TaxTMI 
TaxTMI 
2012 (10) TMI 280
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....n of A.O. for levying penalty on an amount of Rs.11,12,642/- u/s. 271(1)(c) of the Income Tax Act,1961." 3. Brief facts of the case are that the assessee is an individual engaged in the construction business. He filed his return of income on 30-11-2003 declaring total income of Rs.3,14,660/-.The case was taken up for scrutiny. During the course of assessment proceedings the assessee vide his letter dated 22-3-2006 submitted that the long term capital gain shown in the return of income was in fact "business income" and the same has been wrongly shown as "capital gains" instead of "business income". He therefore, requested that it be treated as "business income" and the working of which was as under: Sale consideration rec....
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....the Ld. A.R. submitted that due to mistake the assessee had in the return of income considered the income under the head "capital gain" and offered it to tax. However, during the course of assessment proceedings, on realising the mistake, and before being pointed out by A.O. the assessee suo moto informed the A.O. and rectified the mistake by offering it as business income. The A.O. while passing assessment order, taxed the profit on sale of land as offered by assessee as business income. The Ld. A.R. further submitted that the assessee had furnished all the necessary particulars and explanation during the course of assessment proceedings and the explanation offered by him was not found to be false by the A.O. He thus urged that the penalty....
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....sessee and whether the assessee's case falls within the ambit of the Explanation to section 271(1)(c) so as to levy penalty. Explanation 1 to section 271(1)(c ) reads as under:- "Explanation 1 -Where in respect of any facts material to the computation of the total income of any person under this Act - (A) such person fails to offer an explanation or offers an explanation which is found by the A.O. or CIT(A) to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the tota....
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....ed i.e. where the assessee is unable to substantiate his explanation and also unable to prove that the explanation is bonafide. If the assessee is able to prove that the explanation is bonafide and all the facts relating to the same have been disclosed the assessee's case will not fall within Part-B of the Explanation even if it he is unable to substantiate the explanation. Seen in the light of above, the facts of the present case, are that the assessee, suomoto, during the assessment proceedings informed the A.O. that by mistake in the return of income, profit from sale of land has wrongly been considered as capital gain instead of business income. The assessee submitted the details, its computation and offered it as business income. In....