JAMNABEN PARSHOTTAMDAS PATEL,BANASKANTHA V. THE ITO, WARD(1), PALANPUR

ITA 1801/AHD/2025

AI Insights

The case involves an appeal by Jamnaben Parshottamdas Patel against a penalty imposed by the Income Tax Officer, Ward-1, Palanpur, for the assessment year 2011-12. The penalty was initially levied following an assessment that recharacterized the assessee's reported long-term capital gains from the sale of shares as business income, leading to a higher taxable income and subsequent penalty for alleged concealment of income. The assessee contested the penalty, arguing that there was no concealment as the income was fully disclosed in the tax return. The Tribunal agreed with the assessee, stating that the conditions for imposing a penalty under section 271(1)(c) were not met, as there was no concealment or inaccurate reporting of income.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827211 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH CHAND MEENA
• Assessee Lawyers: SANJAY R. SHAH
• Keywords: Business income; Deduction for capital gain
• Section: 143(3); 271(1)(c)

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before Ms. Suchitra Kamble, Judicial Member Jamnaben Parshottamdas Patel, Jodhanpura, Chadotar, Palanpur, H.O. Palanpur, Banaskantha-385001 PAN: AKHPP5626J (Appellant) Vs The Income Tax Officer, Ward-1, Palanpur, Banaskantha, Gujarat-385001 (Respondent) Assessee by: Shri Sanjay R. Shah, C.A. Revenue by: Shri Suresh Chand Meena, Sr. D.R. Date of hearing : 03-12-2025 Date of pronouncement : 06-01-2026 आदेश/ORDER This is an appeal filed against the order dated 28-07- 2025 passed by National Faceless Appeal Centre(NFAC), Delhi for assessment year 2011-12. 2. The grounds of appeal are as under:- “1. The Commissioner of Income Tax (Appeals) erred in law and in facts by confirming penalty under section 271(1)(c), despite full disclosure of income in the return and during assessment proceedings. There was no concealment or furnishing of inaccurate particulars; hence, the penalty of \u000164,071/- is untenable and deserves to be deleted. 2. Without prejudice to the above, in any case, penalty u/s. 271(1)(c) cannot be levied when the full particulars of income are ITA No.1801/Ahd/2025 Assessment Year 2011-12 Printed from counselvise.com I.T.A No. 1801/Ahd/2025 Jamnaben Parshottamdas Patel, A.Y. 2011-12 2 disclosed and merely been recharacterized from exempt to taxable by the Assessing Officer. It be so held now and the penalty levied be deleted. 3. Your Appellant reserve the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal.” 3. The assessee filed return of income of Rs. 77,920/- for assessment year 2011-12 and the assessment was completed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 on 22-12- 2018 for assessment year 2011-12 at assessed income of Rs. 5,31,140/- after making an addition of Rs. 4,53,220/- u/s. 68 of the Income Tax Act being the profit from the sale of shares of DPL and treated the same as business income and not long term capital gain as claimed by the assessee. In the meanwhile, the Assessing Officer also initiated penalty proceedings u/s. 274 r.w.s. 271(1)(c) of the Act for concealment of particulars of income on 22-12-2018. After taking cognizance of the assessee’s submissions, the Assessing Officer imposed penalty at R. 64,071/- u/s. 271(1)(c). 4. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee 5. The ld. A.R. submitted that though the assessee has lost in quantum appeal and the same is finalized yet the fact remains that the assessee has claimed the same amount on sale of shares and profit thereof as long term capital gain and not as the assessee is only dealing with the said scrips and not more than that. The ld. A.R. further submitted that the notice for penalty u/s. 271(1)(c) has initiated the penalty as per concealment of particulars of income but in the present case the assessee has Printed from counselvise.com I.T.A No. 1801/Ahd/2025 Jamnaben Parshottamdas Patel, A.Y. 2011-12 3 disclosed the said income as long term capital gain and thus there was no concealment at all. 6. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the material available on record. The fact remains that the assessee has taken this income as long term capital gain exemption while filing the income tax return for assessment year 2011-12 and thus the element of concealment does not appear in the present matter. Thought the quantum is confirmed while for invoking section 271(1)(c) the element of filing inaccurate particulars of income and concealment of particulars of income, these two conditions either has to be followed and substantiated by the Assessing Officer while imposing penalty. But in the present case, both the limbs/conditions for invoking provisions of section 271(1)(c) does not appear. Thus, the penalty itself is not justifiable and the same is deleted. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 06-01-2026 Sd/- (Suchitra Kamble) TRUE COPY Judicial Member a.k. Ahmedabad : Dated 06/01/2026 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) Printed from counselvise.com I.T.A No. 1801/Ahd/2025 Jamnaben Parshottamdas Patel, A.Y. 2011-12 4 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद Printed from counselvise.com "