TMI Blog2011 (8) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... armaceuticals Ltd., later know as Poonam Corporation Ltd. (Poonam). The shares had been purchased by the assessee on 8/4/2003 for a sum of ₹ 14,320/- through M/s. V.K.Singhania Co., Stock Share Broker, Calcutta. The assessee had paid the sale consideration in cash at the time of purchase. The shares were sold in August, September and November, 2004 for a total consideration of ₹ 17,87,450/-. The shares had been sold by the assessee through Stock and Share Brokers, Shyamlal Sultania, Calcutta. 4. The AO addressed letters to Poonam. The letters were returned unserved with a remark not known . The assessee was examined under section 131 of the Act and the statement was recorded on 6/12/2007 (in the course of assessment proceedings). In his statement the assessee stated that he purchased the shares through one Shri Rishab bhai who was known to him. It was also submitted that the advice for purchase and sale of shares was given by Rishab bhai. He was also asked as to why he purchased and sold shares through brokers in Calcutta when he was a resident of Mumbai. The assessee submitted that Poonam had office in Mumbai and that he had done the transactions from Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of shares for regular taxation. At the time of hearing it was understood that on offering the said amount for regular taxation there will be no levy of penalty u/s. 271(1)(c) of Income Tax Act 1961. Further I have not gone for any appeal. Looking to the facts of the case our client have good bonafide of intension or belief that after offering the said amount for regular taxation having paid the I.Tax on the said amount in order to buy peace of mind, there is no question of levy of penalty u/s. 271(1)(c) of Income Tax Act 1961. 5. On 19/12/2007 in his statement the assessee submitted as follows: Q.2. Do you need to say something? Ans : Due to old age and to avoid litigation at this age and to buy peace of mind I the Karta of Mitalal Sisodia, HUF hereby surrender my claim for exemption u/s. 54F of the I.T. Act, 1961 and have voluntarily offered the income for taxation which is self explanatory as per my letter dated 14/12/2007. Moreover, I am submitting herewith Xerox copy of revised return filed alongwith revised computation of income and proof for the payment of taxes thereon. 6. Thereafter the AO made a reference to investigation conducted by I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to be evaded. On appeal by the assessee the CIT(A) confirmed the order of the AO. 9. Aggrieved by the order of the CIT(A) the assessee has preferred the present appeal before the Tribunal. 10. We have heard the submissions of the ld. Counsel for the assessee. The ld. Counsel for the assessee submitted that disallowance of a claim perse does not call for imposition of penalty for concealment. In this regard our attention was drawn to the decision of the Hon ble Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd., 322 ITR 158 (SC) and certain other decisions. It is further submitted that imposition of penalty is discretionary and the facts of the present case does not justify imposition of penalty. In this regard ld. Counsel for the assessee drew our attention to the fact that the assessee surrendered its claim that he had derived long term capital gains under section 54F of the Act by declaring the same as income from other sources only with a view to purchase peace and avoid litigation. In this regard the ld. Counsel for the assessee drew our attention to the letter dated 14/12/2007 written by the assessee to the AO in the course of assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fact alone cannot be taken as a basis to conclude that the transactions of sale of shares was not genuine. It is only the denial of Shyamlal Sultania, Share Broker through whom the shares were sold that he had not sold the shares on behalf of the assessee is a circumstance which goes against the assessee. In this regard the assessee did not insist on any cross examination of Shyamlal Sultania. The assessee however, made a surrender of the claim of long term capital gains and exemption under section 54F of the Act. We have already set out the letter of surrender by the assessee. From the sequence of events it cannot be said with certainty that the claim made by the assessee was bogus. It is also seen that the surrender was made by the assessee only with a view to purchase peace and avoid litigation. 13. The letter dated 14.12.2007 sufficiently explains the reasons as to why the Assessee accepted that he was not able to prove the LTCG declared by it. The tenor of the letter shows that the Assessee agreed that the LTCG declared by it be assessed as income from other sources and further the deduction u/s.54F may also be considered as given up. The Assessee filed a revised retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of law arises out of the order of the Tribunal. In Commissioner of Income-tax v. Krishna and Co. 120 ITR 144 (Mad) the facts were that the books of the assessee showed certain borrowings and repayments from certain bankers. The assessee produced the discharged hundis before the ITO who, however, held that the bankers had merely lent their names in what was known as bogus hawala transactions. The assessee, thereupon, agreed to the addition of the peak credit to his income. In the penalty proceedings, the assessee's submission that no penalty was exigible was rejected by the IAC but accepted by the Tribunal. On a reference to the High Court, it was held that in a case where the assessee himself has admitted that the amount represented his own income, no further evidence would be necessary to show that it was the amount which represented his income and it represented his concealed income and that levy of penalty was justified. We notice that it was not a case of qualified surrender as are the facts of the present case. In Commissioner of Income-tax v. Gupta (R.C.)(Dr.) and Co. 122 ITR 567, the Hon ble Rajasthan High Court held that in a case where the assessee himself has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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