2016 (7) TMI 267 - AT - Income Tax

Penalty u/s 271(1)(c) on addition made u/s 68 - Assessee contended that she has neither concealed the income nor furnished inaccurate particular of income. All the relevant particular e.g. bank account, contract notes, share certificates, demat statements, copy of account with broker through whom the share were purchased and sold were submitted. However, the reply of assessee was not considered sufficient and satisfactory - Held that - The assessee submitted her reply in response to the notice for penalty vide her reply dated 17 November 2007, wherein it was contended that sale consideration was paid through banking channel and she has no reason to believe that that the documents were not genuine or bogus as indicated to her by AO. The sale price of shares was received by assessee through her DMAT account out of which, 10,000 shares of were sold on 2nd June 2004 and remaining 16400 shares were sold on 15 June 2004 through DMAT account. Moreover, the claim LT CG was considered as income under section 68 of the Act, Thus it was a sufficient reply as per explanation 1 of Section 271(1) (c) of the Act. Thus the assessee sufficiently explained in the reply to the notice u/s 274 r.w.s. 271(1)(c) of the Act. And as such no inaccurate particular was filed by the assessee and the levy of the penalty was wrongly inflicted upon the assessee, hence there is no merit in the order of penalty and the same is deleted - Decided in favour of assessee

Summary

Issues:
Appeal against penalty order under section 271(1)(c) of the Act for AY 2005-06.

Analysis:
1. The appeal was filed against the penalty order confirming the penalty under section 271(1)(c) of the Act for the assessment year 2005-06.
2. The assessee's return was selected for scrutiny, and the assessment resulted in additions under section 68 for capital gain and sales of shares. The CIT(A) confirmed the addition of sales of shares but deleted the addition related to capital gain.
3. The AO imposed a penalty under section 271(1)(c) after the appeal proceedings, alleging that the assessee had not transacted with the broker mentioned. The penalty was imposed for the addition of capital gain.
4. The assessee appealed to the Commissioner of Appeal, but the appeal was unsuccessful, leading to the present appeal before the tribunal.
5. The AR of the assessee argued that the shares were purchased from a registered broker and provided supporting documents. The AR also cited precedents where similar transactions were considered genuine.
6. The tribunal observed the evidence provided by the assessee, including bills, certificates, and contract notes, and referred to similar cases where transactions were deemed genuine by ITAT benches.
7. The tribunal cited judgments where transactions were considered genuine based on the evidence provided by the assessee and dismissed the revenue's contentions.
8. The assessee's reply to the penalty notice was deemed sufficient under Section 271(1)(c) of the Act, and the tribunal found no merit in the penalty imposed. Precedents were cited where similar transactions were considered genuine, leading to the deletion of the penalty.
9. The tribunal concluded that the penalty was wrongly inflicted, as the assessee had sufficiently explained the transactions, and deleted the penalty.
10. The appeal filed by the assessee was allowed, and the penalty order was set aside.

This detailed analysis outlines the issues involved in the appeal against the penalty order under section 271(1)(c) for the assessment year 2005-06, the arguments presented by the parties, the assessment of evidence by the tribunal, and the application of precedents leading to the deletion of the penalty.