Successful appeal against Income Tax penalty for incorrect tax rate on short term capital gain.

The appeal against the penalty imposed under section 271(1)(c) of the Income Tax Act for the assessment year 2007-2008 was successful. The Tribunal ruled in favor of the appellant, an assessee, noting that the disagreement on the tax rate for short term capital gain did not warrant a penalty if the particulars provided were not inaccurate. Citing a Supreme Court decision and a precedent case, the Tribunal ordered the deletion of the penalty as the facts were similar to the precedent case. Consequently, the penalty of `26,68,707 was deleted, and the appeal was allowed.

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Issues involved: Appeal against penalty imposed u/s 271(1)(c) of the Income Tax Act for assessment year 2007-2008.

Summary:
The appellant, an assessee, challenged the penalty of `26,68,707 imposed by the Assessing Officer u/s 271(1)(c) of the Act in relation to the assessment year 2007-2008. The dispute arose regarding the rate at which short term capital gain on sale of shares under a buyback scheme should be taxed. The Assessing Officer taxed the gain at 30% instead of the 10% claimed by the assessee. The Tribunal noted that the assessee did offer the capital gain for taxation, and the disagreement was only on the tax rate. Citing the Supreme Court's decision in CIT v. Reliance Petro Products Pvt. Ltd., it was held that a mere disagreement on the tax rate does not warrant a penalty u/s 271(1)(c) if the particulars furnished by the assessee were not inaccurate. Relying on a precedent where penalty was deleted under similar circumstances, the Tribunal ordered for the deletion of the penalty, as the facts were identical to the precedent case.

In conclusion, the appeal was allowed, and the penalty was deleted.

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