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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI AMARJIT SINGH, AM
O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 21.02.2023 for AY. 2014-15 confirming the action of the AO levying penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter “the Act”) of Rs.11,088/-.
Brief facts regarding penalty levied is that the assesse had filed the return of income of Rs.11,64,790/-. The assessment was completed u/s 143(3) of the Act at an income of Rs.12,00,671/- after making an addition u/s 68 of the Act to the tune of Rs.35,884/-. The addition of Rs.35,884/- was because during the course of assessment proceedings, it was observed by AO that assessee had invested in alleged penny stock scrip of M/s Sun Asian; and has derived income by way of sale of the such scrip of M/s Sun Asian of 2800 shares for a total consideration of Rs.13,60,884/-.On being asked, the assessee 2 A.Y. 2014-15 Sanchit Vinod Jain submitted that even though he earned Long Term Capital Gain (LTCG) of Rs.12,90,844/- from sale of scrips in question, he has offered more amount of Rs.13,25,000/- for taxation as per the amnesty scheme announced by Government [Income Disclosure Scheme (IDS)] which amount according to assessee was the capital gains claimed as exempt u/s 10(38) by her. On verification by AO, it was found that assessee has offered Rs.13,25,000/- under IDS, but not the full sale consideration of Rs.13,60,884/-. Thus the AO treated the entire sale proceeds pertaining to the penny stock scrip as bogus by holding that the scrips traded by the assessee and exit entry providers are directly linked to assessee [since they purchased the shares from assessee on the stock exchange], which establishes the direct relation with the transaction. Thus, according to AO, he has sufficient cogent tangible proof to show that long term capital gain booked by the assessee in her books were pre-arranged method to evade taxes and launder money. Hence, the difference, amount of Rs.35,884/- (Rs.13,60,884/- minus Rs.13,25,000/-) was added u/s 68 of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A) who confirmed quantum addition made by AO of Rs.35,884/-. Thereafter, the AO issued notice u/s 271(1)(c) of the Act to the assessee and pursuant thereto, the assessee filed her reply which was not acceptable for the AO who was pleased to levy penalty of Rs.11,088/- for concealment of particulars of income. Aggrieved, the assessee preferred penalty appeal before the Ld. CIT(A) who was pleased to confirm the same. Aggrieved, the assessee is before us.
3 A.Y. 2014-15 Sanchit Vinod Jain 3. We have heard both the parties and perused the records. We note that the assessee has already offered the Long Term Capital Gain (LTCG) on the alleged penny stock (M/s. Sun Asian) of Rs.12,90,884/- on sale of share of M/s. Sun Asian (wherein assessee offered more amount of Rs.13,25,000/-) under the Income Disclosure Scheme (IDS). The AO taking note of the aforesaid fact has added the difference amount of Rs.35,884/- which was the purchase consideration of the M/s. Sun Asian shares which was not offered in the IDS. And since the total sale proceeds was to the tune of Rs.13,60,884/-, and assessee only offered Rs.13,25,000/- under IDS, the AO in the quantum assessment added Rs.35,884/- u/s 68 of the Act which has been confirmed by Ld. CIT(A); and it is noted that against the action of Ld. CIT(A), the assessee has not preferred an appeal before this Tribunal. Be that as it may, the fact that the assessee has made claim of LTCG in the return of income filed by her wherein she has made the claim u/s 10(38) of the Act in respect of earning of LTCG regarding the share transaction of M/s. Sun Asian is not disputed. It is also un-disputed that assessee has claimed LTCG of Rs.12,90,884/- which has been settled in the IDS scheme by offering Rs.13,25,000/-. However, the AO has added the purchase consideration of this scrip of Rs.35,884/- in the quantum assessment, which has already been shown by the assessee in the return of income filed by assessee, so the question of concealment of material particulars cannot be charged/faulted against the assessee; and so the charge/fault levied against assessee fails; and resultant penalty 4 A.Y. 2014-15 Sanchit Vinod Jain fastened on the assessee of Rs.35,884/- is unsustainable. Therefore, we are inclined to delete the penalty.