9911796707
TMI Blog2011 (12) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... these transactions, we are of the view that penalty under section 271(1)(C) is not warranted. Various case law relied upon by the assessee also supports the contentions made. However, without getting into the legal parameters, on facts of the case we are of the view that there occurred a bonafide mistake in not examining the provisions of section 94(7) on these transactions. Moreover, though there are disallowances in the course of the assessment proceedings, mere disallowance does not attract penalty proceedings under section 271(1)(C). X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to the provisions of Section 94(7) introduced w.e.f. 1.4.2002 applicable to the AY 2002-03 to submit that both the assessee and its professional advisors have missed the aspects of application of provisions of section 94(7) being the first year of operation. It was also submitted that the assessee took professional help in finalizing the return and placed on record additional evidence in the form of correspondence with CA through email with the petitioner's authorized signatory. It was further submitted that many of the aspects by which new provisions were introduced by the Finance Act 2001, were considered but application of section 94(7) was missed. He submitted that the Hon'ble ITT in the case of Income Tax Officer vs. Chirag Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative however submitted that there is no dispute with reference to the fact that the assessee has purchased the shares immediately before the declaration of dividend and sold them immediately later on so as to claim loss in the transactions and this loss was claimed and would have gone unnoticed but for the verification by the Assessing Officer. In view of this, he supported the orders of the Assessing Officer and CIT (A). 4. We have examined the issue and considered the rival contentions. As seen from the record, the assessee is in the business of purchase of shares and has undertaken large number of transactions and earned substantial profits. In the course of assessee's purchase and sale, the assessee purchased shares of VSNL on 30thJul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss loss allowable otherwise in the course of its business activity of purchase and sale of transactions. Even the professional Auditors/Advisors who examined large number of transactions before filing the returns could not advise the assessee on the application of this particular provision introduced from this assessment year. Even the Assessing Officer at the time of assessment was considered only the loss on VSNL shares alone of ₹ 13,21,084/- as attracted by section 94(7) and disallowed loss. As assessee also undertook transactions in Infosys shares, in which there was gain and also loss on 5 transactions, the CIT (A) allowed setoff and restricted to net amount of ₹ 12,45,342/-. In our view, this is a bonafide mistake happened ..... X X X X Extracts X X X X X X X X Extracts X X X X
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