2013 (9) TMI 1196 - AT - Income Tax

Summary

Issues Involved: The judgment involves the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 on the assessee, which was subsequently deleted by the Commissioner of Income Tax (Appeals).

Comprehensive Details:

1. Background and Penalty Imposition:
The appeal by the Revenue was against an order of the Commissioner of Income Tax (Appeals) arising from an order passed by the Assessing Officer under Section 271(1)(c) of the Act for the assessment year 2006-07. The penalty imposed by the Assessing Officer amounted to Rs. 28,48,775, which was later deleted by the CIT(A).

2. Assessment Dispute - Shares Transaction:
The dispute arose from the treatment of long term capital gain on the sale of shares by the assessee. The Assessing Officer considered it as 'business income' instead of 'capital gains', leading to the denial of exemption claimed under Section 10(38) of the Act, resulting in the imposition of the penalty.

3. CIT(A) Decision and Revenue's Appeal:
The CIT(A) deleted the penalty, stating that the difference in opinion between the assessee and the Revenue regarding the nature of income does not warrant a penalty under Section 271(1)(c). The Revenue appealed this decision before the ITAT Pune.

4. Arguments and Considerations:
The Revenue contended that the profit on the sale of shares should be treated as 'business income', justifying the penalty imposition. On the other hand, the assessee argued that the claim made in the return of income was bonafide, and there was no concealment or furnishing of inaccurate particulars.

5. ITAT Decision and Legal Precedents:
The ITAT Pune analyzed the bonafides of the assessee's claim and referred to legal precedents, including the judgment in CIT vs. Reliance Petroproducts, to support the decision. It was concluded that the claim made by the assessee was bonafide, and the penalty under Section 271(1)(c) was rightly deleted by the CIT(A).

6. Final Verdict and Dismissal of Appeal:
The ITAT affirmed the CIT(A)'s decision to delete the penalty and dismissed the Revenue's appeal. The order pronouncement was made on 19th September 2013.

This summary provides a detailed overview of the legal judgment involving the penalty imposition under Section 271(1)(c) of the Income-tax Act, 1961, and the subsequent decision by the CIT(A) and ITAT Pune.