DR. S.N. GANGULY,KOLKATA vs. ACIT, CIRCLE-21, KOLKATA, KOLKATA

This appeal of the assessee arises out of the order of the Learned CIT(A)- XXIV, Kolkata in Appeal No.1607/CIT(A)-XXIV/Cir.21/13-14/Kol dated 07.08.2014 passed against the order of penalty levied by the Learned AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).

The only issue to be decided in this appeal is as to whether, the learned AO is justified in levying penalty u/s 271(1) (c) of the Act in the sum of Rs.7819/- in the facts and circumstances of the case.

The brief facts of this issue are that the assessee is an individual and filed his return of income for A.Y.2006-07 on 31.07.2006 declaring his total income of Rs.6,25,590/-. In the said return he computed short term capital gain of Rs.3,94,150/- after setting off short term capital loss of Rs.1,16,249/-. The ld. AO observed that the short term capital loss had been incurred by the assessee out of sale of Franklin India OPP fund which was purchased by the assessee on 02.09.2005 for Rs.5,00,000/- and redeemed on 19.10.2005 for Rs. 3,83,751/-. In the intervening period, the assessee derived dividend income of Rs.77,399/- from the said fund. The ld.AO applied the provision

The assessee disclosed interest from saving bank account, interest free deposits, NSC accrued interest and LIC pension totaling to Rs.98,755/- in the return of income. The ld. AO observed that the assessee had actually derived savings bank interest of Rs.87,548/- as against which assessee had disclosed only Rs.36,373/- in his return of income and brought the difference of Rs.51,175/- to tax. These additions were admittedly not agitated by the assessee in appellate proceedings. The ld. AO passed an order levying penalty u/s 271(1)(c) of the Act in respect of the aforesaid additions and levied penalty of Rs.7819/- as below :- “Order u/s 271(1)(c) of the I.T.Act, 1961 During the A.Y. 2006-07, the assessee understated short term capital gain of Rs.85889/-. He also did not disclose interest income of rs.51175/-. Penalty proceedings u/s 271(1)© were initiated. Penalty @ 100% on the amount of tax sought to be evaded is now imposed. The same is worked out as under :- Total including concealed income 52748/- Tax excluding concealed income 44929/- Evaded Tax : 7819/-“

On first appeal the penalty was confirmed by the ld. CIT(A). Aggrieved, the assessee is in appeal before us.

The ld. AR argued that the assessee is retired scientist and is aged 68 years and is not very much conversant with the provisions of the income tax act. On knowing the bonafide error committed by him in his return of income by way of erroneous claim of short term capital loss; erroneous claim of STT while computing short term capital loss and erroneous omission to offer savings bank interest income in part, came forward to accept the same during the course of assessment proceedings and paid 3 Dr.S.N.Ganguly A.Y.2006-07 taxes thereon without preferring any further appeal. He further argued that the ld. AO had not recorded his satisfaction in the order levying penalty u/s 271(1)(c) of the Act as it has been passed in a cryptic manner. In response to this, the ld. DR vehemently supported the orders of the lower authorities.

We have heard the rival submissions and perused the materials available on record. We find from the penalty order that the ld. AO had not recorded any satisfaction regarding the contumacious conduct of the assessee and going by the age of the assessee and from the field from which the assessee was engaged, the arguments of the ld. AR that assessee was not conversant with the provisions of the income tax act is very logical.. We find from the above aforesaid facts that the assessee’s conduct is not malafide to evade payment of tax and hence we have no hesitation in directing the AO to disallow the penalty of Rs.7819/- levied u/s 271(1)(c) of the Act.

In the result the appeal of the assessee is allowed. Order pronounced in the court on 06.05.2016. Sd/- Sd/- [Mahavir Singh] [M.Balaganesh] Judicial Member Accountant Member Date: 06.05.2016. R.G.(.P.S.) Copy of the order forwarded to: 1. Dr.S.N.Ganguly, Flat No.10, AH0Block, Digantika Salt Lake, Kolkata- 700091. The ACIT, Central-21, Kolkata. 2 3. .CIT(A)-XXIV, Kolkata 4. CIT-IX, Kolkata 5. DR, Kolkata Benches, Kolkata