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DCIT, Circle 1 (2) , New Delhi Versus ACEE Enterprises

2017 (11) TMI 801 - ITAT DELHI

Penalty u/s 271(1)(c) - change of head of income from ‘short-term capital gains’ to ‘business income’ - Held that:- In the appeals before us, it is undisputed that the impugned amounts, which formed the basis for the AO to levy penalty, were in fact fully reported in the returns. The fact that the AO chose to treat the income under some other head cannot characterise the particulars reported in the return as “inaccurate particulars” or as suppression of facts. Respectfully applying the ratio of .....

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MBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Shri Satendra Pal, Sr. DR For The Respondent : Shri M.P. Rastogi, Adv. ORDER PER BENCH: These four appeals have been filed by the Department and challenge the action of the Ld. Commissioner of Income Tax (Appeals) - IV, New Delhi in deleting the penalty imposed under section 271 (1) (c) of the Income Tax Act, 1961 (hereinafter called the Act ). Since all the appeals have identical issue, they were heard together and they are .....

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issue in favour of the Income Tax Department and upheld the findings of the AO. The change of head of income from capital gains to business income resulted in difference in the tax rate. Subsequent to the order of the ITAT, the AO held that change of head of income amounted to furnishing of inaccurate particulars of income and proceeded to impose penalty of ₹ 15,10,295/- under section 271 (1) (c) of the Act. On appeal, this penalty was deleted by the Ld. CIT (Appeals) vide order dated 15/0 .....

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as against the claim of the assessee that income was from shortterm capital gain. The assessee took the matter to the Ld. CIT (Appeals) who decided the issue against the assessee. Thereafter, the assessee filed an appeal before the ITAT who confirmed the view of the AO and of the Ld. CIT (Appeals) that the income was to be treated as business income and not as short term capital gain. Thereafter, the AO imposed penalty of ₹ 16,86,000/- for furnishing inaccurate particulars of income. This .....

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gains. The AO s view was confirmed by the Ld. CIT (Appeals) as well as by the ITAT. Thereafter, the AO imposed a penalty of ₹ 5,69,000/- under section 271(1)(c) of the Act, which on appeal, was deleted by the Ld. Commissioner of Income Tax (Appeals) vide order dated 15/09/2014. Now, the Department has approached the ITAT and has challenged the aforesaid deletion of the penalty by the Ld. CIT (Appeals). 2.3 For assessment year 2008-09, the return of income was filed declaring an income of .....

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/- furnishing inaccurate particulars. On appeal, the Ld. CIT (Appeals) deleted the penalty vide order dated 15/09/2014. Now, the Department has approached the ITAT and has challenged the deletion of the penalty by the Ld. CIT (Appeals). 3. The Ld. Senior Departmental Representative submitted that a close look at section 271 (1) (c) of Act along with Explanation 1 thereto would show that in course of any proceedings under the Act, if the AO is satisfied that a person has concealed the particulars .....

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rial to the computation of total income have been disclosed, the amount added or disallowed in computing the total income is deemed to represent the concealed income. The Ld. Sr. DR submitted that this penalty is neither criminal nor quasi-criminal but a civil liability and in such cases mens rea was not essential. It was submitted that on facts, the penalty had been rightly imposed. Reliance was also placed by the Ld. Sr. DR on the judgment of the Hon ble Delhi High Court in the case of CIT v. .....

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naccurate particulars of income. It was submitted that there was only change of income head from short-term capital gains to business income and the issue was at best debatable. It was submitted that the change of income head does not tantamount to furnishing of inaccurate particulars of income as all the material facts had been duly disclosed by the assessee. It was submitted that the transaction details of purchase and sale of shares were duly disclosed in the return of income and it was not a .....

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ecurities Ltd reported in 310 ITR 121 (Delhi) wherein the Hon ble Delhi High Court had held that mere treatment of business loss as a speculation loss by the AO did not automatically warrant the inference of concealment of income. Reliance was also placed on another judgment of the Hon ble Delhi High Court in the case of CIT vs. Amit Jain reported in 351 ITR 74 (Delhi) wherein, on identical facts, the order of the ITAT was upheld by Hon ble Delhi High Court. 5. We have heard the rival submission .....

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the assessment proceedings may constitute evidence in the course of penalty proceedings but they cannot be regarded as conclusive. In the instant appeals, it cannot be said that the assessee had withheld any relevant information regarding its receipts and income from the AO. With regard to the provisions of section 271 (1) (c) of the Act pertaining to penalty, the Hon ble Apex court has laid down that making of a claim by the assessee which is not sustainable will not amount to furnishing inaccu .....

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the revenue suggested that by making inaccurate claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word particular is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word particulars used in the section 271 (1) (c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information .....

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words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT versus Atul Mohan Bindal (2009) 9 SCC 589, where this court was considering the same provision, the court observed that the assessing officer has to be satisfied that a person has concealed the particula .....

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the case of CIT versus Amit Jain (supra) upheld the order of the ITAT upholding the deletion of the penalty by the Ld. CIT (Appeals) on facts similar to the facts in the present appeals. In this case the assessee had declared an income of rupees 2,60,73,558/- from short-term capital gains. The AO, on an interpretation of the relevant provisions and having regard to the nature of transactions treated it as income from business. He also levied penalty under section 271 (1) (c) of the Act to the tu .....

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