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April 2013

Penalty: Section 271(1)(c): Short term capital gains assessed as business income: Penalty u/s. 271(1)(c) not justified:

By K. B. Bhujle, Advocate
Reading Time 1 mins
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CIT vs. Amit Jain; 351 ITR 74 (Del):

The assessee had declared an income of Rs. 2,60,73,558/- from short term capital gains in the return of income. The Assessing Officer assessed it as income from business. He also levied penalty of Rs. 58,45,899/- u/s. 271(1)(c). The Tribunal deleted the penalty.

On appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under:

“i) The amount in question, which formed the basis for the Assessing Officer to levy penalty, was in fact truthfully reported in the return. In view of this circumstance, that the Assessing Officer chose to treat the income some other head could not characterise the particulars reported in the return as “inaccurate particulars” or as suppression of facts.

ii) Therefore, the Tribunal was not in error in deleting the penalty.”

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