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2024 (7) TMI 36 - AT - Income TaxIssues: Imposition of penalty under Section 271(1)(c) for inaccurate particulars of income in share trading transactions. Analysis: The appeal was filed against the penalty order passed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961 concerning the assessment year 2014-15. The assessee challenged the penalty of Rs. 4,49,000 imposed on additions towards estimated income from share trading transactions. Despite being called for a hearing, no one appeared for the assessee, leading to the proceedings being conducted ex-parte. The AO initially made additions towards estimated share trading income based on satisfaction under Section 271(1B) of the Act for furnishing inaccurate particulars of income. However, the AO later imposed the penalty on the grounds of concealing income, altering the basis for penalty imposition. This change in premise for penalty imposition was deemed improper, as the penalty should be based on the satisfaction derived by the AO. The AO's inconsistency in the grounds for penalty led to the penalty order being considered unsustainable. Citing legal precedents, including decisions by the Hon'ble Gujarat High Court and the Tribunal, it was established that when the AO confirms a penalty on different grounds than the original satisfaction under Section 271(1B), the penal action under Section 271(1)(c) is not legally sustainable. Therefore, the penal order imposing the penalty was set aside, and the penalty was cancelled, resulting in the appeal of the assessee being allowed. The judgment was pronounced in open court on 27th June 2024, with the Appellate Tribunal ITAT DELHI ruling in favor of the assessee by canceling the penalty imposed by the AO.
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