SHRI. PRAGNESH J PATEL, Mumbai V. ITO WARD -21(1)(4), Mumbai

ITA 182/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4910 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 14-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Assessee Lawyers: DINKLE HRIYA
• Keywords: Principle of natural justice; Set aside
• Section: 271(1)(c); 143(3); 133(6); 201; 13

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC - I BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 182 /MUM/ 201 9 (ASSESSMENT YEAR 2011 - 12 ) SHRI PRAGNESH J. PATEL 510, C. BHAKTI BUILDING OM NAGAR, ANDHERI (E) MUMBAI - 400 099. PAN : AACPP0600R V S . ITO WARD 21(1)(4) C - 10, PRATYAKSHKAR BHAVAN, 6 TH FLOOR BANDRA KURLA COMPLEX, BANDRA E MUMBAI - 400 051. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MS. DINKLE HRIYA DEPARTMENT BY S HRI KAILASH GAIKWAD DATE OF HEARING 13 . 10 . 20 20 DATE OF PRONOUNCEMENT 15 .10 . 20 20 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] DATED 15.10.2018 PERTAINS TO A.Y. 2011 - 12. 2. THE GROUNDS OF APPEAL READ AS UNDER : - NATURAL JUSTICE 1.1 T HE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 53, MUMBAI ['LD. CIT (A)'] ERRED IN PASSING THE APPELLATE ORDER IN BREACH OF THE PRINCIPLES OF NATURAL JUSTICE AS MUCH AS: (I) NOT PROPER, EFFECTIVE AND FAIR OPPORTUNITY WAS GRANTED TO T HE APPELLANT; (II) THE APPELLANT WAS PREVENTED BY BONA FIDE REASONS FOR NOT BEING ABLE TO REPRESENT BEFORE HIM. 1.2 IT IS SUBMITTED THAT, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE ORDER BE HELD AS BAD IN LAW. WITHOUT PREJUDIC E TO THE ABOVE 2.1 THE LD. CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE A.O. U/S. 271 (1) (C) OF THE INCOME - TAX ACT, 1961 ['THE ACT']. 2.2 THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ORDER PASSED BY THE A.O. AND/OR THE PENALTY LEVIE D WAS BAD AND ILLEGAL AS THE NECESSARY CONDITIONS FOR SHRI PRAGNESH J. PATEL 2 INITIATING THE PENALTY PROCEEDINGS AND THE COMPLETION THEREOF WERE NOT FULFILLED. 2.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH PENALTY WAS LEVIABLE. OUT FURTHER PREJUDICE TO THE ABOVE 3.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN LEVYING PENALTY OF RS. 1,38,3607 - U/S. 271(1)(C) OF THE ACT ON THE ALLEGATION OF CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME BY THE APPELLANT . 3.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, EVEN ON MERITS, NO SUCH PENALTY WAS LEVIABLE. 3. BRIEF FACTS OF THE CASE THE ASSESSEE IS PROPRIETOR OF M/S SHREE SAI GRAPHICS INVOLVED IN THE BUSINESS OF PRINTING AND STATIONERY. IN THE ASSESSMENT ORDER U/S 143(3) DATED 24.03.2014, ADDITIONS ON ACCOUNT OF UNDISCLOSED INCOME OF RS.3,37,732/ - WAS MADE ON ACCOUNT OF DIFFERENCE BETWEEN INCOME OFFERED AND THE DETAILS AS PER 26AS STATEMENT. ADDITION WAS ALSO M ADE IN RESPE CT OF UNDISCLOSED INVESTMENT OF RS.1,23,480/ - . PENALTY PROCEEDINGS WERE INITIATED. IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT NO INCOME WAS CONCEALED, THAT THE MISTAKE WAS DUE TO CLERICAL ERROR AND THAT THE ASSESSEE DEC IDED NOT TO FILE AN APPEAL. THAT H OWEVER THERE WAS NO INTENTION TO CONCEAL THE INCOME. TH AT TH E ASSESSEE HAS BOOKED LESS PURCHASE BILLS WHICH RESULTED IN PAYMENT OF HIGHER INCOME TAX. TH AT TH IS WAS DUE TO NON RECEIPT OF PURCHASE BILLS AND CLERICAL ERROR, THAT PURCHASE BILLS WERE NOT BOOKED. THE AO HAS NARRATED IN THE PENALTY ORDER SUCH DIFFERENCES, AS FOLLOWS : - NAME AS PER 26AS AS PER BOOKS DIFFERENCE ETC NETWORKS LTD. 63,027 40,676 22,251 ABHUDA YA BANK 1,54,875 1,22,858 32 , 017 IDBI BANK 2,78,06,880 2,75,23,516 2,83,364 TOTAL 2,80,24,782 2,76,87,050 3,37,732 IN RESPECT OF THE UNDISCLOSED INVESTMENT IN PURCHASE, THE ASSESSING OFFICER H A S NOTED THAT INQUIRIES WERE CONDUCTED BY O BTAINING INFORMATION U/S 133(6) OF THE IT ACT. IN THE CASE OF M/S . EXECUTIVE PAPER C O., DIFFERENCE WAS F OUND SHRI PRAGNESH J. PATEL 3 AMOUNTING TO RS.1,23,480/ - . TH AT TH E ASSESSEE WAS FOLLOWING MERCANTILE METHOD OF ACCOUNTING AND THEREFORE ACCOUNTS WERE MAINTAINED IN SUCH MANNER, AND THE DIFFERENCE WAS NOT A CLERICAL MISTAKE. ACCORDINGLY, THE AO LEVIED PENALTY WH ICH WAS COMPUTED AT RS.1,38,360/ - . 4. UPON ASSESSEES APPEAL LEARNED CIT(A) NOTED THE ASSESSEES SUBMISSION THAT THE DIFFERENCE IN THE 26AS AND THE INCOME OFFERED OF RS.3,37,732/ - WAS JUST A CLERICAL ERROR WHICH IS ADDED IN SALES IN THE SUBSEQUENT YEAR. B UT IN THE INTEREST OF REVENUE, TO AVOID LITIGATION AND DISPUTE, TO BUY PEACE OF MIND, NO APPEAL WAS FILED. THAT A S REGARDS, DIFFERENCE OF PURCHASE/EXPENSES OF RS.1,23,480/ - , IT WAS STATED THAT THERE WAS AN ACCOUNTING AND CLERICAL ERROR AND SIMILAR EXPENDIT URE WAS FILED. THAT I T WAS REITERATED THAT APPELLANT HAD NO INTENTION TO CONCEAL ANY INCOME AND IT HAD NO MALAFIDE INTENTION TO AVOID TAX. 5. HOWEVER, L EARNED CIT(A) WAS NOT CONVINCED. HE HELD THAT THE ASSESSEE SHOULD HAVE REC ONCILED THE A CCOU NT AND 26AS STATEMENT. HENCE HE CONFIRMED THE PENALTY. 6 . AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7 . I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD. I NOTE THAT ADDITION IN THIS CASE IS A RESULT OF DIFFERENCE IN BOOKING OF INCOME AS PER ASS ESSEES BOOKS AND THAT AS PER 26AS STATEMENT. CERTAIN DIFFERENCE S HAVE ALSO RE SULTED FROM PURCHASE RECONCILIATION. ASSESSEE HAS EXPLAINED THAT THOSE ARE RESULT OF CLERICAL ERROR. THIS EXPLANATION HAS BEEN BRUSHED ASIDE. I NOTE THAT WHEN THE AMOUNT IS DULY REFLECTED IN 26AS, THERE IS NO PRESUMPTION THAT THE ASSESSEE STILL WISHES TO CO NCEAL INCOME. THE NATURE OF DIFFERENCE AND THE ASSESSEE EXPLANATION COMPLEMENT EACH OT H ER . IN THESE FACTS ASSESSEE CANNOT BE VISITED WITH THE REGOUR OF PENALTY U/S. 271(1)(C) OF THE ACT, IN AS MUCH AS ASSESSEE CANNOT BE HELD GUILTY OF SUBMITTING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT . M OREOVER THE CONDUCT OF THE ASSESSEE IS NOT CONTUMACIOUS SHRI PRAGNESH J. PATEL 4 WARRANTING LEVY OF PENALTY. HENCE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BEL OW AND DIRECT THAT THE PENALTY IS DELETED. 8 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES ON 15.10.2020. SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 15 / 1 0 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI