TMI Blog2020 (11) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... income, then obviously explanation furnished by the assessee cannot be held to be bonafide. It is quite possible when a transaction is settled by book adjustment that too on the direction of Hon'ble High Court, there is every possibility to have an understanding that particular transaction cannot lead to tax. Moreover, in the instant case, even after computation of long term capital gain from transfer of equity shares the assessed income for the impugned year results into net loss. There is no deliberate attempt from the assessee to conceal particulars of income or evade payment of taxes. Therefore, the explanation furnished by the assessee that it was by inadvertent mistake omitted to include long term capital gain derived from tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income tax (Appeals) ought to have considered from the behaviour and conduct of the appellant during and after assessment proceedings that omission was purely inadvertent and not deliberate or by neglect. 5. The statutory process for levy of penalty has not been satisfied and that the notice for levy of penalty is void ab initio. 6. The levy of penalty ought to be cancelled on the ground that notice dated 30.11.2009 seeking show cause u/s.274 r.w.s 271 of the Act is fundamentally defective. 3. Brief facts of the case are that the assessee has filed its return of income on 28.10.2007 declaring total loss at ₹ 8,12,979/-. During the course of assessment proceedings, the Assessing Officer noticed that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o him, the assessee has concealed the particulars of income in respect of long term capital gain derived from transfer of shares, even though the said transactions generate long term capital gain . The Assessing Officer further referring to the decision of the Hon ble Supreme Court in the case of UOI Vs. Dharmendra Textiles (2008) (306 ITR 277) observed that penalty u/s.271(1)(c) is a civil liability and wilful concealment is not an essential ingredient for attracting such liability, accordingly rejected the explanation furnished by the assessee and levied penalty of ₹ 5,36,600/- which is at 100% of the tax sought to be evaded. 4. Being aggrieved by the penalty order, the assessee preferred an appeal before the learned CIT(A). Befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the returned income is in loss, the penalty for concealment of income can be levied and this was supported by the decision of the Hon ble Supreme Court in the case of JCIT Vs. Saheli Leasing Industries Ltd. (supra). The learned CIT(A) also distinguished the decision of the Hon ble Supreme Court in the case of M/s. Price Waterhouse Coopers Pvt. Ltd. vs. CIT (supra) and held that facts of those case are entirely different, where the assessee has reported the payment of gratuity in the tax audit report but omitted to add back in the statement of total income. Under those facts, the Hon ble Court came to a conclusion that because of human error on the part of the assessee, the relevant disallowances was not added back to the total income. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the element of wilful concealment is not required to be looked into for levy of penalty. He further argued that what is to be seen is whether there is concealment of income which resulted in enhancement of returned income or reduction of returned loss. Once there is an element of increase in income or reduction in loss, as per Explanation 4(a), penalty u/s.271(1)(c) of the Act can be levied. 7. We have heard both the parties, perused the material available on record along with case laws cited by both parties and gone through the orders of authorities below. It is an admitted fact that assessee has not reported capital gain derived from transfer of equity shares in pursuant to the direction of the Hon ble High Court of Madras for ama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant year appears to be bonafide. Had it been the case of the Assessing Officer that the assessee has received consideration for transfer of equity shares and yet not reported capital gain from transfer of shares in the return of income, then obviously explanation furnished by the assessee cannot be held to be bonafide. It is quite possible when a transaction is settled by book adjustment that too on the direction of Hon'ble High Court, there is every possibility to have an understanding that particular transaction cannot lead to tax. Moreover, in the instant case, even after computation of long term capital gain from transfer of equity shares the assessed income for the impugned year results into net loss. Thus, from the above, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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