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2016 (6) TMI 1080 - ITAT AHMEDABAD

2016 (6) TMI 1080 - ITAT AHMEDABAD - TMI - Penalty u/s 271(1)(c) - quantum addition deleted by the tribunal - Additions were made on account of interest and short term capital gain - Held that:- there are series of decisions of the Tribunal wherein it has been held that if the quantum addition is deleted by the Tribunal then in such cases assessee should not be visited with penalty u/s 271(1)(c) of the Act for concealment of income or furnishing of inaccurate particulars of income. - In appe .....

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. CIT(A), we uphold the same. - Decided in favour of assessee - ITA No.2005 /Ahd/2008 - Dated:- 3-6-2016 - Shri R. P. Tolani, JM, & Shri Manish Borad, AM. For The Appellant : Shri A. R. Rewar, Sr.DR For The Respondent : Shri H. C. Shah, AR ORDER PER Manish Borad, Accountant Member. This is an appeal filed by the Revenue against the order of ld. CIT(A) -I, Ahmedabad, dated 20/3/2008 in appeal No.CIT(A)-I/CCI[ 1]/9/07-08 passed against order u/s 271(1)(c) of IT Act, 1961 (in short the Act) for .....

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y stated facts of the case as culled out from the records are that the assessee is an individual. Return of income was filed on 9.8.2002 declaring total income of ₹ 20,11,420/-. Assessee accounts for the income on cash basis. Assessment u/s 143(3) of the Act was framed on 23.3.2005 on a total income of ₹ 82,77,974/- after making following additions :- 1. Addition on account of accrued interest on OFCPNs of Nirma Indus. Ltd. Rs.50,185/- 2 Addition on account of short term capital gain .....

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ming additions, penalty order u/s 271(1)(c) of the Act dated 23.3.2007 was passed by ld. Assessing Officer imposing penalty of ₹ 22,42,000/- on the confirmed additions made by ld. CIT(A) at ₹ 62,78,505/-. 3. Against the order of ld. Assessing Officer imposing penalty u/s 271(1)(c) of the Act assessee went in appeal before ld. CIT(A) and got partly succeeded. 4. Aggrieved, Revenue is now in appeal before the Tribunal. 5. Ld. DR supported the order of ld. Assessing Officer. 6. Ld. AR s .....

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leted the penalty on addition of ₹ 50,185/- which was added by ld. Assessing Officer on account of accrued interest on OFCPNs of Nirma Indus. Ltd. because assessee follows cash method of accounting and the income is accounted when it is actually received and the interest of ₹ 50,185/- was not included in the income of assessee and, therefore, there was no reason of concealment of income or furnishing of inaccurate particulars of income. As regards the penalty imposed on addition of & .....

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ns have been deleted then no penalty is called for u/s 271(1)(c) of the Act. 8. We have heard the rival contentions and perused the material on record. Through this appeal Revenue is aggrieved with the order of ld. CIT(A) deleting the penalty of ₹ 22,42,000/- which was imposed u/s 271(1)(c) of the Act on the following additions :- 1. Addition on account of accrued interest on OFCPNs of Nirma Indus. Ltd. Rs.50,185/- 2 Addition on account of short term capital gain on sale of DDBs of Nirma L .....

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n OFCPNs of Nirma Indus. Ltd. was not shown in the return of income. Certainly in such situation there cannot be a case of concealment of income or furnishing of inaccurate particulars of such income which are necessary for imposition of penalty u/s 271(1)(c) of the Act. 10. We further observe that in ITA No.1255/Ahd/2006 for Asst. Year 2002-03, vide order dated 21.06.2013, the Tribunal has dealt with the grounds of assessee for the impugned additions of ₹ 8,79,320/- & ₹ 53,49,00 .....

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79,320/- on sale of 40 Deep Discount Bonds of Nirma Limited as short term capital gain. 3. In law and in facts and circumstances of the Appellant's case, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the action of Id. Assessing Officer in not allowing claim of deduction u/s.54EC of the Act on long term capital gain referred to in ground no. 2 above. 2.2.1 The brief facts of the case are that it is noted by the A.O. in para 4 of the assessment order that the assessee has .....

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issued to the assessee dated 05.10.2001. Thereafter, it is noted that DDBs of Series A of Nirma Industries Ltd. were listed in National Stock Exchange (NSE) on 20.09.2001 and was made available for dematerialization as on 19.09.2001. Thereafter, he has noted that these DDBs of Nirma Ltd were sold by the assessee on18.03.2002. The assessee has claimed it as long term capital asset by counting the holding period starting form the date of allotment i.e. 28.07.2000 but the A.O. was of the view that .....

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. Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) but without success and now, the assessee is in further appeal before us. 2.2.2 It was submitted by the Ld. A.R. before us that in the case of Shri Karsanbhai P Patel (HUF) for the same assessment year i.e. assessment year 2002-03, this issue was decided in favour of the assessee in I.T.A.No. 1042/A/2006 dated 09.10.2009. He submitted that this decision is available on pages 62-87 of the paper book and the relevant pa .....

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.2000 and debenture certificate was issued on 05.10.2001 and the same was listed in NSE only on 20.09.2001. Hence, the facts in the present case are identical. This issue was decided by the tribunal as per para 26 of the tribunal decision and for the sake of ready reference, the same is reproduced below: For the aforesaid reasons, we are of the view that the assessee is right in claiming that the capital gains arising on the sale of the deep discount bonds should be assessed as long term capital .....

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, it has to be accepted that it is a LTCG and the assessee is entitled to deduction u/s 54EC also. Hence, in the present case also, by respectfully following the Tribunal decision, we decide both these issues in favour of the assessee and it is held that since period of holding was more than 12 months from the date of allotment i.e. 23.09.2000 till the date of sale i.e. 18.03.2002, the resulting gain has to be assessed as LTCG and the assessee should be held as eligible for deduction u/s 54EC al .....

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d in upholding the action of Id. Assessing Officer in considering the long term capital gain of ₹ 53,49,000/- arising on sale of principal strip part A of Tata finance Ltd. NCDs as short term capital gain. 5. In law and in facts and circumstances of the Appellant's case, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the action of Id. Assessing Officer in not allowing claim of deduction u/s.54EC of the Act on long term capital gain referred to in ground no. 4 above .....

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the bonds of Rural Electricity Corporation (REC) of ₹ 62.20 lacs and the LTCG of only ₹ 8320 had been offered by the assessee. The A.O. has further noted that the assessee has purchased 9 principle strips of Part A Series I of Tata Finance Ltd. of ₹ 1 crores (face value) for a consideration of ₹ 495.41 lacs on 23.10.2000 from Nirma Industries Ltd., which is a group concern of Nirma group and the same was sold by the assessee on 20.03.2002 at ₹ 549 lacs to Nirma Ind .....

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ted by the assessee before the A.O. that as per the press release of the Board dated 20.03.2002, the applicability of the circular is prospective and not retrospective and for this reason also, the gain in question is LTCG and the same cannot be considered to be STCG. The A.O. was not satisfied and he held that this gain of ₹ 53.49 lacs is STSCG and the assessee is not eligible for deduction u/s 54EC also. Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) but wit .....

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.T.A.No. 1248, 1256 & 1266/Ahd/2006 is also in favour of the assessee and a copy of this Tribunal decision is available on pages 196- 199 of the paper book II. Ld. D.R. supported the orders of authorities below. 2.3.3 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the Tribunal decisions cited by Ld. A.R. We find that in the case of Navin Associates (supra), the issue involved was, whether the Board s Circular .....

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.04.2008. We find that in the case of ITO Vs Kulgam Associates (supra), it was held by Ld. CIT(A) that since the Bonds were acquired by the assessee prior to the date of Board s Circular No.2 dated 15.02.2002, such Board s circular cannot be made applicable because the bonds in question were acquired prior to this date and as per subsequent press release dated 20.03.2002, it was made clear that this Board s circular No.2 will be applicable only for bonds which are acquired after this date. This .....

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f Kisan Discretion Family Trust in I.T.A.No. 1850/Ahd/2007 dated 02.11.2007. This Tribunal decision is also available in the paper book-II on pages 141-195. In para 57 of this tribunal decision on page 194 (backside), it was held by the Accountant Member in that case that this Board s Circular dated 15.02.2002 is applicable only to DDBs acquired on or after 15.05.2002 and since Judicial Member in that case was also having the same view, the matter was decided in favour of the assessee without re .....

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