2012 (8) TMI 1062 - AT - Income Tax

Summary

Issues involved: Appeal against penalty u/s 271(1)(c) for incorrect tax rate on capital gains and disallowance of short term capital loss.

Issue 1 - Incorrect tax rate on capital gains:
The appellant declared long term capital gains, including gains from unlisted shares, at a lower tax rate of 10% instead of 20%. The Assessing Officer imposed a penalty u/s 271(1)(c) for this discrepancy. The CIT(A) deleted the penalty, stating that there was no concealment or inaccurate particulars, as the appellant disclosed all transaction details and the mistake was a bona fide calculation error. The Hon'ble Supreme Court's decision in Reliance Petroproducts Pvt. Ltd. was cited to support this view.

Issue 2 - Disallowance of short term capital loss:
The appellant claimed a short term capital loss on the sale of shares of a company that had issued bonus shares. The Assessing Officer disallowed this loss under Section 94(8) and imposed a penalty. The appellant argued that the loss claim was based on a bona fide mistake, as the bonus shares were valued at Nil price as per tax provisions. The CIT(A) accepted this explanation, emphasizing that incorrect claims not sustainable in law do not amount to furnishing inaccurate particulars. The penalty was deleted based on the Supreme Court's ruling in Reliance Petroproducts Pvt. Ltd.

In conclusion, the penalty u/s 271(1)(c) was deleted by the CIT(A) for both issues, as there was no concealment or inaccurate particulars in the appellant's disclosures. The appeal of the department against this decision was dismissed, affirming the CIT(A)'s findings based on legal precedents and the facts of the case.