Sri. Gopalakrishna Karodi Subbanna, Dakshina Kannada V. The Income Tax Officer, Ward- 1, Puttur

ITA 259/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1881 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-12-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 20-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: S SRINIVAS KAMATH
• Keywords: Opportunity of being heard; Tax effect; Set aside
• Section: 271(1)(c); 274; 271B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.259 & 260/BANG/2020 ASSESSMENT YEAR : 2014 15 SHRI GOPALAKRISHNA KARODI SUBBANNA, JAYANAGAR, SULLIA, KASABA, DAKSHINA KANNADA-574 239. PAN AHCPS 1738 G VS. THE INCOME TAX OFFICER, WARD-1, PUTTUR . APPELLANT RESPONDENT APPELLANT BY : SHRI S SRINIVAS KAMATH, C.A RESPONDENT BY : SHRI PRIYADARSHI MISHRA, JCIT (DR) DATE OF HEARING : 01-12-2020 DATE OF PRONOUNCEMENT : 04-12-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS HAVE BEEN FILED BY ASSESSEE AGAINST SEPARATE ORDERS DATED 22/03/2019 PASSED BY LD. CIT (A), MANGALORE FOR ASSESSMENT YEAR 2014-15 ON FOLLOWING GROUNDS OF APPEAL: 1. THE ASSESSMENT ORDER AND CIT ORDER ARE AGAINST THE LAW, FACTS, FIGURES AND CIRCUMSTANCES OF THE CASE. RS.2, 16,300/- PAGE 2 OF 10 ITA NO.259 & 260/BANG/2020 2. THE AUTHORITIES BELOW ERRED IN LEVYING/CONFIRMI NG PENALTY U/S 271(FL(C) WITHOUT CONSIDERING THE FACTS OF THE CASE AND NOT GIVING PROPER OPPORTUNITY OF BEING HEARD. RS.2,16,300/- 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. FOR THE ABOVE AND O THER GROUNDS AND SUBMISSION THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. RS.2,16,300/- 4. THE APPELLANT PRAYS THAT THIS AUTHORITY BE PLEA SED TO ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE LEARNED ASSES SING OFFICER AND CIT ORDER, OR PASS ANY SUCH ORDERS AS THIS AUTHORITY DE EMS FIT AND PROPER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTE REST OF JUSTICE AND EQUITY. RS.2,16,300/- TOTAL TAX EFFECT U/S 271(1)(C)- RS.2,16,300/- BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM C IVIL CONTRACT WORKS. HE FILED HIS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 01/04/2015 DECLARING TOTAL INCOME OF RS.13,74,11 0/-. CASE WAS SELECTED FOR SCRUTINY IN VIEW OF LARGE CASH DEP OSITS IN ASSESSEES SB ACCOUNT AND MISMATCH IN THE FIGURES O F RECEIPTS, TAX CREDIT AND TURNOVER. THE ASSESSMENT WAS COMPLET ED BY ORDER DATED 30/11/2016 BY ASSESSING THE INCOME IN THE HAN DS OF ASSESSEE AT RS.7,00,000/-. SUBSEQUENTLY PENALTY PRO CEEDINGS UNDER SECTION 271(1)(C ) AND 271B OF THE ACT WERE I NITIATED. 3. PURSUANT TO SHOW CAUSE NOTICE ISSUED, ASSESSEE F AILED TO RESPOND OR FILE ANY REPLY BEFORE LD.AO. THE LD.AO T HUS PASS THE PENALTY ORDERS BY LEVYING PENALTY OF RS.2,16,300/- UNDER SECTION 271(1)(C) FOR CONCEALMENT OF INCOME AND A SUM OF RS .1,50,000/- UNDER SECTION 271B OF THE YEAR TO FURNISH AUDIT REP ORT WITHIN STIPULATED TIME AS REQUIRED UNDER SECTION 44 BB OF THE ACT. PAGE 3 OF 10 ITA NO.259 & 260/BANG/2020 4. AGGRIEVED BY THE PENALTY LEVIED, ASSESSEE PREFER RED APPEAL BEFORE LD.CIT (A). 5. LD.CIT(A) WHILE CONSIDERING THE PENALTY UNDER SE CTION 271 (1)(C) OF THE ACT OBSERVED THAT ASSESSEE HAD NOT DI SCLOSED THE BANK ACCOUNTS WHICH HAD CREDITED OF RS.80,11,8000/- AND RS.28,90,093/-. IT WAS NOTED THAT PURSUANT TO SUCH NONDISCLOSURE DURING ASSESSMENT ASSESSEE HAD OFFERE D A SUM OF RS.7 LAKHS AS INCOME FROM THE SAID UNACCOUNTED CONT RACT RECEIVED. ASSESSEE HAS SUBMITTED BEFORE LD. CIT (A) THAT THE SAID TO ACCOUNTS WERE INADVERTENTLY MISSED OUT AND IT WA S NOT A DELIBERATE ACT. LD.CIT(A) HELD THIS SUBMISSION/EXPL ANATION OF ASSESSEE TO BE SELF-SERVING AND UPHELD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 6. WHILE CONSIDERING THE APPEAL AGAINST PENALTY UND ER SECTION 271B, LD.CIT(A) OBSERVED THAT ASSESSEE HAD NOT FILE D ANY MATERIAL EVIDENCING SUPPORT OF THE CLAIM THAT HE WAS NOT WEL L AND WAS HOSPITALISED. LD.CIT(A) UPHELD THE PENALTY LEVIED U NDER SECTION 271(1) (C) OF THE ACT. 7. AGGRIEVED BY ORDERS PASSED BY LD.CIT(A) ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 259/B/2020 8. HE SUBMITTED THAT ASSESSEE WAS A CONTRACTOR REGI STERED WITH PWD DEPARTMENT OF GOVERNMENT OF KARNATAKA. IT WAS S UBMITTED BY LD.AR THAT, ASSESSEE HAD UNDERTAKEN PRIVATE CONT RACT, AGAINST PAGE 4 OF 10 ITA NO.259 & 260/BANG/2020 WHICH AMOUNTS RECEIVED WERE DEPOSITED IN TWO ACCOUN TS, WHICH WERE INADVERTENTLY OMITTED FOR PURPOSES OF COMPUTAT ION OF INCOME FOR RELEVANT YEAR UNDER CONSIDERATION. LD.AR SUBMIT TED THAT, DURING ASSESSMENT PROCEEDINGS ASSESSEE VOLUNTARILY AGREED FOR ADDITION OF RS.7 LACKS TO THE RETURNED INCOME FOR T HE INADVERTENT OMISSION OF ACCOUNTS. HE SUBMITTED THAT THE SAID AD DITION MADE BY LD. AO WAS ON ESTIMATE BASIS AND ASSESSEE HAS NO T APPEALED AGAINST THE ADDITION. 9. LD.AR ALSO SUBMITTED THAT THE NOTICE ISSUED UNDE R SECTION 274 OF THE ACT IS DEFECTIVE INASMUCH AS THE LIMB UN DER WHICH THE PENALTY IS INITIATED IS NOT IDENTIFIABLE. HE PLACED RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565. 10. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT, THE A SSESSMENT ORDER PASSED CLARIFIES THE INITIATION OF PENALTY UN DER BOTH THE LIMBS BEING CONCEALMENT AND FILING OF INACCURATE PA RTICULARS. HE ARGUED THAT PRIMARILY THE PENALTY IS INITIATED FOR CONCEALMENT AND WHILE PASSING THE PENALTY ORDER, PENALTY IS LEVIED FOR CONCEALMENT OF INCOME. HE SUBMITTED THAT AS BOTH THE LIMBS WERE INITIATED BY LD.AO AND THE ASSESSMENT ORDER, NON-STRIKING OF IS A RELEVANT. LD.SR.DR RELYING ON DECISION OF HONBLE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY (SUPRA), SUBMITTED THAT PARA 63 DEALS WITH VARIOUS FACETS OF NOTICE UN DER SECTION 274 AND CIRCUMSTANCES WHEN THE NOTICE ISSUED COULD BE C ONSIDERED TO BE BAD. LD.SR.DR TAKING SUPPORT OF DECISION OF HONBLE KARNATAKA PAGE 5 OF 10 ITA NO.259 & 260/BANG/2020 HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY (SUPRA), ARGUED THAT THE MANNER IN WHICH PENALTY HAS BEEN IN ITIATED AND LEVIED IN THE PRESENT FACTS OF THE CASE IS SUPPORTE D BY VIEW TAKEN BY HONBLE COURT. 11. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 12. ONE OF THE ISSUES INVOLVED IN THIS APPEAL IS WH ETHER, LD.AO WITHOUT STRIKING OUT ONE OF THE LIMB I.E. FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME CAN LEVY PENALTY UNDER SECTION 271(1)( C ) OF THE ACT. LD.AR IS RELIANCE ON DECISION OF HONBLE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 AND OBSERVED THAT THE NOTICE ISSUED BY LD.AO WOULD BE BAD IN LAW, IF IT D ID NOT SPECIFY WHICH LIMB OF SECTION 271(1)( C ) THE PENALTY PROCEEDINGS IS INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME O R FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 13. ON PERUSAL OF THE ASSESSMENT ORDER AND THE PENA LTY ORDER PASSED, WE FIND STRENGTH IN THE ARGUMENT ADVANCED B Y LD.SR.DR. IN THE LIGHT OF THE FACT STATED HEREINABOVE, ADMITT EDLY ASSESSEE HAD NOT DISCLOSED TO BANK ACCOUNTS IN WHICH CONTRAC T RECEIPTS WERE DEPOSITED. WHILE PASSING PENALTY ORDER, WE NOT E THAT PENALTY IS LEVIED FOR CONCEALMENT AS THERE WAS MATERIAL ON RECORD TO SHOW THAT BANK ACCOUNTS CONTAINED UNDISCLOSED INCOME OF ASSESSEE. THIS FACT IS DISCERNIBLE FROM THE ASSESSMENT ORDER. IN THE PAGE 6 OF 10 ITA NO.259 & 260/BANG/2020 ASSESSMENT ORDER LD.AO INITIATED BOTH THE LIMBS, I. E; CONCEALMENT AND FILING OF INACCURATE PARTICULARS. W E THEREFORE DO NOT AGREE WITH THE ARGUMENT ADVANCED BY LD.AR ALLEG ING THE VALIDITY OF NOTICE ISSUED UNDER SECTION 274 OF THE ACT. 14. COMING TO THE MERITS OF THE CASE, LD.AR SUBMITT ED THAT, THE AMOUNT ADDED FOR NONDISCLOSURE OF ACCOUNTS IS BASED ON ESTIMATION. WE NOTE THAT DURING ASSESSMENT PROCEEDI NGS ARE TO BANK ACCOUNT CAME TO THE NOTICE OF ASSESSEE AND THE SAME WAS PLACED BEFORE LD.AO. IT IS ALSO NOTED THAT ASSESSEE FILED REVISED BALANCE SHEET AFTER RECONCILING/EXPLAINING THE CRED ITS IN THE ABOVE SAID ACCOUNTS. THE ASSESSMENT ORDER WAS THEN PASSED AFTER VERIFYING ALL THE DETAILS BY MAKING AN ADDITION ON ACCOUNT OF UNACCOUNTED CONTRACT RECEIPTS AMOUNTING TO RS.7 LAK HS. BY PRODUCING BANK ACCOUNTS, ASSESSEE HAD DISPLACED THE PRESUMPTION THAT FAILURE TO RETURN THE CORRECT INCO ME HAD ARISEN FROM ANY FRAUD OR GROSS OR WILFUL NEGLECT. WE ALSO NOTE THAT NO SPECIFIC ADDITION HAD BEEN MADE IN THE ASSESSMENT O RDER ON THIS ACCOUNT. WE DO NOT FIND ANY DISCREPANCY HAVING NOTE D BY LD.AO IN RESPECT OF THE 2 ACCOUNTS EXCEPT FOR THE FACT TH AT ASSESSEE HAD NOT MAINTAINED ACCOUNTS IN RESPECT OF THE 2 BANK AC COUNTS DECLARED SUBSEQUENTLY. 15. UNDER SUCH CIRCUMSTANCES WE DO NOT FIND ASSESSE E TO BE LIABLE FOR CONCEALMENT UNDER SECTION 271(1)(C) AS D URING ASSESSMENT PROCEEDINGS ASSESSEE DEMONSTRATED HIS BO NA FIDES. PAGE 7 OF 10 ITA NO.259 & 260/BANG/2020 FURTHER ASSESSEE HAS ALSO NOT FILED ANY APPEAL AGAI NST THE ADDITION MADE TOWARDS SUCH BANK ACCOUNTS. 16. THUS THE CONDUCT OF ASSESSEE DESERVES THE PENAL TY TO BE DELETED. ACCORDINGLY WE ALLOW GROUNDS 1-4 RAISED BY ASSESSEE . IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED. ITA NO.260/B/2020 17. PENALTY IS LEVIED FOR DELAY IN UPLOADING THE AU DIT REPORT WITHIN THE DUE DATE. 18. LD.AR SUBMITTED THAT THE TAX AUDIT REPORT TO BE FILED BY ASSESSEE FOR RELEVANT YEAR ON OR BEFORE 31/11/2014. HOWEVER, DUE TO ILL HEALTH, THE SAME WAS FILED ON 31/03/2015 . IT WAS SUBMITTED THAT ASSESSEE RESIDES IN VILLAGE AREA WHE RE ASSESSEE DID NOT HAD SUFFICIENT MEANS TO COMPLY WITH THE PRO CEDURES. LD.AR SUBMITTED THAT, THE DELAY WAS NOT WILLFUL AND REQUESTED FOR THE PENALTY TO BE DELETED. 19. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF AUTHORITY BELOW. 20. WE HAVE PERUSED SUBMISSION ADVANCED BY BOTH SID ES AND RECORDS PLACED BEFORE US. 21. IT IS NOTED THAT, TIME PERIOD FOR FILING AUDIT REPORT WAS EXTENDED TO 13/11/2014 FOR RELEVANT PERIOD UNDER CO NSIDERATION AND THEREFORE THE DELAY IN UPLOADING THE AUDIT REPO RT WAS 3 MONTHS. PAGE 8 OF 10 ITA NO.259 & 260/BANG/2020 22. WE NOTE THAT THERE HAS NOT BEEN ASSESSEE HAS NE VER BEEN HELD FOR SUCH DEFAULT IN THE PRECEDING YEARS AS NOT ED BY LD.AO. WE ALSO NOTE THAT THE REASON SUBMITTED BY ASSESSEE FOR THE DELAY IN FILING OF AUDIT REPORT WAS DUE TO ILL-HEALTH DUR ING THE RELEVANT PERIOD. THERE IS NOTHING ON RECORD TO PROVE ANYTHIN G CONTRARY BY REVENUE, TO WHAT HAS BEEN SUBMITTED BY ASSESSEE BEF ORE AUTHORITIES BELOW OR BEFORE US. 23. WE DO NOT FIND THE CONDUCT OF ASSESSEE TO BE MA LAFIDE UNDER SUCH CIRCUMSTANCES. LD.AO AT THE TIME OF ASSESSMENT PROCEEDINGS HAD THE BENEFIT OF AUDIT REPORT AND THE REFORE IN OUR VIEW LEVY OF PENALTY SHOULD BE LIBERALLY CONSTRUED. WE THEREFORE DO NOT FIND ANY REASON TO SUSTAIN THE PRESENT PENAL TY. ACCORDINGLY GROUNDS RAISED BY ASSESSEE IN THIS APPE AL STANDS ALLOWED. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DEC, 2020 SD/- SD/- (CHANDRA POOJARI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 4 TH DEC, 2020. /VMS/ PAGE 9 OF 10 ITA NO.259 & 260/BANG/2020 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 10 OF 10 ITA NO.259 & 260/BANG/2020 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -12-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -12-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -12-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -12-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -12-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -12-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -12-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS