Tribunal upholds deletion of penalty under section 271(1)(c)

The Tribunal dismissed the Revenue's appeal, upholding the deletion of the penalty under section 271(1)(c). The Tribunal found that the assessee had a bonafide belief regarding the calculation of the three-month period for the sale of securities, leading to the redemption not falling within the specified timeframe. There was no evidence of concealment or furnishing inaccurate particulars, supporting the Commissioner (Appeals)'s decision to delete the penalty. The Tribunal's ruling was pronounced on 14th March 2014.

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Issues:
Challenge to deletion of penalty u/s 271(1)(c) for non-disclosure of short term capital gain on sale of bonds within three months.

Analysis:
The Revenue appealed against the order deleting the penalty u/s 271(1)(c) for the assessment year 2004-05. The Revenue contended that the assessee failed to disclose the sale of bonds within three months and did not disallow the short term capital gain on the sale to the extent of dividend received. The assessee purchased Sundaram Mutual funds for Rs. 40,00,000 on 26th December 2003 and received a dividend of Rs. 15,48,599. Upon redemption on 26th March 2004, a short term capital loss of Rs. 17,31,198 was incurred. The Revenue claimed that the redemption within three months from the record date attracted section 94(7), disallowing the dividend income. The penalty under section 271(1)(c) was imposed based on this disallowance.

The assessee argued that the redemption was not within three months as calculated from the purchase date. The Assessing Officer disagreed, leading to the penalty imposition. The Commissioner (Appeals) deleted the penalty citing the assessee's bonafide belief and the technical nature of the breach. The Revenue contended that as per section 94(7), the loss should be disallowed if securities are sold within three months. The assessee maintained that the calculation was based on a bonafide belief that the three-month period had lapsed before the sale. The Tribunal noted the calculation discrepancies but upheld the deletion of the penalty. The Tribunal found no evidence of concealment or furnishing inaccurate particulars, affirming the Commissioner (Appeals)'s decision.

In conclusion, the Tribunal dismissed the Revenue's appeal, sustaining the cancellation of the penalty. The Tribunal emphasized the assessee's bonafide belief in the calculation of the three-month period, ruling out any grounds for penalty imposition. The order was pronounced on 14th March 2014 by the Tribunal.

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