Penalty 271(1)(c) quashed for non-malafide conduct to evade tax payment in the case of 68 years aged retired scientist not very much conversant with the provisions of the Income Tax Act by ITAT Kolkata in its recent judgment as under:
Case Law Details:
ITA No.1900/Kol/2014 Assessment year : 2006-07
Dr.S.N.Ganguly vs. ACIT
Date of Judgment/Order: 06/05/2016
Brief Facts of the Case:
The assessee in his return of income for A.Y.2006-07 had computed short term capital gain after setting off short term capital loss and apart from that he disclosed interest from saving bank account, interest free deposits, NSC accrued interest and LIC pension . The Assessing Officer (AO) observed the following:
(a) the loss had been claimed for Franklin India OPP fund and during the intervening period of purchase and sale thereof, the assessee had derived dividend income. In terms of the section 94(7) of the Income Tax Act held that the loss to the extent of dividend income should be ignored while computing the short term capital loss.
(b) The assessee, while computing the short term capital gain, had claimed deduction towards Security Transaction tax (STT) which was not admissible as deduction from the capital gain.
(c) The assessee had actually derived savings bank interest of Rs.87,548/- as against which assessee had disclosed only Rs.36,373/- in his return of income
Accordingly the Assesseing Officer added dividend and STT amounting to Rs.85,889/- and difference in interest Rs. 51175/- in the assessment. These additions were not agitated by the assessee in appellate proceedings. The AO also levied penalty u/s 271(1)(c) for of Rs.7819/- in respect of the aforesaid additions.
On first appeal the penalty was confirmed by the CIT(A).
Contentions of the Assessee:
It was submitted that the assessee was a retired scientist and a senior citizen aged 68 years and was not very much conversant with the provisions of the income tax act. On knowing the bonafide error committed by him in his return of income by way of erroneous claim of short term capital loss; erroneous claim of STT while computing short term capital loss and erroneous omission to offer savings bank interest income in part, came forward to accept the same during the course of assessment proceedings and paid taxes thereon without preferring any further appeal. That AO had not recorded his satisfaction in the order levying penalty u/s 271(1)(c) of the Act and passed it in a cryptic manner.
Important Excerpt from ITAT Judgment:
We find from the penalty order that the ld. AO had not recorded any satisfaction regarding the contumacious conduct of the assessee and going by the age of the assessee and from the field from which the assessee was engaged, the arguments of the ld. AR that assessee was not conversant with the provisions of the income tax act is very logical.. We find from the above aforesaid facts that the assessee’s conduct is not malafide to evade payment of tax and hence we have no hesitation in directing the AO to disallow the penalty of Rs.7819/- levied u/s 271(1)(c) of the Act.
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