION CALLED FOR IN THE ASSESSMENT IN THIS REGARD WAS DULY FURNI SHED AND WERE VERIFIED FROM THE RELEVANT DOCUMENTS. THE GENUINENE SS OF THE TRANSACTIONS AND THE LOSS INCURRED HAD BEEN ACCEPTE D IN THE ASSESSMENT PROCEEDINGS. AT THE PENALTY STAGE ALSO N O DOUBTS HAVE BEEN EXPRESSED BY THE ASSESSING OFFICER REGARDING G ENUINENESS OF THE TRANSACTIONS OR THE LOSS. IT WAS ALSO FOUND THAT TH E ASSESSEE HAS BEEN TREATING DERIVATIVES SEPARATELY FROM THE OTHER SHARE TRANSACTIONS. NO FAULT HAD BEEN OBSERVED BY THE AUD ITORS ALSO IN ACCOUNTING AND TAX TREATMENT GIVEN BY THE ASSESSEE TO THESE TRANSACTIONS. EVEN DURING ASSESSMENT PROCEEDINGS AN D LATER APPELLATE PROCEEDINGS THE ASSESSEE HAD TAKEN CONSI STENT STAND THAT DERIVATIVE WERE DIFFERENT FROM SHARES. FURTHER THE RE IS NO ALLEGATION OF ANY MIS-REPRESENTATION OF ANY FACT AT ANY STAGE BY ANY AUTHORITY. 15. CONSIDERING THESE FACTS AND CIRCUMSTANCES IT CAN BE SAFELY CONCLUDED THAT THE ASSESSEE HAS DISCLOSED AND EXPLA INED ITS TRANSACTION WITH FULL DEGREE OF OPENNESS AND TRANSP ARENCY. IT IS POSSIBLE TO HOLD A DIFFERENT VIEW OF THE FACTS BUT THE FACTS THEMSELVES HAD REMAINED UNDISPUTEDLY CLEAR IN THIS CASE. THE A SSESSEE HAD DISCLOSED ITS TRANSACTIONS TRANSPARENTLY IN THE AUD ITED FINANCIAL STATEMENTS AND BEFORE INCOME TAX AUTHORITIES. 16. THE NEXT AND MAIN ISSUE IN THE CASE IS REGARD ING CLAIM OF SETOFF OF THE SHARE LOSSES AGAINST THE BUSINESS INCOME. IN THIS CONTEXT THE CLAIM OF THE ASSESSEE IS THAT THERE WAS MULTIPLICIT Y OF PROVISIONS ON THE MATTER AND THEREFORE IN ITS UNDERSTANDING THER E WAS AMBIGUITY SURROUNDING THE INTERPRETATION OF IMPUGNED PROVISIO NS OF LAW. IT WAS ALSO MENTIONED THAT DERIVATIVES AND SHARES ARE DIFF ERENT AND THE ASSESSEE HAD ALWAYS BELIEVED SO. IT HAS ALSO BEEN A RGUED THAT THE EXPLANATION WAS INTRODUCED TO CURB THE MALPRACTICE OF CREATING ARTIFICIAL LOSSES IN SHARES OF GROUP COMPANIES TO R EAP BENEFIT OF SETOFF AGAINST TAXABLE INCOME. THEREFORE THE ASSESSEE HAD ALWAYS BELIEVED THAT EXPLANATION TO SECTION 73 CAN BE USED ONLY WHE RE THE LOSS IN SHARES HAS BEEN FOUND AS BOGUS. ITA NO.4418/DEL/2016 4 17. I HAVE GONE THROUGH THE RELEVANT PROVISIONS ON THE STATUTE IN FORM OF SECTION 43(5)(D) AND EXPLANATION TO SECTION 73 OF THE ACT. INDEED SECTION 43(5)(D) EXEMPTS THE IMPUGNED DERIVA TIVE TRANSACTIONS FROM THE GAMUT OF BEING SPECULATIVE. ON THE OTHER H AND EXPLANATION TO SECTION 73 TAKES AWAY SUCH EXEMPTION IN CERTAIN CASES. I HAVE ALSO TAKEN NOTE OF THE FACT THAT NEITHER PROVISION OVERR IDES THE OTHER. 18. THE ISSUES CONCERNING INTERPRETATION OF THE L AW ARE OFTEN ENMESHED IN HYPER LEGAL ARGUMENTS AND REQUIRE VERY FINE LEGAL UNDERSTANDING. A NORMAL ASSESSEE CAN-NOT BE FAULTED IF IT DOES NOT POSSESS THOSE SKILLS OR TAKES A LEGAL VIEW WHICH IS FAVORABLE TO HIM. IN THE CASE OF DCIT VS. MADAN LAI LTD. (51 SOT 188)(KOLKATA) RELIED BY THE ASSESSEE IT WAS HELD THAT DERIVATIVE S ARE DIFFERENT FROM SHARES. RELIANCE WAS ALSO PLACED ON ANOTHER DECISIO N IN THE CASE OF ASIAN FINANCIAL SERVICES LTD. VS. CIT - 3 (KOLKATA) IN THIS REGARD. THOUGH DIFFERENT VIEW IS TAKEN BY HON'BLE DELHI HIG H COURT ON THE MATTER IT GOES ON TO SHOW THE COMPLEXITY OF THE IS SUE INVOLVED. THERE ARE CERTAINLY SOME JUDICIAL INTERPRETATIONS WHICH S UPPORT THE VIEW ADOPTED BY THE ASSESSEE. THIS MAKES THE VIEW TAKEN BY THE ASSESSEE AS A PLAUSIBLE VIEW. THEREFORE IN VIEW OF THESE FA CTS AND LEGAL PROPOSITIONS IT IS CLEAR THAT THE MATTER INVOLVED COMPLEX LEGAL ISSUES. IN THIS SITUATION THE ASSESSEE CAN-NOT BE FAULTED FOR TAKING A VIEW WHICH FAVORS IT. CERTAINLY IT SHOULD NOT BE PENALIZ ED MERELY FOR TAKING SUCH A VIEW. 19. FURTHER THE DISALLOWANCE IN THE CASE WAS ALL A BOUT DENIAL OF A CLAIM BASED ON A SPECIFIC DEEMING FICTION OF L AW. IN THE ASSESSMENT THERE WAS MERELY A CHANGE IN NATURE OF O THERWISE GENUINE LOSS. IT IS NOW VERY WELL SETTLED THAT NO P ENALTY CAN BE LEVIED MERELY FOR DENIAL OF CLAIM MADE BY THE ASSESSEE. IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) THE HONBLE APEX COURT HELD THAT WHERE INFORMATION GIVEN IS NOT FOUND TO BE INCORRECT ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS OF INCOME FOR THE PURPOSE OF LEVYING PENALTY U/S 271(L ). FURTHER IT WAS HELD THAT MERE MAKING A CLAIM DOES NOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. IN THE ABSENCE OF FINDING T HAT ANY DETAILS SUPPLIED BY ASSESSEE IS INCORRECT OR FALSE PENALTY CANNOT BE LEVIED. SIMILARLY IT IS NOW A WELL SETTLED PROPOSITION THAT NO PENALTY CAN BE LEVIED MERELY FOR CHANGE IN HEAD OF INCOME. IN THIS REGARD HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. BENNETT COLEMA N & CO. LTD HAS HELD THAT PENALTY U/S 271(1) CANNOT BE IMPOSE D WHEN THERE WAS NO DESIRE ON PART OF ASSESSEE TO HIDE OR CONCEAL THE INCOME BUT IT WAS AN INADVERTENT MISTAKE ON PART OF ASSESS EE AND WHEN THERE IS ONLY CHANGE OF HEAD OF INCOME NO PENALTY C OULD BE IMPOSED. 20. HAVING RESOLVED THE RELEVANT ISSUES ARISING IN THE MATTER I NOW COME TO CONTEMPORARY EXPOSITION DIRECTLY COVERI NG THE MATTER. THE ISSUE OF LEVY OF PENALTY ON THE FACTS IDENTICA L TO THE FACTS OF THIS CASE HAD ALREADY BEEN DEALT IN VARIOUS DECISIONS. IN THE CASE OF CIT VS. JUBILANT ENPRO PVT. LTD. WHEREIN HON'BLE DELHI HIGH COURT HAS HELD AS UNDER: ITA NO.4418/DEL/2016 5 '..THE ASSESSEE HAD MADE FULL DISCLOSURE AND THERE WAS NEITHER ANY CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS. IN FACT THE TRIBUNAL HAS F OUND THAT THE JUSTIFICATION FURNISHED BY THE RESPONDENT ASSESSEE WAS BONAFIDE. CONSEQUENTLY KEEPING IN VIE W THE CONCLUSION OF FACTS ARRIVED AT BY THE TRIBUNAL THE EXPLANATION OFFERED BY THE RESPONDENT ASSESSEE IS BONAFIDE AND THE RESPONDENT ASSESSEE'S CASE WOULD F ALL WITHIN AMBIT OF EXPLANATION 1 TO SECTION 271 OF ACT ' 21. IT IS PERTINENT TO MENTION HERE THAT IT WAS ALS O A CASE WHEREIN THE ASSESSEE WAS IN THE BUSINESS OF DEALING IN SHARES AND HAD TREATED THE LOSSES FROM SHARE TRADING AS NO N- SPECULATIVE. SIMILARLY IN THE CASE OF CIT VS. AURI C INVESTMENTS & SECURITIES LTD. (310 ITR 121)(DEL) IT WAS HELD T HAT '..THE MERE TREATMENT OF BUSINESS LOSS AS SPECULATI ON LOSS BY THE ASSESSING OFFICER DOES NOT AUTOMATICALLY WAR RANT INFERENCE OF CONCEALMENT OF INCOME. . 22. IDENTICAL VIEW ON THESE FACTS HAD BEEN TAKEN IN THE CASE OF CIT VS BHARTESH JAIN (323 ITR 358)(DEL) . THUS IN M Y CONSIDERED OPINION WHEN THE TRANSACTIONS OF THE ASSESSEE ARE UNDISPUTEDLY GENUINE THEN MERELY CLAIM OF SETOFF OF LOSS ARISIN G OUT OF THESE TRANSACTIONS CAN-NOT BE THE SOLE REASON TO LEVY PEN ALTY IN VIEW OF THE COMPLEXITY OF THE ISSUES INVOLVED AND THE TRUE AND FULL DISCLOSURES MADE BY IT IN THE FINANCIAL STATEMENTS AND DURING T HE COURSE OF ASSESSMENT PROCEEDING. IN VIEW OF THE ABOVE DISCUSS ION AND VERY HUMBLY FOLLOWING THE DECISIONS CITED ABOVE HAVING I DENTICAL FACTS AND COVERING THE ISSUE THE PENALTY LEVIED IN THE CASE DESERVES TO BE DELETED ON THIS MATTER AND IS THUS DELETED. 23. REGARDING DISALLOWANCE OF RS. 4 798/- U/S 14A IT IS OBSERVED THAT THE ASSESSEE HAD ITSELF SUBMITTED THE COMPUTATION DURING ASSESSMENT PROCEEDINGS AND HAD NOT PRESSED T HE GROUND IN QUANTUM APPEAL ON ACCOUNT OF AMOUNT BEING PETTY. NO PARTICULARS OF INCOME HAD BEEN SUPPRESSED BY THE ASSESSEE IN THIS REGARD AND COMPLETE AND FULL DISCLOSURES HAD BEEN MADE. NO ADV ERSE OPINION HAS BEEN EXPRESSED BY THE ASSESSING OFFICER REGARDING G ENUINENESS OF CLAIM OF EXPENSES OTHERWISE. CONSIDERING ALL THESE FACTS AND IN VIEW OF DECISIONS CITED BY THE ASSESSEE AND ITS COUNSEL WHICH COVER THE MATTER THE PENALTY ON THIS DISALLOWANCE IS ALSO DE LETED. 24. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D AND PENALTY LEVIED U/S 271(1)(C) IS DELETED. 4. AGGRIEVED WITH SUCH ORDER OF THE LEARNED CIT(A) THE R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.4418/DEL/2016 6 5. THE LEARNED DR STRONGLY CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE ACT. HE SUBMITTED THAT THE QUANTUM ADDITION WAS UPHELD BY TH E LEARNED CIT(A). FURTHER A PERUSAL OF THE ORDER CLEARLY SHOWS THAT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN THE INSTANT CASE IS FULLY JUSTIFIED. HE SUBMITTED THAT LEARNED CIT(A) WITHOUT GIVING ANY VALID REASON HAS DELETED T HE PENALTY WHICH IS NOT JUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF LEARNED CIT(A) SH OULD BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. HE ALSO RE LIED ON VARIOUS DECISIONS. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HANDS HE AVILY RELIED ON THE ORDER OF LEARNED CIT(A) IN CANCELLING THE PENALT Y LEVIED BY THE ASSESSING OFFICER. REFERRING TO PAGE-4 OF THE ASSESSMENT O RDER HE DREW THE ATTENTION OF THE BENCH TO LOSSES SUFFERED DURING THE YEAR WHICH ARE AS UNDER:- A. LOSS ON TRADING IN SHARES THROUGH BSE/NSE AMOUNTING TO RS.10 1 0 75 192/- B. LOSS ON INTRADAY TRADING ON BSE/NSE IN SHARES RS.25 38 407/- C. LOSS ON DERIVATIVES TRADING ON NSE AND BSE RS.17 27 16 630/- 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T ALL DETAILS WERE FILED BEFORE THE ASSESSING OFFICER AND THERE WAS NEITHE R ANY CONCEALMENT OF ANY INCOME NOR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME. REFERRING TO PAGE-80 OF THE PAPER BOOK THE LEARN ED COUNSEL FOR THE ITA NO.4418/DEL/2016 7 ASSESSEE DREW THE ATTENTION OF THE BENCH TO A COPY OF THE PENALTY NOTICE WHICH IS AS UNDER:- 8. HE SUBMITTED THAT THE INAPPROPRIATE WORDS IN THE PEN ALTY NOTICE HAS NOT BEEN STRUCK OFF AND IT IS ONLY A PRINTED FORM AND TH EREFORE IT IS NOT UNDERSTOOD AS TO UNDER WHICH LIMB OF THE PROVISION THE AS SESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS. REFERRING TO THE DECISION OF HONBLE DELHI ITA NO.4418/DEL/2016 8 HIGH COURT IN THE CASE OF PCIT VS SAHARA INDIA LIFE INSUR ANCE COMPANY LTD. VIDE ITA NO.426/2019 ORDER DATED 02.08.2019 HE DREW TH E ATTENTION OF THE BENCH TO PARA 21 OF THE ORDER WHICH READS AS UNDER:- 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1) (C) OF THE ACT WHICH WAS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNA TAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSERVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT S PECIFY WHICH LIMB OF SECTION 271(1) (C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTI CULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULA RS OF INCOME. THE KARNATAKA HIGH COURT HAD FOLLOWED THE ABOVE JUDGM ENT IN THE SUBSEQUENT ORDER IN COMMISSIONER OF INCOME TAX V. SSA S EMERALD MEADOWS (2016) 73 TAXMAN.COM 241 (KAR) THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA IN SLP NO.L 1485 OF 2016 BY ORD ER DATED 5 TH AUGUST 2016. 9. HE SUBMITTED THAT SINCE THE INAPPROPRIATE WORDS IN S AID NOTICE HAS NOT BEEN STRUCK OFF THEREFORE IT IS NOT UNDERSTOOD A S TO UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACC URATE PARTICULARS OF INCOME. THEREFORE ON THIS COUNT ITSELF THE PENALTY PROCEE DINGS INITIATED BY THE ASSESSING OFFICER BEING NOT IN ACCORDANCE WITH LAW HAS TO BE QUASH ED. 10. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PCTI VS RELIANC E PETRO PRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 SUBMITTED THAT HONB LE SUPREME COURT IN THE SAID DECISION HAS HELD THAT MERE MAKING OF AN INCORREC T CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION WHICH HAS NOT BEEN ACCEP TED BY THE REVENUE THE PENALTY U/S 271(1)(C) CANNOT BE ATTRACTED. I F THE CONTENTION OF ITA NO.4418/DEL/2016 9 THE REVENUE IS ACCEPTED THE ASSESSEE WOULD BE LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT IN EVERY CASE WHERE THE CLAIM MADE BY THE ASSESSEE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON. THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 10.1. REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH C OURT IN THE CASE OF CIT VS BHARTESH JAIN REPORTED IN 323 ITR 358 H E SUBMITTED THAT HONBLE DELHI HIGH COURT IN THE SAID DECISION HAS HELD THAT THE PENALTY U/S 271(1)(C) WAS NOT LEVIABLE WHERE THE ADDITION WAS MADE ON AC COUNT OF TREATMENT OF BUSINESS LOSS AS SPECULATION LOSS. REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS AURIC I NVESTMENT & SECURITIES LIMITED REPORTED IN (310 ITR 121)(DEL.) HE SUBMITTE D THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT MERE TREATMENT OF BUSINESS LOSS AS SPECULATION LOSS BY THE ASSESSING OFFICER D OES NOT AUTOMATICALLY JUSTIFY INTERFERENCE FOR CONCEALMENT OF INCOME AND THEREFORE THE PENALTY U/S 271(1)(C) OF THE ACT IS NOT LEVIABLE. SIMILAR VIE W HAS BEEN TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF C IT VS ARPETIC PVT. LTD. REPORTED IN 39 DTR 243 WHERE AGAIN IT IS HELD THAT MERE FA CT THAT THE ASSESSING OFFICER HAD TREATED THE BUSINESS LOSS AS SPECULA TIVE LOSS DID NOT AUTOMATICALLY RESULT IN THE INFERENCE OF CONCEALMENT OF INCOM E JUSTIFYING IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. HE ALSO RELIED ON FOLLOWING DECISIONS:- I. ACIT VS SUDARSHAN FISCAL SERVICES (P) LTD. (2010) 4 ITR 053 2(ITAT MUM.) II. SRJ SECURITIES LTD. VS ITO (2011) 8 ITR 0041 (ITAT DEL.) ITA NO.4418/DEL/2016 10 III. DCIT VS SHREE RAM ELEXTROCAS (P) LTD. (2017) 166 ITD 0209 (ITAT KOL) IV. CIT VS ANR VS SSAS EMERALD MEADOWS (2016) ITA 380/2015 (KAR) V. CIT VS MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR) VI. DILIP SHROFF VS JCIT (2007) 291 ITR 519 (SC) VII. SRI VENKATA RATNAM MEKA VS ACIT IN ITA NO.889/2016 DAT E OF ORDER 17.02.2017 (ITAT HYD.) VIII. CIT VS SAMSON PERINCHERY (2017) 392 ITR 0004 (BOM) IX. MEHERJEE CASSINATH HOLDINGS PVT. LTD. VS ACIT (ITA NO.2555 /2012 DATE OF ORDER 28.04.2017 ITAT MUM. X. M/S ADITYA CHEMICALS LTD. VS ITO (ITA NO.5006/2013 DATE OF ORDER 21.11.2017 (ITAT DEL.) XI. M/S VASHULINGA FINANCE PVT. VS ITO ITA NO.2550/2016 DAT E OF ORDER 13.09.2019 (ITAT DEL.) 11. HE ACCORDINGLY SUBMITTED THAT BOTH LEGALLY AND FACT UALLY THE PENALTY LEVIED BY THE ASSESSING OFFICER IS NOT SUSTAINABLE A ND THEREFORE THE ORDER OF THE LEARNED CIT(A) SHOULD BE UPHELD AND THE GROU NDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE LEARN ED CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO C ONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFIC ER IN THE INSTANT CASE LEVIED PENALTY OF RS. 9 39 26 270/- U/S 271(1)(C) OF THE ACT ON ACCOUNT OF ADDITION OF RS.27 63 30 230/- BEING SPECULATIVE LOS S ON DERIVATIVE TRANSACTIONS WHICH ACCORDING TO HIM CANNOT BE SET OFF A GAINST BUSINESS INCOME AND DISALLOWANCE OF RS.4 798/- U/S 14A R.W.R 8D(2)(III) OF THE RULES. ITA NO.4418/DEL/2016 11 WHILE DOING SO THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF BUSINESS INCOME TO THE EXTENT OF RS.27 63 35 028/-. WE FIND THE LEARNED CIT(A) DELETED THE PENALTY SO LEVIED BY THE ASSESSING OFFICER THE REASONS OF WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF TH E LEARNED CIT(A) CANCELLING THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THIS ISSUE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS BHARTESH JA IN (SUPRA) HAS HELD THAT PENALTY U/S 271(1)(C) OF THE ACT WAS NOT LEVIABLE W HERE THE ADDITION WAS MADE ON ACCOUNT OF TREATMENT OF BUSINESS LOSS AS SP ECULATION LOSS. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS AURIC INVES TMENT & SECURITIES LTD. (SUPRA) HAS HELD THAT THE ASSESSEE HAVING SUBMITTED THE REQUISITE DETAILS OF THE SHARE TRANSACTIONS DURING THE COURSE OF ASSESSME NT PROCEEDINGS AS REQUIRED BY THE ASSESSING OFFICER IT CANNOT BE SAID THAT T HE ASSESSEE HAS CONCEALED ANY PARTICULARS RELATING TO ITS COMPUTATION OF I NCOME. MERELY BECAUSE THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF BUSINESS LOSS BY TREATING IT AS SPECULATION LOSS AND THEREFORE THE PENALTY U/S 271(1)(C) OF THE ACT IS NOT LEVIABLE. WE FIND THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ARETIC INVESTMENT PVT. LTD. HAS HELD THAT MERE FACT T HAT THE ASSESSING OFFICER HAD TREATED THE BUSINESS LOSS AS SPECULATIVE LOSS DID NOT AUTOMATICALLY RESULT IN THE INFERENCE OF THE CONCEALMENT OF INCOME JUSTIFYING IN IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN VARIOUS OTHE R DECISIONS FILED BY THE ASSESSEE IN CASE LAW COMPILATION. UNDER THESE CIRCUMS TANCES WE HOLD THAT MERELY BECAUSE THE ASSESSING OFFICER HAS TREATED T HE BUSINESS LOSS ITA NO.4418/DEL/2016 12 CLAIMED BY THE ASSESSEE AS SPECULATION LOSS THE SAME CAN NOT TANTAMOUNT TO CONCEALMENT OF INCOME WARRANTING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT . 13. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS R ELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT MAKING OF AN INCOR RECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION WHICH HAS NOT BEEN ACCEP TED BY THE REVENUE THE PENALTY U/S 271(1)(C) IS NOT ATTRACTED. IF THE CONTENTION OF THE REVENUE IS ACCEPTED THE ASSESSEE WOULD BE LIABLE FOR PENA LTY U/S 271(1)(C) OF THE ACT IN EVERY CASE WHERE THE CLAIM MADE BY THE ASSE SSEE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON. THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) IS FULLY JUSTIFIED IN CANCELLING T HE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 14. EVEN OTHERWISE ALSO A PERUSAL OF THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S 271 OF THE ACT DATED 29.1 2.2011 A COPY OF WHICH IS PLACED AT PAGE 87 OF THE PAPER BOOK SHOWS THAT IT IS IN ONLY A PRINTED FORM WITHOUT STRIKING OFF THE INAPPROPRIATE WORDS IN THE SAID NOTICE. THEREFORE IT IS NOT UNDERSTOOD AS TO UNDER WHICH LIMB OF THE PROVISIONS OF SECTION 271(1)(C) THE ASSESSING OFFICER HAS INITIATED PENALTY PR OCEEDINGS I.E. WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACC URATE PARTICULARS OF SUCH INCOME. THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPRA) HAS DISMISSED THE APPEAL FILED BY THE REVENUE ON IDENTICAL CIRCUMSTANCES THE RELEVANT OBSE RVATIONS OF WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAP HS WHILE RECORDING ITA NO.4418/DEL/2016 13 THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE. WE THEREFORE HOLD THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER IS BAD IN LAW SINCE IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE P ENALTY PROCEEDINGS HAVE BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULAR OF INCOME. IN THIS VIEW OF THE MATTER WE UPHOLD THE ORDER OF THE LEARNED CIT(A) CANCELLING THE PENA LTY LEVIED BY THE ASSESSING OFFICER. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 15. IN THE FINAL RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ODER PRONOUNCED IN THE OPEN COURT ON 27.05.2021. SD/- SD/- (KULDIP SINGH) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI/DATED- 27.05.2021 F{X~{T COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BY ORDER ASSISTANT REGISTRAR ITAT DELHI