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2016 (12) TMI 802 - HC - Income TaxPenalty u/s 271(1) - nature of income on share transactions - capital gain or business income - Held that - The argument of the assessee with respect to its claim as a short-term capital gain was not benefited and, therefore, in the circumstances of the case penalty was not justified. Having regard to the volume and frequency of the transactions, no separate books of accounts or demat accounts and other facts and circumstances, we are of the opinion that overall effect of all the factors revealed that the activity of sale and purchase of shares claimed under the head short-term capital gain cannot be sustained and it is held as the activity in the nature of business and assessable under the head profit and gains of the business . Mere making a claim not acceptable does not lead to concealment of income - Decided in favour of assessee
Issues:
Revenue's appeal against deletion of penalty by ITAT for assessment years 2006-07 and 2007-08. Analysis: The Revenue challenged the ITAT's decision to remove the penalty imposed on the assessee for claiming higher capital gains in share transactions. The AO rejected the claims, considering factors like volume of investments, period of holding, source of funds, and the nature of holding the shares. The CIT(A) affirmed the addition but ruled out the penalty. The ITAT upheld this decision, emphasizing that the assessee's argument for short-term capital gains did not hold, justifying the absence of a penalty. The ITAT detailed the multiple transactions in specific scrips, highlighting the volume, frequency, and consistency of the trades. The ITAT noted that frequent buying and selling of shares indicated a profit-seeking motive, akin to a business activity rather than investment. Referring to legal precedents, the ITAT emphasized the need to consider all relevant factors to determine the character of the transaction. The Court found no reason to interfere with the ITAT's detailed factual analysis, citing the Supreme Court ruling in Commissioner of Income-tax v. Reliance Petroproducts (P) Ltd. No substantial legal question arose, leading to the dismissal of the appeal.
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