TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 699
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....reinafter referred to as the AO) on the assessee under section 271(1)(c) of the Income Tax Act. 3. The brief facts of the case are that assessee is a partnership firm engaged in the business of manufacture and trading in gold and silver articles. The assessee filed its return of income on 1-12-03 declaring the total income of Rs. 47,533/- which was accepted u/S 143(1). Subsequently, the A.O. reopened the assessment and completed the assessment u/s 143(3) r.w.s. 147 on 28-12-07 determining the total income at Rs. 79,20,740/-. The assessee firm was formed with five partners( including one minor) on 1- 4-01 to carry on business at Borivali, Mumbai and Rajkot. Two partners namely Mr. Chimanlal J Minawala and Shri Kamlesh C Minawala retired fr....
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....that in any case STCG should be only Rs. 34,39,642/- and not Rs. 68,79,284/-. The CIT(A) did not accept the contention that there was no liability for taxing STCG u/s 45(4) but accepted the alternative contention that the STCG was only Rs. 34,39,642/-. 5. During the course of penalty proceedings, the assessee contended that there was only reconstitution of the firm during the year and not dissolution and that there was divergence of opinion between ITAT Jabalpur & Hon'ble Mumbai High Court as to whether transfer of assets at the time of retirement would attract capital gains u/s 45(4). It was further contended that the assessee firm had disclosed all the primary facts including the details of partners who retired and the new partner admitt....
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....elf. He further held that the very fact that the assessee admitted before the Ld. CIT(A) that the STCG should be taxed at Rs. 34,39,642/- showed that the assessee did not make proper and true disclosure in the return of income. He held that the admission before the Ld. CIT(A) proveed the presence of mens rea and the assessee acted deliberately in defiance of law and was guilty of contumacious conduct and, therefore, imposed penalty. He further held that various decisions relied by the assessee were distinguishable on facts and by virtue of explanation 1 to section 271(1)(c), the assessee was liable for concealment penalty and accordingly imposed penalty of Rs. 12,46,600 at the rate of 100% tax to be evaded being the minimum penalty. 6. The....
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....eliberately in defiance of law and is guilt of contumacious conduct. The above observation of the A O in the impugned order is totally unacceptable. The appellant contended before the CIT(A) that there was no liability to capital gain as there was no dissolution and further there was no transfer of capital assets but the some was not accepted. In the alternative, the appellant contended before the CIT(A) that the amount of capital gain should be restricted to Rs .34,39,643/- which can never taken be that the appellant admitted its guilt It is seen from the order of the Mumbai bench of the Tribunal dated 7-1-01 that the issues of transfer of capital asset was discussed. The appellant contended that the stock- in- trade transferred to the ret....
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....erely because the appellant did not admit the capital gains u/s 45(4), no concealment penalty can be imposed. I accept the plea of the representative that its bona fide belief was supported by the Hon'ble Jabalpur decision which was existing at the time of filing of return of income and further that if the value of stock- in- trade transferred to the retiring partners was excluded from the net assets transferred to retiring partners, the appellant did not transfer any capital asset as defined u/s 2(14),and , therefore, there was justification for not admitting the capital gains. The assessee cannot be expected to compute the total income as would be finally determined the AO, but the statutory obligation of the appellant is discharged i....