The Tax Publishers2020 TaxPub(DT) 4746 (Chen-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Where omission of inclusion of capital gain on transfer of shares that too arising out of a book adjustment was purely inadvertent and accidental and not deliberate, for this no liability could be fastened under section 271(1)(c).

Penalty under section 271(1)(c) - Concealment - Omission of inclusion of capital gain - Mistake purely inadvertent and accidental, and not deliberate

AO levied penalty under section 271(1)(c) on the ground that assessee company had not reported capital gain derived from transfer of equity shares in pursuant to the direction of High Court for amalgamation even though the said transactions resulted into long-term capital gain. Held: The fact that the omission of inclusion of capital gain on transfer of shares, that too arising out of book adjustment was purely inadvertent and accidental and the same could not be considered as deliberate concealment of particulars of income. Further, the assessee never had an intention and no incentive to conceal the capital gains inasmuch as the assessee had huge carried forward loss and consequently there was no tax impact, even if the capital gain was reported on transfer of shares. Thus, there was no deliberate attempt from the assessee to conceal particulars of income or evade payment of taxes. Therefore, the explanation furnished by the assessee that it was by inadvertent mistake omitted to include long term capital gain derived from transfer of shares in the return of income is bona fide and for this liability cannot be fastened under section 271(1)(c).

REFERRED :

FAVOUR : In favour of assessee.

A.Y. : 2007-08



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