The Income Tax Appellate Tribunal (ITAT) of Jaipur bench has recently held that, no penalty shall be levied under Section 271(1)(c) of Income Tax Act 1961 on payment received on sale of penny stock shares.
Assessee Rajesh Kumar Agarwal filed his return on 29.11.2012 declaring total income of Rs. 18,84,340/.
The assessment was reopened after getting approval from the Principal Commissioner of Income Tax under Section 148 of Income Tax Act.
As per the notice it was required to the assessee to furnish a return of Income in the prescribed format within 30 days from the service of the notice.
Thereafter assessee filed the return declaring total income of Rs. 20,40,640/- as declared in the original return of income filed.
After completing the assessment AO made an addition of Rs. 21,300/- being the amount of income received from sale of penny stock.
As the additions were made, penalty proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income were initiated.
Aggrieved from the order of the AO levying penalty assessee preferred an appeal before the CIT(A).
While considering the appeal CIT(A) found that the assessee sold a property for Rs. 40,00,000/ and the Sub-registrar registered the property for Rs. 43,12,517/-.
The AO made additions on these sale considerations. Further, the AO added Rs. 21,300/- received on sale of penny stock, Divine Multimedia (India) Ltd.
The AO passed a penalty order under Section 271(1)(c) of the Income Tax Act on account of the above two additions.
Assesee did not get any favor from the NFAC. Then the assessee filed an appeal before the tribunal.
Suhani Meharwal, Counsel for the assessee submitted that the Assessment for the assessment year 2012-13 was reopened on the basis of difference between actual sale consideration and consideration under Section 50C of the Income Tax Act 1961 after issuing the reassessment notice under Section 148 of Income Tax Act.
The assessee thoroughly investigated the financial affair again and corrected the mistake by himself, which had been inadvertently made by the assessee in declaring the value under Section 50C Income Tax Act for plots sold during the year.
The penalty was levied upon the entire value of sale of shares amounting to Rs. 21300/-, which had also been offered for tax to avoid litigation.
Monisha Choudhary counsel for the revenue supported the contentions of the order of CIT(A).
It was observed by the tribunal that the assessee has already shown the income in response to the notice issued under Section 148 of the Income Tax Act.
Further, as regards the addition of Rs 21,300/- amount of income received from sale of penny stock has been made on account of the meager amount and on account of difference of opinion only.
Therefore, the two-member bench of Sandeep Gosain, (Judicial Member) an dRathod Kamlesh Jayantbhai, (Acountant Member) allowed the appeal filed by the assessee.
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