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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJPAL YADAV, HON’BLE & DR. MANISH BORAD, HON’BLE
O R D E R
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The present appeal is directed at the instance of the assessee against the order of the National Faceless Appeal Centre, Delhi, [hereinafter the “ld. CIT(A)”] dt. 07/03/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2013-14. 2. The assessee has raised the following grounds of appeal:- “1. That the order passed u/s 250 is bad in law as well as on facts of the case.
2. That the Hon’ble CIT(A), NFAC erred in law as well as on facts of the case by confirming the imposition of penalty u/s 271(1)(c) of the I.T. Act, 1961 by the Ld. AO to the tune of Rs.1,50,000/-
3. That the appellant craves to leave, add, amend or adduce any of the grounds of appeal during the course of appellate proceedings.”
Facts in brief are that the assessee is an individual and she filed her original return of income for Assessment Year 2013-14 on Assessment Year: 2013-14 Sarika Dugar 2 23/03/2014 declaring taxable income of Rs.4,15,890/-. In this return, the assessee claimed exemption u/s 10(38) of the Act towards long term capital gain from sale of equity shares of Quest Financial Services Ltd.. Thereafter, based on the information, case of the assessee was reopened and notice u/s 148 of the Act was issued and during the course of assessment proceedings, the assessee admitted to offer long term capital gain of Rs.6,75,967/- as income from other sources accepting it to be bogus long term capital gain. Due taxes were paid and the assessee did not file any appeal against the assessment order framed on 03/12/2019. The ld. Assessing Officer on observing that the assessee had accepted the bogus long term capital gain initiated penalty proceedings u/s 271(1)(c) of the Act and after carrying out the penalty proceedings and considering the submissions of the assessee, finally levied penalty of Rs.1,50,000/- u/s 271(1)(c) of the Act.
The present appeal is regarding the issue of levy of penalty u/s 271(1)(c) of the Act. The assessee carried the matter in appeal before the ld. CIT(A) but failed to succeed. 5. Aggrieved the assessee is now in appeal before this Tribunal. 6. The ld. Counsel for the assessee firstly raised a legal ground stating that the penalty order u/s 271(1)(c) of the Act is barred by limitation and, therefore, deserves to be quashed. As far as the merits are concerned, it was submitted that the assessee had filed complete details in the original return itself and for peace of mind it offered to tax the long term capital gain in the reopening proceedings.
Assessment Year: 2013-14 Sarika Dugar 3 6.1. On the other hand, the ld. D/R submitted that the order u/s 271(1)(c) of the Act is not barred by limitation as on account of Covid- 19 Pandemic, the limitation period was extended from time to time by the CBDT. Copies of such notifications are placed on record. So far as the merits of the case are concerned, it was stated that the assessee would not have offered to tax if the case of the assessee would not have been reopened and, therefore, penalty should be confirmed.
We have heard rival contentions and perused the record placed before us. Penalty u/s 271(1)(c) of the Act at Rs.1,50,000/- is in challenge before us. The ld. Counsel for the assessee, firstly has taken a legal ground contending that the penalty order u/s 271(1)(c) of the Act is barred by limitation. He took us through the provisions of Section 275 of the Act which deals with the bar on imposing of penalties and referring to Section 275(1)(c) of the Act it was stated that the penalty order was required to be framed either after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. The assessment order u/s 143(3)/147 of the Act was framed on 03/12/2019 and in the very same assessment order, penalty proceedings were initiated but finally the order was framed on 17/01/2022. Though, the period referred in Section 275(1)(c) of the Act expired before the framing of penalty order on 17/01/2022, we, however considering the fact that from March, 2021 onwards the country passed through Covid-19 Pandemic and Assessment Year: 2013-14 Sarika Dugar 4 various restrictions were made and period of limitation has been extended by the Hon’ble Supreme Court in the case of suo moto Writ Petition (C) No. 3 of 2020 dated 10.01.2022 by which the period from 15.03.2020 to 28.02.2022 has been directed to be excluded for the purpose of limitation and in addition a further period of 90 days has also been granted for providing the limitation from 01.03.2022. The ld. D/R also placed copy of Notification No. 74/2021, dt. 25/06/2021, stating that the limitation period has been extended.
Under these given facts, we find that the penalty order u/s 271B of the Act is not barred by limitation and thus, is a legally sustainable order. We, thus fail to find any merit in the legal ground raised
by the assessee and the same is dismissed.
9. As far as the merits are concerned, the assessee in the original return filed on 23/03/2014, has undisputedly disclosed the transactions of earning long term capital gain from sale of equity share from Quest Financial Services Ltd.. The details of the said transactions forms part of the original return of income and, therefore, so far as the particulars of income are concerned, they have been accurately furnished and, therefore, cannot be said to be inaccurate filing of particulars of income. However, when the case was reopened on the basis of certain information, the assessee has suo-moto offered it to tax during the course of reassessment proceedings itself and had paid the taxes and not challenged the addition before the appellate authorities. Now so far as the alleged transactions of long term capital gains in concerned, the assessee has carried out through banking channel and shares were transferred through DMAT account and security Assessment Year: 2013-14 Sarika Dugar 5 transaction tax was duly paid and, therefore, so far as the conditions provided u/s 10(38) of the Act was concerned, the same were duly complied based on which the assessee furnished the ITR and claimed the said exemption. Now, post filing of income tax return, there were certain information available with the Income tax department through its investigation wing along with information received through SEBI about few companies which were indulged in providing accommodation entries and were said to be penny stock companies. Such type of transactions have been carried out by various assessees across the country and the matters have been travelling ot the higher appellate authorities and some matters have even reached to the levels of Hon’ble High Courts of various States and in some cases the assessees have got relief also. So it is an admitted fact that this issue of claiming long term capital gain from the alleged penny stock companies have been accepted to be a question of law before the Hon’ble High Courts and both the views have been taken. The assessee though claiming exemption in the income tax return but thereafter during the course of reassessment proceedings accepted the said sum as income, even though nothing specific has been found against the assessee.
We, therefore, are of the considered view that under these given facts and circumstances are inclined to hold that the assessee should not be visited with the penalty u/s 271(1)(c) of the Act and accordingly, delete the impugned penalty and allow the grounds raised on merits of the case.