TaxTMI 
TaxTMI 
2016 (1) TMI 457
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....t is pertinent to note that the concessional rate of tax under section 111A on STCG arising on sale of shares shall be applicable only if the transactions had suffered Security Transaction Tax. At the time of assessment proceedings, it was noticed by the AO that the shares sold by the assessee did not suffer security transaction tax and hence, the concessional rate provided u/s 111A of the Act is not applicable to the STCG declared by the assessee. When it was pointed out, the assessee immediately agreed to pay tax as per the normal rate of tax. Accordingly, the AO determined the total income at Rs. 544.09 lakhs, i.e., at the same level of return income and levied tax at the normal rate. The AO initiated penalty proceedings under section 271(1)(c) of the Act. Though the assessee submitted that it did not concealed any particulars of income or furnished any inaccurate particulars of income, the AO was not satisfied with the same and accordingly levied penalty of Rs. 76.91 u/s 271(1)(c) of the Act. The ld. CIT(A) also confirmed the same and hence the assessee has filed this appeal before us. 3. We heard the parties and perused the record. The ld. AR submitted that the question of ....
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....ing the penalty levied by the AO. 5. We have heard the rival contentions and perused the record. We notice that the ld. CIT(A) has taken the view that the assessee has declared a total income at Rs. 31.31 lakhs only in the return of income and the AO has assessed the same at Rs. 544.09 lakhs. A perusal of paper book filed by the assessee would show that the said observation made by the ld. CIT(A) is not in accordance with the facts available on record. The income of Rs. 31.31 lakhs pertains to business income declared by the assessee and the assessee has also declared STCG arising on sale of shares and the aggregate amount of both the incomes have been declared in the return of income filed by the assessee and the same income has also been assessed by the assessing officer. Hence as submitted by the ld. AR there is no difference between the income returned by the assessee and the income assessed by the AO. Thus, we notice that the Ld CIT(A) has proceeded to adjudicate the issue on incorrect appreciation of facts. 6. The mistake has occurred only in the computation of tax payable on the total income and not in arriving at the total income. While the assessee has computed the tax ....
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....ate bench first considered the question as to whether offering the tax at a concessional rate applicable to a different category of income would amount to furnishing of inaccurate particulars of income attracting the provisions of sec. 271(1)(c) of the Act. The relevant discussions made by the Tribunal are extracted below:- "7. We have considered the rival submissions as well as relevant material on record. The question arises for our consideration and adjudication is whether offering the tax at a concessional rate applicable on a different category of income would amount to furnishing inaccurate particulars of income attracting the provisions of section 271(1)(c). The facts in the case of the assessee are not in dispute as the assessee filed its original return of income on 31.07.2009 and offered the Long Term Capital Gain on sale of paintings to tax at the normal rate of 20% as applicable on such Long Term Capital Gain. Subsequently, the assessee has filed a revised return on 8.09.2009 and offered the tax at a concessional rate of 10% under the proviso to section 112(1) of the Income Tax Act. It is pertinent to note that the concessional rate of tax @ 10% as per second p....
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....sessee in all the return of income which remains same and, therefore, there is no change in the source of income and the category of income which is specified as capital gain from sale of paintings then even if the assessee has applied incorrect rate of tax in the revised return, it would not constitute that the assessee has changed the class/nature of income eligible for concessional tax u/s 112(1) of the Income Tax Act. When there is no attempt on the part of the assessee to show the Long Term Capital Gain in a different category then merely because a concessional rate of tax was applied in the revised return does not ifso facto lead to the conclusion that the assessee has concealed the particulars of income. Even otherwise, all these facts and circumstances supports the explanation of the assessee that the concessional rate of tax on Long Term Capital Gain was applied on the basis of the advice of the Chartered Accountant, therefore, it was a bona fide mistake. This explanation, in our view is quite reasonable as per the Explanation 1B of section 271(1) of the Income Tax Act particularly in view of the fact that the assessee did not claim the benefit of indexed cost while comput....
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....ed while finalizing the assessment and the AO considered the revised computation of income and tax payable working filed by assessee vide its letter dated 23.11.2010. Considering the facts, we find merit in the submission of assessee that there was a bonafide clerical error in the computation of tax liability while filing the return in regard to chargeability of tax rate which was rectified during the course of assessment proceedings and, accordingly, no refund as claimed by the assessee in the return filed was processed by the department. The Hon'ble Supreme Court in the case of Reliance Petro Products (P) Ltd (supra) has held that if all the facts relating to claim are disclosed and the information given in the return is not found incorrect or inaccurate, assessee cannot be held guilty of furnishing inaccurate particulars of income. Their Lordships also held that mere making of a claim which is not sustainable in law by itself, will not amount to furnishing inaccurate particulars regarding income of the assessee and such claim made in the return cannot amount to furnishing inaccurate particulars. 12.1 In the case before us, we observe that assessee placed all the fac....
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....ssessee violated of provisions of section 94(7) of the Act by not ignoring losses while computing short-term capital gains on transactions related to section 94(7) of the Act. It is important to state here that the Assessing Officer made the addition only on the basis of material and in formations furnished by the assessee. The Apex Court in the case of Reliance Petroproducts (P.) Ltd. (supra) regarding the word 'particulars' used in section 271(1)(c) has held that there can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. But in the case under consideration we find that the assessee has furnished full detail and has not concealed any particulars of income or has furnished any inaccurate particular of income. Further, we noticed that there were no such specific requirements in the return form applicable to the year under consideration. Such requirement of the column in the return has been inserted by amendment in return form, ITR-6, at page 17, "Schedule CG capital gain" S. N. 3(d) which....
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....s not upheld, even though the assessee has disclosed all material facts and has not suppressed any material facts, the levy of penalty is not justified. In the said case, the assessee claimed deduction of Rs. 9,94,399/- on account of diminution in the value of shares held by it. The same were disallowed on the ground that the shares were held as investments, and profits and losses on the sale thereof were to be considered under the head "capital gains". Therefore, the quantum proceeding was concluded against the assessee. The Assessing Officer levied penalty under Section 271(1)(c) of the Act. The Hon'ble jurisdictional High Court held that it was not the case of the department that the assessee withheld any information or furnished any false information. The facts necessary for carrying out the assessment proceedings were admittedly disclosed in the return filed by the assessee. It was held that the assessee had wrongly claimed deduction and it was not entitled to the same as it is a pure question of law. In that context, the Hon'ble jurisdictional High Court held that by making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Simply in the....
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....e the Hon'ble Supreme Court. The Supreme Court after hearing ld counsel for the parties observed that assessee is undoubtedly a reputed firm and has great expertise available with it. Notwithstanding this, it is possible that even the assessee could make a "silly" mistake and indeed this has been acknowledged both by the Tribunal as well as by Hon'ble High Court. The Hon'ble Apex Court held that the contents of the tax audit report suggest that there is no question of the assessee concealing its income, when assessee filed tax audit report alongwith the return which was unequivocally for provision of payment was not allowable under section 40A(7) of the Act but still assessee made computation of the assessee in its return of income. The Hon'ble Apex Court held that all that has happened is that through a bonafide and inadvertent error by the assessee while submitting his return and failed to add provision of gratuity to its total income. The caliber and expertise of the assessee has little or nothing to do with the inadvertent error. The Apex Court also stated that assessee should have been careful cannot be doubted, but the absence of due care, in a case such as th....
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....called for various details through the notice issued u/s 142(1) of the Act. The assessee furnished its reply through its letter dated 18-10-2011, wherein the assessee, inter alia, furnished the details of STCG. A copy of the reply is attached in the paper book filed by the assessee. A perusal of the same would show that the assessee has furnished the details of STCG by segregating the STCG into two categories, viz., (a) STCG on which STT was not paid and (b) STCG on which STT was paid. Thus it is noticed that the assessee has furnished all the relevant details relating to STCG and the same shows that there was no malafide intention on the part of the assessee to pay tax at a reduced amount, as presumed by the assessing officer. During the course of assessment proceedings itself, the assessee filed another letter dated 15.11.2011 accepting its mistake and requested the assessee to raise demand by computing correct tax. 12. In the explanations furnished by the assessee during the course of penalty proceedings, the assessee has explained that the mistake was committed by a clerk while computing the tax. The various letters furnished before the AO during the course of assessment pro....