INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Furnishing of income under incorrect head and consequential short payment of taxes -

Assessee, who was a salaried employee, disclosed the value of his stock appreciation rights (ESOP) and gains thereof and claimed the same as capital gain. However, AO treated the gain as a revenue receipt and consequentially, levied penalty under section 271(1)(c). However, Tribunal deleted the said penalty. Aggrieved, Revenue was in appeal. Held: It was nobody's case that assessee concealed the allotment of stock appreciation rights or gain arising out of such appreciation. There was a difference of opinion or difference in interpretation of the manner, in which, the assessee interpreted the returns. Therefore, when there were two opinions possible, it could not be stated that the conduct of the assessee amounted to deliberate concealment of income with certain mala fide intentions. Further, furnishing of income under incorrect head and consequential short payment of taxes would not amount to concealment of income and hence, the penalty levied under section 271(1)(c), would not be sustainable.

Distinguished:CIT v. Zoom Communication (P) Ltd. (2010) 191 Taxman 179 (Del): 2010 TaxPub(DT) 1957 (Del-HC), M/s. Jivanlal and Sons v. Asstt. CIT (2019) 103 Taxman.com 208 (SC): 2019 TaxPub(DT) 1801 (SC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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