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Shri Vikram Kapur Versus DCIT Circle 24 (1) New Delhi

Penalty u/s 271(1)(c) - Loss incurred on purchase and sale of shares treated as short-term capital loss or business loss - FDR interest and dividend received assessed under the head “income from other sources” or “income from business” - Held that:- The findings recorded in the assessment proceedings insofar as “concealment of income” and “furnishing of incorrect particulars” would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings .....

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SUDHAKAR REDDY, ACCOUNTANT MEMBER This is an appeal filed by the assessee directed against the order of Ld. CIT(A)XXIII, New Delhi dated 4.1.2013 for the assessment year 2001-02. The assessee has two proprietorship concerns. These are M/s. Highlight Fashions and M/s. Global Investment. In the profit and loss account of M/s. Global Investment, the assessee disclosed the following incomes :- 1. FDR Interest ₹ 1562732.48 2. Commission Received ₹ 39026.73 3. Dividend Received ₹ 983 .....

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ellate authority confirmed the order of the AO. 3. The second issue is whether the FDR interest and dividend received by the assessee, be assessed under the head income from other sources or under the head income from business . The AO came to the conclusion that these incomes from FDR interests and dividend are to be assessed under the head income from other sources and consequently the expenses claimed u/s 37 are to be disallowed. On appeal the first appellate authority as well as the ITAT con .....

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nalty u/s 271(1)(c) amounting to ₹ 3,81,670/- levied by the Ld. Assessing Officer i grossly injudicious, unwarranted and bad in law. 2. Under the facts and circumstances of the case, the penalty of ₹ 3,81,670/-levied by the Ld. Assessing Authority under the provisions of section 271(1)(c) of the Act is grossly injudicious, unwarranted and bad in law as the appellant has neither concealed the particulars of its income nor furnished any inaccurate particulars thereof. 4. Ld. Counsel fo .....

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that the assessee has given correct and complete information with the return of income and merely because the AO shifted the head of income under which assessment has to be made, penalty u/s 271(1)(c) cannot be levied. On the issue of assessability of loss on purchase and sale of shares under the head business , she relied the submissions made before the lower authorities. Similarly on the assessability of FDR interests and dividend under the head income from business she reiterated the content .....

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irst appellate authority and submitted that the assessee has deliberately claimed short term capital loss as a business loss and has deliberately disclosed income which is assessable under the head income from other sources as income from business and made a wrong claim of expenditure. He submitted that the ITAT, in the quantum proceedings, has confirmed the disallowance amounting to ₹ 11,35,925/- and deleted the disallowance of ₹ 4,22,797/-. The disallowance of claim of loss of S .....

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off of loss on sale of shares and huge expenses which were not otherwise allowable as a deduction from income from other sources . He submitted that the penalty should be confirmed. 6. Reliable contentions have been heard. 7. On a careful consideration of the facts and circumstances of the case and perusal of the papers on record and the orders of the authorities below, we hold as follows. 8. The assessee in this case has disclosed fully and truly all material facts alongwith the return of inco .....

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eparate office to look after the investment portfolios for the two different units and activities are on a large scale and require full time involvement. It was submitted that experienced people with expert knowledge were employed to make investment decisions, so that the income of the assessee could be maximised . 9. When these submissions are considered and the decision of the AO as confirmed by the appellate authorities are looked into, we are of the considered opinion that the issues in ques .....

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ositions:- The High Court had to consider whether penalty u/s 271(1)(c ) can be levied in a case where the assessee agrees to an addition made by the AO so as to buy peace of mind. HELD by the High Court: Merely because the assessee agreed for addition does not lead to the inference that the said addition is on account of concealment if the assessee has offered an explanation which is not found to be false. The mere fact that the assessee agreed to pay tax and did not challenge the assessment or .....

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itions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. (f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation l1(A) and (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. (g) Even if these conditions do not exist in the assessment order passed, at least, .....

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er of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the Assessing Officer in the assessmen .....

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to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. (o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. (p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i. .....

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