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Mrs. Urmila Bhabhera Versus The Asst. Commissioner of Income Tax -20 (3) , Mumbai

2016 (9) TMI 991 - ITAT MUMBAI

Penalty u/s 271(1)(c) - LTCG V/S STCG - treatamnet to capital gain - Held that:- We are of the considered view that the learned CIT (A) has confirmed the penalty levied by the AO on the basis that the assessee sought undue advantage by seeking to declare income earned from shares as long term capital gains when in the quantum appeal the Tribunal treated the same as short term capital gains. In our considered view, mere making a claim under wrong head does not automatically constitute that any de .....

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I SANDEEP GOSAIN, JM For The Appellant : Ms. Payal GAda, AR For The Respondent : Mr. S. S. Kumaran, DR ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the Revenue against the order of the learned CIT (A)-31, Mumbai dated 17-07-2014 passed in appeal No.CIT(A)-31/IT-37/ACIT-20(3)/2012-13 for assessment year 2006-07 wherein the learned CIT (A) has confirmed penalty of ₹ 6,93,053/- levied by the Assistant Commissioner of Income Tax -20(3), Mumbai u/s 271 (1) (c) of the Act , .....

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(c) of the Act. 2. The CIT (A) erred in confirming action of the Assessing Officer in levying penalty on the basis of income-tax including surcharge and education cess. The appellant contends that surcharge on income-tax and education cess cannot be considered in levying the penalty as the same is not part of tax . 3. The appellant contends that the impugned order of penalty is bad in law and requires to be quashed. WITHOUT PREJUDICE TO THE ABOVE 4. The CIT (A) erred in confirming penalty even .....

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urn of income for the assessment year 2006-07 on 05-10-2006 declaring total income at ₹ 75,93,546/-.The return was subsequently processed and case was selected for scrutiny. The assessment was completed u/s 143 (3) of the Act vide Order dated 28-11-2008 wherein apart from capital gains on sale of shares income shown by the assessee as income from business The AO held that the long term capital gains of ₹ 23,58,900/- in respect of Inter-link Finance Ltd. (ILFL) shares as bogus income .....

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A). Finding the explanations of the assessee unsatisfactory, the AO proceeded to levy penalty of ₹ 6,93,053/- vide order dated 30th March, 2012. Aggrieved by the order of penalty, the assessee preferred appeal before the learned CIT (A). After hearing both the parties the learned CIT (A) has dismissed the appeal of the assessee vide order dated 17-07- 2014 thereby upholding the penalty of ₹ 6,93,053/- levied by the AO. Aggrieved from the order of the learned CIT (A) the assessee has .....

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r ₹ 6,93,053/-271 (1) (c) of the Act has also discussed the order passed by the Tribunal in quantum proceedings. Therefore, before deciding the issue, it is necessary to refer to the order of the Tribunal passed in appeal being ITA No.2081/Mum/2011 dated 20-08-2013 for assessment year 2006-07. The relevant portion of the said order is reproduced herein below:- 7.2 Referring to the above order of the CIT (A) it was the submission that there is no basis for treating the amount of purchase at .....

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The Ld. DR however relied on the orders above. 7.3 We have considered the issue. It is a fact that t he assessee got the shares transferred to demat account as on 31.03.2005 and sold as on 18.04.2005. Therefore, assessing the purchases cost either at ₹ 1,36,000/- or at ₹ 22,48,000/- as directed by the Ld. CIT (A) does not arise in this year, as the transaction occurred before 31.03.2005 i.e. in assessment year 2005-06. Therefore, order of CIT (A) on this issue sustaining addition of .....

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2005 and sale on 18.04.2005. Since assessee claimed only amount of ₹ 1,36,000/- as cost, there is o need for estimating the cost at ₹ 22,48,000/- on presumptions as was done by the CIT (A). The transaction can be much before that date also as it will take time to get them into demat account. In the circumstances of the case, considering the evidence on record, we direct the AO to treat the gain offered by the assessee as short term capital gain and determine the tax liability accordi .....

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ncome from undisclosed sources. The Tribunal held that the amount in question is to be taxed as income from shortterm capital gain in view of the fact that the appellant was unable to adduce any evidence to substantiate the date of purchase of shares as being 02.04.2004. Thus it is clear that in this case the appellant has neither furnished accurate particulars of income in her return nor has furnished any bona-fide explanation nor been able to substantiate the claims made in relation to the sum .....

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rticulars. That being so, I view of the entire conspectus of facts of the case that judicial pronouncements discussed above, the penalty of ₹ 6,93,053/- u/s 271 (1) (c) is upheld and the ground raised by the appellant is dismissed. 6. After conjoint reading of the orders mentioned above as well as after hearing both the parties, we find that the learned CIT (A) has primarily held that the assessee sought undue advantage by seeking to declare the long term capital gains what was held by the .....

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penalty has further concluded that in this case the assessee has neither furnished accurate particulars of income in her return nor has she furnished any bona-fide explanation nor she was able to substantiate her claim for long term capital gains. 7.1 However, from perusal of the order of the Tribunal passed in quantum appeal of the assessee it is clear that the conclusion of the AO that the amount of ₹ 23,58,900/- as income from undisclosed sources is not upheld by the Tribunal. The Tribu .....

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eal is rooted in latine word cocelare which implies to hide or withdraw some observations, to cover or to keep from sight to prevent discovery of whole knowledge or concealment of those facts or portion thereof from the knowledge of the Income Tax Authorities. Therefore, as per the dictum of the Hon ble Apex Court rendered in the case of Dharmendra Textiles reported in 306 ITR 277 wherein the Hon ble Apex Court has not only clarified that mens rea was not required to be proved for levy of penalt .....

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xist. These conditions are that the assessee should have concealed the particulars or income or furnished inaccurate particulars of such income before the penalty u/s 271 (1) (c) can be levied. From the facts before us, we have noted that the assessee has made a claim before the AO on disclosed facts which has not been accepted by the AO. Thus, when there is full disclosure of particulars of income by the assessee, it cannot amount to concealment of income and/or furnishing of inaccurate particu .....

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enalty on concealment can be imposed if both the conditions are fulfilled namely when the assessee has failed to substantiate its explanation and has also failed to prove its bona-fide and penalty can be levied when the conditions are purely of legal issue. As per the facts of the present case there cannot be any denial that along with the return of income, during the course of assessment proceedings, the assessee furnished all the relevant details before the AO and therefore, the assessee canno .....

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dition made on account of commission payment of ₹ 1,17,945/- has also been deleted by the Tribunal in the said order. 7.3 We have also analyzed the judgments cited by the learned AR in the cased of Shree Krishna Electricals (2009) 23 VST 249(SC) wherein it has been held that penalty cannot be levied merely because exemption claimed by A was disallowed . We have also gone through the judgment cited by the learned AR in the case of CIT Vs Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC) whe .....

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