Case Law Details
Pr. CIT Vs Prakash Mangilal Jain (Bombay High Court)
Following FIFO or LIFO method cannot be the basis for levying penalty as per the provisions of section 271(1)(c) of the Act. In order to justify the levy of penalty, two factors must co-exist, (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee’s income and the amount in question was disclosed by the assessee in his return. Explanation filed by the assessee about the disputed amount plays a vital role in deciding the justification of levying concealment penalty. In the matter before us, the assessee had disclosed all the necessary details. In our opinion, explanation filed by the assessee in that regard was bonafide. Secondly, it is an accepted principle of taxation jurisprudence that additions made during assessment proceedings cannot result in automatic levy of penalty. Therefore, we delete the penalty confirmed by the FAA with regard to share transactions.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. This appeal is filed by the Revenue challenging the judgment of the Income Tax Appellate Tribunal (Tribunal for short) dated 8th May, 2015.
2. Following question is presented for our consideration:
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