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TMI Blog2011 (12) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 550.03 lakhs and depreciation on BSE Card of Rs. 59.06 lakhs. He confirmed the penalty on the disallowances under section 94(7) of Rs. 12,45,342/-. The Revenue has not come in appeal on the deleted part of penalty, whereas the assessee is contesting the confirmation of penalty on the basis of disallowances. 2. It was the submission of the learned Counsel that the assessee is in the business of stock broking, trading and investment banking declaring a total income of Rs. 8,47,91,121/-. In the course of its purchase and sale of shares the assessee has purchased shares of VSNL and Infosys Ltd and incurred loss on the transactions totaling to the above amount of Rs. 12,45,332/-. Since these transactions are part of the business activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eere (P) Ltd vs. ACIT 120 TTJ( pune) 535 and judgments of Hon'ble Punjab & Haryana in cases of CIT vs. Deepak Kumar 232 CTR 78 (P&H) and CIT vs. Sindhu Enterprises 322 ITR 80 (P&H) for the proposition that wherever Income Tax returns are filed through experts in I.T. laws and on their advise the assessee acted on bonafide belief, and where there is no finding of intentional or motivational mistake penalty is not attracted. It was his submission that these two transactions alone on which dividends were received attracted the provisions of section 94(7) which aspect was not noticed at the time of filing of return so there is no malafide intention on the part of assessee to furnish inaccurate particulars or to conceal the income. He further su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were adjusted in the course of appellate proceedings before the CIT (A). Only in these two transactions the assessee received dividend which were declared in the meantime, thereby attracting the provisions of section 94(7). As per the provisions the loss arising in purchase and sale of transactions falling within 3 months of declaration of dividend is not allowed. It was initially contended that the loss is business loss not covered by the provisions of section 94(7) but in the course of appellate proceedings before the ITAT the ground was withdrawn thereby loss stood disallowed. The issue is whether the claim of the loss disallowed by virtue of provisions of section 94(7) attracts penalty under section 271(1)(c). 5. In our view this do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these transactions, we are of the view that penalty under section 271(1)(C) is not warranted. Various case law relied upon by the assessee also supports the contentions made. However, without getting into the legal parameters, on facts of the case we are of the view that there occurred a bonafide mistake in not examining the provisions of section 94(7) on these transactions. Moreover, though there are disallowances in the course of the assessment proceedings, mere disallowance does not attract penalty proceedings under section 271(1)(C). Accordingly the assessee's ground is allowed. The penalty levied on this disallowance of loss is hereby cancelled. 6. In the result, assessee's appeal is allowed. Order pronounced in the open court on 30t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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