Concealment penalty due to penny stocks.

[RAJESH SANGHVI]

The assessee submitted LTCG from shares in his return. The AO treated the same as penny stock  and treated the LTCG as unexplained cash credit. The CIT(A) upheld the same. Matter is in ITAT pending. AO levied penalty u/s 271(1)(c). Before CIT(A), assessee contention is that after LTCG was shown, hence withut prejudice, it is only change of heading from LTCG to unexplaine dcash credit. No addition in terms of quantum is made. Can concealment penalty be made. Cases relied upon are Reliance Petro products

AI Summary

Assessee Challenges Penalty for Reclassified Penny Stocks; CIT(A) Deletes Penalty Citing Legal Issues, Not Reclassification. An assessee declared long-term capital gains (LTCG) from shares, which the Assessing Officer (AO) classified as penny stocks, treating the gains as unexplained cash credit and imposing a penalty under Section 271(1)(c). The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this decision, but the case is pending at the Income Tax Appellate Tribunal (ITAT). The assessee argued that the reclassification from LTCG to unexplained cash credit did not change the quantum, questioning the penalty's validity. The CIT(A) eventually deleted the penalty, citing procedural deficiencies and legal issues, not the reclassification of penny stocks.