TaxTMI 
TaxTMI 
2018 (10) TMI 1290
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....ng the action of the Assistant Commissioner of Income-tax 25(2), Mumbai (hereinafter referred to as the Assessing Officer) in levying penalty of Rs. 2,18,189 under section 271(l)(c) of the Act. The appellant contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have confirmed the impugned penalty levied by the Assessing Officer under section 271(1)(c) of the Act. 2. The appellant further, contends that the CIT(A) erred in upholding the action of the Assessing Officer in levying penalty inasmuch as the order of the Assessing Officer levying the said penalty is bad in law. 3. The appellant further, contends that the CIT(A) erred in upholding the action of the Assessing Officer in levying penalty in asmuch as the bona fides of the appellant cannot be doubted. The appellant craves leave to add to, alter or amend the aforestated grounds of appeal." The assessee is an individual who has undertaken transactions of sale and purchase of shares. The assessee income comprises of brokerage & commission income, short term capital gains and long term capital gains(exempt) on sale of shares and income from other sources. The assessee also ear....
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....4,981/- which was clearly chargeable to income-tax under provisions of Section 111A of the 1961 Act on which tax was required to be paid albeit at concessional rates was wrongly shown in the return of income filed with the Revenue as income from long term capital gains on sale of shares which were claimed as an exempt income keeping in view the provisions of Section 10(38) of the 1961 Act and which clearly caused prejudice to Revenue as no taxes stood paid to Revenue on these gains, will lead to levy of penalty u/s 271(1)(c) of the 1961 Act. It is further accepted by the assessee also that short term capital gains on sale of shares to the tune of Rs. 12,83,843/- declared in return of income filed with the Revenue was wrongly declared and taxes were paid at concessional rate u/s 111A of the 1961 Act, while admittedly the said gains were business income on which income-tax at normal rates ought to have been paid as these gains arose from wrong trades executed by the assessee on behalf of the clients and it never arose from any investments made by the assessee. The assessee has admittedly accepted that these were clearly mistakes committed by chartered accountant in the return of the ....
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.... capital gains as well as long term capital gain with respect to share transactions entered into by the assessee. The AO treated these capital gains as business income and accordingly brought the same to income-tax as business income. This issue of treating capital gain on sale of shares as business income attained finality so far as treatment of short term capital gains of Rs. 12,83,843/- which was held by learned CIT(A) to be a business income, which was also accepted by assessee as these gains had arisen from wrong trades executed by the assessee on behalf of the clients and were never out of the investments made by the assessee.This chargeablity of income of Rs. 12,83,843/- as business income has attained finality in quantum proceedings as this income never had any nexus with investments made by the assessee and was clearly a business income. Thus, the assessee clearly wrongly declared business income arisen on wrong trades executed on behalf of the clients as short term capital gains on sale of shares, claiming concessional rate of income-tax on short term capital gains on shares within provisions of Section 111A of the 1961 Act as against chargeability of business income at n....
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....ving direct impact on legitimate expectation of Revenue in depriving Revenue in collection of legitimate income-tax dues payable to them within mandate of the 1961 Act. No bonafide of committing such glaring mistakes are brought on record and these bald pleas cannot be accepted. The decision of Hon'ble Supreme Court in the case of Price Waterhouse Coopers Private Limited(supra) was decided on its own facts which cannot be applied in the instant case.The Hon'ble Supreme Court has also referred to in the judgment that this case is decided on its own peculiar and unique facts, the relevant extracts are as under: "14. During the course of hearing this appeal against the judgment and order of the Calcutta High Court, we had require the assessee to explain to us how and why the mistake was committed. 15. The assessee has filed an affidavit dated 14th September, 2012 in which it is stated that the assessee is engaged in Multidisciplinary Management Consulting Services and in the relevant year it employed around 1,000 employees. It has a separate accounts department which maintains day to day accounts, payrolls etc. It is stated in the affidavit that perhaps there was some confusion be....