TMI Blog2010 (1) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... i, Adv. for the Respondent ORDER A.L. Gehlot, Accountant Member. - 1. This appeal filed by the revenue is directed against the order of CIT(A)-IV, Mumbai, on 22-11-2007 for the assessment year 2003-04 wherein the revenue has raised the following grounds of appeal:- " 1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the penalty levied by the Assessing Officer stating that the expenses incurred by the assessee is genuine whether it is for speculative business or non-speculative business. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) was not justified in holding that there is no concealment of income or furnishing inaccurate particulars of income when it was clearly brought out by the Assessing Officer as well as the ld. CIT(A) in the appellate order that the expenses related to speculation business is not allowable as deduction against the other business income. 3. On the facts and circumstances of the case and in law, the impugned order of the ld. CIT(A) is contrary to law and consequently merits to be set aside and that of the Assessing Officer be restored." 2. Briefly the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The IT AT dismissed both the appeals of assessee as well as revenue vide its order dated 7-8-2008 in ITA No. 6817/Mum./2005 (Revenue's appeal) and ITA No. 6928/Mum./2005 (Assessee's appeal) and confirmed the order of CIT(A). 2.2 The Assessing Officer initiated penalty proceedings under section 271(1)(c) and levied penalty under section 271(1)(c) after rejecting the assessee's explanation that the expenses of share trading cannot be treated as speculation loss. The Assessing Officer relied upon the judgment of Hon'ble Bombay High Court in the case of Sind National Sugar Mills (P.) Ltd. v. CIT[ 1980] 121 ITR 742 and the decisions of ITAT wherein it has been held that allocation of expenses between speculation loss and business income is necessary to arrive at the correct figure of speculation loss. The Assessing Officer levied penalty on the amount of disallowance restricted by the CIT(A) of Rs. 39,23,891 (34,23,891 + 5,00,000) whereas as per the CIT(A) the addition restricted to Rs. 35,09,342. [There is a difference in figure in the order of CIT(A) against the quantum appeal in penalty order of Assessing Officer]. The relevant findings of the Assessing Officer is reproduced bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself, is a matter which is a question of interpretation and estimation and it is not in itself concealment of income or furnishing of inaccurate particulars of income as has been held in the three judgments quoted at page 2 of the penalty order while quoting submission of the assessee before the Assessing Officer. Under the circumstances, the Assessing Officer is directed to exclude the amount of Rs. 34,23,891 for calculation of penalty under section 271(1)(c). 7. The amount of Rs. 5 lakhs claimed as expenses under the legal and professional charges, which were found to be not connected to the business of assessee by the Assessing Officer as well as by the CIT(A) in course of appellate proceedings, is the amount which should be considered for levy of penalty as the assessee has deliberately with an intention to save its tax liability claimed the expense which were not claimable. The assessee did furnish inaccurate particulars of claim of legal and professional charges amounting to Rs. 5 lakhs with a view to conceal the particulars of income." 3. Both the assessee and the revenue were filed appeals before the ITAT. The present appeal before us is pertaining to revenue where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the necessary particulars as was sought for by the Assessing Officer and AAC regarding the expenses claimed by it, the disallowance based on apportionment between speculation and business income was correct. 4.1 The learned DR further submitted that it is not a question of claiming expenditure under one head or other head but question of claiming expenses pertaining to the head 'Speculation loss' under the head 'Business income'. The learned DR submitted that the assessee has adopted a practice from assessment years 2002-03 to 2005-06 just to reduce the taxable income. The learned DR submitted that the same mistake is repeated by the assessee year after year despite being objected by the department and such mistake can neither be considered mere omission or negligence nor it can be considered as a bona fide mistake. The learned DR further submitted that it is not a simple arithmetic calculation for disallowance of expenses. The assessee has completely disregarded the binding precedent of the decision in the case of Sind National Sugar Mills (P.) Ltd. (supra) where the assessee failed to prove that his explanation was bona fide and, therefore, Explanation 1 to section 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction of the High Court. Thus, on the second question also, the decision of the ITO which was subsequently upheld by the AAC and the Tribunal will be required to be confirmed." 5.2 The learned AR submitted that it is a case of merely change of head of income. He further submitted that on identical set of facts, the ITAT, Mumbai Bench in the case of ITO v. GACL Finance Ltd. [2009] 30 SOT 360 in ITA No. 6528/Mum./05 vide order dated 19-3-2009 has cancelled the penalty. He has also relied upon another decision of Hon'ble Delhi High Court in the case of CIT v. Zinga Chemicals (P.) Ltd. [2008] 172 Taxman 176, CIT v. SPK Steels (P.) Ltd. [2005] 144 Taxman 469 (MP) and ITAT, Delhi in the case of Nera (India) Ltd. v. Dy. CIT[IT Appeal No. 107 (Delhi) of 2009, dated 4-8-2009]. The assessee also relied upon the following decisions:- 1. Income Tax Appeal No. 9 of 2009 vide order dated 30-3-2009 in case of CIT v. Suresh Choudry Bonsai Calcutta High Court. 2. CIT v. Ravail Singh and Co. [2002] 254 ITR 191 (Punj. and Har.). 3. Harigopal Singh v. C/r[2002] 258 ITR 852 (Punj. and Har.). 5.3 The learned AR submitted that it is a case apportionment of expenses, therefore, und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is failure on the part of the assessee, the Assessing Officer can estimate the apportionment and penalty under section 271(1)(c) is also leviable, for which he relied upon the following decisions:- 1. T.J. Mathai 's case (supra). 2. Yusuf Abdulla Patel's case (supra). 3. Dwarkadas Kesardeo Morarka's case (supra), which has been affirmed by the Hon'ble Supreme Court in 236 ITR 937 (sic). 4. Jeevan Lal Sah's case (supra). 7. We have heard the learned representatives of the parties and perused the record. Before coming to the main issue, on which the Assessing Officer levied penalty under section 271(1)(c) on account of furnishing inaccurate particulars of income, we would like to consider the submissions of the learned DR as under:- 7.1 The first contention of the learned Departmental Representative is that under section 73 of the Act, the onus lies on the assessee to show that it did not spend any money to earn income from its own trading, which is treated as speculation business. He submitted that it cannot be accepted that the assessee did not spend any money to carry on the speculation business. We find from the assessment order that before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st appeal to the CIT(A). In the assessment year 2004-05, the CIT(A) gave relief to the assessee in part and this order was accepted both by the assessee as well as the department. When penalty was sought to be imposed on identical circumstances for the assessment years 2004-05 and 2005-06, the assessee objected and by orders dated 18-5-2009 the penalty proceedings were dropped and these orders have been compiled in the Paper Book. It is, thus, seen that in those years the department has not held that the assessee concealed its income or furnished inaccurate particulars of income by contending that no part of the expenses were apportionable against the speculation business. There is no justification for taking a different view for the year under appeal when there is no change in the facts. It is expected of the department to be consistent in its approach on same facts. 7.3 Now coming to the merits of the case, we noticed that the Assessing Officer levied penalty under section 271(1)(c) on the ground that the assessee has filed inaccurate particulars of income. What is inaccurate particulars of income within the meaning of provisions of section 271 (1)(c) of the Act has been disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was bona fide or not is also a question of fact. In the assessment proceedings, the ITO while ascertaining the total income chargeable to tax would be in a position to detect the specific or definite particulars of income concealed or inaccurate particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it would amount to concealment to that extent. In the same way where specific and definite particulars of income are detected as inaccurate, then such figure will also make the total income inaccurate in particulars to the extent it does not include such income. In other words, the Assessing Officer cannot invoke provision of section 271(1)(c) on the basis routine and general presumptions. Whether it be a case of only concealment or of only inaccuracy of particulars or both, the particulars of income so vitiated would be specific and definite and be known in the assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a position to initiate the penalty pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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