No penalty can be levied merely because AO treats “Business loss” as “Speculation loss” and carries forward the same for set off in future:

Appellant entered into transactions on MCX i.e. Multi Commodity Exchange and incurred loss. The said loss was treated as normal business loss by the appellant and the same was set off against income under other heads of income. AO treated the said loss as speculation loss, allowed the same to be carried forward for claiming set off in future, disallowed appellant’s claim in respect of business loss and levied penalty on the same. Hon’ble ITAT observed that MCX was a recognised stock exchange w.e.f. 28^th September 2003 and Finance Act 2005 inserted clause (d) in S.43(5) w.e.f. 01/04/06 which provided that eligible transactions carried out in recognised stock exchange shall not be treated as speculation loss. Hence, the appellant had a bona fide belief that the transactions on MCX were to be treated as normal business. Further, act of AO was merely change of head of income. Since the appellant had disclosed all the material facts and the explanation furnished by him was not found to be false by AO, the penalty was deleted.

[Jagdish R. Acharya vs. ACIT – ITA Nos.2460-61/Ahd/2012]