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TMI Blog2013 (6) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty by the Assessing Officer under Section 271(1)(c) of the Act. 2. The assessee filed a return under the Act for the assessment year 2008-09 on 30.09.2008 declaring an income of Rs. 78,83,303/-. The assessee did not include capital gains of Rs. 86,98,461/- that had resulted on account of the assessee exercising of stock options and the sale of the shares vested with the assessee pursuant the exercise of the Employees Stock Option (ESOP). The assessee did not include the said amount as gains were claimed to be long term capital gains. 3. The assessee was a senior executive with Citi Bank N.A. and had been granted the employee stock options by the employer on various dates from January 1998 to January 2004 during the course her of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see exercised her ESOP. The date of grant of ESOP was not considered by the Assessing Officer as the date of acquisition of the capital asset sold by the assessee. The assessee contended that although the assessment raised were contentious she decided not to contest the assessment order in order to avoid litigation and to buy peace. The assessee also wrote a letter dated 06.12.2010 accepting the view of the department and surrendering her right to contest the issue on the condition that no penalty under Section 271(1)(c) of the Act would be imposed on her. 5. The Assessing Officer thereafter commenced penalty proceedings and passed an order dated 29.06.2011 imposing a penalty of Rs. 29,56,610/- which was calculated on 100% of the increment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal before the Income Tax Appellate Tribunal. The Tribunal relying on the decision of the Supreme Court in the case of Commissioner of Income Tax v. Reliance Petro Product Pvt. Ltd.: [2010] 322 ITR 158 upheld the decision of CIT (Appeals) that merely making a wrong claim could not be a ground for imposing a penalty under Section 271(1)(c) of the Act. 9. We are in complete agreement with the decision of the CIT (Appeals) and the Income Tax Appellate Tribunal that this is not a case which would attract penalty under Section 271(1)(c) of the Act. The question whether gains arising out of exercise of cashless options was long term capital gains or short term capital gains could have been a contentious issue at the material time. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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