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TMI Blog2015 (9) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... . FDR Interest Rs. 1562732.48 2. Commission Received Rs. 39026.73 3. Dividend Received Rs. 983902.70 Total Rs. 2585661.91 2. Against this income, total expenditure of Rs.. 15,16,558.15 was claimed and net profit of Rs. 10,69,103.76 was declared. The expenditure claimed included an amount of Rs, 4,08,119.85 as " loss on Share Trading". The AO for the various reasons given in the order, held that the loss incurred on purchase and sale of shares, is assessable under the head "short-term capital loss". The claim of the assessee of business expense was disallowed. On appeal the first appellate authority confirmed the order of the AO. 3. The second issue is whether the FDR interest and dividend received by the assessee, be assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no concealment or furnishing of inaccurate particulars of income. She submitted that there was a difference of opinion between the assessee and the AO, as to the head under which the loss on purchase and sale of shares has to be assessed and as to under which head of income, interest on FDR and dividend have to be assessed. She vehemently contended that the assessee has given correct and complete information with the return of income and merely because the AO shifted the head of income under which assessment has to be made, penalty u/s 271(1)(c) cannot be levied. On the issue of assessability of loss on purchase and sale of shares under the head "business", she relied the submissions made before the lower authorities. Similarly on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... colourable device and assessee has credited income from interest and dividend only, to claim set off of loss on sale of shares and huge expenses which were not otherwise allowable as a deduction from "income from other sources". He submitted that the penalty should be confirmed. 6. Reliable contentions have been heard. 7. On a careful consideration of the facts and circumstances of the case and perusal of the papers on record and the orders of the authorities below, we hold as follows. 8. The assessee in this case has disclosed fully and truly all material facts alongwith the return of income. The issue whether income from purchase and sale of shares is assessable under the head "income from business" or under the head "income from capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made by the AO so as to buy peace of mind. HELD by the High Court: "Merely because the assessee agreed for addition does not lead to the inference that the said addition is on account of concealment if the assessee has offered an explanation which is not found to be false. The mere fact that the assessee agreed to pay tax and did not challenge the assessment order does not mean that his conduct is mala fide. The following principles apply: (a) Penalty under Section 271(1)(c) is a civil liability. (b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. (c) Wilful concealment is not an essential ingredient for attracting civil liability. (d) Existence of conditions stipulated in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility came to be admitted and if not it would have escaped from tax net and as opined by the Assessing Officer in the assessment order. (l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not 'bonafide, an order imposing penalty could be passed. (m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the same and material to the computation of his total income have been disclosed by him, no penalty could be imposed. (n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. (o) If the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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