No Penalty for Offering income under capital gain instead of Business head under bonafide impression
Case Law Details
ACIT Vs M/s. Sane & Doshi Enterprises (ITAT Mumbai)
We find that the assessee had shown unsold stock as investment in its books of accounts from 01.04.2005, that that profit arising out of the sale of the flats was offered for tax under the head capital gains,that the AO was of the opinion that the stock in trade cannot partake the character of investment, that the AO levied penalty,invoking the provisions of section 271(1)(c)of the Act,that the FAA deleted the penalty.In our opinion,the basic issue to be decided is as to whether the treatment given by the assessee to the sale proceeds of unsold stock can be treated as furnishing of inaccurate particulars.We find that the fact of sale of flats was never concealed.
There is a difference of opinion between the AO and the assessee about the treatment to be given to the transaction. As far as quantum proceedings are concerned,they stand on different footing. Any addition to the income of an assessee or disallowance of a claim cannot and should not lead to automatic levy of penalty. What has to be seen is that as to whether the explanation filed by the assessee during the penalty proceedings was a plausible explanation.
In the case under consideration the assessee had claimed that it was under bonafide impression that profit arising to it was taxable under the head capital gains. Taxability of an item of income under a particular head should not result in levy of penalty.After considering the peculiar facts and circumstances of the case under consideration, and taking note of the judgment of the Hon’ble High Court in appeal 375 of 2013 along with the cases cited by the AR we are of the opinion that the order of the FAA does not suffer from any legal or factual infirmity.So,confirming his order we decide the effective ground of appeal against the AO.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
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