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2014 (12) TMI 516 - AT - Income TaxPenalty u/s 271(1)(c) – Relevant facts not disclosed by assessee - Loss on commodity trading under F&O as STCG or speculation loss – AO was of the view that the loss is to be treated as speculation loss penalty u/s 271(1)(c) levied - Held that:- The assessee claimed that he has disclosed all the relevant facts in the return of income - assessee entered into contracts of purchasing and selling commodities and the contracts were settled without actual delivery of commodities - Prima facie the loss incurred was a ‘speculative loss’ incurred on speculation transaction of commodities - The speculation loss can be allowed only against the speculation profits and it cannot be allowed to set off against any other income of the assessee - The speculation transactions are clearly defined in section 43(5) of the Income-tax Act, 1961 wherein a speculative transaction means a transaction in which a contract for the purchase or sale of the commodity, including stocks and shares, is periodically and ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. The assessee has tried to take the benefit of provisions of section 43(5)(d) which provides for the purpose of section 43(5) that an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 carried out in a recognized stock exchange - once it is established that the claim is wholly untenable in law and unsustainable, then the assessee would be liable to the imposition of penalty for making a claim of this nature - The assessee’s claim that all the relevant facts were disclosed in the return of the income is not correct - He has not disclosed that the loss was on the transactions where no delivery of commodities has taken place - assessee has not disclosed in the return that loss was of speculative loss, not short term capital loss - The explanation submitted by the assessee is not a bonafide explanation and it is also unsustainable in law - The law clearly defines the ‘speculative transactions’. Assessee was well in the knowledge of the fact that for the transactions entered into, delivery of commodities has not taken place - It is a clear case of “speculation transaction” - assessee had not disclosed all relevant facts in the return of income - assessee is liable to penalty u/s 271(1)(c) and the order of the CIT(A) is upheld – Decided against assessee.
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