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TMI Blog2013 (5) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... the brokers were not passing the tax collected from the clients to the government then how the assessee can be penalized. Thus, AO has adopted two contradictory versions as one treated the transaction as bogus and yet also reported that the transactions were conducted through the brokers. Thus CIT(Appeals) on an analysis of all these material arrived at a conclusion that assessee has given an explanation which, they might have failed to substantiate but their explanation was not proved to be false. It was also contended that if STT was not paid then exemption under sec. 10(38) can be denied to the assessee but Assessing officer cannot change the head of income i.e. from long term capital gain to unexplained receipts. Unaccounted gifts - Held that:- With regard to the gifts the assessee has submitted all necessary documents i.e. disclosing the identity of the donor, disclosing the manner how gifts have been received. The addition was made on the ground that it is against the human probability. Additions qua agricultural income have been made on estimate basis by disbelieving the agricultural income partly. These amounts do not qualify for visiting the assessee with the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 under sec. 143(3) read with sec. 264 of the Income-tax Act, 1961. Dissatisfied with this order, assessee filed an appeal before the Learned Commissioner which has been decided on Ist of June 2011. 3. The above facts are common in the case of Smt. Kamlesh Pal, Jamuna Pal, Shri Gopal Pal (HUF) Individual, Neha Pal and Meenu Pal. The order of the Learned Commissioner dated Ist of June 2011 has not been challenged. Originally, learned Assessing Officer has made additions under five heads which are mentioned in the penalty order of Smt. Kamlesh Pal. It reads as under:- (i) Addition on account of claim of alleged Long Term Capital Gain Rs.7,94,300 (ii) Addition on account of transportation income Rs.17,98,504 (iii)Addition on account of claim of alleged gift Rs. 5,00,000 (iv) Addition on account of unexplained investment Rs.2,33,570 (v) Addition on account of claim of alleged agricultural income Rs. 43,500 4. In the subsequent proceedings, this addition of Rs.7,94,300 was confirmed by the Learned Commissioner while deciding the revision of the assessee under sec. 264 of the Act. The confirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re transfer through certificate of share transfer agent from which physical delivery of shares and purchase/sale could be ascertained; (ii) Any evidence to the effect that shares were routed through Kolkata Stock Exchange also could not be produced; (iii) Any evidence to the effect of availability of funds for purchase of shares also could not be furnished; (iv) Copy of bank account from which the cheque the payments was received; (v) Copy of broker accounts through whom transaction undertaken. 8. The assessee has submitted that shares were purchased through the share broker and payments were made to them. The year in which shares were purchased, no doubt was raised by the learned Assessing Officer about the purchases. The shares were held for more than 12 months and sold through the share brokers, who were members of the stock exchange. The sale consideration was received from the shares brokers through account payee draft. The share brokers have charged the security transaction tax on the said transaction. The assessee has filed copy of the contract notes for purchase and sale of shares, copy of share certificate, copy of the D-mat account and copy of capital gain calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Their claim has been accepted partly. Estimated disallowance has been made. 11. Learned First Appellate Authority has deleted the penalty imposed by the learned Assessing officer. Learned DR while impugning the order of Learned CIT(Appeals) submitted that Learned First Appellate Authority has deleted the penalty for denial of the assessee's claim in respect of long term capital gain, on the ground that assessees have basically disclosed all the material facts. They failed to substantiate their transactions before the Assessing officer. According to the Learned First Appellate Authority, the Assessing officer has not proved that assessees have not purchased the shares in the immediately preceding year etc. which are claimed to have been sold in the present year. The purchase amounts were duly shown in the balance sheet and they were not treated as bogus. The assessments have not been reopened in the earlier years. Thus, according to the Learned CIT(Appeals), if purchases are genuine then their sales cannot be doubted. Learned DR submitted that there was no scrutiny assessment in earlier assessment years. The investigation has been conducted in the present year and it has been demo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have duly considered the rival contentions and gone through the record carefully. Section 271(1)(c) of the Act has a direct bearing on the controversy and, therefore, it is salutary upon us to take note of the relevant provisions of section 271(1)(c) along with Explanation 1 which read as under:- "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1). If the Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)******** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i) and (Income-tax Officer,)******** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits:- Explanation 1.- Where in respect of any facts material to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income. Under first situation, the deeming fiction would come to playa if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee, for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 15. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts. Learned CIT(Appeals) on an analysis of all these material arrived at a conclusion that assessee has given an explanation which, they might have failed to substantiate but their explanation was not proved to be false. Similarly, with regard to the gifts the assessee has submitted all necessary documents i.e. disclosing the identity of the donor, disclosing the manner how gifts have been received. The addition was made on the ground that it is against the human probability. On due consideration of all these facts, we are of the opinion that addition qua long term capital gain was primarily made on the basis of the conduct of the brokers. But to our mind that conduct would not suggest that explanation given by the assessee during the assessment proceedings about their investment was false. Learned First Appellate Authority has considered all these aspects before deleting the penalty. As far as the penalty on additions qua agricultural income is concerned, we find that these additions have been made on estimate basis by disbelieving the agricultural income partly. These amounts do not qualify for visiting the assessee with the penalty because learned Assessing officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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