JAMNABEN PARSHOTTAMDAS PATEL,BANASKANTHA vs. THE ITO, WARD(1), PALANPUR

The grounds of appeal are as under:- “1. The Commissioner of Income Tax (Appeals) erred in law and in facts by confirming penalty under section 271(1)(c), despite full disclosure of income in the return and during assessment proceedings. There was no concealment or furnishing of inaccurate particulars; hence, the penalty of �64,071/- is untenable and deserves to be deleted. 2. Without prejudice to the above, in any case, penalty u/s. 271(1)(c) cannot be levied when the full particulars of income are

The assessee filed return of income of Rs. 77,920/- for assessment year 2011-12 and the assessment was completed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 on 22-12- 2018 for assessment year 2011-12 at assessed income of Rs. 5,31,140/- after making an addition of Rs. 4,53,220/- u/s. 68 of the Income Tax Act being the profit from the sale of shares of DPL and treated the same as business income and not long term capital gain as claimed by the assessee. In the meanwhile, the Assessing Officer also initiated penalty proceedings u/s. 274 r.w.s. 271(1)(c) of the Act for concealment of particulars of income on 22-12-2018. After taking cognizance of the assessee’s submissions, the Assessing Officer imposed penalty at R. 64,071/- u/s. 271(1)(c).

Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee

The ld. A.R. submitted that though the assessee has lost in quantum appeal and the same is finalized yet the fact remains that the assessee has claimed the same amount on sale of shares and profit thereof as long term capital gain and not as the assessee is only dealing with the said scrips and not more than that. The ld. A.R. further submitted that the notice for penalty u/s. 271(1)(c) has initiated the penalty as per concealment of particulars of income but in the present case the assessee has

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

Heard both the parties and perused all the material available on record. The fact remains that the assessee has taken this income as long term capital gain exemption while filing the income tax return for assessment year 2011-12 and thus the element of concealment does not appear in the present matter. Thought the quantum is confirmed while for invoking section 271(1)(c) the element of filing inaccurate particulars of income and concealment of particulars of income, these two conditions either has to be followed and substantiated by the Assessing Officer while imposing penalty. But in the present case, both the limbs/conditions for invoking provisions of section 271(1)(c) does not appear. Thus, the penalty itself is not justifiable and the same is deleted.

In the result, the appeal of the assessee is allowed.

DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,