The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 27(1)(C) of the Income Tax Act, 1961 as there was no concealment of particulars and filing of inaccurate particulars of income.
The assessee, Dineshkumar Kanjibhai Patel filed return of income declaring income after claiming exemption under Section 10(38) of the Income Tax Act being Long Term Capital Gain (LTCG) earned by the assessee on the sale of shares of Devika Proteins Limited on the ground that they were held by him for more than one year, and thereafter, sold the same through stock exchange enabling him to offer the aforesaid exemption.
The Assessing Officer (AO) rejected the claim of the assessee on the ground that the said capital gain was in respect of penny stock and made addition being sale consideration received under Section 68 of the Income Tax Act. The Assessing Officer initiated proceedings under Section 271(1)(c) of the Income Tax Act for concealment of particulars of income thereby issuing notice on 22.12.2018.
The assessee filed his reply. After taking cognizance of the reply the Assessing Officer levied penalty under Section 271(1)(c) of the Income Tax Act for concealment of particulars of income at the rate of 100%.
Sanjay R Shah, who appeared on behalf of the assessee submitted that the assessee had not concealed any income as such but had claimed the LTCG as per the details filed in return of income. Therefore, the imposition of penalty under Section 271(1)(c) of the Income Tax Act was not justifiable.
Ashesh R Rewar on behalf of the revenue relied upon the assessment order, penalty order.
A single Bench of Suchitra Kamble, (Judicial Member) observed that t in the assessment order itself the Assessing Officer had noted that the capital gain shown by the assessee in the statement of income as a credit entry was rejected and the addition was made in respect of non-granting of LTCG.
The Bench allowed the appeal filed by the assessee and deleted the penalty holding that assessee at no point of time concealed its particulars of income or filed inaccurate particulars of income at any stage of revealing its income to the revenue authorities.
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