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2016 (1) TMI 639 - AT - Income TaxAddition on LTCG on which the STT was not paid - penalty u/s 271(1)(c) - whether by claiming an amount representing long term capital gain, on which STT was not paid, as exempt u/s 10(38) the assessee is furnishing inaccurate particulars of his income within the meaning of the provisions of section 271(1)(c) as held by the Authorities below? - Held that - The Hon ble Jurisdictional High Court, in CIT vs. The Shahabad Co-op. Sugar Mills (2009 (10) TMI 154 - PUNJAB & HARYANA HIGH COURT), has held that making of wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty u/s 271(1)(c) of the Act. For the above discussion, finding force in the grievance sought to be raised by the assessee, the same is accepted. The levy of penalty, as confirmed by the ld. CIT(A) is, hence, set aside and cancelled. - Decided in favour of assessee
Issues Involved:
1. Confirmation of levy of Rs. 1,38,202/- as concealment penalty. 2. Whether the assessee furnished inaccurate particulars of income by claiming LTCG as exempt under Section 10(38) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Confirmation of Levy of Rs. 1,38,202/- as Concealment Penalty: The assessee appealed against the confirmation of a penalty of Rs. 1,38,202/- for the assessment year 2008-09. The penalty was levied for allegedly furnishing inaccurate particulars of income concerning Long Term Capital Gains (LTCG) on which Securities Transaction Tax (STT) was not paid. The Assessing Officer (AO) found that STT was paid only on Rs. 22,79,462/- out of the total LTCG of Rs. 34,98,034/-, leaving Rs. 12,18,572/- on which no STT was paid. The AO held that this amount was taxable under Section 112 of the Income Tax Act. The assessee contended that the amount was on account of switching of securities, hence no STT was deducted. The AO, however, levied the penalty, asserting that the assessee knowingly claimed exemption on the entire LTCG, thereby furnishing inaccurate particulars of income. 2. Whether the Assessee Furnished Inaccurate Particulars of Income by Claiming LTCG as Exempt under Section 10(38) of the Income Tax Act, 1961: The AO and the Commissioner of Income Tax (Appeals) [CIT(A)] held that the assessee furnished inaccurate particulars by claiming the entire LTCG as exempt. The CIT(A) stated that mens rea is not essential for civil liability of penalty under fiscal statutes and cited several judgments supporting the imposition of penalty for making incorrect claims. The CIT(A) upheld the penalty, emphasizing that the assessee did not contest the quantum addition before the appellate authority. The assessee argued that the claim was made based on the understanding that long-term investments were tax-free and that the investments were not sold but redeemed by switching over. The assessee maintained that there was no gross or willful neglect in making the claim and that all particulars were provided in the return. The Tribunal referred to the Supreme Court decision in "CIT vs. Reliance Petro Products (P) Ltd.," which held that making an incorrect claim does not amount to furnishing inaccurate particulars of income. The Tribunal observed that the assessee had furnished all details of expenditure in the return, which were not found to be inaccurate. The Tribunal emphasized that merely because a claim made by the assessee is not accepted by the Revenue does not attract penalty under Section 271(1)(c). The Tribunal also referred to the Jurisdictional High Court's decision in "CIT vs. Bal Kishan Dhawan HUF" and "CIT vs. The Shahabad Co-op. Sugar Mills Ltd.," which supported the view that making a wrong claim is not equivalent to concealment or furnishing inaccurate particulars of income. Conclusion: The Tribunal found merit in the assessee's contention that making an incorrect claim does not amount to furnishing inaccurate particulars of income. The Tribunal set aside and canceled the penalty of Rs. 1,38,202/- confirmed by the CIT(A), allowing the appeal of the assessee. Result: The appeal of the assessee was allowed, and the penalty was canceled.
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