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2018 (9) TMI 1853 - ITAT MUMBAILevy of penalty u/s. 271(1)(c) - non specification of charge - A.O. rejected the claim of the long term capital gain and charged the same @ 30% as income from other sources as undisclosed income - HELD THAT:- We find that the assessee in this case is engaged into the purchase and sale of shares. The assessee has offered the gain as long term capital gain chargeable @ 10%. 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, 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. 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. 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 Bombay High Court, the issue becomes debatable and penalty u/s. 271(1)(c) cannot be levied. - Decided in favour of assessee.
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