TMI Blog2012 (8) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gain as against higher tax rate of 20% as bonafide and consequently erred in deleting the penalty levied U/s 271(1)(c) of the I.T.Act 1961 of ₹ 12,19,488/-. 2. Brief facts of the case are that the assessee has declared long term capital gains of ₹ 1,28,258,902/- out of which long term capital gain, of ₹ 3,75,902/- pertained to listed shares. The entire LTCG was claimed as exempt under section 10(38) including the capital gain of ₹ 1,24,50,000/- pertaining to sale of unlisted shares. The assessee had accordingly offered tax at the rate of 10% without taking the benefit of indexation. During the course of the assessment proceedings, the assessee was required by the Assessing Officer as to why the long term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for penalty under Section 271(1)(c) and imposed the penalty of ₹ 12,08,139/-. He also imposed penalty on the disallowance of short term capital loss of ₹ 1,13,486/- on the sale of shares of Torrent Pharma Ltd. as the assessee has sold these shares within a month, wherein the company has issued bonus shares on these shares, and therefore, the loss of ₹ 1,13,486/- has to be adjusted under Section 94(8). Accordingly, penalty was levied on this wrong claim of loss. 3. In the first appeal, learned CIT(A) deleted the penalty on the ground that there is neither a concealment of income nor furnishing of any inaccurate particulars as the assessee has disclosed all the particulars of income. The only dispute relates to levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te particulars and inaccurate claim has to be on the basis of income disclosed in the return of income. In this case the income disclosed has not been changed. Mere making a claim which is not sustainable in law will not amount to furnishing of inaccurate particulars of income. The Apex Court has considered the decision of Dilip N Shroff 291 ITR 519 (SC) and the Dharmendra Textile Processors 306 ITR 277 (SC) before deciding the issue. 4. Learned Senior DR submitted that the assessee was fully aware of the provisions of Section 112, which clearly provides that rate of 10% shall be allowed on the long term capital gain in respect of listed shares only. The action of the assessee is in violation of statutory provisions, hence, same amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment and valued at Nil value. The provision of Sec.55(2)(aa)(iia) of the Income Tax Act, 1961 clearly state that the Bonus shares are to be valued at Nil price for the purpose of investment. The policy of the appellant is to value the investment on FIFO basis. Accordingly the appellant has valued the shares at Nil value and shown the short term capital loss on the sale of original shares while computing the income. There was no intention on the part of the appellant to hire or show inaccurate particulars of income. 5. We have carefully considered the rival submissions and also perused the material on record. From the facts, it is fairly borne out that the assessee has furnished all the particulars of transaction in shares including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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