TaxTMI 
TaxTMI 
2019 (9) TMI 900
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....-II, Kanpur has erred in law and on facts in deleting the penalty without appreciating the facts that the assessee has not been able to substantiate as to why wrong claim of LTCG was made by her in the return of income which was found to be fictitious and arrange through accommodation entries during the course of penalty proceeding. 3. The Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the penalty without appreciating the fact that the assessee surrendered the said income arising out of the LTCG only when the show, cause notice was served upon her and not voluntarily u/s 139(1) and thus tried to conceal the income by furnishing inaccurate particulars. 4. The Ld. Commissioner of Income Tax (Appeals)-II, Kanpur being erroneous in law and facts, be vacated and the order dated 30.09.2016 passed under section 271(1)(c) of Income Tax Act, 1961 by the Assessing Officer be restored. 3. The brief facts of the case are that in the case of the assessee the A.O passed an assessment order dated 31.03.2016 under section 143(3) of the Income Tax Act, 1961, inter-alia, making the following addition(s)/ disallowance(s): - i. Disallowance of Rs. ....
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....on by AO and appellant. A perusal of the assessment order u/s 143(3) of the Income Tax Act, 1961 dated 31.03.2016 shows that AO made following addition(s):- i. Disallowance of Rs. 67,00,748/- claimed as Long Term Capital Gain exempt u/s 10(38) of the Income Tax Act, 1961. ii. Addition on account of Valuation of closing stock - Rs. 15,42,274/- iii. Disallowance u/s 40a(ia)- Rs. 9,63,357/- iv. Interest on bank account- Rs. 20,413/- It is also true as contended by the appellant that the penalty proceedings u/s 271(1)(c) were initiated only on the amount of disallowance of Rs. 67,00,748/- surrendered during assessment proceedings. A perusal of the notice u/s 274 r.w.s 271(1)(c) of the Income Tax Act, 1961 dated 31/03/2016 sows that under the same AO has not specified the specific charge specifying whether notice dated 31.03.2016 is being issued for furnishing of inaccurate particulars or for concealment of income. It is clear from the order of AO imposing penalty that AO, passed the penalty order u/s 271(1)(c) of the Income Tax Act 1961 on 30.09.2016 on both the limbs of the section. Though the AO had not specified on which limb of section 271(1)(c) of the Income Tax Act, 196....
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....cepted or was not acceptable to the Revenue, that by itself would not attract the penalty under s. 271(1)(c). AO imposed penalty u/s 271(1)(c) of the Act for the reason that at the time of assessment proceedings, appellant agreed to the disallowance of Rs. 67,00,748/- and surrendered the same during the assessment proceedings, on account of Long Term Capital Gain on sale of shares. It is seen that the penalty order is passed without making any further enquiry on the alleged bogus sale transactions. AO has not made any effort during penalty proceedings to rebut the questions raised and discrepancies pointed out by appellant on the evidence collected during assessment proceedings. AO has simply reiterated the findings given in the assessment order and relied heavily and solely upon the surrender of the appellant while imposing penalty. The penalty u/s 271(1)(c) of the Act can be levied only when there is any concealment of income or the assessee has furnished inaccurate particulars of Income. A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Appellant has shown this....
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....erial relating to transactions giving rise to capital gain was furnished. The assessee purchased these shares of M/s Makeover Vintrade Pvt. Ltd. a company that got amalgamated with M/s Oasis Cine Communication Ltd. through the Order of Hon'ble Kolkata High Court. These shares were sold through properly legally valid DMAT accounts. All these facts have not been doubted by the AO in the assessment order. These are the facts given by appellant and also verified by the investigation wing. The appellant disclosed all the material and details in respect of long term capital gain, while filing the return of her income, therefore, the Ld. AO was not justified in levying the penalty u/s 271(1)(c) of the Income Tax Act, 1961. In the proceedings u/s 271(1)(c) of the Income Tax Act, 1961, onus is on the AO to prove what are the facts or records submitted by assessee that is false or incorrect and that the assessee has furnished inaccurate particulars or concealed its income. It is also admitted fact that appellant had a bonafide belief and adequate reasons, in the shape of copies of bill for purchase of shares, physical share certificates of M/s Makeover Vintrade Pvt. Ltd, order of Hon&#....
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....h is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) Such person offers an explanation, which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." Now, the question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. Here appellant....
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.... cogent explanation and the AO is unable to rebut it. CIT vs. Mansa Ram & Sons - [1975] CTR (AH) 163; [1977] 106 ITR 307 (AH.) TC 50R. 625: "A conditional surrender of cash credits or agreement to certain assessment does not attract penalty proceedings. On the facts and in the circumstances of the present case, it appears to be obvious that the income assessed by the ITO was agreed to by the appellant as a measure of co-operation and with a view to escaping penal consequences. It, therefore, appears that the agreement was conditional. In such circumstances, penalty cannot be imposed." In the light of the fact that appellant has discharged the primary burden by a cogent explanation and placing evidence on record and the AO has not been able to rebut it by bringing anything contrary to the evidence placed by appellant and in light of categorical exposition of law laid down by the apex court, I do not find action of the AO as justified in imposing penalty u/s 271(1)(C) of the Act, Penalty imposed by the AO is hereby deleted." 7. Before us, the ld. D.R. submitted that the ld. CIT(A) has erred in law and on facts in deleting the penalty of Rs. 22,00,000/- imposed by the Assessi....