TMI Blog2013 (9) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals)-29, Mumbai dated 18-01-2011 whereby he sustained the penalty imposed by the AO u/s 271(1)(c) to the extent it was in respect of addition of Rs.66,59,023/- made on account of long term capital gains. 2. The assessee in the present case is a partnership firm which is engaged in the business of trading in equity shares as well as carrying on investment and ware housing activities. The return of income for the year under consideration was filed by it on 27-10-2005 declaring total income of Rs.78,46,575/-. In the said return, exemption u/s 10(38) of the Act was claimed by the assessee in respect of long term capital gain of Rs.77,18,627/- arising from sale of shares of M/s Matrix Lab Ltd. During the course of assessment proceedings, the AO noticed that the said long term capital gain to the extent of Rs.75,20,351/- had arisen from shares sold by the assessee on 07-09-2004. He also noted that as per the provisions of section 10(38), the profit arising from the share transactions made only after 1st Oct., 2004 was eligible for exemption from tax if Securities Transaction Tax (STT) was paid thereon. Since the long term capital gain to the extent of Rs.75,20,351/- had arisen to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration which was the first year in which the said provision was introduced. It was submitted that the assessee, however, was eligible for the said exemption in respect of capital gain only to the extent of Rs.10,49,477/- on which STT was paid and there was a bonafide mistake in claiming exemption in respect of the balance amount of capital gain of Rs.66,59,023/- for which penalty u/s 271(1)(c) should not be imposed. The learned CIT(Appeals), however, did not find merit in the contention of the assessee and sustained the penalty imposed by the AO u/s 271(1)(c) to the extent it was in respect of addition of Rs.66,59,023/- made on account of capital gain for the following reasons given in paragraph No. 2.5 and 2.6 of his impugned order : 2.5 I have considered the facts of the case, arguments of the Assessisng Officer and the written submissions of the Authorised Representative of the appellant. As per Explanation 1 to section 271(1)(c) if an addition is made to the total income of a person because of the fact that such person failed to offer an explanation with regard to any facts material to the computation of his total income or offered an explanation which is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable. He submitted that long term capital gain for the period 1st October, 2004 to 31st March, 2005 was shown wrongly at Rs.1,98,276/- as against the correct figure of Rs.10,49,477/- and similarly long term capital gain for the period 1st April, 2004 to 30th Sept., 2004 was wrongly shown at Rs.75,20,351/- as against the correct figure of Rs.66,59,023/-. He submitted that all these other mistakes committed by the assessee in the computation of total income are sufficient to show that the mistake committed by it in claiming exemption u/s 10(38) in respect of long term capital gain for the period 01-04-2004 to 30-09-2004 was a bonafide and genuine mistake. He contended that other relevant details regarding the computation of long term capital gain, however, were fully and truly given by the assessee and it is thus not a fit case to impose penalty u/s 271(1)(c). He also contended that the series of mistake committed by the assessee in the computation of long term capital gains shows the bonafides of the assessee which is further supported by the fact that the said mistakes were accepted by the assessee in the letter dated 11th November, 2007 filed before the AO. He contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38) thus was wrongly claimed by the assessee which was detected by the AO during the course of assessment proceedings. 7. The learned counsel for the assessee in support of the assessee s case has contended that the exemption u/s 10(38) was inadvertently claimed by the assessee as a result of genuine and bonafide mistake. Nothing, however, has been brought on record before us to show as to how the so called mistake committed by the assessee in claiming wrong exemption u/s 10(38) was a result of genuine and bonafide mistake. Merely because there were certain other mistakes committed by the assessee in computing the long term capital gain, it cannot be concluded that the wrong claim of exemption made by the assessee u/s 10(38) was a result of bonafide and genuine mistake. As already noted by us, the provisions of section 10(38) in this regard are very plain and simple and since none of the two conditions stipulated therein was satisfied in the case of the assessee, it is difficult to accept the contention raised on behalf of the assessee that exemption under the said provision was wrongly claimed as a result of genuine and bonafide mistake. It is also observed that the entire long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income. 9. In the case of Asia Attractive Dividend Stock Fund (supra) decided by the Tribunal and cited by the learned counsel for the assessee, the assessee had worked out tax payable on short term capital gain at the rate of 10% as per section 111A of the Act instead of 30% and when he received a notice u/s 142(1), while preparing reply to the said notice, he noticed the said mistake. He, therefore, filed a letter before the AO suo motu bringing the said mistake to the notice of the AO. Along with the said letter, revised computation of income and tax payable thereon was also filed by the assessee and keeping in view these facts of the case as well as the fact that the assessee had furnished all the relevant particulars fully and truly in the return of income, penalty imposed u/s 271(1)(c) was held to be unsustainable by the Tribunal. In the present case, the assessee had initially claimed exemption in respect of entire long term capital gain u/s 54D of the Act and in the letter dated 11th November, 2007 filed at the fag end of the assessment proceedings, the assessee stated that the said exemption was wrongly claimed u/s 54D instead of u/s 10(38) due to clerical mistake ..... X X X X Extracts X X X X X X X X Extracts X X X X
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