Conversion of stock into investment in order to avoid payment of full tax attracts penalty u/s. 271(1)(c)

IN THE HIGH COURT OF DELHI AT NEW DELHI

{ITA No. 1977 of 2010}

Judgement delivered on: 14.01.2011

THE COMMISSIONER OF INCOME TAX

VS

SPLENDER CONSTRUCTION

 A.K. SIKRI, J.

1. This appeal was admitted on 9^th December, 2010 on the following question of law:-

1 .Whether the treatment given by the assessee company to the short terms capital asset as a long term capital asset is not a colorable device used by the assessee company to pay lower rate of tax on the gain accruing from the sale of immovable property under the garb of ‘Long Terms Capital Gain’ which was actually the short terms capital gain attracting normal rate of tax?

2. Whether AO was justified in imposing penalty under Section 271(1)(c) as the income derived by the assessee was taxable at the normal rate of tax i.e. 35% under short terms capital gain, whereas in the return of income the assessee declared this income as Long Terms Capital Gain, and paid tax at a lower rate i.e. 20% and thus furnished inaccurate particulars of its income?