TMI Blog2018 (12) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [(CIT(A)]-2, Visakhapatnam vide Appeal No.0867/2013-14/Trnsf./CIT(A)-6 Mum/2014-15 dated 24.12.2014 for the assessment year 2004-05. 2. The assessee filed the return of income on 07.12.2004 declaring total income of ₹ 2,35,440/-. The return was processed u/s 143(1) and subsequently the case was selected for scrutiny. In the return of income, the assessee claimed short term capital loss on sale of shares / mutual funds amounting to ₹ 66,92,169/-. The AO further observed that the assessee claimed the loss of ₹ 70,61,600/-on sale of equity shares and earned the profit of ₹ 3,69,431/- on sale of mutual funds which resulted in net loss of ₹ 66,92,169/-. Thus the resultant loss on sale of shares and mutual funds was adjusted against the short term capital gain on fixed assets. The Assessing Officer (AO) furnished the details of the sale of shares and the resultant losses as under : S.No Name of the company Quantity Rate and cost of value Date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed the loss claimed by the assessee and initiated penalty for furnishing inaccurate particulars of income u/s 271(1)(c) of the Act and accordingly issued notice u/s 271(1)(c) r.w.s. 274 of the Act. 4. In response to the notice issued u/s 271(1)(c), the assessee filed reply dated 16.11.2009 and submitted that the assessee had furnished all the particulars and evidences during the assessment proceedings and there is no case of furnishing the inaccurate particulars, hence, requested to drop the penalty proceedings. However, the Ld.AO was of the view that the assessee has never made any attempt to prove the genuineness of the transactions, therefore held that the assessee has not discharged its onus and the case is fit for levying penalty u/s 271(1)(c) of the Act, accordingly levied penalty of ₹ 25,35,000/- by an order dated 30.10.2009. 5. On appeal before the CIT(A), the Ld.CIT(A) confirmed the penalty stating that the assessee failed to prove the transaction to be genuine and claimed the loss as genuine with sufficient materials and the documentary evidences either during the assessment proceedings or appellate proceedings. Therefore, confirmed the penalty levied by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the shares, thus argued that there was no fault on the part of the assessee. Accordingly, the Ld.AR argued that there is no case for imposing penalty u/s 271(1)(c) and the same should be cancelled. The Ld.AR relied on the decision of ITAT Kolkata B Bench in the case of Sri Deo Kumar Saraf Vs. ACIT, Circle-49, Kolkata in I.T.A. No.199/Kol/2015 dated 07.10.,2015. 7. On the other hand, the Ld.DR vehemently opposed and strongly supported the orders of the lower authorities. The Ld.DR submitted that ITAT has given a finding that no material was placed before the ITAT and the transaction was not genuine. Explanation 1 to section 271(1)(c) is applicable and the onus is on the assessee to establish the transaction as bonafide transaction. In this case, the assessee did not establish the transaction as genuine. Therefore, argued that the Ld.CIT(A) has rightly confirmed the penalty and no interference is called for in the order of the Ld.CIT(A). 8. We have heard both the parties and perused the material placed on record and gone through the relevant orders. In this case, the assessee has declared loss of ₹ 70,61,600/- on purchase and sale of shares. The assessee s main busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO. There is no independent enquiry caused by the AO during the penalty proceedings. Similarly, the Ld.CIT(A) while confirming the penalty placed heavy reliance on the order of the AO and confirmed the addition. Since the assessee placed all the material before the AO, we are of the considered opinion, there is no case for imposing penalty for furnishing inaccurate particulars. On similar facts, Hon ble ITAT, Kolkata B Bench in the case of Sri Deo Kumar Saraf (supra) deleted the penalty. For the sake of clarity and convenience, we extract relevant part of the order of the Tribunal in para No. 6, 9 and 11 which reads as under : 6. Coming to the merits of the case. The first aspect added by the AO is bogus speculation income. Briefly stated facts are that the assessee has disclosed speculation profit to the extent of ₹ 53,34,463/- in the audited profit and loss account for the year ending 31.03.2009 and set off the same against brought forward speculation loss of earlier years and the difference of ₹ 1,58,786/- was shown as income from profit and gains of business and profession. During the course of assessment proceedings the AO required the assessee to expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have any transaction with the assessee. But, assessee's main claim was that this letter of Nakamichi Securities Ltd. was never confronted to the assessee during the course of assessment proceedings or during the penalty proceedings. Even during first appeal, this letter of Nakamichi Securities Ltd. was never confronted to the assessee. When a specific query was put to Ld. Sr. DR he categorically stated that this statement was never confronted to the assessee. When a query was put from the bench whether any details or evidence were filed by the assessee in respect to speculation profit of ₹ 53,39,463/- other than a certificate purportedly received from Nakamichi Securities Ltd. We find that the entire basis of penalty is the denial letter issued by Nakamichi Securities Ltd. dated 21.12.2011 and there is no other evidence available with revenue which suggests that the assessee has concealed the particulars of income. Once the very basis for levy of penalty is no doubt, it cannot be said that the assessee has concealed the particulars of income or furnished inaccurate particulars of income, as the case may be. Here in the present case, the assessee has disclosed income from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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