TMI Blog2015 (2) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 94(7) and u/s 14A there is no reason to doubt the explanation of the assessee. Besides, the additions/disallowances on which penalty in question has been levied, have been made undisputedly on the basis of disclosure made by the assessee available on record. Hence it cannot be said beyond doubt in the present case that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assesee to attract penal action u/s 271(1)(c) of the Act on the disallowances / additions as discussed above. Nor is it the case of the revenue that the assessee has failed to disclose fully and truly all the material facts relating to particulars of income, the only mistake committed by the assessee was that whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,90,683/- on account of STT. The AO was of the view that as per section 40(a)(ib) of the Income Tax Act, 1961 the STT is not an allowable expenses under the head Income from Business and Profession. The AO accordingly made addition of ₹ 49,90,683/- to the income of the assessee. The AO made further addition of ₹ 54,000/- u/s 94(7), SIT disallowance of ₹ 85,179/- aggregating to ₹ 1,39,719/- and disallowance u/s 14A amounting to ₹ 8,15,040/-. The penalty in question has been levied on these additions. Regarding the penalty levied on the ground that the assessee had claimed STT in its profit and loss account and has thereby reduced its income by concealing the particulars of income, Ld. AR submitted that asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STT from the tax was to be allowed. 5. Ld. AR submitted that assessee is in the purchase and sale of shares as its business and had made an aggregate amount of ₹ 318.61 crores as purchase and ₹ 319.22 crores as sales of shares. STT which is paid at the time of purchases remained part of purchase price and was actually claimed in profit and loss account purchases. There was no malafide or in other words it was a case of bonafide error which is proved by the fact that in its return of income, its tax liability was nil and the entire rebate on account of STT u/s 88 E remained to be set off against any tax liability. Even if STT is disallowed and additional tax is worked out yet there is no tax payable as rebate on account of STT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings that STT was inadvertently claimed and there was no gain to the assessee and STT could not utilized as rebate and submissions made before the Ld. CIT(A) explaining the error because of amendment in section 40 of the Act. 8. Regarding the penalty levied on the addition of ₹ 54,000/- made u/s 94(7) of the Act, STT disallowance of ₹ 85,719/- and disallowance u/s 14A amounting to ₹ 815040/-, the Ld. AR submitted that penalty cannot be imposed in respect of two amounts in as much as the addition u/s 94(7) itself was not maintainable as the shares of Suraj Diamond were purchased on 6th and 7th February, 2007 as mentioned in the asstt. Order and also in grounds before the Ld. CIT(A). Thus these shares were purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the situation i.e tax payable on return income and tax position in the assessed income, the tax liability was Nil. So far as other addition / disallowance made on account of section 94(7) and u/s 14A of the Act are concerned there is no reason to doubt the above explanation of the assessee. Besides, the additions/disallowances on which penalty in question has been levied, have been made undisputedly on the basis of disclosure made by the assessee available on record. Hence it cannot be said beyond doubt in the present case that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assesee to attract penal action u/s 271(1)(c) of the Act on the disallowances / additions as discussed ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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