Penalty under Income Tax Act overturned by ITAT Pune due to lack of incriminating evidence

The Appellate Tribunal ITAT Pune allowed the appeal of the assessee against the penalty under section 271(1)(c) of the Income Tax Act, 1961. The Tribunal considered the voluntary nature of the revised return and the lack of incriminating evidence regarding penny stock transactions, concluding that it was not a fit case for penalty. The penalty was set aside in favor of the assessee.

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Issues involved: Appeal against order confirming levy of Penalty u/s 271(1)(c) of the Income Tax Act, 1961.

Summary:
1. The appeal was filed by the assessee against the order confirming the penalty u/s 271(1)(c) of the Income Tax Act, 1961.
2. The assessee initially showed long term capital gain in the return, later revised it to short term capital gain due to market news.
3. The Assessing Officer held that no genuine purchase/sale transactions took place, treating the gains as income from other sources.
4. The assessee contended that revised return was voluntary, but AO found it invalid and imposed penalty u/s 271(1)(c).
5. The Tribunal considered the nature of transactions involving penny stocks and the disputed taxability of gains.
6. The Revenue argued that the transactions were bogus, and revised return should not be considered valid.
7. The Tribunal referred to previous decisions where voluntary disclosure without incriminating evidence did not warrant penalty.
8. The Tribunal found the assessee's case to be covered by previous decisions and concluded that it was not a fit case for penalty.
9. The appeal of the assessee was allowed, and the penalty was set aside.

Judgement: The Appellate Tribunal ITAT Pune allowed the appeal of the assessee against the penalty u/s 271(1)(c) of the Income Tax Act, 1961, based on the voluntary nature of the revised return and lack of incriminating evidence regarding the penny stock transactions.

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