INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)Validity Change of opinion--Assessee declared long-term capital gains on sale of stock options. Assessing officer, however, took a different view and assessed the same as short-term capital gains and also directed initiation of penalty proceedings under section 271(1)(c). Held: Was not justified as the question whether the sale of the stock options would result in long-term capital gains or short-term gains was not very clear at the time when the assessee filed his return for the relevant assessment year. In fact, the view taken by the assessing officer in the quantum proceedings that on sale of stock options the gain would be short-term capital gain, instead of long-term capital gain, had been reversed by the Commissioner (Appeals) in the appeal filed by the assessee. The view taken by the Commissioner (Appeals) was ultimately reversed by the Tribunal and the view of the assessing officer was upheld in the quantum proceedings. This, in itself, was indicative of the fact that the issue was not very clear-cut. That being the position, the case of the assessee could not be brought within the provisions of section 271 (1) (c) of the said Act.

Income Tax Act, 1961 Section 271(10(c)