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ITO 8(2)(1) R. No. 216, Aayakar Bhavan MK Marg Mumbai Vs. Rishi R. Oswal 81-82, Solitaire, Central Avenue, M.K. Marg Mumbai 400 020
March, 27th 2015
                  MUMBAI BENCH "D", MUMBAI
                      ITA No. 8854/Mum/2011
                      Assessment Year: 2005-06

         ITO 8(2)(1)                      Rishi R. Oswal
         R. No. 216, Aayakar              81-82, Solitaire, Central
         Bhavan MK Marg               Vs. Avenue, M.K. Marg
         Mumbai                           Mumbai 400 020
                                          PAN:- AABCM 6419 P
               (Appellant)                         (Respondent)

                      Assessee by : Shri Beharilal
                       Revenue by : Shri Love Kumar

                    Date of hearing    : 18.03.2015
                     Date of Order     : 25.03.2015


       The aforesaid appeal has been filed by the Revenue, against the
order dated 18.10.2011 passed by Ld. CIT(A)-19 Mumbai in relation to
the penalty proceeding u/s 271(1)(c) for the A.Y. 2005-06. The revenue
is mainly aggrieved by the deletion of penalty of Rs.29,47,020/-, levied
on account of offering of long term capital gain on sale of shares, which
was treated as "Income from other sources" by the AO.

2.     At the outset, learned counsel submitted that on similar issue, the
Tribunal in assessee's own case for the A.Ys. 2002-03, 2003-04 and
2004-05 has deleted the penalty, vide order dated 12.12.2014. He
further submitted that in the case of Shri Rishi R. Oswal (HUF), and
other family members, for the A.Y. 2004-05, the Tribunal has deleted
                                    2                   ITA No. 8854/Mum/2011
                                                       Assessment Year: 2005-06

the penalty and such an order of Tribunal has been affirmed by the
Hon'ble Supreme Court. Therefore, on similar facts, penalty should be
3.    Ld. DR accepted that the issue involved is covered by the decisions
of the Tribunal.
4.    After considering the contention of the parties and on perusal of
material placed on record, we find that, a survey u/s 133A was
conducted on 28.06.2006 at the business premises owned by Oswal
family concern. Thereafter, the assessee has filed a revised statement of
income on 18.01.2007, offering long term capital gain on sale of shares
of Rs.47,55,256/- as "income from other sources." In the penalty
proceedings, the assessee submitted that the long term capital gain was
offered as income from other sources, suo motu without there being
any incriminating material found during the course of the survey qua the
suggesting transaction of shares any concealment of particulars. The AO
has also not brought out anything on the record that the transaction of
sale of shares were not genuine and all the relevant evidences to prove
the transaction was furnished. Such an explanation of the assessee has
not been rebutted by the assessing officer. The penalty has been levied
solely on t he ground that, due to survey conducted at the premises of
the assessee, the assessee had come forward and filed the revised
computation. There is no whisper in the assessment order or penalty
order as to what was the material against the assessee, which prompted
the assessee to file the revised statement. In the case of Rishi R. Oswal
(HUF) and others, the Tribunal on similar set off facts has deleted the
penalty after observing and holding as under:-
                                 3                       ITA No. 8854/Mum/2011
                                                        Assessment Year: 2005-06

       "We have considered the issue. As far as the facts are
concerned there is evidence that the assessee has purchased
shares as early as April/ May 2002. This aspect has not been
disputed by the Revenue. It is also true that the assessee has
shown necessary investments in its return made earlier years. It
is also on record that the assessee has sold the shares through
stock broker, received the proceedings through bank account and
the stock broker also confirmed the transactions. It is not a single
transaction of sale but a series of transactions of sales of 5,000
each happened from December 2003 to March 2004, over a
period of three months, and the assessee has received the
'consideration in the bank account by way of cheques from the
said broker. It is not the case of the A.O. that both the purchase
and sale are bogus. The only enquiry made by the A.O. was
whether the transactions are recorded in the Stock Exchange.
The Stock Exchange has informed that the transactions are not
recorded there. It is not verified by the A.O. whether the
transaction are off market transactions or through the Stock
Exchange. No further enquiry was made. Even though the stock
broker has co- firmed the transactions the A.O. has not made any
further enquiry. He has only, treated the long term capital gain
claimed exempt as income from other sources and not eve
entire sale price. Prima facie the sale and purchase seems to be
genuine and cannot be considered as bougus transactions. As the
assessee could not establish at a later point of time the
transactions of sale undertaken after the sub-broker was black
listed from the Stock Exchange prudently filed the revised return
and paid the tax so as to avoid litigation and hardship. The same
was also reiterated by the AO in para 6 of the order which is as
  "6. On 14-11-2006, the assessee filed a revised statement of
  income wherein the Long Term Capital Gain declared in the
  original return of income has been offered to tax under the head
  "Income From Other Sources", with a covering letter dtd. 14-11-
  2006, which reads as under:

  "I hereby enclose a revised statement of total income for the
  above year for your reference. I hereby revise said income to buy
  peace to avoid litigation and hardship with a request not to levy
  penal interest and penalty 7/s 271(1)(c) of the I.T. Act, 1961.

7. In view of this, we are of the opinion that the principles
established by the Hon'ble Supreme Court in the case of Suresh
Chandra Mittal (supra) will equally apply to the facts of the case
                                     4                      ITA No. 8854/Mum/2011
                                                           Assessment Year: 2005-06

     as the A.O. has only made persistent enquiries and has not
     established either concealment or furnishing of inaccurate
     particulars. The explanation of the assessee can be treated as
     bona fide and penalty is not leviable. Eventhough the learned
     counsel referred to various principles and case law, those need
     not be considered here as the facts are similar to the facts in the
     case of CIT Vs. Suresh Chandra Mittal 251 ITR 9(SC). The
     Hon'ble Supreme Court in the above said case has held as
     Penalty under section 271(1)(c)-Concealment-Revised return filed
     showing higher income-Assessee surrendered the income after
     persistent queries by AO-However, revised returns have been
     regularized by Revenue-Explanation of the assessee that he has
     declared additional income to by peace and to come out of vexed
     litigation could be treated as bona fide-Penalty rightly cancelled-
     No interference warranted."

     8. Since the A.O. has not made any' further enquiries except
     the enquiry under section 133(6) and since the assessee has
     surrendered the amount eventhough he could establish it
     with evidences/continuous litigation, we are of the opinion
     that the explanation of the assessee can be accepted as a
     bona fide one. Since the revised return was filed on a clear
     understanding that no penalty proceeding will be levied,
     based on the principles established by the Hon'ble Supreme
     Court in the above said case, we hold that there is no need
     to levy penalty in the given circumstances. Accordingly
     penalty is cancelled."

This order of the Tribunal has also been confirmed by the Hon'ble High
Court in the appeal filed by the department, vide judgment and order
dated 16.06.2011. In assessee's own case for the earlier years, similar
penalty has also been deleted. Therefore, respectively following the
aforesaid orders of the Tribunal in assessee's own case as well as the
cases of other family members where penalty was levied by the AO on
same ground has been deleted we also the delete the penalty and
                                                 5                           ITA No. 8854/Mum/2011
                                                                            Assessment Year: 2005-06

accordingly, the order of the Ld. CIT(A) is confirmed. Thus, ground
raised by the revenues is dismissed.

5.     In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on this 25th day of March, 2015.

                 Sd/-                                                                Sd/-
      (B.R. BASKARAN)                                                      (AMIT SHUKLA)
     ACCOUNTANT MEMBER                                                   JUDICIAL MEMBER

Mumbai, Dated: 25.03.2015
Copy to: The   Appellant
         The   Respondent
         The   CIT, Concerned, Mumbai
         The   CIT(A) Concerned, Mumbai
         The   DR "D" Bench

                                          //True Copy//

                                                              By Order

                                                Dy/Asstt. Registrar, ITAT, Mumbai.
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