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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI C.N. PRASAD & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the Revenue. The relevant assessment year is 2008-09. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-33, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’).
The grounds of appeal
read as under:
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs.4,87,90,000/- levied by the Assessing Officer u/s 271(1)(c) of the I.T. Act, 1961 for furnishing of inaccurate particulars of income.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete penalty where the assessee has consciously furnished inaccurate particulars of income by showing share trading income under the head “Income from Capital Gain” instead of “Business Income”.
3. The reliance placed by the Ld. CIT(A) on the case of Reliance Petroproducts Pvt. Ltd., 322, ITR 158 (SC) and other cases in misplaced.
4. The appellant prays that the penalty order of the Ld. CIT(A) on the above ground be set aside and that of the AO be restored.
3. Briefly stated, the facts of the case are that the assessee filed his return of income for the assessment year (AY) 2008-09 on 25.02.2009 declaring total income of Rs.2,85,46,065/-. During the year under consideration, the assessee had earned income from sale of shares and offered it for taxation under head ‘capital gains’. The Assessing Officer (AO) vide assessment order dated 24.12.2010 treated the gains arising from sale of shares as business income. The reason given by the AO is that the assessee’s transactions in shares is to be treated as ‘business income’ consistent with the method adopted by the assessee in earlier year. Thereafter, the AO vide order dated 31.03.2013 levied a penalty of Rs.4,87,87,084/- u/s 271(1)(c) on addition of income of Rs.13,07,44,505/-.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). In the appellate order dated 17.04.2015, the Ld. CIT(A) held that : “From the facts stated in the preceding paras, it is clear that the appellant had made a claim of capital gains and showed the same in the return of income filed under a bona fide belief that this is the correct computation of capital gains and the Assessing Officer assessed the same income as business income. Such a view of the matter taken by the Assessing Officer is just like having a different opinion on the same set of facts and it does not amount to filing of inaccurate particulars of income or concealment of income. Merely because the appellant had made a claim in the return of income filed under a bona fide belief of same being the correct claim and if such claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under section 271(1)(c). The disallowances of a claim would not make the appellant liable for penalty u/s 271(1)(c) as held by the Apex Court in the case of CIT v. Reliance Petroproducts (P) Ltd.”
5. Before us, the Ld. DR submits that though the assessee had shown its transaction in shares in earlier year as business income, it deliberately filed the return of income for the impugned assessment year showing the same income as short term capital gain and long term capital gain. So, it is argued by him that the assessee deliberately furnished inaccurate particulars of such income and therefore, penalty u/s 271(1)(c) has been rightly levied by the AO. 6. On the other hand, the Ld. counsel of the assessee submits that during the year under consideration the assessee earned capital gains from sale of shares amounting to Rs.18,85,71,756/-. Out of this, short term capital gains of Rs.1,91,83,705/- was offered to tax and long term