TMI Blog2020 (3) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ter considering the provisions of section 45A(2) of the Act. Having regard to the fact that investments were converted into stock-in-trade during the previous year relevant to this assessment year, the charter accountant should have considered the computation of income under section 45(2) of the Act. We noted that this mistake was immediately rectified by the assessee during the assessment proceedings and according to us, this mistake has occurred on the advice of chartered accountant, who has filed the return of income. Hence, we are of the view that the CIT(A) has rightly relied on the decision of Hon ble Supreme Court in the case of Reliance Petro Product Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] . Hence, we are of the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an intent to avoid paying of taxes. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating the fact that only after assessing officer made a particular inquiry about working of capital gains that assessee rectified the mistake and offered the income for tax and thus it cannot be said as a Suo Moto admission of income. 3. Briefly stated facts are that the AO during the course of assessment proceedings noticed from the tax audit report that the assessee has converted capital asset into stock-in-trade and this was not disclosed by the assessee in the return of income. The AO required the assessee to furnish working of capital gain in accordance with the provisions of section 45(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income within the meaning of section 271(1)(c) of the Income Tax Act, 1961 for offering business income at a loss of ₹3,66,19,350/- instead of business profit of ₹30,16,391/-. Aggrieved assessee preferred the appeal before Commissioner of Income Tax (Appeals). 4. The CIT(A) deleted the penalty by recording the following findings: - During the year, the Appellant Company converted it's capital assets into stock in trade at a loss of ₹ 2,74,03,924/-. This conversation has not been doubted. Subsequently, the shares were sold when the shares were sold on the open market via the stock exchange (STT Paid), there was a business loss. However, the Appellant's representative in the assessment proceedings er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted it's capital assets into stock in trade at a loss of ₹ 2,74,03,924/-. This bonafide conversion by the assessee has not been found to be false or untrue by the Hon ble Apex Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) after considering various decisions including Dilip N. Shroff vs. JCIT(2007) 291 ITR 519(SC) and Union of India vs. Dharamendra Textile Processors (2008) 306 ITR 277 (SC) has observed and held (page 158 head notes as under: A glance at the provisions of section 271(1)(c) 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 particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the assessee which may call for levy of penalty u/s 271(1)(c) of the Act and accordingly the levy of penalty u/s 271(1)(c) of ₹ 1,28,59,816/- by the Ld. AO cannot be sustained in appeal and is directed to be deleted. Accordingly, this ground of appeal is allowed. Aggrieved, Revenue came in appeal before Tribunal. 5. We have heard rival contentions and gone through the facts and circumstances of the case. We noted from the facts of the case that the assessee has declared loss of ₹3,66,19,350/- in its return of income by disclosing in Tax audit report in From 3CD in column 12 that it had converted its investment into stock-in-trade. We noted that the loss as per annual accounts was determined as per the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the fact that investments were converted into stock-in-trade during the previous year relevant to this assessment year, the charter accountant should have considered the computation of income under section 45(2) of the Act. We noted that this mistake was immediately rectified by the assessee during the assessment proceedings and according to us, this mistake has occurred on the advice of chartered accountant, who has filed the return of income. Hence, we are of the view that the CIT(A) has rightly relied on the decision of Hon ble Supreme Court in the case of Reliance Petro Product Private Limited (2010) 322 ITR 158 (SC). Hence, we are of the view that the CIT(A) has rightly deleted the penalty and we confirm the same. This appeal of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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