The Cit-8 Mumbai v. M/S.vrushchik Consultancy

K.J. IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.72 OF 2009 The CIT-8 Mumbai )..Appellant Vs. M/s.Vrushchik Consultancy ) Services (P) Ltd., Mumbai )..Respondents ---- Mr.R.Ashokan for the appellant. Mr.J.D.Mistri with Mr.A.K.Jasani for the respondents. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Date : 25.3.2009. PC 1. Revenue is in appeal on the following question :- . "Whether on the facts, in the circumstances of the case and in law the Hon’ble tribunal was justified in cancelling the penalty of Rs.25,29,105/- imposed upon the assessee U/s.271(1)(c) of the Income Tax Act holding that the assessee had made full and true disclosure of all the facts material to the computation of total income and that the action of the Assessing Officer the facts material to the computation of total income and that the action of the Assessing Officer in treating the loss as speculation loss was based on difference of opinion with regard to the applicability of the explanation to section 73 of the Income Tax Act" ? 2. The contention on behalf of the revenue is that the assessee has not preferred any appeal against the order passed in the quantum proceedings and in these circumstances, it was open to the A.O. who has imposed the penalty. Section 271(1)(c) confers : 2 : powers on the authorities parties to reasonable cause, not to impose penalty if otherwise it predicates section 271(1) has been satisfied. In the instant case against the order of A.O. imposing penalty the assessee preferred an appeal. CIT(A) cancelled the penalty on four main grounds which were : one The assessee had made full and true disclosure of all the facts material to the computation of its total income including loss on trading of shares, both in the return of income as also in the course of the assessment proceeding ; two : the explanation given by the assessee for treating the impugned loss as business loss was not found to be false either by the A.O. or by CIT(A) and hence the explanation given by the assessee was a bonafide one ; three : mere dis-allowance of deduction or expenditure per se could not amount to concealment of income or furnishing of inaccurate particulars of income ; and four : the impugned loss was treated as speculation loss and not normal business loss by virtue of the fiction created by the explanation to section 273 and not by virtue of any addition or disallowance made by the A.O. in the assessment order. 3. These findings recorded by the CIT(A) for the purpose of setting aside the order of the A.O. imposing penalty has been affirmed by ITAT in paragraph-7 of its order. Once there be a power not : 3 : to impose penalty if reasonable cause is shown, in our opinion, on the facts shown, we do not find that the question of law as raised would arise. For the aforesaid reasons, appeal dismissed. (R.S.Mohite,J) (F.I.Rebello,J)