Mulchandbhai Shankarbhai Amin, Surat vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA No. 2623/Ahd/2011 िनधा रण वष /Assessment Year: 2005-06 DCIT, Vs Shri Mulchand Shankarbhai Amin Circle-3, Prop. Shiva Engineering Works, Surat 17, Meera Nagar Society, Ghod Road, Surat PAN : ABWPA 7967 M

अपीलाथ / अपीलाथ / (Appellant) ू यथ यथ / थ / (Respondent)

Revenue by : Shri B.L. Yadav, Sr. DR Assessee(s) by : Shri Rashesh Shah, AR सु नवाई क$ तार ख / Date of Hearing : 12/05/2015 घोषणा क$ तार ख / Date of Pronouncement: 15/05/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

This is an appeal filed by the Revenue and is directed against the order of the Commissioner of Income-tax(Appeals)-II, Surat dated 04.08.2011 pertaining to the Assessment Year 2005-06.

2. The only ground raised in this appeal by the Revenue is against the deletion of the penalty of Rs.24,62,098/- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act.

3. We have heard both the parties and perused the material placed before us. The Assessing Officer levied the penalty u/s 271(1)(c) in respect of following two additions/disallowances:-

ITA No. 2623 Ahd 2011 DCIT v. Shri Mulchand Shankarbhai Amin AY: 2005-06 2

1 Short Term Capital Gain treated as Long Term Rs.68,87,173 Capital Gain 2 Disallowance of loss on derivatives Rs.26,14,405

4. We find that in quantum appeal, the ITAT vide ITA No.127/Ahd/2009 has treated the sum of Rs.68,87,173/- as Short Term Capital Gain. Thus, the assessee's contentions have been upheld by the ITAT. Therefore, there is no question of levy of penalty in respect of Short Term Capital Gain.

5. So far as loss on derivatives amounting to Rs.26,14,405/- is concerned, the ITAT accepted the Revenue's contention that it is a speculation loss. However, there is no dispute that the assessee incurred the loss on the trading of derivatives. There is no dispute about the genuineness of loss or the quantum of loss. The only dispute is whether the loss on sale of derivatives is normal business loss or speculation loss. In our opinion, it is a legal issue and merely because the assessee's contention that loss on trading of derivatives is to be treated as business loss was not accepted but the loss was treated as speculative loss does not mean that the assessee either concealed the income or furnished inaccurate particulars of income. The case of the assessee would be squarely covered by the decision of the Hon'ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt Ltd, reported in [2010] 322 ITR 158 (SC), wherein their Lordships held as under:-

"Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars."

ITA No. 2623 Ahd 2011 DCIT v. Shri Mulchand Shankarbhai Amin AY: 2005-06 3

6. The ratio of above decision would be squarely applicable to the case of the assessee because the details furnished by the assessee have not been found to be inaccurate, false or incorrect. Merely because the assessee's claim that the loss on trading of derivatives is to be treated as normal business loss was not accepted and instead, such loss was treated as speculative loss does not mean that the assessee furnished inaccurate particulars of income. In view of above, we, respectfully following the above decision of the Hon'ble Supreme Court, are of the opinion that the penalty u/s 271(1)(c) is not leviable merely because the loss of sale on derivatives was treated as speculative loss. We, therefore, uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue.

7. In the result, Revenue's appeal is dismissed.

Order pronounced in the Court on 15th May, 2015 at Ahmedabad.

Sd/- Sd/-

(RAJPAL YADAV) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 15/05/2015 Biju T., PS

षत Copy आदे श क$ ूितिल+प अमे+षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू यथ / The Respondent. 3. संबंिधत आयकर आयु. / Concerned CIT 4. आयकर आयु.(अपील) / The CIT(A)

5. +वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

/ BY ORDER, आदे शानु सार

TRUE COPY

Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad