2013 (1) TMI 897 - AT - Income Tax

Furnished inaccurate particulars of income - penalty levied u/s.271(1)(c) - Held that - Transaction in respect of the share trading was duly disclosed at the time of filing of the return - Income was shown as longtern capital gain and part of the income was also shown as speculative business - assessee disclosed the names of the companies, description of the shares, date of transfer of shares, sale consideration, cost of acquisition and the index cost and considered the gain as long-term capital - thus there is no allegation of concealment of facts - the addition was made merely because of change in the head of income - Therefore in absence of any inaccuracy in the particulars of income or concealment of facts the penalty must not be levied - Decided in favor of assessee

Summary

Issues:
1. Confirmation of penalty under section 271(1)(c) of the IT Act.
2. Allegation of furnishing inaccurate particulars of income.
3. Treatment of long-term capital loss as speculative business loss.
4. Consideration of penalty imposition without mens-rea.
5. Disclosure of share transactions and treatment of income.

Detailed Analysis:
1. The appeal was filed by the Assessee against the penalty levied under section 271(1)(c) of the IT Act. The penalty was confirmed by the ld.CIT(A)-XXI, Ahmedabad, amounting to Rs. 1,63,093 for the assessment year 2008-09.

2. The Assessee, a company engaged in trading of shares and securities, declared a loss in the return. The Assessing Officer (AO) treated the long-term capital loss as speculative business loss due to differences in calculation methods. The penalty was imposed for furnishing inaccurate particulars of income, and the Assessee's argument of absence of mens-rea was dismissed citing relevant legal precedents.

3. The AO determined a total loss after treating long-term capital gain and trading in scripts as speculative business loss, leading to the penalty imposition. The ld.CIT(A) upheld the penalty, stating that the Assessee furnished inaccurate particulars of income, justifying the penalty under section 271(1)(c) of the IT Act.

4. During the hearing, the Assessee's representative highlighted that complete information about share transactions was filed with the return of income. The Assessee argued that there was no concealment or sham transaction, citing legal precedents to support their position.

5. The Tribunal found that the Assessee had disclosed the share trading transactions in detail, distinguishing between long-term capital gain and speculative business income. Despite the AO's treatment of the income as speculative, there was no allegation of concealment or sham transactions. Relying on legal precedents, the Tribunal concluded that in the absence of inaccuracies or concealment, the penalty should not be levied. Consequently, the Tribunal reversed the decision of the lower authorities and directed the deletion of the penalty, allowing the Assessee's appeal.