Gurmeet Singh, Nalagarh V. ITO, Baddi

ITA 1315/CHANDI/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51534 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Bonafide mistake
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1315/CHD/2010 ASSESSMENT YEAR 2004-05 SHRI GURMEET SINGH, V INCOME TAX OFFICER C/O M/S BANTOO MEDICOS, BADDI. SAI ROAD, BADDI, TEH. NALAGARH. PAN: ANSPS-6121P (APPELLANT) (RESPONDENT) ASSESSEE BY: NONE DEPARTMENT BY: SMT. JAISHREE SHARMA DATE OF HEARING : 05.10.2011 DATE OF PRONOUNCEMENT : 17.10.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 15.09.2010 PASSED BY THE LD. CIT(A) SHI MLA AGAINST THE ORDER U/S 271(1)(C) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUND OF APPEAL: 1. THE LD. CIT(A) IS WRONG IN CONFIRMING THE PENALTY OF RS.1,17,536/- LEVIED U/S 271(1)(C) OF THE ACT ON ADDITION OF RS.3,91,788/- WITHOUT SPECIFICALLY FINDING ANY CONCEALMENT AND BY IGNORING THE FACT THAT ADDITION WAS MADE ON ESTIMATED BASIS BY APPLYING THE NP RATE OF 8% OF GROSS RECEIPTS, AFTER REJECTING THE BOOKS OF ACCOUNT. THE LD. AO HAD ARBITRARILY INCREASED THE NET PROFIT FROM 4.38% TO 8% OF THE TOTAL RECEIPTS A S THE EXPENSES WERE NOT FULLY VOUCHED. 2 3. IN THIS CASE, THE AO LEVIED PENALTY U/S 271(1)(C ) OF THE ACT AT RS.1,17,540/- ON THE GROUND THAT THE ASSESSEE DI SCLOSED THE INCOME OF RS.76,500/- IN THE RETURN FILED IN RESPON SE TO NOTICE U/S 148 OF THE ACT. BEFORE THE AO, IT WAS CONTENDE D BY THE ASSESSEE THAT THERE WAS A MISTAKE IN DRAFTING OF OR IGINAL BALANCE-SHEET AND THE SAME HAD BEEN RE-DRAFTED. TH E RECEIPT OF RS.13,99,088/- WAS ERRONEOUSLY COULD NOT BE CREDITE D TO THE CONTRACT RECEIPTS ACCOUNT. SIMILARLY, THE EXPENSES AMOUNTING TO RS.13,22,588/- ON THE CONTRACT WERE NOT DEBITED TO THE PROFIT & LOSS ACCOUNT. THESE RECEIPTS AND EXPENSES RELATE T O NAGAR PANCHAYAT CONTRACT ONLY AND DUE TO NON-PASSING OF J OURNAL ENTRY I.E. TRANSFER OF EXPENSES AND INCOME TO PROFI T & LOSS ACCOUNT, THE ERROR OCCURRED IN THE BALANCE-SHEET. THE PROFIT ON THIS TRANSACTION HAS NOW BEEN CREDITED TO THE PROFI T & LOSS ACCOUNT. THE MISTAKE IS A BONAFIDE MISTAKE AND THE TRUE AND CORRECT INCOME WAS DISCLOSED IN THE RETURN. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AND LEVIED THE IMPUGNED PENALTY. THE LD CIT(A) CONFIRMED THE SAID PENALTY. 4. A PERUSAL OF THE RELEVANT RECORD AND THE SUBMISS IONS FILED BY THE ASSESSEE BEFORE THE AO AND CIT(A) REVEAL THA T THE CREDIT BALANCE OF RS.76,500/- IN NAGAR PANCHAYAT ACCOUNT B EING PROFIT EARNED FROM SUCH CONTRACT WAS MISTAKENLY SHOWN UNDE R THE HEAD CURRENT LIABILITIES. THE ASSESSEE DISCLOSED THE IMPUGNED RECEIPT IN THE RETURN FILED IN RESPONSE TO NOTICE U /S 148 OF THE ACT. THE AO REJECTED THE BOOKS OF ACCOUNT AND APPL IED NET PROFIT RATE AT 8% ON THE GROSS RECEIPTS OF THE ASSE SSEE. THE ASSESSEE HAD ENCLOSED THE TDS CERTIFICATES IN RESPE CT OF THE IMPUGNED RECEIPT ALONGWITH THE RETURN OF INCOME. T HEREFORE, IT 3 WAS A BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE. SUCH BONAFIDE MISTAKES ARE NOT COVERED UNDER THE CONCEPT OF CONCEALED INCOME WITHIN THE MEANING OF SECTION 271( 1)(C) OF THE ACT. THE BONAFIDE OF THE ASSESSEE IS EVIDENT FROM THE TDS CERTIFICATE ANNEXED WITH THE RETURN OF INCOME IN RE SPECT OF SUCH RECEIPTS. NEEDLESS TO SAY THAT LEVY OF PENALTY IS NOT MANDATORY AND AUTOMATIC IN NATURE. IT IS INCUMBENT UPON THE AO TO CONSIDER THE FACTUAL MATRIX OF THE CASE IN A HUMANE AND CONSIDERATE MANNER. WE ARE OF THE CONSIDERED OPINI ON THAT SUCH BONAFIDE MISTAKE OF THE ASSESSEE CANNOT BE CON SIDERED AS CONCEALMENT. THEREFORE, THE FINDINGS OF THE LD. CI T(A) ARE NOT UPHELD. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH OCT.,2011 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH