TaxTMI 
TaxTMI 
2016 (4) TMI 1261
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....e purchased the shares at Rs. 100/- per share from M/s. Arcee Ispat Udyog Ltd., Hisar on 08.11.2007. The company is not listed with any Stock Exchange in India. Allotted shares were dislodged by the assessee in a short period of time to M/s. TCG Stock Broking Ltd., New Delhi and sold the same on 31.03.2008 at Rs. 10/- per share. So the shares allotted by unlisted company on 08.11.2007 at Rs. 100/- per share were sold on 31.03.2008 to Share Broker at Rs. 10/- per share. The share broker, M/s. TCG Stock Broking Ltd. sold these shares on 12.08.2008 at Rs. 100/- per share to Mrs. Krishna Gupta, wife of Shri R.C. Gupta, Managing Director of M/s. Arcee Ispat Udyog Ltd., Hisar. Mrs. Krishna Gupta is also one of the Directors in M/s. Arcee Ispat Udyog Ltd., Hisar, thus shares were allotted directly by the unlisted company creating the circular route, to share transactions to create short term capital loss. The same modus-operandi have been adopted by other assessees. The particulars of filing of return of income and claim of loss on shares is reproduced in the impugned order. The Assessing Officer disallowed short term capital loss of Rs. 45 lacs as claimed by the assessee by recording det....
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....cation to disallow the loss and in any case, cannot be a basis to levy penalty under section 271(1)(c) of the Act. It is a matter of record that loss disallowed stood deleted by the ld. CIT (Appeals), however, findings have been reversed by the Tribunal. It is, thus, a case where there is a difference of opinion in respect of the claim made by the assessee and this fact alone establishes that there were no furnishing of inaccurate particulars of income. No documentary evidence or fact has been found to be either false or inaccurate particulars or otherwise incorrect and hence, it cannot be validly held that assessee had any intention to furnish any inaccurate particulars of income. Mere expression of an opinion by rejection of legal claim supported by evidence does not entail levy of penalty for furnishing of inaccurate particulars of income. 6(i) The assessee relied upon decision of Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. 322 ITR 158. In the instant case, in the return of income, the assessee had declared loss on sale and purchase of shares. It is not a case where it has been found that shares had not been purchased and sold by the assessee. Al....
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.... are independent and distinct proceedings. Merely because addition on quantum have been confirmed, is no ground to levy penalty under section 271(1)(c) of the Act. The details of sale of land/sale of shares have been disclosed correctly in the return of income. Entire transactions are substantiated through evidence and on suffering of the loss, all particulars disclosed and even the tax have been paid on the sale consideration. PB-1 and 2 is computation of income in which income from capital gains have been shown. The Assessing Officer made independent inquiries from the companies which have supported the claim of assessee of sale of shares at Rs. 10/- per share. Therefore, there is no concealment of particulars of income or filing of inaccurate particulars of income. No evidence of any unaccounted deposit in the account of the assessee have been found. Since all material facts have been disclosed in the return of income and there is no adverse finding by the authorities below on quantum, therefore, Explanation-I to Section 271(1)(c) of the Act will not apply against the assessee. No adverse inference can be drawn. In fact, even the Assessing Officer has held the claim of assessee ....
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....eir shares by the assessee. M/s. Arcee Ispat Udyog Ltd., Hisar supplied the information to the Assessing Officer under section 133(6) regarding allotment of shares to the assessee and its sales. Copy of the same is filed at page 123 in which the company has confirmed that they have allotted shares to the assessee on which payments have been made by cheque and later on, the shares have been transferred by the assessee to share broker M/s. TCG Stock Broking Ltd., New Delhi at Rs. 10/- per share. It was also explained that face value is Rs. 10/- per share and premium is Rs. 90/-. PB-125 is transfer details. PB-127 is copy of allotment advice. PB-128 is ledger account of M/s. Arcee Ispat Udyog Ltd., Hisar in the name of the assessee. PB-129 is bank account showing the transactions through banking channel. The assessee in the surrender letter has offered to withdraw the short term capital loss and clarified that it is not acceptance of the guilt of the assessee. The explanation of the assessee, thus, supported by the evidence and material on record to show that assessee purchased the shares and sold the shares to the share broker. It may be noted here that sale of shares by assessee to ....
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....e income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word 'particulars' used in Section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provisions, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, 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. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no....
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....ntary evidence to substantiate its claim. The Assessing Officer levied the penalty because the explanation of the assessee was not acceptable to the Assessing Officer. Therefore, Explanation-I to Section 271(1)(c) of the Act would not apply in the case of the assessee because the explanation of the assessee was bona fide and was substantiated through documentary evidence and explanation of the assessee was not found to be bogus or false. Since assessee disclosed complete facts in the return of income therefore, there cannot be filing of inaccurate particulars of income. Hon'ble Gujrat High Court in the case of New Sorathia Engineering Co. V. CIT 282 ITR 642 while following its earlier decision in the case of CIT Vs. Manu Engineering Works 122 ITR 306 held (head note) as under: "Penalty - Concealment of Income - Order of penalty must clearly state whether it is for concealment or for furnishing inaccurate particulars - Order stating penalty was for one of the offences - Not valid - Income Tax Act, 1961, s. 271(1)(c)". 11. Considering the above discussion, we are of the view that even if the quantum addition have been confirmed upto the stage of Hon....