TaxTMI 
TaxTMI 
2016 (1) TMI 639
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....G as exempt u/s 10(38) of the Act, the AO made an addition of Rs. 12,18,572/- being the LTCG on which the STT was not paid. This amount was held to be taxable u/s 112 of the I.T.Act. An additional tax including surcharge and cess amounting to Rs. 1,38,202/- was levied vide order dated 16.12.2010 passed u/s 143(3) of the Act. 3. In the penalty proceedings, on query, the assessee filed a reply, which has been reproduced in the penalty order. It reads as follows: "That the assessee was given to understand that the said investment being long term are free of tax. That the said investments were not sold but redeemed by switching over. That full details of purchase and sale of investments were provided in the return. That there is no gross or willful neglect on the part of the assessee in making the claim of being non taxable. It has been held by various courts that making a wrong claim do not by itself call for imposition of penalty when all the particulars were given. That imposition of penalty is not mandatory. Penalty must be grounded on contumacious conduct and callous indifference to the provisions of law and willful non-compliance of....
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....mendra Textile Processors, 306 ITR 277 (SC). In the instant case the appellant is having only source of income as interest and capital gains and therefore, it cannot plea ignorance on account of omission or inadvertent mistake while making such a wrong claim. The appellant has signed the return and computation of income while making such claim under long term capital gain. It is not an inadvertent mistake. Even where the incorrectness of the return is claimed due to want of care on the part of the assessee there is no reasonable explanation for such want of care, infer deliberateness and treat it as a false return (Cement Marketing Company of India Ltd. vs. ACIT Commissioner of Sales Tax and others (SC) 124 ITR 15). There are umpteen number of judgments where bogus claim when detected, have been treated as incorrect particulars of income. Even bogus claim of deduction in returns prepared by auditor had been overruled and penalty upheld. Kutto Karan Machine Tools vs. ACIT (Ker) 313 ITR 413. In the present case the excess claim of exemption under long term capital gain was detected by the AO and the admission of excess claim was not voluntary on the part of....
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.... switching of the securities; that it was, therefore, that no STT was deducted thereon; that the non-deduction of STT was on account of the fact that the assessee had been advised that the said investments, being long term investments, are free of tax; that the investments in question were not sold, but were redeemed by switching over; that the full details of purchase and sale of investments were provided in the return of income filed; that there was no gross or willful neglect on the assessee's part in making the claim of long term capital gain being not taxable; that making of a wrong claim does not, by itself, call for imposition of penalty, where all the particulars are given; that the levy of penalty must be grounded on contumacious conduct and callous indifference to the provisions of law and willful noncompliance of the requirements of law, which is not the case; that levy of penalty is not mandatory, since the assessee declared his income from capital gains, though part of the same became taxable on account of nondeduction of STT, there was no willful non-compliance of the provisions of law by the assessee. It is only that there was an inadvertent mistake in the return....
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....e would be liable for penalty u/s 271(1)(c) of the Act, in every case, where the claim made by the assessee is not accepted by the AO for any reason, which clearly is not the intendment of the legislature. In the present case, as in "Reliance Petro Products (P) Ltd." (supra), no information given in the return of income filed was found to be incorrect or inaccurate. The Hon'ble Supreme Court has held that mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to inaccurate particulars. In the present case, the assessee has furnished all the details of its expenditure in its return, which details, in themselves, were not found to be inaccurate, nor could be viewed as concealment of income. It is upto the Authorities to accept the claim in the return or not. Merely because the assessee has claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that, by itself, would not attract the penalty u/s 271(1)(c) of the Act. 10. Apropos reliance of the Department of "Reliance Petro Products (P) Ltd.'....