Case Law Details
Advent Computer Services Ltd. Vs ACIT (ITAT Chennai)
It is an admitted fact that assessee has not reported capital gain derived from transfer of equity shares in pursuant to the direction of the Hon’ble High Court of Madras for amalgamation of M/s. i Theories Business Factory India Pvt. Ltd., with the assessee company, even though the said transactions resulted into long term capital gain of Rs.23,91,261/-. The contention of the assessee is that because of book adjustment there being no monetary consideration for transfer of shares, and hence, it was inadvertently omitted to include long term capital gain derived from transfer of shares in the return of income filed for relevant year and such a mistake is purely human error without any deliberate attempt to evade payment of taxes which is evident from the fact that even after computation of long term capital gain, the assessed income for the year was Nil. We have gone through the arguments of the assessee in light of the facts brought out by the authorities including learned CIT(A) and found that the assessee has transferred its investments in shares in pursuant to the directions of the Hon’ble High Court of Madras for amalgamation of M/s. iTheories Business Factory India Pvt. Ltd., with the assessee company to settle the outstanding dues payable to Mr. Arif B.Rehman for Rs.50,94,386/-. The said transaction is a book adjustment without there being any monetary consideration for transfer of equity shares. From the above, one can infer that explanation furnished by the assessee that by inadvertent mistake and human error, the capital gain derived from transfer of equity shares has not been reported in the return of income filed for the relevant year appears to be bonafide. Had it been the case of the Assessing Officer that the assessee has received consideration for transfer of equity shares and yet not reported capital gain from transfer of shares in the return of income, then obviously explanation furnished by the assessee cannot be held to be bonafide. It is quite possible when a transaction is settled by book adjustment that too on the direction of Hon’ble High Court, there is every possibility to have an understanding that particular transaction cannot lead to tax. Moreover, in the instant case, even after computation of long term capital gain from transfer of equity shares the assessed income for the impugned year results into net loss. Thus, from the above, we are of the considered view that there is 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 bonafide and for this liability cannot be fastened u/s.271(1)(c) of the Act. The learned CIT(A) without appreciating these facts simply confirmed the penalty levied by the Assessing Officer u/s.271(1)(c) of the Act. Hence, we reverse the findings of the learned CIT(A) and direct the Assessing Officer to delete the penalty levied u/s.271(1)(c) of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-4, Chennai dated 28.11.2017 and pertains to assessment year 2007-08.
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