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2014 (11) TMI 435 - AT - Income TaxCancellation of penalty u/s 271(1)(c) - Bonafide belief to treat the profits arisen from the relevant transaction to be chargeable to tax or not – Relevant particulars furnished or not - Held that:- The penalty imposed by the AO u/s 271(1)(c) in respect of addition made to the total income of the assessee on account of short term capital gains has been cancelled by the CIT(A) on the basis that the claim made by the assessee for exemption of such short term capital gain was a bona fide claim and all the particulars relevant to the clam were duly furnished by the assessee – the claim of exemption has already been rejected by the Tribunal in the quantum proceedings - the relevant clause relied upon by the learned counsel for the assessee cannot be seen in isolation to ascertain the exact nature of asset transferred by the assessee, and it is necessary to read the entire agreement as a whole to ascertain such nature - It was thus a clear case of transfer of commercial right by the assessee and there is nothing in the agreement to suggest or indicate that any right to carry on business was transferred by the assessee – revenue rightly contended that the claim made by the assessee for exemption of short term capital gain arising from the transaction entered into with M/s. Pintell Systems Pvt. Ltd on the basis that the transaction involved transfer of right to carry on business, thus, was patently a wrong claim and there is nothing to show that the Said claim of the assessee was a bona fide claim. In the Directors’ Report, a passing reference only was made to indicate that its consultancy business was sold by the assessee company for ₹ 31,75,000 - There was however, no mention made about this transaction in the notes forming part of accounts, despite the fact that a sum of ₹ 20,12,902 stated to be profit arising from the transaction was credited to the capital account and the same was directly shown under “Reserves and Surplus” in Schedule 2 of the balance Sheet - No details were given showing the exact nature of this amount appearing as capital reserve nor the basis of arriving at the said figure was given either in the Schedule or even in the notes forming part of the accounts for the year under consideration - no exemption for the short term capital gain was separately or specifically claimed by the assessee either in the return of income or even in the computation of total income and even the basis of claiming the said exemption being the relevant asset having no cost of acquisition was not mentioned by the assessee either in the return of income or in any of the documents filed alongwith the return of income –the order of the CIT(A) that all the material particulars relating to its claim for exemption on account of capital gain were fully and truly furnished by the assessee cannot be accepted - the claim made by the assessee for exemption on account of short term capital gain arising from the transaction entered into with M/s. Pintell Systems Pvt. Ltd was patently a wrong claim and the assessee having failed to furnish the correct particulars of its income on account of short term capital gains, it is a fit case to impose penalty under S.271(1)(c) of the Act – thus, the order of the CIT(A) is to be set aside – Decided in favour of revenue.
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