Dy. Commissioner of Income Tax Circle–3(1) v. M/s. Budhrani Finance Ltd
[Citation -2016-LL-0930-240]

Citation 2016-LL-0930-240
Appellant Name Dy. Commissioner of Income Tax Circle–3(1)
Respondent Name M/s. Budhrani Finance Ltd.
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 30/09/2016
Assessment Year 2002-03
Judgment View Judgment
Keyword Tags imposition of penalty • share transaction • trading of shares • speculation loss • finance company • business loss • trading loss
Bot Summary: During the pendency of appeal before the Tribunal, the Assessing Officer initiated proceeding for imposition of penalty and vide order dated 21st March 2007, imposED penalty of 59,36,809. Against the order imposing penalty under section 271(1)(c), the assessee preferred appeal before the learned Commissioner. The learned Commissioner, following his order in assessee s own case for assessment year 2001 02 and 2000 01, deleted the penalty imposed. 2006 dated 23rd April 2009, restored both the 3 M/s. Budhrani Finance Ltd. additions, on the basis of which penalty was imposed to the file of the Assessing Officer for deciding afresh. As far as the issue of imposition of penalty under section 271(1)(c) is concerned, the Tribunal upheld the order of the learned Commissioner in deleting the penalty. Undisputedly, the basis for imposition of penalty is on account of treating the trading loss as speculation loss and disallowance made under section 14A. On a perusal of the order passed by the co ordinate bench in ITA no.2617/Mum. 2005 dated 23rd April 2009, we have noted that both the issues on the basis of which penalty was imposed have been restored back to the file of the Assessing Officer for fresh adjudication.


IN INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA no.4225/Mum./2008 (Assessment Year : 2002 03) Dy. Commissioner of Income Tax Circle 3(1), Aayakar Bhawan . Appellant 101, M.K. Road, Mumbai 400 020 v/s M/s. Budhrani Finance Ltd. 94, Maker Chambers VI . Respondent Nariman Point, Mumbai 400 021 PAN AAACB2504R Revenue by : Shri Saurabh Kumar Rai Assessee by : Ms. Vasanti B. Patel Date of Hearing 15.09.2016 Date of Order 30.09.2016 ORDER PER SAKTIJIT DEY, J.M. Instant appeal by Revenue is directed against order dated 31st March 2008, passed by learned Commissioner (Appeals) 27, Mumbai, deleting penalty imposed under section 271(1)(c) of Income Tax Act, 1961 (for short "the Act") for assessment year 2002 03. 2. Brief facts are, assessee non banking finance company is engaged in business of leasing, hire purchase, investment in 2 M/s. Budhrani Finance Ltd. stocks and trading in shares. For assessment year under consideration, assessee filed its return of income declaring loss of ` 14,82,131. During assessment proceedings, Assessing Officer treated loss from trading of shares as speculative loss as against business loss claimed by assessee and added back amount of ` 1,66,19,718. Further, disallowance under section 14A to extent of ` 21,028 was made which was reduced to ` 10,000 in appeal. On basis of aforesaid additions made, assessee preferred appeal before learned Commissioner (Appeals) and learned Commissioner (Appeals) having allowed assessee s claim, Department came in appeal before Tribunal. During pendency of appeal before Tribunal, Assessing Officer initiated proceeding for imposition of penalty and vide order dated 21st March 2007, imposED penalty of ` 59,36,809. Against order imposing penalty under section 271(1)(c), assessee preferred appeal before learned Commissioner (Appeals). learned Commissioner (Appeals), following his order in assessee s own case for assessment year 2001 02 and 2000 01, deleted penalty imposed. Being aggrieved, Department is in appeal. 3. Learned Departmental Representative submitted before us, in mean time, Tribunal while deciding appeal of Department in ITA no.2617/Mum./2006 dated 23rd April 2009, restored both 3 M/s. Budhrani Finance Ltd. additions, on basis of which penalty was imposed to file of Assessing Officer for deciding afresh. He, therefore, submitted, issue relating to imposition of penalty may be restored back to file of Assessing Officer for deciding afresh on basis of assessment to be made by Assessing Officer in pursuance to direction of Tribunal. 4. Learned Authorised Representative brought to our notice that similar issue relating to claim of loss on share transaction also arose in assessee s case for assessment year 2001 02 and Tribunal has restored matter back to file of Assessing Officer for fresh adjudication. As far as issue of imposition of penalty under section 271(1)(c) is concerned, Tribunal upheld order of learned Commissioner (Appeals) in deleting penalty. 5. We have considered submissions of parties and perused material available on record. Undisputedly, basis for imposition of penalty is on account of treating trading loss as speculation loss and disallowance made under section 14A. On perusal of order passed by co ordinate bench in ITA no.2617/Mum./ 2006 and 5804/Mum./2005 dated 23rd April 2009, we have noted that both issues on basis of which penalty was imposed have been restored back to file of Assessing Officer for fresh adjudication. 4 M/s. Budhrani Finance Ltd. Therefore, very foundation on which penalty was imposed under section 271(1)(c) no longer exist. We have also noted in assessment year 2001 02, in assessee s own case in ITA no.4211/ Mum./2008, upon considering fact that issue relating to loss from share transactions whether in nature of trading or speculation loss has been restored back to file of Assessing Officer, Tribunal upheld order of learned Commissioner (Appeals) in deleting penalty with liberty to Assessing Officer to initiate penalty proceedings after deciding issue of claim of loss by assessee. In consonance with aforesaid order of co ordinate bench, we uphold order of learned Commissioner (Appeals) in deleting penalty imposed under section 271(1)(c). However, it is open to Assessing Officer to initiate proceedings for imposition of penalty, if warranted, after completing assessment in pursuance to direction of Tribunal. 6. In result, Revenue s appeal stands dismissed. Order pronounced in open Court on 30.09.2016 Sd/- Sd/- MANOJ KUMAR AGGARWAL SAKTIJIT DEY ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.09.2016 5 M/s. Budhrani Finance Ltd. Copy of order forwarded to: (1) Assessee; (2) Revenue; (3) CIT(A); (4) CIT, Mumbai City concerned; (5) DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary (Dy./Asstt. Registrar) ITAT, Mumbai Dy. Commissioner of Income Tax Circle–3(1) v. M/s. Budhrani Finance Ltd
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