TaxTMI 
TaxTMI 
2011 (1) TMI 1224
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....,50,000 shares of Indocare Pharmaceuticals Ltd., purchased by the assessee on February 25, 2004 and sold on October 21, 2005. The shares were purchased for a sum of Rs. 16,65,227 and sold for Rs. 50 lakhs. In the statement of income, the assessee claimed the capital gains of Rs. 33,34,973 to be exempt under section 10(38) of the Income-tax Act, 1961. She was required to furnish the purchase and sale agreements. The sale bill was submitted on August 6, 2008 vide letter of the same date in which information on two other points was also submitted. The purchase bill was submitted on August 11, 2008 vide letter of the same date in which information regarding one more point was furnished. Thereafter, the assessee submitted a letter dated August 29, 2008, in which it is stated that the sale agreement was on "spot basis". The share was listed on the Ahmedabad Stock Exchange. She held the shares in demat form with a depository. In the relevant period, the Ahmedabad Stock Exchange (ASE) was not in operation for more than a year and, therefore, the shares were sold on "spot basis". The accountant, by mistake, has treated the gains to be exempt under section 10(38) at the time of preparing inc....
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....r the evidence not called for in support of exemption under section 10(38), the assessee would have forgotten away without paying tax on capital gains. The plea regarding lack of knowledge of ignorance of law was not accepted on the ground that she is being assisted by professional accountants. Coming to the mens rea, reliance was placed on the decision of the hon'ble Supreme Court in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC). A part of the judgment as indicated below, was reproduced in the order (page 302) : "Explanations appended to section 271(1)(c) of the Income-tax Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) has not considered the affect and relevance of section 276C of the Income-tax Act. The object behind enactment of section 271(1)(c) read with Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability willful concealment is not an essential ingredient for att....
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....t, 1961. Therefore, in view of the decision of the Gujarat High Court in the case of CIT v. West Inn Ltd. dated November 25, 2009, the mistake on the part of the appellant is held as bona fide as appellant may not have been well verse on about the complex provisions of the proviso to section 112 of the Income-tax Act, 1961 and had relied on the advice rendered by the accountant, who himself was not aware of these provisions." Before us, the learned Departmental representative submitted that a notice and a questionnaire were issued to the assessee. The Assessing Officer requested the assessee to furnish "broker notes" regarding purchase and sale of shares and unique ID of the assessee. In response to this questionnaire, the assessee filed the bill of sale on August 6, 2008 and bill of purchase on August 11, 2008. Some discussion took place on August 11, 2008. Thereafter, the assessee surrendered capital gain for taxation on August 29, 2008. Therefore, it was argued that the surrender of income for taxation was not voluntary. Once purchase and sale bills had been requisitioned by the Assessing Officer, the assessee had no alternative but to offer capital gains for taxation. H....
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....id on January 30, 2009 after receipt of the assessment order. The assessee had not filed any revised return to rectify the error but offered the income for taxation through the aforesaid letter. In these circumstances, it is argued that penalty cannot be levied on the assessee. In order to support the aforesaid contention, reliance has been placed on the decision of the hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC). In this case, a sum of Rs.28,77,242 was disallowed under the provisions of section 14A. The admitted position was that all facts regarding the issue were available in the return of income. The hon'ble court referred to the meaning of the word "inaccurate" in Webster's Dictionary to mean "not accurate, not exact or correct ; not according to truth ; erroneous ; as a inaccurate statement, copy of transcript". It was mentioned that since all the details furnished in the return of income were found to be correct, the assessee cannot be charged for furnishing inaccurate particulars of income. Merely because the assessee had claimed the expenditure, which was not found to be acceptable, that by itself would not attract the....
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....e may deal with the preliminary issue at the outset. The decision in the case of Ms. Madhushree Gupta [2009] 317 ITR 107 (Delhi) and ECS Ltd. [2011] 336 ITR 162 (Delhi) is that the prima facie satisfaction of the Assessing Officer should be discernible from the assessment order. The initiation cannot be cancelled merely because the Assessing Officer has used the words "penalty proceedings are initiated separately". Coming to the facts of this case, the Assessing Officer gave a finding that the assessee was asked to submit proof of purchase and sale of shares, in response to which purchase note and sales note were filed. Thereafter, the assessee offered capital gains for taxation on August 29, 2008 by filing a letter to that effect. In the concluding paragraph, following observations are made : "In view of the above discussion the amount of Rs. 33,34,973 is treated as the income of the assessee from capital gains arising out of transaction of listed securities as mentioned in the proviso to section 112 of the Income-tax Act, 1961. Penalty under section 271(1)(c) has been initiated on this point separately." Thus, it transpires that the claim of the assessee has been rejecte....