AI Drafter 
TaxTMI 
TaxTMI 
2016 (9) TMI 991
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.... case and in law, the Assessing Officer ought not to have levied the impugned penalty under section 271 (1) (c) of the Act. 2. The CIT (A) erred in confirming action of the Assessing Officer in levying penalty on the basis of income-tax including surcharge and education cess. The appellant contends that surcharge on income-tax and education cess cannot be considered in levying the penalty as the same is not part of "tax". 3. The appellant contends that the impugned order of penalty is bad in law and requires to be quashed. WITHOUT PREJUDICE TO THE ABOVE 4. The CIT (A) erred in confirming penalty even on the addition of alleged commission which was deleted in quantum appeal by the Honourable Tribunal. The appellant contends that on the facts and in the circumstances of the case and in law, the CIT (A) ought to have directed to reduce the penalty amount proportionately. The appellant craves leave to add to, alter or amend the aforestated grounds of appeal." 3. The brief facts of the case are that the assessee individual earning income from salary, business income and capital gains filed his return of income for the ass....
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....t there is no basis for treating the amount of purchase at Rs. 22,48,000/- and confirm the addition as the assessee got the shares transferred into demat account by 31.03.2005, which fact was also accepted by the Ld. CIT (A). If the shares are purchased as alleged by the CIT (A) then, the addition of the amount cannot be made in this assessment year as the said purchases are made in assessment year 2005-06. It was submitted that assessee purchased the shares on 02.04.2004 and sold them on 18.04.2005 and correctly offered the long term capital gain. The Ld. DR however relied on the orders above. 7.3 We have considered the issue. It is a fact that t he assessee got the shares transferred to demat account as on 31.03.2005 and sold as on 18.04.2005. Therefore, assessing the purchases cost either at Rs. 1,36,000/- or at Rs. 22,48,000/- as directed by the Ld. CIT (A) does not arise in this year, as the transaction occurred before 31.03.2005 i.e. in assessment year 2005-06. Therefore, order of CIT (A) on this issue sustaining addition of so called purchase cost, cannot be upheld. Since there is no verifiable evidence to establish whether the assessee purchased shares on 02.04.200....
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.... entire conspectus of facts of the case that judicial pronouncements discussed above, the penalty of Rs. 6,93,053/- u/s 271 (1) (c) is upheld and the ground raised by the appellant is dismissed." 6. After conjoint reading of the orders mentioned above as well as after hearing both the parties, we find that the learned CIT (A) has primarily held that the assessee sought undue advantage by seeking to declare the long term capital gains what was held by the Tribunal to be short term capital gains. It was further held by the learned CIT (A) in the penalty appeal that there is, therefore, clear indication of concealment of income and/or furnishing of inaccurate particulars of income. That being so, in view of the entire conspectus of the facts of the case and the judicial pronouncements discussed by the learned CIT (A) the penalty of Rs. 6,93,053/- levied u/s 271 (1) (c) of the Act was upheld. 7. The learned CIT (A) while upholding the order of penalty has further concluded that in this case the assessee has neither furnished accurate particulars of income in her return nor has she furnished any bona-fide explanation nor she was able to substantiate her claim for long term capital....
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....nd as such penalty is not warranted. Even otherwise, as per Explanation (1) to Section 271 (1) (c) of the Act cast a duty on the AO to first record reason that there has been concealment and then seek explanation from the assessee and once the AO finds the explanation of the assessee to be false, the AO can levy penalty on the amount which is found to be concealed. Thus, penalty on concealment can be imposed if both the conditions are fulfilled namely when the assessee has failed to substantiate its explanation and has also failed to prove its bona-fide and penalty can be levied when the conditions are purely of legal issue. As per the facts of the present case there cannot be any denial that along with the return of income, during the course of assessment proceedings, the assessee furnished all the relevant details before the AO and therefore, the assessee cannot be held to have furnished inaccurate particulars of such income within the meaning of Section 271 (1) (c) so as to call for any penalty. After appreciating the order passed by the Tribunal in quantum appeal in the assessee's own case, the Tribunal held that income from capital gains of IFL to be assessed as income assessa....