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2013 (5) TMI 281 - ITAT DELHIPenalty u/s 271(1)(c) - claim of long term capital gain - CIT(A) deleted the penalty observing that AO has not disbelieved the investment in the shares in the earlier years - AO has observed that there was no availability of cash for the purchases of shares & as shares were not routed through stock exchange therefore, the payment of STT is out of question and no exemption can be claimed under sec. 10(38) - Held that:- The investment was duly disclosed in the balance sheet. Once the investment was accepted, it will amount to acceptance of genuineness of the transaction partly. According to CIT(A), the shares were purchased through account payee cheques which indicate that funds were available in the accounts of the assessee. Assessee before the CIT(Appeals) submitted that AO himself accepted in his report that the transactions in shares were conducted through the broker against whom either inquiry proceedings were in progress or who were suspended by the SEBI. Thus AO has clearly recognized the existence of the broker and if brokers were duping their clients or the brokers were not passing the tax collected from the clients to the government then how the assessee can be penalized. Thus, AO has adopted two contradictory versions as one treated the transaction as bogus and yet also reported that the transactions were conducted through the brokers. Thus CIT(Appeals) on an analysis of all these material arrived at a conclusion that assessee has given an explanation which, they might have failed to substantiate but their explanation was not proved to be false. It was also contended that if STT was not paid then exemption under sec. 10(38) can be denied to the assessee but Assessing officer cannot change the head of income i.e. from long term capital gain to unexplained receipts. Unaccounted gifts - Held that:- With regard to the gifts the assessee has submitted all necessary documents i.e. disclosing the identity of the donor, disclosing the manner how gifts have been received. The addition was made on the ground that it is against the human probability. Additions qua agricultural income have been made on estimate basis by disbelieving the agricultural income partly. These amounts do not qualify for visiting the assessee with the penalty because AO has not proved that claim made by the assessee was false. In favour of assessee.
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