Harvestdeal Securities P. Ltd, Mumbai vs Assessee

सव ौी वजय पाल राव, याियक सदःय एवं नरे ि कुमार ब"लै$या, लेखा सदःय के सम&

BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND

SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER

आयकर अपील सं./I.T.A. No.1615/Mum/2013 िनधा रण वष / Assessment Year : 2007-08 (िनधा M/s. Harvestdeal Securities बनाम/ बनाम The ITO, Ward 4(1)(2), Pvt. Ltd., Mumbai Vs. 3 r d Floor, Surya Mahal, Nagindas Master Road, Fort, Mumbai-400 023 ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACH 8152R (अपीलाथ* /Appellant) .. (ू,यथ* / Respondent) अपीलाथ* ओर से/ Appellant by: Shri Jeetendra Kumar

ू,यथ* क. ओर से/Respondent by: Shri Vijay Mehta

सुनवाई क. तार0ख / Date of Hearing :24.02.2015 घोषणा क. तार0ख /Date of Pronouncement :27.02.2015

आदे श / O R D E R

PER N.K. BILLAIYA, AM:

This appeal by the assessee is preferred against the order of the Ld. CIT(A)-8, Mumbai dt. 22.01.2013 pertaining to assessment year 2007-08.

2. The sole grievance of the assessee is that the Ld. CIT(A) erred in confirming the levy of penalty made u/s. 271(1)(c) of the Act.

2 ITA No. 1615/M/2013 3. The root for the levy of penalty lie in the assessment order dt. 21.12.2009 made u/s. 143(3) of the Act. While scrutinizing the return of income, the Assessing Officer noticed that the assessee has debited share trading and other loss at Rs. 4,90,13,303/- out of which loss of Rs. 4,97,62,744/- comprises of F &O loss and speculation loss. On perusing the bifurcation, the AO noticed that the loss of Rs. 32,91,021/- pertains to daily squared up loss which was treated as speculation loss by the AO. The AO dismissed the claim of the assessee that it is also having share trading income on delivery basis and being a private limited company, the same should be treated as speculative income and the same if set off against the speculative loss as taken by the AO, there will be still speculation profit. The AO completed the assessment by treating daily squared up loss as speculation loss and initiated penalty proceedings u/s. 271(1)(c) of the Act for filing inaccurate particulars of income.

4. During the course of the penalty proceedings, the assessee contended that penalty cannot be imposed if business loss is treated as speculation loss. Further there is no tax liability and there is no loss of revenue by changing the head from business loss to speculation loss because the total carry forward losses are the same. The claim of the assessee did not find any favour with the AO. The AO was of the firm belief that the assessee has willfully claimed speculation loss as business loss and proceeded by levying penalty u/s. 271(1)(c) of the Act at Rs. 15 lakhs.

5. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A) but without any success.

3 ITA No. 1615/M/2013 6. Before us, the Ld. Counsel for the assessee stated that the AO has proceeded by treating the loss as speculative loss by applying the provisions of Sec. 73 of the Act. This itself shows that the action of the AO is applying the deeming provisions of Sec. 73 of the Act which does not amount to furnishing of inaccurate particulars of income. It is the say of the Ld. Counsel that if the non delivery based transaction squared up during the day itself is treated as a speculative transaction resulting into speculative loss, then transactions which have resulted into profit should also be treated as speculation profit and the speculation loss could easily be set off against the said speculation profit as per provisions of Sec. 73 of the Act. The Ld. Counsel concluded by saying that the levy of penalty is bad in law.

7. Per contra, the Ld. Departmental Representative strongly relied upon the orders of the Revenue authorities.

8. We have carefully perused the orders of the authorities below and the relevant documentary evidences brought on record. In so far as the loss of Rs. 32,91,021/- is concerned, there is no dispute that this is a genuine loss suffered by the assessee. The only point of dispute is that the assessee has suffered this loss on daily transactions which were squared up during the day itself by invoking the provisions of Sec. 73 of the Act, the AO has treated such losss as speculation loss. In our considerate opinion, such action of the AO does not prove that the assessee has filed inaccurate particulars of income. On similar set of facts, the Co ordinate Bench in ITA No. 2598/M/2009 observed as under:

"We have considered the rival contentions and relevant record. We noted that the assessee disclosed and furnished relevant particulars and material necessary for the assessment.

4 ITA No. 1615/M/2013 The AO has framed the assessment based on record available and filed by the assessee. Therefore, the disallowance was merely, by treating the loss on sale of shares as speculative loss instead of business loss claimed by the assessee and not on the basis of any bogus claim or false claim made by the assessee. When the assessee disclosed all the material facts regarding the source of income /loss then it cannot be said that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. The addition on account of treatment of loss by applying the provisions of section 73 itself shows that the disallowance was made by the AO by applying the deeming provisions, under section 73 which does not amount to concealment of particulars of income or furnishing inaccurate particulars of income."

9. Considering the facts of the case in the light of the decision of the Co ordinate Bench and considering the decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. 322 ITR 158, we set aside the findings of the Ld. CIT(A) and direct the AO to delete the penalty levied u/s. 271(1)(c) of the Act.

10. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 27th February, 2015

Sd/- Sd/-

(VIJAY PAL RAO ) (N.K. BILLAIYA) याियक सदःय/JUDICIAL MEMBER लेखा सदःय / ACCOUNTANT MEMBER

मुंबई Mumbai; 4दनांक Dated : 27th February, 2015 व.िन.स./ RJ , Sr. PS 5 ITA No. 1615/M/2013

आदे श क. ूितिल प अमे षत/Copy षत of the Order forwarded to :

1. अपीलाथ* / The Appellant

2. ू,यथ* / The Respondent.

3. आयकर आयु6(अपील) / The CIT(A)-

4. आयकर आयु6 / CIT

5. वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स,या पत ूित //True Copy// उप/सहायक उप सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai