Penalty upheld for inaccurate reporting of interest income, dismissed for incorrect capital gains claim.

The tribunal upheld the penalty for inaccurate reporting of interest income while dismissing the penalty for the incorrect claim of capital gains cost of acquisition, partially allowing the assessee's appeal against the penalty order under section 271(1)(c) for the assessment year 2015-16.

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Issues involved:
Appeal against penalty order u/s 271(1)(c) for A.Y. 2015-16 - Incorrect claim of capital gains cost of acquisition - Inaccurate reporting of interest income.

Analysis:

1. Incorrect Claim of Capital Gains Cost of Acquisition:
The case involved an appeal against a penalty order under section 271(1)(c) for the assessment year 2015-16. The assessee had declared income comprising of salary, LTCG, and income from other sources. The AO observed that the assessee received shares as a gift from her father, sold them during the year, and claimed part of the capital gain as exempt u/s 54EC. The assessee initially claimed indexation cost of acquisition for computing LTCG but later withdrew the claim during assessment proceedings, voluntarily offering the entire gains to tax. The tribunal found that the shares were acquired by the father before 1st April 2001, and as per Explanation 2 of section 55(2), the cost of acquisition to the previous owner should be considered. The tribunal concluded that the claim of acquisition was bona fide, and the withdrawal during assessment proceedings was justified. Thus, the penalty u/s 271(1)(c) was not justified in this regard.

2. Inaccurate Reporting of Interest Income:
Regarding interest income, the AO noticed a disparity between the interest earned and the amount offered to tax. The assessee had earned savings bank interest but offered only a portion to tax. During assessment proceedings, the assessee voluntarily offered the balance of interest income to tax. The tribunal deemed this as a case of furnishing inaccurate particulars of income, as the full interest income was not initially reported or offered for tax. Consequently, the penalty concerning the interest income was confirmed. The tribunal partially allowed the appeal, confirming the penalty related to interest income but ruling out the penalty for the incorrect claim of capital gains cost of acquisition.

In conclusion, the tribunal upheld the penalty for inaccurate reporting of interest income while dismissing the penalty for the incorrect claim of capital gains cost of acquisition, thereby partially allowing the assessee's appeal.

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