ITAT refuses plea of ‘Wrong Legal Opinion’ of Assessee being director of a Company

Smt. V. Sujatha Vs. ITO (ITAT Hyderabad)

It was the explanation of assessee that the legal opinion given by the Counsel that there is no capital gain on the STT paid transactions, was not accepted by AO stating that she is a promoter of a company and has a battery of legal advisors and her husband also has legal knowledge. The explanation for not offering interest income was that she was under the impression that the bank interest was exempt. On the third item of claim u/s. 54F, it was the submission that the investment made was only of capital gain but not net consideration and she got confused with provisions of Section 54 and 54F which had different parameters. AO did not accept.

Held by ITAT

I am of the opinion that penalty proceedings are not attracted on the claim made u/s. 54F. All the particulars regarding the claim was made and it was only the computational mistake which resulted in dis allowance of the claim to an extent of Rs. 20,41,230/-. Mere dis allowance of claim does not attract penalty u/s. 271(1)(c) either as concealment of income or furnishing of inaccurate particulars. Reliance is placed on the decision of the Supreme Court in the case of CIT Vs Reliance Petroproducts Limited [322 ITR 158]. Thus, the penalty u/s. 271(1)(c) on dis allowance of claim partly u/s. 54F cannot be considered for levying of penalty.

Coming to the other two amounts, the explanation of assessee is not bonafide. Assessee was already filing returns in earlier years and has incomes and investments. Assessee invested funds in Port Folio Management. As pointed by AO, she is also a promoter of a company. Thus, the reason of legal counsel opinion is not plausible in the given circumstances. The filing of revised return is not accompanied by payment of relevant tax, as can be seen from the order of AO, where there is no credit for any pre- paid Therefore, I am of the opinion that assessee has concealed the income which was brought to tax under the head ‘Short Term Capital Gain’ on Port Folio Management.

Please become a Premium member. If you are already a Premium member, login here to access the full content.