INU Exports Private Limited Vs ITO (ITAT Mumbai)
The appeal before the Income Tax Appellate Tribunal Mumbai concerned the levy of penalty under section 270A of the Income Tax Act, 1961, for Assessment Year 2017–18. The assessee had filed its return declaring a loss of ₹87.92 crore. During scrutiny assessment completed under section 143(3), the Assessing Officer observed that the assessee had claimed a loss of ₹87.83 crore arising from claim and settlement of forward contracts entered into for sale of commodities. According to the Assessing Officer, as there was no actual delivery of goods, the transaction constituted a speculative transaction, and the loss claimed was speculative in nature rather than a normal business loss. Accordingly, the loss was treated as speculative loss, and penalty proceedings under section 270A were initiated on the ground of under-reporting of income.
The Assessing Officer issued a show cause notice and, after considering the assessee’s reply, levied a penalty of ₹15.19 crore at 50% of the tax allegedly attributable to under-reporting. The penalty order was passed on 13.01.2022. The assessee challenged the penalty before the Commissioner of Income Tax (Appeals), who upheld the levy, noting that the assessee had accepted the recharacterisation of loss during assessment and had not challenged the quantum addition.
