Mere taking a claim not sustainable in law, will not amount to furnishing inaccurate particulars regarding income of the assessee

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘D’: NEW DELHI

BEFORE SHRI G.D.AGRAWAL, VICE PRESIDENT AND

SHRI I.C.SUDHIR, JUDICIAL MEMBER

ITA Nos.3416/Del/2011 & 3417/Del/2011

Assessment Years : 2004-05 & 2002-03

Assistant Commissioner of

Income Tax,

Circle-46(1),

New Delhi.

(Appellant)

Vs.

Shri Jaswinder Singh Ahuja,

E-365, Greater Kailash-II,

New Delhi – 110 048.

PAN : AAAPA2041H.

 (Respondent)

Appellant by: Shri R.S.Negi, Sr.DR.

Respondent by: None.

ORDER

PER G.D.AGRAWAL, VP:

The only ground raised in these appeals by the Revenue is against the cancellation of penalty levied under Section 271(1)(c) of the Income-tax Act, 1961 at `2,50,102/- and `15,69,445/- for AY 2004- 05 and 2002-03 respectively.

2. Since the facts of both the years are identical except variation in the quantum, we shall discuss herein the facts relating to AY 2004-05.

3. The assessee is an individual who is the Managing Director of Cadence Design Systems India Pvt.Ltd. For the AY 2004-05, he filed a return of income at `1,75,05,081/- comprising of salary income at `1,02,72,400/- from Cadence Design Systems India Pvt.Ltd. and salary income of `65,97,305/- from Cadence Design System Inc., USA. The assessee has been granted stock option under an incentive stock option agreement dated 17th September, 1993 with Cadence Design Systems, USA. During the year under consideration, the assessee sold the stock options and received the sum of `11,36,829/- on sale of such stock options. The same was declared as long term capital gain. The Assessing Officer assessed the same as short term capital gain and also levied penalty under Section 271(1)(c) thereon at `2,50,102/- being the difference between the tax as short term capital gain and tax as long term capital gain on the sum of `11,36,829/-. The learned CIT(A) cancelled the penalty. Hence, the Revenue is in appeal.

4. We have heard both the parties and perused the material placed before us. From the facts of the case, it is evident that the only dispute is whether the income from sale of stock options is assessable as long term capital gain (as disclosed by the assessee) or short term capital gain (as assessed by the AO). Apparently, there is no concealment of any fact or furnishing of any incorrect or wrong fact. Merely because in the opinion of the Assessing Officer the income from sale of stock option is assessable as short term capital gain and not as long term capital gain, it would not amount to concealment of income. In our opinion, on the facts of the assessee’s case, the decision of Hon’ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. – 322 ITR 158 (SC) would be squarely applicable wherein their Lordships held as under:-

“Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere taking of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”

5. In the assessee’s case, evidently, there is no furnishing of any inaccurate particulars. It is not the case of the Revenue that the assessee has either concealed any fact or has submitted any wrong or incorrect fact. It is only the question of opinion whether the income from sale of stock option is assessable as short term capital gain or as long term capital gain. In view of the above, respectfully following the above decision of Hon’ble Apex Court in the case of Reliance Petroproducts Pvt.Ltd., we uphold the order of learned CIT(A).

6. Admittedly, the facts of AY 2002-03 are identical except that the quantum of penalty is `15,69,445/- and the amount received from the sale of stock option is `1,05,19,631/-. For the detailed discussion in para 4 & 5 above, we uphold the order of learned CIT(A) for AY 2002- 03 also.

7. In the result, the Revenue’s appeals are dismissed.

Decision pronounced in the open Court on conclusion of hearing on 25th June, 2012.

                                                      Sd/-                            Sd/-

                                          (I.C.SUDHIR)         (G.D.AGRAWAL)

                                      JUDICIAL MEMBER VICE PRESIDENT

Dated: 25.06.2012

VK

Copy forwarded to:

1. Appellant: Assistant Commissioner of Income Tax, Circle-46(1), New Delhi.

2. Respondent : Shri Jaswinder Singh Ahuja, E-365, Greater Kailash-II, New Delhi – 110 048.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar