TaxTMI 
TaxTMI 
2012 (7) TMI 768
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....w, the ld. CIT(Appeals) erred in deleting the penalty of Rs.21.00 lacs levied u/s. 271(1)(c) of the Act on the disallowance of adjustment/set off of short term capital loss incurred in sham transaction of purchase and sale of shares." 2. The facts in brief are that Assessing Officer noted during the course of assessment proceedings that assessee had entered into a number of transactions of purchase and sales of shares as a result of which it had incurred heavy loss of Rs.58,29,228/-. The assessee in its computation of income filed along with return of income claimed set off of this loss of Rs.58,29,228/- against the Long Term Capital Gains (LTCG for short) of Rs.1,04,51,949/-. It was observed by the AO that assessee had suffered continuo....
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.... Ld. CIT(A) whereby the penalty was deducted to be deleted. 5. Ld. SR-DR Shri B.L. Yadav for the Revenue submitted that order of Ld. CIT(A) is erroneous as the Assessing Officer has rightly came to the conclusion that assessee had furnished inaccurate particulars of income by making a share capital loss and claiming of set off against the LTCG received on the investment made in earlier years. He vehemently argued that order of AO may be confirmed and order of Ld. CIT(A) be reversed. 6. On the contrary, Ld. Authorized Representative for the assessee, Shri Mukund Bakshi supported the order passed by Ld. CIT(A). He placed reliance on the judgment of Hon'ble Supreme Court in the case of CIT v. Reliance Petroproduct Pvt. Ltd. (2010) 322 IT....
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....er existing position, i.e., penalty can be levied only in a case where there has been either concealment of income or furnishing of inaccurate particulars of income. Whether there has been concealment or furnishing of inaccurate particulars would be decided only after any of the three following conditions are satisfied:- (i) Where no explanation is offered, (ii) Where the explanation offered is found to be false, or (iii) Where the explanation is unsubstantiated. 7.3 In the instant case, it appears that the penalty has been levied considering the loss suffered by the assessee to be a sham transaction. This conclusion seems to have been arrived at based on the fact that the assessee suffered continuous losses in its transactions,....
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....e AO, and such explanation has not been found to be false or unsubstantiated, the onus cast upon the assessee would stand discharged. Accordingly, I am of the opinion, on the above facts, that the penalty in respect of Rs.21,00,000/-was not justified and is accordingly cancelled." It is contended by Ld. Authorized Representative that in quantum proceedings so far as the transaction conducted by Thakkar Share Brokers Pvt. Ltd is concerned. It has been held to be genuine and the Hon'ble ITAT has set aside the orders of authorities below as regards to the transactions conducted by Thakkar Share Brokers Pvt. Ltd. on behalf of the assessee and the Assessing Officer is directed to allow the claim of the assessee for set off of STCG against the....
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....Ltd. as noted by Hon'ble ITAT in appellate quantum proceedings and addition made on account of transaction through Thakkar Share Brokers Pvt. Ltd. has been deleted by Hon'ble co-ordinate Bench in ITA No.861/Ahd/2008 (supra). Further, we find merit in the contention of Ld. AR that the judgment of Hon'ble Supreme Court in the case of Reliance Petroproduct Pvt. Ltd. (supra) is applicable on the facts and circumstances of the present case. As the assessee had made claim of short term loss, and merely claim of the assessee has been rejected by the Assessing Officer would not be sufficient to levy of the penalty. The penalty provisions u/s. 271(1)(c) of the Act can not be invoked solely on the ground that a claim made in terms of income is reject....