M.Thangavelu, Coimbatore V. ACIT, Coimbatore

ITA 1470/CHNY/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7761 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 26-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VI KRAMADITYA
• Assessee Lawyers: K RAGHU
• Keywords: Bonafide mistake
• Section: 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1470/MDS/2011 (ASSESSMENT YEAR: 2007-08) MR. M.THANGAVELU, 156-2, EAST THOTTAM, MADAMPATTI, COIMBATORE-641 010. PAN:AFSPT3975N VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-II, COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. K.RAGHU, C.A. RESPONDENT BY : MR. V IKRAMADITYA, JCIT DATE OF HEARING : 11 TH JULY, 2012 DATE OF PRONOUNCEMENT : 25 TH JULY, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNING THE ORDER OF THE CIT(A)-I, COIMBATORE DATED 4.5.201 1 RELEVANT TO THE ASSESSMENT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF ONE MR. D.SRINIVASAN OF M /S.SREE ANNAPOORNA GOWRISHANKAR ESTATES & CONSTRUCTIONS (P) LTD., IT TRANSPIRED THAT SHRI K.THANGAVELU , THE PRESENT ASS ESSEE IS WORKING AS COMMISSION AGENT AND ON THE COMMISSION P AID TO THE ASSESSEE, TAX WAS DEDUCTED BY SHRI D.SRINIVASAN . ON ITA NO.1470/MDS/2011 2 VERIFICATION IT EMERGED THAT THE ASSESSEE WAS NOT A SSESSED TO TAX . SUMMONS UNDER SECTION 131 OF THE INCOME TAX A CT, 1961 WAS ISSUED TO THE ASSESSEE ON 7.7.2008. THE AS SESSEE ADMITTED THE RECEIPT OF THE COMMISSION FROM SHRI D. SRINIVASAN TO THE TUNE OF ` 81,92,208/-, DURING THE CURRENT YEAR AND ` 15.00 LAKHS DURING THE FINANCIAL YEAR ENDED ON 31.3 .2008. NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 17.7.2008. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED RETURN ON 16.2.2009 RELEVANT TO THE ASSESSMENT YEAR 2007-0 8 ADMITTING TOTAL INCOME OF ` 26,18,340/-. IN THE INCOME AND EXPENDITURE STATEMENT, THE ASSESSEE ADMITTED BROKER AGE AND COMMISSION OF ` 76,92,208/- WHEREAS IN THE TDS CERTIFICATES THE AMOUNT WAS SHOWN AS ` 81,92,208/-. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 17.11.2009 MADE ADDITION OF ` 5.00 LAKHS IN THE INCOME RETURNED BY THE ASSESSEE. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) WERE AL SO SEPARATELY INITIATED AGAINST THE ASSESSEE. THE ASS ESSING OFFICER VIDE SEPARATE PENALTY ORDER DATED 31.5.2010 IMPOSED MINIMUM PENALTY OF 100% TAX SOUGHT TO BE EVADED AMO UNTING ITA NO.1470/MDS/2011 3 TO ` 10,22,535/- . THE ASSESSING OFFICER WHILE IMPOSING PENALTY HELD THAT FIRSTLY THE ASSESSEE HAD NOT FILE D RETURN OF INCOME VOLUNTARILY AND SECONDLY THE ASSESSEE HAD CONCEALED INCOME OF ` 5,00,000/- THEREBY EVADING TAX. 3. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE ORDER DATED 4.5.2011 DISMISSED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE WAS NOT FILING ANY RETURN OF INCO ME VOLUNTARILY EVEN THOUGH HE WAS LIABLE FOR PAYMENT O F TAX. FROM THE RECORDS, IT IS EVIDENT THAT CONCEALMENT OF INCOME HAS TAKEN PLACE ON TWO COUNTS. FIRSTLY, BY NON-FILI NG OF RETURN OF INCOME VOLUNTARILY AND SECONDLY BY CONCEALING AN AMOUNT OF ` 5.00 LAKHS. THE CIT(A) ALSO CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271( 1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. SHRI K.RAGHU, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT ASSESS ED TO TAX PRIOR TO THE ASSESSMENT YEAR 2007-08. NOTICE W AS ISSUED TO THE ASSESSEE UNDER SECTION 148. IN COMPLIANCE OF THE ITA NO.1470/MDS/2011 4 NOTICE, THE ASSESSEE HAD FILED RETURN BEFORE THE EX PIRY OF THE TIME AS PRESCRIBED UNDER SECTION 153 OF THE ACT. TH EREFORE THE RETURN FILED BY THE ASSESSEE IS VOLUNTARY RETURN. H E FURTHER CONTENDED THAT THE AMOUNT OF ` 5.00 LAKHS WAS INADVERTENTLY NOT MENTIONED IN THE INCOME AND EXPENDITURE STATEME NT AND IT WAS NOT DELIBERATE CONCEALMENT ON THE PART OF THE A SSESSEE AND IT WAS ON ACCOUNT OF OVERSIGHT. THEREFORE, THE PENALTY ON ACCOUNT OF CONCEALMENT OF ` 5.00 LAKHS AND NON- FILING OF RETURN VOLUNTARILY IS LIABLE TO BE SET ASIDE BY THE TRIBUNAL. 5. ON THE OTHER HAND, SHRI VIKRAMADITYA, REPRESENTI NG REVENUE SUBMITTED THAT THE ASSESSEE HAD DELIBERATE LY NOT FILED THE RETURN OF INCOME. IF THE NOTICE WOULD NOT HAVE BEEN ISSUED, THE ASSESSEE WOULD NOT HAVE FILED THE RETUR N OF INCOME, THUS EVADING THE TAX LIABILITY. MENS REA WAS APPARENT ON THE PART OF THE ASSESSEE IN NOT FILING THE RETURNS AND ESCAPING WITH TAX LIABILITY. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE PARTIE S AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES. WE ARE OF THE CONSIDERED OPINION THAT THE RETURN FILED BY THE ASSESSEE IN COMPLIANCE OF THE NOTICE UNDER SECTION 148 IS NOT ITA NO.1470/MDS/2011 5 A VOLUNTARY RETURN. THE FACTS AND CIRCUMSTANCES OF THE CASE CLEARLY SUGGEST THAT THE ASSESSEE HAD EARLIER NOT F ILED THE RETURN AND IT WAS ONLY PURSUANT TO THE ASSESSMENT PROCEEDINGS OF SHRI D.SRINIVASAN OF M/S. SREE ANNAP OORNA GOWRISHANKAR ESTATES & CONSTRUCTIONS (P) LTD., IT T RANSPIRED THAT THE ASSESSEE WAS WORKING AS COMMISSION AGENT A ND WAS PAID COMMISSION AND TAX WAS DEDUCTED ON THE COMMISS ION SO PAID. WE ARE OF THE VIEW THAT EVEN IF THE RETURN HA S BEEN FILED WITHIN THE TIME PRESCRIBED UNDER SECTION 153 OF THE ACT IS NOT A VOLUNTARY RETURN. EXPLANATION TO SECTION 148 MAKE S IT CLEAR THAT NOTHING CONTAINED IN THE FIRST PROVISO OR THE SECOND PROVISO SHALL APPLY TO ANY RETURN WHICH HAS BEEN FU RNISHED ON OR AFTER THE 1ST DAY OF OCTOBER, 2005 IN RESPONSE T O A NOTICE SERVED UNDER THIS SECTION. THEREFORE, THE ASSESSEE CANNOT SAY THAT THE RETURN FILED WAS VOLUNTARY RETURN AS I T WAS FILED BEFORE THE EXPIRY OF THE TIME LIMIT AS SPECIFIED IN SECTION 153 OF THE ACT. 7. THE SECOND CONTENTION OF THE ASSESSEE IS WITH RE GARD TO ADDITION OF ` 5.00 LAKHS MADE BY THE ASSESSING OFFICER. THE DOCUMENTS ON RECORD CLEARLY SHOW THAT TAX WAS DEDUC TED AT ITA NO.1470/MDS/2011 6 SOURCE AND COMMISSION RECEIVED WAS TO THE TUNE OF ` 81,92,208/-, WHEREAS IN THE RETURN FILED THE INCOME ADMITTED WAS ` 76,92,208/-. SO THERE IS CONCEALMENT OF INCOME OF ` 5.00 LAKHS IN THE INCOME RETURNED BY THE ASSESSEE. THE P LEA OF THE ASSESSEE THAT ERROR WAS ON ACCOUNT OF OVERSIGHT IS NOT TENABLE. THE ASSESSEE HAD FILED RETURN OF INCOME IN PURSUANCE TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE ASSESSEE HAS CLAIMED BENEFIT OF TAX DEDUCTED AT SOU RCE ON THE COMMISSION EARNED. THE ASSESSEE HAS SHOWN IN HI S RETURN OF INCOME, THE EXACT AMOUNT OF TAX DEDUCTED AT SOURCE WHEREAS HE HAS SHOWN ` 5,00,000/- LESS IN THE COMMISSION EARNED. THIS CANNOT BE SAID TO BE AN INADVERTENT OR A BONAFIDE MISTAKE. IT IS CLEARLY A DELIBERATE ATTEMP T ON THE PART OF THE ASSESSEE TO CONCEAL THE INCOME. WE, THEREFO RE, REJECT THE SUBMISSIONS OF THE A.R. OF THE ASSESSEE ON THIS ISSUE AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 8. WITH REGARD TO PENALTY, THE A.R. SUBMITTED THAT PENALTY HAS BEEN IMPOSED ON THE ENTIRE AMOUNT OF ` 10,22,535/-. WE ARE OF THE CONSIDERED OPINION THAT TAX HAS BEEN DED UCTED AT SOURCE. SINCE THE ASSESSEE HAD FILED RETURN FOR THE FIRST TIME, IT ITA NO.1470/MDS/2011 7 WOULD BE TOO HARSH TO IMPOSE PENALTY ON THE ENTIRE AMOUNT OF TAX. WE, THEREFORE, REDUCE THE PENALTY ONLY TO BE L EVIED ON THE INCOME ESCAPED I.E. ` 5,00,000/- THE AMOUNT NOT SHOWN IN THE RETURN OF INCOME. WE PARTLY ALLOW THIS GROUND OF TH E ASSESSEE. HOWEVER, WE SUSTAIN THE ORDER OF PENALTY, BUT THE A MOUNT ON WHICH THE PENALTY HAS TO BE LEVIED IS THE CONCEA LED INCOME I.E. ` 5,00,000/-. THE ASSESSING OFFICER IS DIRECTED TO RE WORK THE PENALTY ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, THE 25 TH DAY OF JULY, 2012 AT CHENNAI. SD/- SD/- ( ABRAHAM P.GEORGE ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 25 TH JULY, 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .