COMMISSIONER OF INCOME TAX Vs. NEENU DUTTA

JUDGEMENT

(1.) This is an appeal filed on behalf of the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the "Act"). The appellant herein has challenged the order dated 20.07.2012 passed by the Income Tax Appellate Tribunal in ITA No. 215/Del/2012 for the assessment year 2008-09. The controversy in the present case relates to levy of penalty by the Assessing Officer under Section 271(1)(c) of the Act.

(2.) The assessee filed a return under the Act for the assessment year 2008-09 on 30.09.2008 declaring an income of Rs. 78,83,303/-. The assessee did not include capital gains of Rs. 86,98,461/- that had resulted on account of the assessee exercising of stock options and the sale of the shares vested with the assessee pursuant the exercise of the Employees Stock Option (ESOP). The assessee did not include the said amount as gains were claimed to be long term capital gains.

(3.) The assessee was a senior executive with Citi Bank N.A. and had been granted the employee stock options by the employer on various dates from January 1998 to January 2004 during the course her of employment. The first employee stock option was granted to the assessee on 20.01.1998 and on the last option the stock option was granted on 20.01.2004. The employee stock options that were granted to the assessee were exercised by her on various dates. The employee stock option granted to the assessee on 20.01.1998, 2.11.1998, 13.02.2002, 12.02.2003 and 13.02.2002 was exercised by the assessee on 30.04.2007, 03.05.2007, 19.04.2007, 23.04.2007 and 13.07.2007 for 2680, 3431, 514, 600 and 128 nos. of shares respectively. The employee stock options granted to the assessee were cashless options and the shares vested with the assessee pursuant to the exercise of the options were liable to be sold and the net proceeds thereof remitted to the assessee. The shares vested with the assessee pursuant to the options exercised were sold on the date of exercise of options and after deducting the price at which the options were granted and the expenses for sale of shares, the balance proceeds were remitted to the assessee.