2012 (6) TMI 837 - AT - Income Tax

Cancellation of penalty levied under Section 271(1)(c) - whether the income from sale of stock options is assessable as long term capital gain (as disclosed by the assessee) or short term capital gain (as assessed by the AO) - Held that - In the assessee s case, evidently, there is no furnishing of any inaccurate particulars. It is not the case of the Revenue that the assessee has either concealed any fact or has submitted any wrong or incorrect fact. It is only the question of opinion whether the income from sale of stock option is assessable as short term capital gain or as long term capital gain. Thus mere making a claim which is not admissible does not lead to furnishing inaccurate particulars - Decided against revenue.

Summary

Issues:
- Cancellation of penalty under Section 271(1)(c) of the Income-tax Act for AY 2004-05 and 2002-03.

Analysis:
- AY 2004-05: The appeal pertains to the cancellation of penalties totaling &8377; 2,50,102/- and &8377; 15,69,445/- for AY 2004-05 and 2002-03, respectively, under Section 271(1)(c) of the Income-tax Act. The assessee, a Managing Director, declared income from the sale of stock options as long-term capital gain, but the Assessing Officer treated it as short-term capital gain, imposing penalties. The CIT(A) canceled the penalties. The tribunal noted that the dispute revolved around the characterization of the income from the sale of stock options. It emphasized that a mere difference in opinion between the assessee and the Assessing Officer on the tax treatment does not constitute concealment of income. Citing the decision in CIT Vs. Reliance Petroproducts Pvt.Ltd., the tribunal held that unless there is a finding of incorrect or false details in the return, penalty under section 271(1)(c) cannot be imposed. As there was no inaccurate particulars furnished by the assessee, the tribunal upheld the CIT(A) order, dismissing the Revenue's appeal for AY 2004-05.

- AY 2002-03: The facts for AY 2002-03 mirrored those of AY 2004-05, with penalties amounting to &8377; 15,69,445/- and income from stock options at &8377; 1,05,19,631/-. Following the reasoning applied for AY 2004-05, the tribunal upheld the CIT(A) order for AY 2002-03 as well, emphasizing the absence of inaccurate particulars furnished by the assessee. Consequently, the Revenue's appeals for both years were dismissed. The decision was pronounced on 25th June, 2012, in open court.