TaxTMI 
TaxTMI 
2013 (5) TMI 1051
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....nter alia, added the amount of Rs. 90,60,705/- to the income of the assessee. Later, vide order dated 29.09.2011 passed u/s 271 (1)(c) of the Act, the Assessing Officer levied a penalty of Rs. 33,04,510/-on the assessee regarding this issue. By virtue of the impugned order, the Ld. CIT (A) deleted the penalty. Aggrieved, the department is in appeal. 3. Challenging the impugned order, the Ld. DR has contended that the Ld. CIT (A) has erred in deleting the penalty levied u/s 271 (1)(c) ignoring the fact that the case of assessee was reviewed by the CIT- XVI, New Delhi u/s 263 and the assessee could not substantiate that she had not concealed the particulars of income under ESOP; that the Ld. CIT (A) has erred in deleting the penalty levied u/s 271 (1) (c) ignoring the fact that the assessee had deliberately not disclosed the income of Rs. 90,60,705/- received under ESOP during the course of assessment proceedings u/s 143 (3) and that the Ld. CIT (A) has erred in ignoring the fact that the assessee had deliberately furnished inaccurate particulars by not offering Rs. 90,60,705/- received on sale of ESOP for taxation as income in the return filed by her. 4. The ld. counsel for th....
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....T and in this process he has simply given effect to the addition made by the Ld CIT. He has simply followed the direction of CIT and therefore, he was not empowered under the law to initiate the penalty proceedings and to record the satisfaction about the concealment of income. The judgment relied upon by the Ld Counsel in the case of CIT vs. Shadiram Balmukand 84 ITR 183 is on the similar lines. Thus I have no other option but to hold that the penalty order passed by the Ld AO is without jurisdiction and null and void and the amount of penalty levied by him deserves to be deleted on this ground itself. The Ld Counsel has vehemently argued that even on merits, the penalty is not leviable. With a view to avoid multiplicity of litigation, I consider it as my bounden duty to address the issue of levy on penalty of merits as well. On merits also I find that the argument of the appellant carries force. With regard to the addition on account of sale of ESOP shares the argument in brief of the appellant is that per the bonafide and genuine belief she did not include this amount in her taxable income and it has been argued that merely because CIT has different opinion and accordin....
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....oduced above are directly on this issue." 6. Having considered the matter, we find no error whatsoever in the order of the Ld. CIT (A). Since the addition was made by the ld. CIT while passing the order u/s 263 of the Act, it was for the CIT to record satisfaction and levy penalty, and not the Assessing Officer, who merely gave effect to the order passed u/s 263 of the Act. In this regard, in 'SPL's Sidhartha Ltd.' (supra), it has been held that "6. It is relevant to point out that sub-Section (1) and sub- Section 2 of Section 151 of the Act are two independent provisions. The definition of Joint Commissioner is contained in Section 2(28C) and the definition of Commissioner given in Section 2(16), which are as under: "Joint Commissioner means a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under sub- Section (1) of Section 117. "Commissioner" means a person appointed to be a Commissioner of Income Tax under sub-Section(1) of Section 117." 7. Section 116 of the Act also defines the Income Tax Authorities as different and distinct Authorities. Such different and distinct authorities have to exerc....
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....isdiction. 8. Then, even on merits, it is seen that the assessee did not include the amount received on sale of ESOP in her return of income, as taxable income. This non-inclusion was based on the assessee's understanding of the law. In this regard, the assessee stood guided by 'CIT vs. B.C. Srinivasa Setty', 128 ITR 294 (SC), according to which decision, capital gain of an asset sold can be computed only when cost of acquisition of an asset sold is ascertainable. In case cost cannot be ascertained, then, capital gain cannot be computed and thus the amount received cannot be made taxable under the head of capital gains. In the case of ESOP shares, the date of exercise of option and date of sale is same and there is no difference between price prevalent at the time of option and sale of share. Thus, either the cost was not ascertainable or it was same as market price of that day. Thus, in both the situations, no capital gain accrued to the assessee on sale of shares of ESOP allotted to her. 9. Further, the Delhi Bench of the Tribunal (Third Member) in the case of 'Garrick D'Silva vs. Jt. CIT', 105 TTJ 445 (Del) (TM) has held that there was a confusion with respect to the taxab....