TaxTMI 
TaxTMI 
2015 (10) TMI 1603
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....e penalty imposed u/s 271(1)(c) of the Act, observing that mere disallowance of a claim would not entail imposition of penalty u/s 271(1)(c) of the Act. 2. On the facts and in the circumstances of the case and in law, the Led.CIT(A) erred in deleting the penalty imposed u/s 271(1)(c) of the Act, holding that disallowance of mere a claim would not attract penalty u/s 271(1)(c) of the Act, without appreciating that - a) The assessee has been carrying on the business of share trading and had shown profits from share trading business till A.Y. 2005-06 which it arbitrarily changed to short term capital gains solely with the intention to pay tax at the lesser rate applicable to short term capital gains. b) As found by the Ld.CIT(A) during q....
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..... The learned DR for the Revenue, on the other hand, placed reliance on the orders of the Assessing Officer. 4. We have heard the rival submissions and perused the records. In the facts of the present case that during the course of assessment proceedings, the A.O. noted that the assessee had declared income from short term capital gain on sale of shares and mutual funds. The assessee was show caused as to why the said income should not be assessed as business income in the hands of the assessee. Rejecting the explanation of the assessee, the A.O. assessed the said income under the head 'income from business'. Penalty proceedings u/s 271(1)(c) of the Act were initiated against the assessee. The AO noted in the order levying penalty ....
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.... its stock in trade in to investment, that it was maintaining two portfolios in the year under appeal, that it had showed income from certain share transaction under the business head. As per the provisions of the Act, the assessee can convert his stock in trade in to investment. So, if in the year under consideration, it had opted for that option, there was no reason to reject its claim. It had passed necessary entries in the books of accounts. Therefore just because of a decision taken in quantum proceedings, it cannot be held that the assessee had concealed particulars of income. It is said that decision in the assessment proceedings do not result in automatic imposition of penalty. In the matter before us, the assessee had filed all the....