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2014 (8) TMI 1237 - AT - Income TaxPenalty proceedings u/s 271(1)(c) - determination of correct head of income - Gain on sale of shares - LTCG OR Business Income - income from capital gain was held to be assessable under the head ‘income from business and profession’ because according to AO the shares were purchased for trading purposes - also assessee has claimed deduction u/s 80G but the assessee had not filed any evidence regarding exemption - HELD THAT:- it was a finding of fact that shares were not held as investment which was confirmed by the Hon'ble High Court. However, at the same tome we find that there is no bar in the Companies Act to convert the stock in trade into investments. Merely because the assessee has treated a particular item of income and the Revenue has changed that treatment would not attract the penal action. See Cement Marketing Co. of India Ltd v Assistant Commissioner of Sales Tax Wherever the assessee has a bonafide explanation to treat an item in a particular fashion and if that view is not accepted then the same cannot be fastened with penal consequences. See Reliance Petroproducts (P) Ltd [2010 (3) TMI 80 - SUPREME COURT] Thus the assessee has duly disclosed the facts regarding sale of shares but the only difference is that since shares were treated as investment, therefore, gains were declared under the head ‘capital gain’ whereas same were assessed as income from business and profession by the Assessing Officer. This cannot be called to be a case of concealment of income or furnishing of inaccurate particulars of income. Merely the change in the heads of income would not lead to levy of penalty u/s 271(1)(c) Rejection of claim on account of donation u/s 80G - As we find force in the submissions of assessee that assessee had itself added back his claim of donation in the computation of income, copy of which is available at page 5 of the paper book. In any case this claim was denied simply because the assessee could not file the certificate of eligibility for exemption u/s 80G and as far as payment is concerned, the same has not been doubted. Therefore penalty is not leviable in this case and accordingly we set aside the order of Ld. CIT(A) and delete the penalty. Assessee appeal allowed.
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