2019 (7) TMI 225

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....nalty u/s. 271(1)(c) of the Act amounting to Rs. 35 lakhs. The ITAT has deleted the penalty by observing as under :- 10. We have carefully considered the submissions and perused the records. We find that the assessee in this case is engaged into the purchase and sale of shares. The assessee has offered the gain as long term capital gain chargeable @ 10%. The A.O., on the other hand, made certain enquiries and came to the conclusion that on the economic and financial parameter, the huge gain was not justified. Hence, quoting the case laws on the subject of preponderance of probability, the A.O. rejected the claim of the long term capital gain and charged the same @ 30% as income from other sources as undisclosed income. In this rega....

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....s placed reliance upon the Hon'ble Bombay High Court decision in the case of Nayan Builders (supra) for the proposition that when substantial question of law is admitted, the issue become debatable and penalty u/s. 271(1)(c) cannot be levied. In our considered opinion, this case law also supports the plea of the ld. Counsel of the assessee that the substantial question of law having been already admitted by the Hon'ble jurisdictional High Court. 13. In the background of the above discussion and precedent, we find that in this case the penalty u/s. 271(1)(c) cannot be sustained as firstly the addition is based upon the theory of preponderance of probability and defect in the documentation for claim of long term capital gain,....

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....tend that the decision of the Tribunal contain mistake apparent from record in as much as the Tribunal while relying on various judicial decisions has deleted the penalty, which is not justifiable in this case. It has been submitted that the Tribunal had ignored the fact that the Assessing Officer in assessment order has found whole transactions to be pre-structured colourable transaction. Further it has been submitted that it is not mere change of head of income, different rate of taxes were applicable and it was attempt to infuse money into account through fraudulent penny stocks @ 10%, which was rightly brought to tax @ 30% by the Assessing Officer. That attempt of the assessee failed and the amount was treated as 'income from other sour....