M/S. SPORTS CLUB OF GUJARAT LTD.,AHMEDABAD vs. THE DCIT, CIRCLE - 4(1)(2), AHMEDABAD

The solitary ground of appeal of the assessee is against the decision of ld. CIT(A) in confirming penalty of Rs. 2,52,728/- levied u/s. 271(1)(c) of the act.

The fact in brief is that assessee has filed return of income declaring total income at Rs. 56,70,260/-. The assessment u/s. 143(3) was made on 3rd December, 2012. Regarding issue contested in the appeal during the course of assessment, the assessing officer noticed that assessee had carried forward the long term capital loss of Rs. 13,90,766/- although allowable long term loss to be carried forward was only Rs. 6,37,568/- and further the short term capital gain was of Rs. 1,40,812/- instead of Rs. 51,585/- which was adjusted against the brought forward short term capital loss of Rs. 3,65,560/- and the remaining loss was carried forward to next year. The assessing officer has stated that assessee revised its computation and submitted vide dated 16th October, 2012 and after incorporating the said fact of short term/long term profit in the statement of income the short term capital accumulated stands at Rs. 1,40,812/- instead Rs,. 51,585/- and long term capital loss stands at Rs. 6,37,568/- instead Rs. 13,90,766/-. The assessee has also issued penalty proceedings u/s. 271(1)(c) of the act for furnishing inaccurate particulars of income.

During the course of penalty proceedings, the assessee has contended that all the details and particulars were filed by the assessee suo moto in the course of assessment proceedings and there was no concealment of income by the assessee. The assessing officer was not satisfied with the submission of the assessee and stated that the assessee had furnished inaccurate particulars of income and imposed penalty of Rs. 2,52,728/- u/s. 271(1)(c) of the act.

The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal holding that assessee has failed to compute the income correctly and thereby avoided notional income for which the assessing officer has levied penalty u/s. 271(1)(c) .

We have hard rival contentions and perused the material on record. During the course of assessment, the assessing officer stated that assessee has taken into account the effect of shortterm/long term profit as per books in the statement of income and after incorporating the said effect of short term/long term profit in the statement of income short term capital gain stands at Rs. 1,40,812/- instead of Rs.51,585/- and long term capital loss stands at Rs. 6,37,568/- instead of Rs. 13,90,766/- however there was no effect on total income. There was net long term capital loss of Rs. 6,37,568/- after adjusting of short term capital gain of Rs. 1,40,812/- which was to be carried forward. The ld. CIT(A) has sustained the penalty stating that long term capital loss having notional tax effect. The ld. CIT(A) has sustained penalty stating that revised computation was filed by the assessee during the course of assessment proceedings after same was pointed out by the assessing officer. On the other side, the assessee has claimed that assessing officer was himself of the opinion that assessee has furnished revised working suo moto and there was only a notional tax effect of such transaction. There was no concealment of income for filing inaccurate particulars of income. In this regard, we have perused the assessment order and noticed that assessing officer has discussed the issue short term/long term gain and loss at para 5 of the assessment order and nowhere in the assessment order, assessing officer has stated that the impugned discrepancy Page No 4 Sports Club of Gujarat Ltd. vs. Dy. CIT in reporting of transaction was pointed out to the assessee. The assessing officer has only mentioned that assessee company has furnished the revised computation in its submission dated 16-12-2012. Apart from it, we could not find any show cause notice issued to the assessee pointing out of not disclosing the correct effect of short term/long term profit in the statement of income. No material is brought to our notice which demonstrates that above discrepancy was pointed out to the assessee by the assessing officer. Looking to the above facts and circumstances, we are not inclined with the decision of ld. CIT(A), therefore, the impugned penalty is deleted and the appeal of the assessee is allowed.