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2017 (1) TMI 777 - ITAT MUMBAI

2017 (1) TMI 777 - ITAT MUMBAI - TMI - Levy of penalty under section 271(1)(c) - change of head of income - the income shown under the head STCG by the assessee is to be assessed under the head income from ‘Business and Profession’ - Held that:- The assessee had declared the income arising out of purchase and sale activity in shares and securities as STCG as against business income assessed by the AO. It is seen that the assessee had also filed written submissions before the authorities below th .....

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of the matter and respectfully following the decision of the Hon'ble Bombay High Court in the case of Bennett Coleman & Co. Ltd. (2013 (3) TMI 373 - BOMBAY HIGH COURT) and of the Coordinate Bench of the Tribunal in the case of Mita J. Jhaveri (2017 (1) TMI 682 - ITAT MUMBAI) we hold that since there is only a change of head of income from ‘STCG’ as declared by the assessee to ‘business income’ as held by the AO and no evidence brought on record that the assessee’s claim was not bona fide, we de .....

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nder section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act') for A.Y. 2008-09. 2. The facts of the case, briefly, are as under: - 2.1 The assessee filed her return of income for A.Y. 2008-09 on 30.03.2009 declaring total income of ₹ 46,99,360/- under the heads of income from house property, short term capital gains (STCG), long term capital gains (LTCG) and income from other sources . The case was subsequently taken up for scrutiny. In the course of assessment proceeding .....

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e of notice under section 274 r.w.s. 271 of the Act simultaneously while completing the order of assessment under section 143(3) of the Act vide order dated 26.11.2010. 2.2 Penalty proceedings were taken up by the AO by issue of show cause notice. The assessee s submissions dated 26.06.2013 and 16.09.2013 sought dropping of penalty proceedings submitting, inter alia, that penalty under section 271(1)(c) of the Act cannot be levied for reclassification of STCG income declared by the assessee as b .....

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the AO in respect of the very same income. The AO rejected the assessee s contentions and proceeded to levy penalty of ₹ 1,18,735/- under section 271(1)(c) of the Act in the order dated 23.03.2013. 2.3 On appeal, the learned CIT(A)-31 vide the impugned order dated 04.01.2016 upheld the AO s action in levying the penalty under section 271(1)(c) of the Act for A.Y. 2008-09 holding as under at para 5.10 thereof:- 510. I have gone through the facts marshaled during the assessment and penalty .....

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for deciding the issue of penalty to be imposed u/s 271(1) (c). Facts of the case decide whether a belief could be treated as bona fide or not. In other words it can safely be held that if an appellant, disregarding all the relevant facts and circumstances, interprets a section that suits its interest then such interpretation cannot be held bona fide belief. AO's view that appellant consciously attempted to reduce tax liability to the extent of ₹ 1,18,735/- being the difference between .....

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Commissioner of Income Tax (Appeals) - 36, Mumbai [hereinafter referred to as the "Ld. CIT(A)"] erred in passing the order dated 05.01.2016 confirming the penalty levied by the Ld. A.O. in penalty order dated 23.09.2013 passed under section 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as "the Act"]. The Appellant strongly objects to the levy of penalty confirmed by the Ld. CIT(A)-36. 2. Penalty u/s 271(1)(c) of ₹ 1,18,735/- The Ld. CIT(A) erred in conf .....

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same may be deleted. 3. The Appellant craves leave to add, alter, rescind or amend any of the above grounds of appeal. The only issue raised in this appeal is against the order of the learned CIT(A) for confirming the levy of penalty by the AO under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income. 3.2 When the case was called for hearing, none was present for the assessee, but the learned D.R., who was present, fairly conceded that the assessee s appeal is to be a .....

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see s income is mainly from STCG/LTCG arising from dealings in shares and securities and also from house property and income from other sources . The AO was of the view that the income from STCG of ₹ 8,19,450/- arising from investment activity as declared by the assessee is to assessed under the head business income and after assessing the same accordingly in the order of assessment dated 26.11.2010, simultaneously initiated penalty proceedings under section 271(1)(c) of the Act for furnis .....

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ore authorities below by the assessee, that the assessee s proposition was that its activity of dealing/investment in shares and securities are investment activity and not business activity as held by the AO/CIT(A) and that there was only a change of head of income from STCG to business income and therefore there was no furnishing of inaccurate particulars of income as is being sought to be made out. From the details on record before us, we too observe that there is only a change of head of inco .....

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s held that when there is only a change of head of income and in the absence of any evidence to show that the assessee s claim was not bona fide, penalty levied under section 271(1)(c) for furnishing of inaccurate particulars of income/concealment of income was to be deleted. At para 3 of its order the Hon'ble Bombay High Court held as under: - 3. So far as question (ii) is concerned, the respondent- assessee had claimed premium on redemption of debentures as income from capital gains. Where .....

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al held that there is no dispute with regard to the fact that the respondent- assessee had disclosed that the amount received as premium on redemption of debentures in its computation of income. Further, the Tribunal records that it is not the case of the department that the respondent-assessee had concealed any particulars of income or furnished inaccurate particulars of income by stating incorrect facts. The assessing officer considered the said premium received on redemption of debentures to .....

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o entertain the proposed question (ii). 3.3.3 The aforesaid decision of the Hon'ble Bombay High Court in the case of Bennett Coleman & Co. Ltd. (259 CTR 383) (Bom) on similar fact situation was followed by a Coordinate Bench of the Tribunal in the case of Mita J. Jhaveri in ITA No. 6210/Mum/2012 dated 30.08.2016. We find that in the case on hand, the assessee had declared the income arising out of purchase and sale activity in shares and securities as STCG as against business income asse .....

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