Arun Gupta HUF, Hyderabad V. Asst. Commissioner of Income Tax, Circle-6(1), Hyderabad

ITA 1538/Hyd/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4874 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J DIVYA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 1538/HYD/2017 ASST. YEARS: 2 005 - 06 SRI ARUN GUPTA (HUF), HYDERABAD. PAN: AAHHA 7572 A VS. ACIT, CIRCLE - 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P. MURALI MOHAN RAO REVENUE BY: SMT. K.J. DIVYA DR DATE OF HEARING: 07/10/ 2020 DATE OF PRONOUNCEMENT: 12 /10/2020 ORDER PER A. MOHAN ALANKAMONY, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 9, HYDERABAD IN APPEAL NO. 0194/IACIT, CIRCLE - 6(1)/20 - 15 - 16, DATED 19/05/2017 PASSED U/S. 271(1)(C) R.W.S 250(6) OF THE ACT FOR THE AY: 2005 - 06. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ALL ITS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN UPHOLDING THE PENALTY LEVIED BY THE LD. AO INVOKING THE PRO VISIONS OF SECTION 271(1)(C) OF THE ACT. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH & SEIZURE OPERATIONS WERE CONDUCTED IN THE CASE OF ARUN GUPTA ON 14/12/2007. DURING THE COURSE OF SEARCH, IT WAS OBSERVED THAT SRI ARUN GUPTA AND HIS SPOUSE SMT. PUSHPA GUPTA HAD JOINTLY PURCHASE D A HOUSE PROPERTY AT A - 108, JOURNALIST COLONY, JUBILEE HILLS, HYDERABAD FOR A PURCHASE CONSIDERATION OF RS. 2,25,00,000/ - . IT WAS ALSO REVEALED THAT THE ASSESSEE HAD PAID ON MONEY OF RS. 1,54,00,000/ - FOR THE SAME TRANSAC TION. ON QUERY, THE ASSESSEE HAD EXPLAINED THAT SOME FUNDS FROM THE HUF OF THE ASSESSEE WAS ALSO UTILISED FOR THE PURCHASE OF THE HOUSE PROPERTY. IN THE ABOVE BACKGROUND NOTICE U/S. 153C WAS ISSUED IN THE CASE OF THE ASSESSEES HUF. IN RESPONSE THE ASSESS EE HUF FILED ITS RETURN OF INCOME ADMITTING INCOME OF RS. 3,72,330/ - . 4. THEREAFTER, ASSESSMENT U/S. 143(3) R.W.S 153C OF THE ACT WAS COMPLETED ACCEPTING THE RETURN OF INCOME FILED BY THE ASSESSEE. SUBSEQUENTLY, THE LD. AO INVOKED PENALTY PROCEEDINGS U/S . 271(1)(C) OF THE ACT AND LEVIED PENALTY ON THE ASSESSEE FOR RS. 66,908/ - FOR THE AY: 2005 - 06 BY REJECTING THE PLEA OF THE ASSESSEE THAT INADVERTENTLY THE INTEREST INCOME EARNED BY THE ASSESSEE WAS OMITTED TO BE TAKEN INTO ACCOUNT. THE LD. AO HAD OPINED TH AT ONLY AS A RESULT OF SEARCH THE INTEREST EARNED ON FIXED DEPOSITS MAINTAINED BY THE ASSESSEE IN VARIOUS BANKS WAS REVEALED AND IT WAS A WILFUL AND CONSCIOUS ACT OF THE ASSESSEE 3 FOR CONCEALING THE PARTICULARS OF INCOME IN ORDER TO EVADE TAX. ON APPEAL, TH E LD. CIT (A) AGREED WITH THE VIEW OF THE LD. AO AND THEREBY CONFIRMED THE ORDER OF THE LD. AO. 5. AT THE OUTSET, WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD. REVENUE AUTHORITIES FOR IMPOSING PENALTY ON THE ASSESSEE BY INVOKING THE PROVISIONS OF SECT ION 271(1)(C) OF THE ACT. FROM THE FACTS OF THE CASE, IT APPEARS THAT IT IS ONLY AN INADVERTENT OMISSION ON THE PART OF THE ASSESSEE FOR NOT TAKING INTO ACCOUNT OF THE INTEREST ACCUMULATED ON THE FDS MAINTAINED WITH VARIOUS BANKS. THE AMOUNT OF FDS IS AL SO NOT PHENOMENAL. IT IS ALSO OBVIOUS THAT THE BANKS WOULD HAVE DEDUCTED TAX AT SOURCE FOR THE INTEREST EARNED BY THE ASSESSEE ON ITS FIXED DEPOSITS. IT IS ALSO APPARENT THAT AS SOON AS THE ASSESSEE REALISED ITS OMISSION, IT HAD FILED THE RETURN OF INCOME AND THE SAME WAS ACCEPTED WITHOUT ANY ADDITION. IN THIS SITUATION, WE ARE REMINDED OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF PRICE WATER HOUSE COOPERS PVT LTD VS. CIT AND OTHERS REPORTED IN 348 ITR 306 WHEREIN IT WAS HELD THAT THE FAILURE ON THE PART OF THE ASSESSEE TO INCLUDE THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME IN THE RETURN OF INCOME DOES NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 4 6. CONSIDERING THE PEC ULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT APPEALS BEFORE US, WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HONBLE APEX COURT CITED HEREIN ABOVE IS SQUARELY APPLICABLE TO THE PRESENT CASES BEFORE US. IT IS QUITE NATURAL THAT WHEN INDIVI DUALS / HUF MAINTAIN FIXED DEPOSITS IN PIECEMEAL WITH VARIOUS BANKS, THE INTEREST EARNED ON THE FIXED DEPOSITS MIGHT BE LOST SIGHT OFF AS THE INTEREST GETS AUTOMATICALLY ACCUMULATED WITH THE DEPOSITS. THE NEED TO EVALUATE THOSE FIXED DEPOSITS WILL ARISE ON LY WHEN FUNDS ARE REQUIRED FOR A SPECIFIC PURPOSE. IN THE CASE OF THE ASSESSEE - HUF IT APPEARS THAT THE ASSESSEE TOOK STOCK OF THE FIXED DEPOSITS WHEN THEY WERE IN THE PROCESS OF PURCHASING THE HOUSE PROPERTY AND THE INTEREST EARNED BY THOSE FIXED DEPOSIT WAS INADVERTENTLY OMITTED TO BE TAKEN INTO ACCOUNT. HENCE, WE ARE OF THE VIEW THAT IT IS ONLY AN UNINTENDED OMISSION ON THE PART OF THE ASSESSEE. IT IS PERTINENT TO MENTION THAT THE DECISIONS RELIED ON BY THE LD. DR ARE NOT APPLICABLE TO THE FACTS AND CIRC UMSTANCES OF THESE CASES BEFORE US. THEREFORE, IN THE INTEREST OF JUSTICE, WE HEREBY SET ASIDE THE ORDERS OF THE LD. CIT (A) AND FURTHER DIRECT THE LD. AO TO DELETE THE PENALTY IMPOSED ON THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT IN ALL THESE CASES FOR THE RELEVANT ASSESSMENT YEARS. 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN ITS FAVOUR. PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2020. SD/ - (SMT. P. MADHAVI DEVI) SD/ - ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 12 TH OCTOBER, 2020. OKK COPY TO: - 1) SRI ARUN GUPTA (HUF), C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 2) THE ACIT, CIRCLE - 6(1), HYDERABAD. 3) THE CIT(A) - 9, HYDERABAD (II) ADDL. CIT, RANGE - 6 , HYDERABAD. 4) THE PR. CIT - 6, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE