TaxTMI 
TaxTMI 
1976 (1) TMI 53
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....st. yr. 1968-69, against the order dt. 5th Sept., 1974 passed by the AAC sustaining the order of penalty passed by the ITO under s. 271(1)(c) of the IT Act, 1961 imposing a penalty of Rs. 5,836.00. 2. The assessee derives income from interest from private parties, banks, dividends and property income. The ITO during the course of assessment proceedings found that a partial partition took place in the family of Umedmal Abheymal and at the time of partition, the assessee received 2000 shares worth Rs. 2,50,000. Besides this the assessee was already holding shares worth Rs. 3,92,400. The value of all such shares was Rs. 6,42,400. The assessee disposed of the entire shares for a consideration of Rs. 7,94,875, thus resulting in a capital gain....
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....d return informing that capital gain to the extent of Rs. 5,836 may be taxed. The ITO completed the assessment and during the course of assessment proceedings he was of the opinion that there was concealment of income by the assessee and as such he initiated penalty proceedings under s. 271(1)(c) of the IT Act, 1961. 3. In penalty proceedings the assessee gave detailed explanation which reads as under:- "With reference to your above notice we have to submit as under :- 1. That the penalty notice seems to have been issued for taxing 'Capital gains' of Rs. 5,836 on sale of shares against which the assessee begs to submit as under :- A. That the facts of the sale of shares was duly explained to the Income Tax Adviser Shri S.K. Jain....
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....s will. 6. That the learned ITO asked us only on 4th Feb., 1971 as to why capital gains be not taxed but we had already written a letter voluntarily on 5th Aug., 1970 giving calculations of capital gains and revising the return to that extent. 7. That simply because capital gains have been taxed it does not imply that actually they were the gains which may warrant taxation. In view of the above penalty proceedings be dropped and obliged." 4. The learned ITO after considering the explanation of the assessee was of the view that the assessee has wilfully concealed particulars of his income concerning capital gains and as such the provisions of s. 271(1)(c) are attracted. Thus he imposed a penalty of Rs. 5,836 under s. 271(1)(c) of....
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....t exceed twice the amount of income in respect of which the particulars have been concealed or inaccurate particulars have been furnished. It has also been argued by Shri R.S. Dani that while filling the return the assessee had the bona fide belief that no capital gain accrued on the sale of the shares. This contention of the assessee does not have any force because the sale price of the shares was Rs. 7,73,200 and the purchase price thereof as on 1st Jan., 1954 was clearly and un-ambiguously Rs. 7,73,200 and capital gains were apparently to the extent of Rs. 21,675 which figure the assessee has himself worked out as per letter dt. 5th Aug., 1970 and therefore it is quite obvious that while filing the return the assessee had not furnished t....
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....ital gains and as such it was the duty of the assessee to disclose all such capital gains at the time of filing the return and since the assessee failed to do so and as such there was concealment of income and the learned AAC was correct in sustaining the order of the ITO imposing a penalty of Rs. 5,836 under s. 271(1)(c). 8. We have heard the parties and perused the material available on record. We may point out that on 5th Aug., 1970 the assessee gave all the details regarding the purchase and sales of the shares in the letter dt. 5th Aug., 1970, the copy of which is in the paper book. According to the assessee capital gains were to the tune of Rs. 5,836 and the same may be taxed. As a matter of fact, the letter dt. 5th Aug., 1970 was ....
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....with the return. That it is clear that that the time of filing the return the assessee concealed no income and also did not furnish inaccurate particulars of his income. Looking to the entire facts and the circumstance of the case, we are of the opinion that there was no concealment of income by the assessee. The assessee has been under bona fide impression that there were no capital gains. The bona fide impression was based on probable grounds. Moreover, when the assessee came to know that there was some capital gain he filed revised return much before the assessment was completed. We may also point out that there is nothing on the record from which it could be said that the ITO detected that there was capital gains. Before the ITO could d....