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TMI Blog2013 (5) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia, that the surplus on sale of shares allotted to the assessee under ESOP by Wipro Spectromind Services Ltd., of ₹ 90,60,705/-, was taxable as short term capital gain. This amount was added to the assessee s income. The Assessing Officer subsequently, vide order dated 01.03.2011, passed u/s 143 (3) read with Section 263 of the Act, to give effect to the said order of the CIT, inter alia, added the amount of ₹ 90,60,705/- to the income of the assessee. Later, vide order dated 29.09.2011 passed u/s 271 (1)(c) of the Act, the Assessing Officer levied a penalty of ₹ 33,04,510/-on the assessee regarding this issue. By virtue of the impugned order, the Ld. CIT (A) deleted the penalty. Aggrieved, the department is in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd force in the arguments of the Ld Counsel. The perusal of section 271(1)(c) shows that it begins with the following words:- If the AO or the CIT(A) or the Commissioner in the course of any proceedings is satisfied that any person . It is worth noting here that earlier the word 'CIT(A)' was not there and it was inserted in this section w.e.f. 10.07.1978. Similarly the word 'Commissioner' was also not there earlier which has been inserted by Finance Act 2002 w.e.f. 01.06.2002. It shows that the legislature is conscious of this fact and now w.e.f. 01.06.2002 the power has been given to the Commissioner to record satisfaction and to impose penalty in case of addition or disallowance made by him. It is settled law tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... null and void and the amount of penalty levied by him deserves to be deleted on this ground itself. The Ld Counsel has vehemently argued that even on merits, the penalty is not leviable. With a view to avoid multiplicity of litigation, I consider it as my bounden duty to address the issue of levy on penalty of merits as well. On merits also I find that the argument of the appellant carries force. With regard to the addition on account of sale of ESOP shares the argument in brief of the appellant is that per the bonafide and genuine belief she did not include this amount in her taxable income and it has been argued that merely because CIT has different opinion and according to CIT, this amount was taxable, that alone would not make this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him with respect to sale of ESOP shares. Subsequently CIT-XVI, New Delhi passed order u/s 263, in which he took a view contrary to the view of the A.O. and held the amount to be taxable. Thus, there was a difference of opinion between two authorities i.e. A.O. and CITLXVI, New Delhi. Under such a position of law and facts of the case, it can be said that belief of the assessee that the impugned amount is not taxable is genuine and bonafide. It is settled law that if the return has been filed by the assessee on the basis of bonafide and genuine belief and if any disallowance has been made by A.O. as per his understanding of law it cannot be said that assessee has concealed any particulars of income or has furnished inaccurate particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of law and hierarchy of administration will mean nothing. Satisfaction of one authority cannot be substituted by the satisfaction of the other authority. It is trite that when a statute requires, a thing to be done in a certain manner, it shall be done in that manner alone and the Court would not expect its being done in some other manner. It was so held in the following decisions: (i) CIT Vs. Naveen Khanna (dated 18.11.2009 in ITA No.21/2009 (DHC). (ii) State of Bihar Vs. J.A.C. Saldanna Ors. AIR (1980) SC 326. (iii) State of Gujarat Vs. Shantilal Mangaldas, AIR (1969) SCN 634. 8. Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n her return of income, as taxable income. This non-inclusion was based on the assessee s understanding of the law. In this regard, the assessee stood guided by CIT vs. B.C. Srinivasa Setty , 128 ITR 294 (SC), according to which decision, capital gain of an asset sold can be computed only when cost of acquisition of an asset sold is ascertainable. In case cost cannot be ascertained, then, capital gain cannot be computed and thus the amount received cannot be made taxable under the head of capital gains. In the case of ESOP shares, the date of exercise of option and date of sale is same and there is no difference between price prevalent at the time of option and sale of share. Thus, either the cost was not ascertainable or it was same as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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