INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Income reported and different head - Mistake of wrong classification of the securities yielding long-term Capital Gain -

Assessee declared long-term Capital Gain arose from sale of securities/shares and paid the advance tax @ 10% on lTCG. Assessee revised her computation of income and offered the tax on long-term Capital Gain @ 20% by treating them as unlisted shares instead of listed shares. AO completed the scrutiny assessment under section 143(3) accepting the returned income, though AO recorded his satisfaction for initiation of penalty proceedings under section 271(1)(c) in respect of long-term Capital Gain declared by assessee for sale of listed shares which was found to be unlisted shares. AO levied penalty in respect of long-term Capital Gain classified as listed shares. Held: When return was filed through the Tax Consultant then it is only a matter of misclassification of the capital asset sold by assessee which resulted into short payment of tax. Therefore, it was a case of inadvertent and bona fide mistake of wrong classification of the securities yielding long-term Capital Gain and consequently the assessee had paid the tax @ 10% instead of 20%. Once assessee had explained reasons for wrong classification of securities and the said explanation of assessee was bona fide being inadvertent mistake on the part of the Tax Advisor then this case would not fall in clause B of Explanation 1 to section 271(1) (C). Thus, no penalty shall be levied under section 271(1)( c).

REFERRED : MAK Data Pvt. Ltd. v. CIT (2013) 358 ITR 593 (SC) : 2013 TaxPub(DT) 2358 (SC) Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC) CIT & Ors. v. Manjunatha Cotton & Ginning Factory & Ors. (2014) 359 ITR 565 (Kar.) : 2014 TaxPub(DT) 0202 (Karn-HC) CIT v. Societex (2013) 212 Taxman 73 (Del) : 2013 TaxPub(DT) 1462 (Del-HC)

FAVOUR : In assessee's favour

A.Y. :

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