Exemption Claim on Unlisted Share Sale Attempt to Avoid Tax

The Madras High Court examined whether penalty under Section 271(1)(c) of the Income-tax Act could be sustained where an assessee, after paying advance tax on capital gains arising from sale of unlisted shares, subsequently claimed exemption under Section 10 while filing the return and sought refund of the taxes already paid. 

The Court held that the claim was neither bona fide nor attributable to a typographical error or inadvertent omission. 

Observing that the assessee was fully aware of the taxability of the transaction and had consciously sought an inapplicable exemption, the Court upheld the Tribunal’s order restoring the penalty. The appeal was accordingly dismissed in favour of the Revenue.