TMI Blog2016 (6) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... i N.J. Singh, Sr. DR For The Respondent : Dr. Rakesh Gupta Sh. Somil Agrawal, Adv. ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER The present appeal is preferred by the Department against the order dated 27.09.2011 passed by the Ld. CIT(A), Faridabad deleting the penalty amounting to ₹ 29,04,614/- imposed u/s 271(1)( c) of the Act for assessment year 2005-06. 2. The facts in brief are that the assessee filed his return of income declaring income of ₹ 4,84,980/- on 27.10.2005, which was processed u/s 143(1) of the Act. The Assessee is proprietor of M/s Neumann Engineering Works and engaged in the business of manufacturing of sheet metal components. In the return of income, the assessee claimed exemption of ₹ 80,31,540/- u/s 10(38) of the Act on account of sale of 50000 shares of M/s. Quality Synthetic Industries Ltd. (hereinafter referred to as QSIL) during the F.Y. 2004-05, as Long Term Capital Gain. The shares were purchased in F.Y. 2003-04 for ₹ 1,40,800/-. The case was selected for scrutiny and assessment was completed on 20.12.2009, wherein the AO disputed the claim of Long Term Capital Gains on sale of shares and made additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh to establish the purchases of shares, though disbelieved by the AO. The admitted fact remains that neither the sale prices of shares confirmed by Kolkata Stock Exchange in the month of March 2005 nor the contract notes raised by share broker Shri Sunil Kumar Jhunjhunwala nor the share certificates produced by the appellant nor the confirmation submitted by QSIL have been controverted by the AO or otherwise established to be false. The ITO (Inv.) Kolkata has simply opined that the transaction of sale of shares the appellant were sham without establishing any truth of transactions. It is correct that degree of appreciation of facts and material evidences may vary at different appellate levels, as in the present case, where the additions were deleted by Ld. CIT (Appeals) but confirmed by Hon ble ITAT leading to inference as to the change of opinion. The additions have been sustained by the Hon ble ITAT on the basis of theory of preponderance of human probability and surrounding circumstances. However, mere confirming the additions does not become conclusive factor for the purpose of levying penalty, as per the rationale laid down in large number of decisions of Hon ble Courts cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, in upholding the order of the Assessing Officer by applying the test of human probability evolved in the case of Sumat i Dayal v. CIT (1995) 214 ITR 801 (SC)? 3. Whether the impugned order passed by the Tribunal reversing the order of CIT (A) thereby having the effect of sustaining the addition under Section 68 of the Income Tax Act. 1961 is based on irrelevant findings, illegal, perverse and a result of wholly erroneous approach not permitted by law? Admitted. 7. The Ld. AR submitted that in view of the appeal of the assessee having been admitted by the Hon'ble Punjab Haryana High Court on the quantum addition, it is evident that the issue is debatable and is subject to interpretation. He placed reliance on the decision of the Hon'ble Delhi High Court in the case of CITII vs Liquid Investment Trading Co. In I.T.A. No. 240/2009 and submitted that in view of the issue being a debatable one, the penalty was not sustainable and as such the same should be cancelled. 8. We have heard the rival submissions and perused the material on record. It is seen from the records that ITAT F Bench had earlier confirmed the penalty imposed in its order dated 8.3.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mercantile Ltd. vs. DCIT, 91 ITD 237(Ahd.) (TM) and Smt. Ramilaben Ratilal Shah vs. ACIT, 60 TTJ 171(Ahd.), the Tribunal held that no penalty was exigible u/s. 271(1) (c), once the High Court had held that the issue of addition/disallowance represented a substantial question of law. On an appeal by the Revenue, the Hon ble Bombay High Court held that the imposition of the penalty was not justified. The court noted that the Tribunal, as a proof that the penalty was debatable and involved an arguable issue, had referred to the order of the court passed in the assessee's appeal in quantum proceedings and had also referred to the substantial questions of law which had been framed therein. It held that where the High Court admitted an appeal on the ground that it involved a substantial question of law, in respect of which penalty was levied, impugned order of penalty was to be quashed. It held that the appeal challenging the order of the Tribunal passed for deleting the penalty levied, raised no substantial question of law and as a consequence dismissed it with no order as to costs. 10. An appeal u/s 260A of the Income Tax Act, 1961 lies to the High Court from an order of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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