2016 (6) TMI 797

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....e filed his return of income declaring income of Rs. 4,84,980/- on 27.10.2005, which was processed u/s 143(1) of the Act. The Assessee is proprietor of M/s Neumann Engineering Works and engaged in the business of manufacturing of sheet metal components. In the return of income, the assessee claimed exemption of Rs. 80,31,540/- u/s 10(38) of the Act on account of sale of 50000 shares of M/s. Quality Synthetic Industries Ltd. (hereinafter referred to as QSIL) during the F.Y. 2004-05, as Long Term Capital Gain. The shares were purchased in F.Y. 2003-04 for Rs. 1,40,800/-. The case was selected for scrutiny and assessment was completed on 20.12.2009, wherein the AO disputed the claim of Long Term Capital Gains on sale of shares and made additio....

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.... of shares by the assessee were not shown in the return of income of preceding year and the companies to whom shares were sold by the assessee could not be ultimately traced passed penalty order u/s 271(l)(c) of the Act imposing penalty of Rs. 29,04,614/-, being 100% of amount of tax sought to be evaded, for furnishing inaccurate particulars of income. 3. On appeal before the First Appellate Authority, the Ld. CIT(A) while deleting the penalty observed in pages 23 and 24 of the impugned order as under:- "There is no dispute to the fact that the assessee had disclosed all the material facts relating to his claim of exemption u/s 10(38) on account of long term capital gains on sale of shares in the return of income and before the AO. The ap....

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.... particulars of income while making the addition of Rs. 81,72,340/-. Hence, no penalty is exigible on such addition. As regards penalty on the addition of Rs. 4,08,615/- made by the AO by estimating the alleged commission @ 5 %, the same addition is based purely on estimation basis and no penalty is leviable in view of the decision of Hon'ble Punjab and Haryana High Court in the case of CIT vs. Ajaib Singh (253 ITR 628). In the light of rationale laid down in the above judicial rulings and facts of the appellant's case, I hold that the appellant cannot be held to have either concealed the particulars of income or furnished inaccurate particulars of income for imposing penalty. Therefore, the penalty order passed by the AO levying penalty 29....

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.... Officer by applying the test of human probability evolved in the case of Sumat i Dayal v. CIT (1995) 214 ITR 801 (SC)? 3. Whether the impugned order passed by the Tribunal reversing the order of CIT (A) thereby having the effect of sustaining the addition under Section 68 of the Income Tax Act. 1961 is based on irrelevant findings, illegal, perverse and a result of wholly erroneous approach not permitted by law?" Admitted." 7. The Ld. AR submitted that in view of the appeal of the assessee having been admitted by the Hon'ble Punjab & Haryana High Court on the quantum addition, it is evident that the issue is debatable and is subject to interpretation. He placed reliance on the decision of the Hon'ble Delhi High Court in the cas....

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....ome of Rs. 1,04,76,050 and disallowance of expenses of Rs. 10,79,221 on brokerage and Rs. 2,00,000 on legal fees made by the AO were sustained by the Tribunal and the appeal of the assessee u/s. 260A was admitted by the High Court on ground that the said addition and the disallowances represented a substantial question of law. The AO, pending the disposal of the appeal by the Hon'ble High Court, had levied a penalty of Rs. 37,32,777 u/s. 271(1)(c) of the Act which was confirmed by the Commissioner(Appeals). On a further appeal by the assessee to the Tribunal, challenging the levy of the penalty, the Tribunal held that, when the High Court admitted a substantial question of law on the merits of an addition/disallowance, it became apparent th....

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....eleting the penalty levied, raised no substantial question of law and as a consequence dismissed it with no order as to costs. 10. An appeal u/s 260A of the Income Tax Act, 1961 lies to the High Court from an order of the Tribunal only where the High Court is satisfied that the case involves a substantial question of law. A full bench of the Hon'ble Supreme Court in the case of Santosh Hazari vs. Purshottam, 251 ITR 84 (SC) held that to be a substantial, a question of law must be debatable, not previously settled by law of the land or a binding precedent ...that it was not free from difficulty or that it called for a discussion for an alternate view. It further held that the word "substantial" qualifying "question of law" meant having subs....