TMI Blog2018 (9) TMI 1853X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITAT in the quantum addition wherein while confirming, the ITAT had held that the genuineness of the transaction was not proved if not actually disproved. No defect was found in the documentation supporting the transaction and the ITAT had gave a finding that the assessee s explanation was unproved but not disproved. In identical situation in the case of Upendra vs. Mithani [ 2009 (8) TMI 1159 - BOMBAY HIGH COURT] has held that in these circumstances, the penalty u/s. 271(1)(c) cannot be imposed. In the case of Bennett Coleman Co. Ltd. [ 2013 (3) TMI 373 - BOMBAY HIGH COURT] has held that no penalty is leviable where there is only a change of head of income. The assessee deserves to succeed on the touch stone of this case law also. In this case the penalty u/s. 271(1)(c) cannot be sustained as firstly the addition is based upon the theory of preponderance of probability and defect in the documentation for claim of long term capital gain, per se have not been found to be defective. Similarly as held by the Hon'ble Bombay High Court in the case of Nayan Builders (supra) when substantial question of law is admitted in the quantum appeal by the Hon'ble Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has erred in upholding the penalty of ₹ 35 lakhs due to inaccurate particulars (a) By not passing a speaking well reasoned order. (b) By not appreciating that the bonafide explanation with voluminous evidences filed in response to the penalty proceeding were neither disproved nor negated by the AO (c) By solely relying on the findings in the ITAT order. 4. Brief facts of the case are as under: In this case, the Assessing Officer found that in the return of income for the year under consideration, the assessee had shown income of ₹ 89,57,677/- under the head income from capital gains and paid taxes at ₹ 8,95,768/- @ 10% on this income. The Assessing Officer has further noted that on the basis of detailed enquiries conducted at the time of assessment proceedings, it was established that shares related to M/s Eltrol Ltd. was a Penny Stock and the price of the penny stock was ramped up by circular trading involving operators for price raging. That there was a manipulation of purchase date for completion of 12 months for making transactions eligible for long term capital gains. The Assessing Officer has fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani (in Appeal No.1860 of 2009 vide order dated 05.08.2009), the Hon'ble jurisdictional High Court has held that if the assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee s case is false. In such situation, the Hon ble High Court has upheld the proposition that no penalty can be imposed. Further, the ld. Counsel of the assessee submitted that the Hon'ble jurisdictional High Court in the case of quantum addition has already accepted the substantial question of law vide order dated 11.12.2017. By way of this order, the Hon'ble jurisdictional High Court has admitted the substantial question of law on the addition made in this case. 8. By submitting that this issue is debatable and substantial question of law has been admitted by the Hon'ble jurisdictional High Court, the ld. Counsel of the assessee referred to the decision of the Hon'ble Bombay High Court decision in the case of CIT vs. Nayan Builders Developers [2014] 368 ITR 722 (Bom) for the proposition that when substantial question of law is admitted by the Hon ble Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the gain as long term capital gain chargeable @ 10%. The A.O., on the other hand, made certain enquiries and came to the conclusion that on the economic and financial parameter, the huge gain was not justified. Hence, quoting the case laws on the subject of preponderance of probability, the A.O. rejected the claim of the long term capital gain and charged the same @ 30% as income from other sources as undisclosed income. In this regard, the submission of the assessee is that all the documents in support of the genuineness of the transactions were submitted. The assessee has duly offered the gain to tax. Hence, it is the assessee s submission that there is no concealment of income or furnishing of inaccurate particulars of income. In this regard, we find it gainful to refer to the decision of the ITAT in the quantum addition wherein while confirming, the ITAT had held that the genuineness of the transaction was not proved if not actually disproved. 11. From the above, it is clear that no defect was found in the documentation supporting the transaction and the ITAT had gave a finding that the assessee s explanation was unproved but not disproved. In identical situation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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