Priya Soparkar v. Reliance Petroproducts Ltd.[1

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.67 OF 2017WITHINCOME TAX APPEAL NO.88 OF 2017 Principal Commissioner of Income Tax(Central)-4… Appellant V/s. M/s Ashok Apparels Pvt. Ltd.… Respondent WITHINCOME TAX APPEAL NO.83 OF 2017 Principal Commissioner of Income Tax(Central)-4… Appellant V/s. Smt. Amla Ashok Ruia… Respondent --- Mr.Suresh Kumar for the Appellant in ITXA No.67 of 2017.Mr.Tejveer Singh for the Appellant in ITXA Nos.88 of 2017 and83 of 2017. Mr.Percy Pardiwalla, Senior Counsel with Mr.Madhur Agrawali/by Mr.Atul Jasani for the Respondents. --- CORAM : AKIL KURESHI AND SARANG V.KOTWAL, JJ. DATE : APRIL 8, 2019. P.C.:- 1.These appeals arise in similar background. We may record facts from record of Appeal No.67 of 2017. Priya Soparkar 27 itxa 67-17 and 88-17 and 11 itxa 83-17-o 2.This appeal is filed by the revenue to challenge the judgment of the Income Tax Appellate Tribunal. Following question was presented for our consideration:- “Whether on the facts and in the circumstances ofthe case and in law, ITAT was justified in deletingthe concealment penalty under Section 271(1)(c)levied by the Assessing Officer on a quantum ofaddition which has been confirmed by the Hon’bleHigh Court of Bombay?” 3. The issue pertains to penalty imposed by the AssessingOfficer under Section 271(1)(c) of Income Tax Act, 1961 (“theAct” for short) against the respondent-assessee in relation to theassessee’s return of income for the assessment year 2004-05. Insuch return, the assessee had shown certain derivative transactionsand claimed a loss arising out of such transactions. The AssessingOfficer was of the opinion that the transactions were speculative innature and therefore, in terms of Section 43(5) of the Act, theloss arising out of such transactions, was a speculation loss. Theissue reached the High Court at the hands of the revenue. TheHigh Court allowed the revenue’s appeal against which we areinformed that Special Leave Petition is filed and appeal is Priya Soparkar37 itxa 67-17 and 88-17 and 11 itxa 83-17-oadmitted. Parallelly the penalty proceedings ensued. The Tribunalwhile deleting the penalty observed that the assessee had raised aclaim which was based on bonafide interpretation of theprovisions of the Act, was not a case where assessee had madeintentionally a wrong claim. Priya Soparkar 4. We are broadly in agreement with the view of theTribunal. The assessee had made a bonafide claim. It may bethat such claim was not accepted by the High Court. That by itselfwould not mean that the penalty should be confirmed. It is wellsettled that mere rejection of a claim otherwise made bonafideand on arguable legal contentions would not give rise to penaltyproceedings. Reference in this respect can be made to thedecision of the Supreme Court in case of CIT Vs. Reliance PetroProducts Ltd.[1]. 5.In the result, appeals are dismissed. (SARANG V.KOTWAL,J.) (AKIL KURESHI,J.)….