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TMI Blog2016 (3) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... had sold 7,48,000 equity shares of M/s. Vishal Retail Ltd in offmarket and made a profit of Rs. 8,30,00,000/-. The assessee was under the bonafide belief that since the shares of listed company i.e. M/s. Vishal Retail Ltd were traded on off market, no capital gains is to be returned thereon.U/s. 10(38) of the Act, any income from the transfer of a long term capital asset (LTC Asset) being an equity share in a company is exempt from taxation. The condition for exemption is that STT in respect of the transaction ought to have been charged. Since the shares were sold by the assessee offmarket i.e. not through Stock Exchange no STT was paid. During the course of assessment proceedings, the assessee filed a revised computation of his total income by including long term capital gains on sale of said shares of M/s. Vishal Retail Ltd on off market as the STT(Securities Transaction Tax) was not suffered on said transaction. The ld.AO felt that this offer of long term capital gain was not voluntarily made by the assessee and it was made only when the assessee was confronted by the ld.AO during the course of assessment proceedings. Hence in the opinion of the ld.AO, it was detected by the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible for exemption u/s. 10(38) of the Act. The ld.AR of the assessee has also filed the copy of order-sheets that were recorded in the course of assessment proceedings. He drew our attention to the proceedings dated 29-10-2010, wherein the ld.AR was merely asked for submission of details of purchase and sale of shares and mutual funds among others. In response to the same, the assessee filed a revised computation on 8-11-2010, wherein long-term capital gain was offered to tax on sale of shares of M/s. Vishal Retail Ltd and consequently, exemption claimed thereon was withdrawn by the assessee. This is very evident from the fact that offer of disclosure of long term capital gain was made voluntarily by the assessee before detection by the department. More so, the belief of the assessee is bonafide in view of listed company's shares traded by the assessee which cannot be doubted. In support of his arguments, the ld.AR of the assessee has placed his reliance on various judgments. 5. We have heard the rival submissions and perused the material available on record including the paper book and the case laws as relied upon by both the parties on the impugned issue before us. We find fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department in the return of income. We find that following case laws support the facts of the assessee:- 5.1.1. Hon'ble High Court of Punjab and Haryana in the case of CIT vs. Shahabad Coop. Sugar Mills Ltd (2010) 322 ITR 73 (P&H), wherein it has been held that: "From the order of the Tribunal, we do not find any such point having been raised by the Revenue. In any case, reasoning which has been applied for setting aside penalty in respect of wrong claim under section 80P of the Act will also apply to wrong claim under the head of depreciation. Making of wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty under section 271( 1) ( c) of the Act." 5.1.2. Hon'ble High Court of Punjab and Haryana in the case of CIT vs. Sidhartha Enterprises (2010) 322 ITR 80 (P&H), wherein it has been held that: "We are unable to accept the submission. The judgment of the Hon'ble Supreme Court in Dharmendra Textiles Processors'case (supra) cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. What has been laid down is that qualitative difference between criminal liability u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the parties, we are of the view that the facts of the case are rather peculiar and somewhat unique. The assessee is undoubtedly a reputed firm and has great expertise available with it. Notwithstanding this, it is possible that even the assessee could make a "silly" mistake and, indeed this has been acknowledged both by the Tribunal as well as by the High Court. 18. The fact that the Tax Audit Report was filed along with the return and that it unequivocally stated that the provision for payment was not allowable under section 40A(7) of the Act indicates that the assessee made a computation error in its return of income. Apart from the fact that the assessee did not notice the error, it was not even noticed even by the Assessing Officer who framed the assessment order. In that sense, even the Assessing Officer seems to have made a mistake in overlooking the contents of the Tax Audit Report. 19. The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. It appears to us that all that has happened in the present case is that through a bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling the return. When the Assessing Officer starts scrutiny of the return and initiate assessment proceedings there is nothing concealed and the inaccuracy, if any, disappeared. Therefore the assessee cannot be held guilty of concealment. 20. A perusal of the provision of Section 271(1)(c ) read with Explanation 1 clearly show that it is in the course of any proceedings under the Act, assessment proceedings in this case, that the Assessing Officer is to be satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income . It is thus to be judged at this stage and if at this stage he has declared the correct income and / or furnished accurate particulars of his income then there is no scope, in our opinion, to arrive at the satisfaction by the Assessing Officer because at that stage there is no such concealment. It disappeared by an action of the Assessing Officer. In this case the assessee has no doubt did not show the amounts received as alleged gifts as his income,but no details of loans are given in the return nor any other particulars thereof given by the assessee at that stage, not to speak of inaccurate one. When th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer had information to call for specific information. The query "Had you taken / given any loan / gift during the financial year under consideration ?" itself suggests that the revenue was not sure enough whether any gift was there. Mere asking of a question or simply raising of an enquiry without anything further does not tantamount to detection of concealment. There was neither any detection, nor any information in the possession of the revenue, nor the manner of its communication to the assessee which might lead to a detection of concealment. 24. There was no specific provocation or an apprehension of detection prevailing at the time when the offer was made and in the absence of any such imminent fear from the side of the revenue, if the assessee came forward and paid the tax thereon by adding the same in the returned income, it has to be taken as a voluntary offer to tax. On the face of the evidence in the shape of confirmation letters, bank accounts, passport etc., in the hands of the assessee, it might be valid gift that would have convinced a reasonably minded person, specially a person exercising a judicial function. The accepted position of law is that merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order sheets by the ld.AO. Thus, the assessee offered the same voluntarily before detection by the department. We also find that the version of the ld.AO in his penalty order that assessee was confronted with the specific issue on taxability of long term capital gain on sale of shares of M/s. Vishal Retail Ltd is factually incorrect. It is relevant to reproduce herein below the Explanation 1 to section 271(1) of the Act. Explanation 1 to section 271(1) ( c): "Where in respect of any facts material to the computation of the total income of any person under this Act- (A) such person fails to offer an explanation or offers an explanation which is found by the assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause ( c) of this sub-section, be deemed to represent the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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