Income Tax Appellate Tribunal - Mumbai
Gangadharan Mohan, Mumbai vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'G'
BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND
SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER.
ITA No.1114/Mum/10
(Assessment Year : 2006-07)
Asst. Commissioner of Income Vs. Shri Gangadharan Mohan, 74,
Tax, Circle 21(2), Mumbai. Tower B, Kalpataru Residency,
Sion (East), Mumbai-400 022.
PAN ACQPG2928A
Appellant. Respondent.
Appellant By : Shri A.K. Nayak.
Respondent By : Shri Devdatta S. Mainkar.
O R D E R
PER D.K. AGARWAL :
This appeal preferred by the revenue is directed against the order dt.13.11.2009 passed by the learned CIT(A) for the Asst. Year 2006-07 deleting the penalty of Rs.54,50,200 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (the Act).
2. Briefly stated facts of the case are that the assessee, an individual, is carrying on the business of trading in shares, stock, future and options and commodities. He filed return declaring a total loss of Rs.1,91,24,870. During the course of assessment proceedings, the Assessing Officer observed that
-2- ITA No.1114/Mum//09 the assessee declared profit on trading in shares and stock at Rs.11,91,515 and the said profit has been set off against loss in trading in shares and stock at Rs.2,03,41,762. The A.O. further observed that an amendment was brought under section 43(5)(d), in accordance with an eligible transaction in respect of trading derivatives carried out in a recognized stock exchange shall not to be deemed to be a speculative transaction. The Assessing Officer further noted that said provision became effective from the date with CBDT notified the Exchange through which such transactions has been carried out. The notification has been issued by the CBDT recognizing the Stock Exchange where the assessee has transacted is effective from 25.1.2006 and accordingly the Assessing Officer was of the view that till 25.1.2006 all transactions in F & O have to be admitted as speculative in nature. Accordingly the Assessing Officer held that loss of Rs.1,63,58,485 incurred on F & O transaction upto 25.1.2006 is a speculative loss which can be set off only against profits from speculative in future. The Assessing Officer treated the balance loss of Rs.39,83,277 as business loss and after adjusting the profit on trading in shares and stock amounting to Rs.11,91,515, the Assessing Officer determined the loss at Rs.27,91,762 and accordingly completed the assessment at a loss of Rs.27,91,762 vide order dt.29.12.2008 passed under section 143(3) of the Act.
-3- ITA No.1114/Mum//09 On appeal, the learned CIT(A) upheld the action of the Assessing Officer to treat the loss of Rs.1,63,58,485 as speculative loss to be set off only against profits from speculative transactions in future. On further appeal before the Tribunal, the Tribunal while relying on the decision in the case of G K Anand Bros Buildwell (P) Ltd Vs. ITO 34 SOT 439 (Del) allowed the assessee's appeal. In the meantime, prior to the order passed by the Tribunal (supra) the Assessing Officer after considering the assessee's submission levied the penalty of Rs.54,50,200 on the disallowance of loss of Rs.1,63,58,485 vide order dt.24.6.2009 passed under section 271(1)(c) of the Act. On appeal, the learned CIT(A) on the assessee's contention that he was under the bona fide belief that the section was operative from 1.4.2006, deleted the penalty imposed by the Assessing Officer.
3. Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before us challenging the deletion of penalty imposed by the Assessing Officer.
4. At the time of hearing, the learned departmental representative supports the order by the Assessing Officer.
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5. On the other hand, the learned counsel for the assessee submits that since the Tribunal in assessee's own case , in quantum appeal, has treated the loss as business loss and not loss in speculative business, therefore, there is no concealment on the part of the assessee and the learned CIT(A) was fully justified in deleting the same. He also placed on record the copy of the said order of the Tribunal.
6. Having carefully heard the submissions of the rival parties and perusing the material available on record, we find that there is no dispute that the Tribunal in quantum appeal while relying on the decision in the caseof G.K. Anand Bros. Buildwell (P) Ltd Vs. ITO 34 SOT 439 (Del) has treated the said loss of Rs.1,63,58,485 as loss incurred as a business loss and not loss in speculative business and has allowed the assessee's appeal. Virtually the basis for imposition of levy of penalty under section 271(1)(c) is not applicable. Hence such is the position, the imposition of penalty is not in accordance with the law. Hence, we are inclined to uphold the order of the learned CIT(A) in deleting the penalty imposed by the Assessing Officer. The grounds taken by the revenue are, therefore, rejected.
-5- ITA No.1114/Mum//09
7. In the result the revenue's appeal stands dismissed.
Order pronounced in the open Court on 8-12-2010.
Sd/- Sd/-
(PRAMOD KUMAR) (D.K. AGARWAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai,
Dt.8-12-2010.
* Gpr
Copy to :
1. The Assessee.
2. The Assessing Officer.
3. CIT(Appeals)
4. CIT
5. Departmental Representative, ITAT, Mumbai.
By order
Dy./Asst.Registrar,
ITAT, Mumbai
-6- ITA No.1114/Mum//09
Date Initials
1. Draft dictated on 2.11.2010
2. Draft placed before author
3. Draft proposed & placed
before second member
4. Draft discussed & approved
by second member
5. Approved draft comes to 18.11.2010
Sr.PS/PS
6. Kept for pronouncement on
7. File sent to Bench Clerk
8. Date on which file goes to the
Head Clerk
9. Date of dispatch of order.