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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey]
Per Rajesh Kumar, AM:
This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 14.09.2023 for the AY 2012-13.
The only issue raised in various grounds of appeal is against the order of Ld. CIT(A) confirming the penalty order passed u/s 271(1)(c) of the Act by AO wherein the penalty of Rs. 1,21,855/- was imposed for concealing the income.
Assessment Year: 2012-13 Shubh Karan Baid 3. Facts in brief are that the assessee filed return of income on 31.08.2012 declaring total income of Rs. 2,13,640/-. Subsequently, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on the ground that the assessee has claimed long term capital gain on sale of shares of M/s Quest Financial Services Ltd. to the tune of Rs. 6,70,390/- as exempt u/s 10(38) of the Act. In the assessment proceedings, the assessee offered the said amount of capital gain to tax by filing a revised computation which has been extracted by the AO in para 4 of the assessment order and finally in para 5, the AO noted that based on the said declarations the total income was assessed as under:
Total Income (as per return) Rs. 2,40,630/- Add:- Declaration made by the assessee Rs. 6,70,390/- Assessed total income Rs. 9,11,020/- Thereafter the AO initiated penalty proceedings u/s 271(1)(c ) of the Act. A copy of the notice issued u/s 148 of the Act dated 18.12.2019 is placed at page 14 of PB which states that the penalty has been initiated for concealing the particular of the income and the penalty was imposed equal to 100% of tax sought to be evaded at Rs. 1,21,855/- vide order dated 02.02.2022.
The said order was challenged before the appellate authority. However the same was dismissed on the ground that the assessee has claimed bogus long term capital gain u/s 10(38) of the Act.
5. After hearing the rival contentions and perusing the material on record, we find that the assessee has disclosed all the facts of having earned long term capital gain from sale of shares of Quest Financial Services Pvt. Ltd. to the tune of Rs. 6,70,390/- in the return of income filed by the assessee and the same was claimed as exempt u/s 10(38) of the Act. The case of the assessee was reopened by issuing notice u/s 148 of the Act for the reasons that the assessment has escaped due to claim by the assessee u/s 10(38) qua long term capital gain of Rs. 6,70,390/-. In the assessment proceedings, the assessee offered the said income to tax by filing revised computation
Assessment Year: 2012-13 Shubh Karan Baid which has been extracted in para 4. Thereafter the AO simply brought the said capital gain to tax and initiated the penalty proceedings u/s 271(1)(c ) without recording any satisfaction framing the charge whether the initiation of penalty proceedings was for concealment of income or for filing inaccurate particulars of income though in the notice issued u/s 271(1)(c) dated 18.12.2019 the AO stated that “It appears that you have concealed the particular income”. Thus it clear from the above that the AO was himself not sure as to the charge of penalty. In our opinion, the said approach of the AO in making assessment without framing the charges and issuing notice without being sure as to levy of penalty on particular charge is not permissible under the Act. This is undisputed that the assessee has disclosed all the particulars in the return of income qua long term capital gain and nothing has been concealed by the assessee. In our opinion, in such case, no penalty is leviable. The case of the assessee finds support from the decision of Co-ordinate Bench in the case of Chetan Kumar Tekriwal (HUF) vs. ITO in for AY 2015-16 dated 30.11.2023 wherein the similar issue has been decided in favour of the assessee. In the present case also the AO has failed to demonstrate that the claim of the assessee was false during the assessment proceedings or during the penalty proceedings. The operative part of the decision is extracted below:
After hearing the rival contentions and perusing the material on record, we note that in this case the assessee has admitted during the survey conducted at the business premises by DDIT(Inv), Unit-1(1), Bhubaneswar that Rs. 52,51,973/- was received as long term capital gain from the sale of penny stock of CCL International Ltd. The assessee offered sum as income from other source and accordingly assessment was completed in the assessment proceedings. The AO noted that considering these facts Rs. 52,51,973/- was constituted as unexplained cash credit u/s 68 of the Act by ignoring the fact that the assessee has already offered the same for tax suo-motto as admitted during the course of survey. The AO has not discussed anything on merit as to how this constitute filing inaccurate particulars of income and simply imposed penalty for furnishing inaccurate particular of income. In our opinion, the assessment proceedings are distinct and different from the penalty proceedings. In this case, the AO has only issued show cause notice to the assessee and then proceeded to imposethe penalty by ignoring the fact that the assessee has made disclosure of income during survey and has also not contested the issue in appeal. Further we note that AO has passed an order in a very cryptic manner. In our opinion, the addition is only on the basis of admission of the assessee and the AO nowhere demonstrated that the claim of the assessee was either found to be false either during assessment proceedings or during penalty proceedings. The case of the assessee finds support from the decision of Co-ordinate Bench in the case of Robbs Traders & Finance Pvt. Ltd. vs. ITO in wherein it was held as under:
Assessment Year: 2012-13 Shubh Karan Baid 9. We have duly gone through the facts of the present case. A perusal of the assessment order would reveal that ld. Assessing Officer has nowhere demonstrated as to how the loss claimed by the assessee is bogus. He only issued a show-cause notice and the Assessee withdrew its claim just in order to avoid litigation with Department. But when the Department intended toimpose a penalty upon the assessee under section 271(1)(c), the assessee has contested the issue in the penalty proceeding. The ld. Assessing Officer instead of entertaining the arguments on merit summarily rejected it on the ground that all these issues must have been raised during the assessment proceedings and must have been rejected. He observed that this penalty proceeding cannot take the character of assessment and cannot sit in judgment. It is pertinent to observe that the addition is only on the admission of the assessee that it withdrew its claim. Nowhere, it has been demonstrated that the claim of the assessee was false or bogus. Explanation 1 to section 271(1)(c) provides that, if the assessee fails to offer an explanation or offers an explanation which is found by the ld. Assessing Officer to be false, but now in the present case, the assessee has an explanation and it has buttressed this explanation with the following documentary evidence, i.e. (a) Trading of shares was done through broker in a recognized stock exchange. (b) Payment and receipt is through banking channel. (c) Documentary evidence for transactions like contract note, demat statement, and bank statement are enclosed. (d) We offered the loss voluntarily to avoid litigation and requested the Assessing Officer to not initiate penalty proceedings u/s 271(1)(c). (e) We paid the tax due and challan copy is enclosed. (f) No appeal is filed. In addition, the assessee referred to various case laws. These documents have not been held as false either by the ld. Assessing Officer during the assessment proceeding or during penalty proceeding. Therefore, the assessee does not deserve to be visited with penalty.” In the present case, the assessee has fully disclosed the particulars of the capital gain and claimed the same as exempt u/s 10(38) of the Act and thus fully disclosed all the facts qua the gain on sale of shares. The case of the assessee is also supported by the decision of Hon’ble Apex Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd [2010] 189Taxman322 (SC) in which the Apex Court has held that where the assessee has fully disclosed the particulars in the return of income then it is not liable to penalty proceedings on the ground that the disclosure made by the assessee are not as per the provision of the Act or not acceptable to the revenue. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the penalty.”
5. In the above said decision, the Co-ordinate Bench has followed the decision of Hon’ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. [2010] 189 Taxman 322 (SC) wherein the Hon’ble Apex Court has held that the assessee has fully disclosed the particulars in the return of income, then the assessee is not liable for penalty proceedings on the ground that disclosures made by the assessee are not made as per the provisions of the Act or are not acceptable to the revenue. Therefore, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the penalty.
Assessment Year: 2012-13 Shubh Karan Baid 6. In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 24th June, 2024