Vikram Satyanarayan Warma, Nashik V. Deputy Commissioner of Income-tax, Circle - Malegaon, Malegaon

ITA 260/PUN/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0966 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 15-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Capital Gains
• Section: 27; 271(1)(c); 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.260/PUN/2019 / ASSESSMENT YEAR : 2014-15 VIKRAM SATYANARAYANA WARMA, YASHWANT BHAVAN, CAMP ROAD, MALEGAON, DIST. NASHIK. PAN : AACPW7608L. . / APPELLANT. V/S THE DY.COMMISSIONER OF INCOME TAX, CIRCLE, MALEGAON, MAHARASHTRA. . / RESPONDENT ASSESSEE BY : NONE (WRITTEN SUBMISSIONS FILED) REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 1, NASHIK DATED 10.12.2018 FOR THE ASSESSMENT YEAR 2014-15. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM BUSINESS, SALARY AND CAPITAL GAINS ETC. ASSESSEE ELECTRONICALLY FILED HIS RET URN OF INCOME FOR A.Y. 2014-15 ON 29.11.2014 DECLARING TOTAL INCOME OF RS.28,63,946/-. THE CASE WAS SELECTED FOR SCRUTINY AND TH EREAFTER / DATE OF HEARING : 15.07.2019 / DATE OF PRONOUNCEMENT: 03.09.2019 2 ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER D T.04.08.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.31,82,140/- IN TER-ALIA BY MAKING ADDITION OF RS.3,18,195/- ON ACCOUNT OF INCOME FROM INTEREST ON FDRS. ON THE AFORESAID ADDITION, AO VIDE PENALTY ORDER DAT ED 22.02.2017 PASSED U/S 271(1)(C) OF THE ACT LEVIED PENALTY O F RS.98,420/- FOR CONCEALING THE PARTICULARS OF INCOME. AGGRIE VED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE O RDER DT.10.12.2018 (IN APPEAL NO.NSK/CIT(A)-1/557/2016-17) DISMISS ED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT (A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND : ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER THE LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) 1, N ASHIK, IS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS.98,42/- L EVIED BY ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 3. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE THOUGH NOTICE WAS SERVED ON THE ASSESSEE. ASSESSEE HAS HOWEVER FILED WRITTEN SUBMISSIONS ON 11.07.2019. WE THEREFORE PROCEED T O DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE BASED ON THE WR ITTEN SUBMISSIONS FILED BY THE ASSESSEE AND ON THE BASIS OF MATERIAL AVAILABL E ON RECORD AND AFTER HEARING THE LD. D.R. 4. AO NOTED THAT IN THE RETURN OF INCOME FILED BY THE ASS ESSEE ON 29.11.2014 ASSESSEE HAD NOT OFFERED RS.3,18,195/- ON ACCO UNT OF INTEREST INCOME RELATING TO FDRS. HOWEVER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, ASSESSEE OFFERED THE INTEREST A MOUNT TO TAX AND ALSO PAID THE TAXES ON SUCH INTEREST. AO WAS OF THE VIEW THAT NOT OFFERING THE AMOUNT OF INCOME FROM FDRS TO TAX IN THE RETU RN OF INCOME FILED BY THE ASSESSEE WOULD ATTRACT PENALTY U/S 271(1)(C) O F THE ACT. HE 3 ACCORDINGLY LEVIED PENALTY OF RS.98,420/- ON SUCH ADDITION. THE PENALTY LEVIED BY AO WAS ALSO CONFIRMED BY LD.CIT(A). AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 5. IN THE WRITTEN SUBMISSIONS, LD.A.R. INTER-ALIA SUBMITTED TH AT NO SPECIFIC CHARGE AS TO WHETHER IT IS CONCEALMENT OF INCOME O R A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME HAS NOT BEEN MENTIONED IN THE ASSESSMENT ORDER BUT HOWEVER IN THE PENALTY ORDER, PENALTY HAS BEEN LEVIED ON ACCOUNT OF CONCEALMENT OF THE PARTICULARS OF INCOME. IT WAS FURTHER STATED IN THE WRITTEN SUBMISSION THAT ASSESS EE INADVERTENTLY SKIPPED THE INCLUSION OF INTEREST INCOME OF FDRS IN THE RETU RN OF INCOME AND THAT THERE WAS NO MALAFIDE INTENTION TO HIDE THE INCO ME MORE SO WHEN THE BANK ACCOUNTS OF THE ASSESSEE HAVE BEEN DIS CLOSED IN THE RETURN OF INCOME. HE THEREFORE RELYING ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL LIMITED VS. ST ATE OF ORISSA REPORTED IN 83 ITR 26 SUBMITTED THAT THE PENALTY LEVIED BY THE AO BE DELETED. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 7. THE NECESSARY INGREDIENTS FOR ATTRACTING EXPLANATION-1 TO SECTION 271(1)(C) ARE THAT: (I) THE PERSON FAILS TO OFFER THE EXPLANATION , OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE AO OR THE LD.CI T(A) OR THE LD.CIT TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANA TION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DIS CLOSED BY HIM. IF 4 THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATE GORIES, THEN ACCORDING TO THE DEEMING PROVISION PROVIDED IN EXPLANATION- 1 TO SECTION 271(1)(C) THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TO TAL INCOME SHALL BE CONSIDERED AS THE INCOME IN RESPECT OF WHICH PART ICULARS HAVE BEEN CONCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION 27 1(1), AND THE PENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE T O OFFER AN EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALS E, AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOS ED BY HIM, THEN IN THAT CASE PENALTY SHALL NOT BE IMPOSED. 8. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT , THE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITION MADE WOULD AM OUNT TO CONCEALMENT OF PARTICULARS, OF INCOME. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICU LARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY B E MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PR OBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON TH E PREPONDERANCE OF PROBABILITIES AND REVENUE HAS TO PROVE THAT THE CLAIM OF EXPENSES BY THE ASSESSEE WAS NOT GENUINE OR WAS INFLA TED TO REDUCE ITS TAX LIABILITY. BEFORE US, LD.A.R. HAS GIVEN THE REASONS FOR NOT OFFERING THE INTEREST INCOME RELATING TO FDRS TO TAX BUT HOWEVER DURING THE 5 COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE OFFERED THE IN TEREST AMOUNT TO TAX AND ALSO PAID THE TAXES ON SUCH INTEREST. THE SUBMISSIONS HAVE NOT BEEN CONTROVERTED BY THE REVENUE NOR HAVE BEEN FOUND TO BE U NTRUE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF T HE VIEW THAT IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1)(C ) OF THE ACT HAS BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/S . 271(1)(C) OF THE ACT. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 3 RD DAY OF SEPTEMBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 3 RD SEPTEMBER, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR. CIT-1, NASHIK. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.