| The Tax Publishers2019 TaxPub(DT) 2171 (Ind-Trib) INCOME TAX ACT, 1961,
Section 271(1)(c)
Where AO disallowed loss on sale of wheat treating it to be a speculative loss and also initiated penalty proceedings under section 271(1)(c) on disallowance of the loss, but mens rea was not proved against the assessee and there was no furnishing of inaccurate particulars of transactions, two divergent views were also possible thereby the loss could be treated as a business loss or speculation loss, thdrefore, the penalty was deleted.
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Penalty under section 271(1)(c) - Leviability - Addition on disallowance of loss on sale of wheat - Two divergent views possible
Assessee claimed business loss on sale of wheat. AO found that there was no physical delivery of goods in the transaction loss arising there from was a speculative loss falling under the provisions of section 43(5) and could be set off only against as speculative profit. Therefore, the AO disallowed the loss on sale of wheat treating it to be a speculative loss. Further that, the AO initiated penalty proceedings under section 271(1)(c) on disallowance of loss, which was confirmed by CIT(A). The assessee's contention was that the claim of business loss was bona fide. Further that, there was no attempt to evade any tax by the assessee. Held: Authorities had not pointed out any mistake, error or anomaly in the genuineness of the transaction of purchase and sale of wheat with regard to the quantity of goods, amount of purchase and sale, details of the party with whom the transaction had been carried out. Assessee's mensrea was not proved and there was no furnishing of inaccurate particulars of transactions. Both the lower authorities erred in levying the penalty under section 271(1)(c) on the alleged transaction of purchase and sale of wheat because the assessee had bona fidely treated the loss as business loss and disclosed all necessary details relevant to the transaction in the books of account and further for the alleged transaction two divergent views were possible thereby the alleged loss could be treated as a business loss or speculation loss. Therefore, the penalty was deleted.
Relied:CIT v. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC) : (2010) 189 Taxman 322 (SC) : 2010 TaxPub(DT) 1683 (SC)
REFERRED : Krishna Soya Product Pvt. Ltd. v. DCIT, Indore [ITA No. 496/Ind/2015 Order, dated 28-9-2017 (Indore Bench)]; CIT v. Navichandra & Co (2014) 42 Taxmann.com 28 (Guj) : 2014 TaxPub(DT) 1808 (Guj-HC); Jagdish R. Acharya v. ACIT [ITA No. 160/Ahd/2013, dt. 26-9-2014] : 2015 TaxPub(DT) 4575 (Ahd-Trib); CIT v. Auric Investment and Securities Ltd. (2009) 310 ITR 121 (Del-HC) : 2009 TaxPub(DT) 0095 (Del-HC); CIT & Anr. v. M/s. Oscar Udyog Ltd. [ITA No.311 of 2013, dt. 29-10-2013] : 2014 TaxPub(DT) 1427 (Karn-HC); CIT v. SPIC Stech Pvt. Ltd. (2004) 32 ITC 244 (MP)
FAVOUR : In assessee's favour
A.Y. :
IN THE ITAT, INDORE BENCH
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