ITAT upheld deletion as ommission was due to bonafide mistake of assessee.

1. The assessee was a retired Brigadier of Indian Army and earned income under the head 'salary' (pension income). The assessee had filed return of income for AY 2006-07 declaring an income of Rs.1,68,420/-. The case of the assessee was picked up for scrutiny. The assessee participated in the scrutiny proceedings and produced the bank account details; and brought to the knowledge of the AO that his wife had sold 5,00,000 equity shares of M/s. Quantum Stocks Pvt. Ltd. for Rs.1,60,94,000/- crores. The assessee filed revised computation of income and deposited the tax payable of Rs.16,73,682/- with the department before the assessment was completed and later on, the AO after making some additions of short term capital gains raised a demand of Rs.59,027/- which was also paid by the assessee. The AO initiated penalty proceedings against the assessee. The assessee participated in the penalty proceedings and brought to the knowledge of the AO that the assessee was of the bonafide belief that income from long term/short term capital gains was exempt u/s 10(38) (of Income Tax Act, 1961), so it does not form part of the total income; and that the assessee did not had any intention to deliberately hide or conceal the income or has not filed any inaccurate particulars before the AO which would warrant penalty against the assessee. AO levied a penalty at the minimum rate of 100% which comes to Rs.12,74,450/-.

2. CIT (A) deleted the penalty.

3. On appeal, the ITAT held as under:

"The assessee's explanation that he was of the bonafide belief that income from long term and short term capital gains is exempt u/s 10(38) (of Income Tax Act, 1961) and does not form part of the total income has to be accepted unless the AO is able to show that the explanation of the assessee is false or he has not been able to substantiate his explanation. We find that there is no deliberate attempt on the part of the assessee either to conceal income or to file inaccurate particulars of income. The assessee at the time of assessment proceedings has given all the details before the completion of the assessment proceedings. His explanation given to the AO has not been found to be false. Therefore, we concur with the CIT (A) that the long term/short term capital gains of the assessee's wife on which assessee had filed the revised return and had offered the tax before the completion of the assessment proceedings and the omission reflected in the return of income, was due to bonafide mistake on the part of the assessee. So, we are inclined to uphold the decision of the CIT(A) and delete the penalty.”

Case Reference - ITO, Ward 41 (1), vs. Brig. Ashish Dube (Retd.)

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'A' : NEW DELHI)

BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND

SHRI A.T. VARKEY, JUDICIAL MEMBER

ITA No.1915/Del./2013

(ASSESSMENT YEAR : 2006-07)