NAMEETA V. CHHABRIA, MUMBAI V. ADDL CIT 11(1), MUMBAI

ITA 2764/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8214 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI
• Keywords: Salary income; Maximum Marginal Rate; Bonafide belief; Revised return; Bonafide mistake
• Section: 143(3); 139(5)

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.2764/ MUM/2015 ( / ASSESSMENT YEAR : 2009-10) SMT. NAMEETA V. CHHABRIA, 301, GRAND CANYON, 87 PALI HILL, BANDRA (W), MUMBAI 400 050. / V. ADDL. COMMISSIONER OF INCOME TAX 11(1), MUMBAI. ./ PAN : ADDPC2908F ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : MR. DARSHAN GANDHI REVENUE BY : MR. R.A. DHYANI, DR / DATE OF HEARING : 07-02-2017 / DATE OF PRONOUNCEMENT :15-02-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 2764/MUM/2015, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 20-02-20 15 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 4, MUMBAI (HE REINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2009-10, THE APPELLAT E PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE PENALTY ORDER DATED 30 TH APRIL, 2012 PASSED BY LEARNED ASSESSING OFFICER ( HEREINAFTER CALLED TH E AO) U/S 271(1)(C) OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 2764/MUM/2015 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (HER EINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER FOR LEVY OF PENALTY AMOUNTING TO RS. 6,58,573/- U/S 271(1 )(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN INCOME FROM SALARY, CAPITAL GAIN S AND OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143 (3) R.W.S. 143(2) OF THE ACT, THE A.O. OBSERVED FROM THE CAPITAL ACCOUNT OF THE ASSESSEE THAT THE ASSESSEE HAS CREDITED AN AMOUNT OF RS.19,37,552/- A S MANAGEMENT BONUS FROM M/S. FAIRDEAL MULTIMEDIA PVT. LTD. BUT THE SAM E WAS NOT OFFERED FOR TAXATION. THE ASSESSEE WAS ASKED BY THE AO IN QUANT UM ASSESSMENT PROCEEDINGS TO FURNISH DETAILS OF MANAGEMENT BONUS AND WAS ALSO ASKED TO JUSTIFY THAT WHY THE SAME WAS NOT OFFERED FOR TAXAT ION . THE ASSESSEE IN REPLY SUBMITTED THE FOLLOWING DURING THE QUANTUM ASSESSME NT PROCEEDINGS:- DURING THE YEAR UNDER CONSIDERATION I RECEIVED THE MANAGEMENT BONUS OF RS. 19,37,552/- FROM FAIRDEAL MULTIMEDIA PVT. LTD. THE SAID BONUS IS AN OUTCOME OF THE TERMS AND CONDITIONS AGREED INTO W ITH THE FOREIGN COMPANY AT THE TIME OF TAKEOVER OF FAIRDEAL MULTIMEDIA PVT. LTD.. THE TERMS AND CONDITIONS FOR ELIGIBILITY OF MANAGEMENT BO NUS WAS THAT AS PER THE AUDITED FINANCIALS OF FAIRDEAL MULTIMEDIA P VT. LTD. EBIT (EARNING BEFORE INTEREST AND TAX) SHOULD BE MORE THAN RS. 2 CRORES. IF THE COMPANY ACHIEVES THAT TARGET THEN I WAS ELIGIBLE FOR THE BONUS AMOUNT OF 8% OF EBIT OF THE COMPANY. AS SUCH THIS AMO UNT COULDN'T BE DETERMINED UNLESS THE FINANCIALS OF THE FAIRDEAL MU LTIMEDIA WAS FINALISED. THE AUDIT OF THE FAIRDEAL MULTIMEDIA WAS C OMPLETED IN THE SEPTEMBER MONTH AND HENCE THE AMOUNT WAS ALSO DETERMI NED ONLY AT THE END OF THE SEPTEMBER. AGAIN AS THE TDS ON THE MAN AGEMENT BONUS WAS NOT PAID BY THE COMPANY THERE WAS A DELAY IN REC EIVING THE TDS CERTIFICATE BY ME AND BY THAT TIME MY COMPUTATION WAS FINALISED BY MY ACCOUNTANT AND HENCE THIS PARTICULAR OF INCOME ESCAPED TO BE SHOWN IN THE TAXATION. HOWEVER THE ENTIRE AMOUNT OF TDS ON THIS MANAGEMENT BONUS WAS DEDUCTED AND PAID BY THE COMPANY AND AS SUC H THERE WAS NO TAX WHICH HAS ESCAPED TO BE PAID IN THIS TRANSACTION . MOREOVER THE ITA 2764/MUM/2015 3 SAID ITEM OF INCOME WAS APPROPRIATELY DISCLOSED IN MY BALANCE SHEET AND I HONESTLY DECLARED THE SAME TO THE ASSESSING OFFI CER AT TIME OF THE ASSESSMENT'. THE ASSESSEE HAD FILED RETURN OF INCOME ON 26-02-20 10 DECLARING TOTAL INCOME OF RS. 2,26,03,878/-. THE RETURN OF INCOME WAS FILE D BELATEDLY U/S 139(4) OF THE ACT, WHILE DUE DATE OF FILING RETURN OF INCOME U/S 139(1) OF THE ACT WAS 31- 07-2009. THE A.O. ADDED THE AMOUNT OF RS. 19,37,552 /- RECEIVED BY THE ASSESSEE AS MANAGEMENT BONUS FROM FAIRDEAL MULTIMED IA PVT. LTD. TO THE INCOME OF THE ASSESSEE IN QUANTUM ASSESSMENT PROCEE DINGS VIDE ASSESSMENT ORDER DATED 24-10-2011 PASSED BY THE AO U/S 143(3) OF THE ACT WHEREIN THE ASSESSED INCOME WAS RS. 2,45,41,430/- AS AGAINST RE TURNED INCOME OF RS. 2,26,03,878/- . THE SAID ASSESSMENT ORDER DATED 24 -10-2011 REACHED FINALITY AS THE SAME WAS ACCEPTED BY THE ASSESSEE AND NO FUR THER APPEAL WAS FILED BY THE ASSESSEE. THE INCOME OF RS. 19,37,552/- RECEI VED BY THE ASSESSEE AS MANAGEMENT BONUS WAS OFFERED TO TAX BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY FILING REVISED COMPUTATIO N OF INCOME AND NO REVISED RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE A.O. INVOKED PROVISIONS OF SECTION 271(1)(C) OF THE ACT AND LEVI ED PENALTY OF RS. 6,58,573/- U/S 271(1)(C) OF THE ACT VIDE ORDERS DATED 30-04-20 12. NOTICE DATED 24.10.2011 U/S 274 R.W.S. 271 OF THE ACT WERE ISSUE D BY THE AO ASKING TO FURNISH EXPLANATION AS TO WHY PENALTY U/S 271(1)(C) OF THE ACT SHOULD NOT BE LEVIED AGAINST THE ASSESSEE. IN REPLY, THE ASSESSE E SUBMITTED AS UNDER:- WITH REFERENCE TO THE ABOVE, I HAVE RECEIVED THE ABOVE NOTICE AND STATE AS UNDER: I HAVE PROPERLY DISCLOSED THE FACTS BY SUBMITTING REVI SED COMPUTATION OF TOTAL INCOME ALONGWITH FULL PAYMENT OF TAX INCLUDING INTEREST THEREON BEFORE YOUR HONOUR HAS ASKED THE QUESTION ON 11 TH OCT, 2011 AS I HAVE PROPERLY DECLARED THE INCOME BY MYSELF VOLUNTARILY B Y FILING REVISED SHEET AND PAID THE ENTIRE TAX INCLUDING INTEREST. I HAV E NOT HIDE ANY FACTS OR MY INCOME AND HENCE THE PROVISIONS OF THE SE CTION 271(L)(C) OF THE INCOME TAX LIABILITY IS NOT APPLICABLE IN MY CASE. ITA 2764/MUM/2015 4 THE PENALTY U/S. 271(1)(C) MAY BE LEVIED IF ANY PER SON HAS: A) CONCEALED THE PARTICULARS OF HIS INCOME OR B) FURNISHED INACCU RATE PARTICULARS OF HIS INCOME. ACCORDINGLY CONCEALMENT IMPLIES SOME DEL IBERATE ACT ON THE PART OF THE ASSESSEE IN WITH HOLDING THE TRUE FROM THE AUTHORITIES, MERE OMISSION FROM THE RETURN OF AN ITEM OF RECEIPT DOES N EITHER AMOUNT INTO CONCEALMENT NOR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS AND UNTIL THERE IS SOME EVIDENCE TO SHO W OR SOME CIRCUMSTANCES FOUND WHICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION O F TAX THEREON, K.C.BUILDERS VS. ASSTT CIT (2004) 265 ITR 562/135 T AXMAN 461(SC). CONCEALMENT REFERS TO A DELIBERATE ACT ON PART OF ASSES S IF EXPLANATION GIVEN BY ASSESSEE WITH REGARD TO MISTAKE COMMITTED BY H IM HAS BEEN TREATED TO BE BONA FIDE AND IT HAS BEEN FOUND AS A FAC T THAT HE HAS ACTED ON BASIS OF WRONG LEGAL ADVICE QUESTION OF HIS FAILURE TO DISCHARGE HIS BURDEN IN TERMS OF EXPLANATION OF HIS FAILURE TO DISCHARGE HIS BURDEN IN TERMS OF EXPLANATION APPENDED TO SECTION 271 (1)(C) WOULD NOT ARISE. T ASHOK PAI VS CIT (2007) 161 TAXMAN 340/292 ITR L1(SC). SIR I HAVE FILED THE REVISED COMPUTATION OF TOTAL COM PUTATION OF TOTAL INCOME AND DECLARED THE CORRECT INCOME. I HAVE THE PAR TICULARS OF MY INCOME IN MY CAPITAL ACCOUNT. I HAVE PAID THE ENTIRE TAX TOGETHER WITH INTEREST MUCH BEFORE YOUR HONOUR RAISED ANY QUESTION O F PARTICULARS INCOME. EVEN FINDINGS IN ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE IF ASSESSEE FURNISHED THE PARTICULARS AND DECLARE THE I NCOME AND THAT ASSESSEE HAS CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME OR HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS. CIT V S ANWAR ALI (1970) 76 ITR 696 (SC). SIR IN THE ABOVE CIRCUMSTANCES I SINCERELY REQUEST THAT WHEN I MYSELF HAS DECLARED THE CORRECT INCOME AND PAID THE TAX THER EON TOGETHER WITH INTEREST BEFORE YOUR HONOUR RAISED ANY QUESTION. I SH OULD NOT BE PENALISED. THE A.O. REJECTED THE CONTENTIONS OF THE ASSESSEE A S THE INCOME OF MANAGEMENT BONUS OF RS.19,37,552/- WAS NOT DISCLOSE D IN THE RETURN OF INCOME FILED BY THE ASSESSEE, HENCE, IT WAS OBSERVE D THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AS MANAG EMENT BONUS WAS TAXABLE. THE A.O. ACCORDINGLY LEVIED PENALTY U/S 2 71(1)(C) OF THE ACT BEING 100% OF THE TAX EVADED AMOUNTING TO RS. 6,58,573/- ON AN INCOME OF RS. 19,37,552/- SOUGHT TO BE EVADED BY THE ASSESSEE VID E PENALTY ORDER DATED 30- ITA 2764/MUM/2015 5 04-2012 PASSED BY THE AO U/S 271(1)(C) OF THE ACT W HEREIN LEARNED AO HELD THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME BY FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN MEANING OF SECTION 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE PENALTY ORDER DATED 30-04-2012 PASSED BY THE A.O. U/S 271(1)(C) OF THE ACT, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE , INTER-ALIA , CONTENDED THAT THE ASSE SSEE RECEIVED MANAGEMENT BONUS OF RS. 19,37,552/- FROM M/S FAIRDEAL MULTIMED IA PRIVATE LIMITED ON WHICH TAX WAS DEDUCTED AT SOURCE BY THE EMPLOYER AT MAXIMUM MARGINAL RATE OF TAX BUT THE SAME WAS NOT DISCLOSED IN RETURN OF INCOME FILED WITH REVENUE . THE ASSESSEE SUBMITTED THAT DURING COURSE OF SCRUTI NY PROCEEDINGS IN QUANTUM ASSESSMENT, THE ASSESSEE SUBMITTED REVISED COMPUTATION OF INCOME BEFORE BEING ASKED BY THE AO AND INCLUDED SAID MANA GEMENT BONUS OF RS. 19,37,552/- IN HIS REVISED INCOME AND ALSO TOOK CRE DIT OF TAX DEDUCTED AT SOURCE BY THE EMPLOYER WHICH WAS DEDUCTED AT MAXIMU M MARGINAL RATE ON THE ENTIRE AMOUNT OF MANAGEMENT BONUS AND HENCE THE RE WAS NO ADDITIONAL LIABILITY TO PAY TAX BY THE ASSESSEE. IT WAS SUBMIT TED THAT THE ASSESSEE HAD TO FILE REVISED COMPUTATION OF INCOME DURING SCRUTINY PROCEEDINGS INSTEAD OF FILING REVISED RETURN OF INCOME TO INCLUDE MANAGEME NT BONUS OF RS. 19,37,552/- IN ITS INCOME BEFORE THE AO AS SINCE TH E ASSESSEE FILED ORIGINAL RETURN BELATEDLY U/S 139(4) OF THE ACT ON 26-02-201 0 AS AGAINST THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT WHICH WAS 31-07-2009, AND HENCE THE ASSESSEE COULD NOT FILE REVISED RETURN OF INCOME U/S 139(5) OF THE ACT AS PER PROVISIONS OF THE ACT OF 1961. THE LD. C IT(A) CONFIRMED THE PENALTY ORDER OF THE A.O. ON THE GROUND THAT THE ASSESSEE H AS NOT DISCLOSED THE SAID MANAGEMENT BONUS IN THE RETURN OF INCOME FILED WITH THE REVENUE. IT WAS ALSO OBSERVED BY THE LEARNED CIT(A) THAT THE ASSESSEE FI LED REVISED COMPUTATION OF INCOME INCLUDING INCOME FROM MANAGEMENT BONUS OF RS .19,37,552/- AS INCOME ON 21.10.2011 DURING SCRUTINY PROCEEDINGS AF TER BEING CONFRONTED BY ITA 2764/MUM/2015 6 THE AO ON 11.10.2011. THE LEARNED CIT(A) REFERRED T O LARGE NUMBER OF CASES WHILE SUSTAINING/ CONFIRMING ORDER OF THE AO LEVYIN G PENALTY U/S 271(1)(C) OF THE ACT. THUS, THE LEARNED CIT(A) CONFIRMED THE PEN ALTY OF RS. 6,58,573/- LEVIED BY THE AO U/S 271(1)(C) OF THE ACT BY HOLDIN G THAT THE SAID PENALTY OF RS. 6,58,573/- LEVIED BY THE AO WAS JUSTIFIABLE AND THE AO HAS CORRECTLY LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT VIDE AP PELLATE ORDERS DATED 20-02- 2015 PASSED BY LEARNED CIT(A) WHEREIN APPEAL OF THE ASSESSEE WAS DISMISSED BY LEARNED CIT(A). 5. AGGRIEVED BY THE APPELLATE ORDER DATED 20-02-201 5 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 226, 03,878/- BELATEDLY ON 26- 02-2010 U/S 139(4) OF THE ACT WHILE DUE DATE OF FIL ING RETURN OF INCOME WAS 31-07-2009. IT WAS SUBMITTED THAT THE ASSESSEE IS M ANAGING DIRECTOR OF M/S FAIRDEAL MULTIMEDIA PVT. LTD. . THE ASSESSEE BECAM E ELIGIBLE FOR MANAGEMENT BONUS FROM M/S FAIRDEAL MULTIMEDIA PVT. LTD. DURING FINANCIAL YEAR 2009-10 BASED UPON THE PERFORMANCE IN THE PRECEDING YEAR I. E. FINANCIAL YEAR 2008-09 WHICH WAS DETERMINED AND QUANTIFIED ONLY IN THE MON TH OF SEPTEMBER, 2009 WHEN THE FINANCIAL ACCOUNTS OF M/S FAIRDEAL MULTIME DIA PRIVATE LIMITED WERE FINALIZED/AUDITED , HENCE, THE ASSESSEE WAS UNDER A BONA-FIDE BELIEF THAT THE SAID INCOME FROM MANAGEMENT BONUS SHOULD BE DECLARE D AS INCOME FOR THE ASSESSMENT YEAR 2010-11 WHICH IS RELEVANT TO PREVIO US YEAR 2009-10 WHEN THE QUANTIFICATION OF BONUS TOOK PLACE IN THE MONTH OF SEPTEMBER 2009. HENCE BASED ON THE SAID BONAFIDE BELIEF, THE SAID I NCOME OF RS. 19,37,552/- FROM MANAGEMENT BONUS WAS NOT OFFERED FOR TAXATION DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR 2009-10. IT IS SUBMITTED THAT ON THE INCOME OF MANAGEMENT BONUS OF RS. 19,37,552/-, TAX WAS DULY DEDUCTED BY THE EMPLOYER M/S FAIRDEAL MULTIMEDIA PRIVATE LIM ITED AT SOURCE AT ITA 2764/MUM/2015 7 MAXIMUM MARGINAL RATES AND NO PREJUDICE WAS CAUSED TO REVENUE. IT WAS SUBMITTED THAT THE ASSESSEE DERIVED NO BENEFIT BY N OT DECLARING THE SAID MANAGEMENT BONUS AS INCOME IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2009-10 AS THE TAX WAS DULY DEDUCTED AT SOURCE AT THE MAXIMUM MARGINAL RATES. IT WAS SUBMITTED THAT THE ASSESSEE FILED REVISED COMPUTATION OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDIN GS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT, WHEREIN SAID MANAGEMENT BONUS OF RS.19,37,552/- WAS ADDED TO INCOME AND ALSO CREDIT FOR TAX DEDUCTE D AT SOURCE AT MARGINAL RATE WAS TAKEN AND HENCE NO PREJUDICE IS CAUSED TO THE REVENUE AS ALL THE DUE TAXES WERE PAID BY THE EMPLOYER M/S FAIRDEAL MU LTIMEDIA PRIVATE LIMITED WHILE PAYING THE BONUS AMOUNT OF RS. 19,37,552/-. THUS, IT IS SUBMITTED THAT IT IS A BONAFIDE MISTAKE WHICH HAS HAPPENED DU E TO THE BONAFIDE BELIEF OF THE ASSESSEE THAT SINCE THE BONUS AMOUNT HAS BEEN D ETERMINED AND QUANTIFIED ONLY IN THE MONTH OF SEPTEMBER, 2009 BA SED ON FINALIZED AUDITED ACCOUNTS OF EMPLOYER M/S FAIRDEAL MULTIMEDIA PRIVAT E LIMITED FOR FINANCIAL YEAR 2008-09 , THAT THE SAID MANAGEMENT BONUS WILL BE CHARGEABLE TO TAX IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 010-11. THE LD. COUNSEL RELIED ON THE FOLLOWING CASE LAWS:- A) ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATIO N) V. CONVERGYS INFORMATION MANAGEMENT GROUP INC. [2013] 35 TAXMANN . COM 346 (MUMBAI TRIB.), WHEREIN IT WAS HELD THAT MERE FAC T THAT PAYER DEDUCTED TAX AT SOURCE CANNOT BE A SOLE REASON TO CONCLUDE T HAT AMOUNT IS TAXABLE IN HANDS OF RECIPIENT AND, THEREFORE, IF RECIPIENT DOES NOT OFFER SAID AMOUNT TO TAX IN RETURN OF INCOME, IT DOES NOT NECESSARILY FOLLOW THAT PENALTY HAS TO BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. B) CIT VS. JYOTI LTD. [2013] 34 TAXMANN.COM 65 (GUJARA T), WHEREIN IT WAS HELD THAT WHERE ASSESSING OFFICER IN ORDER OF PENALTY DI D NOT COME TO A CLEAR FINDING REGARDING PENALTY BEING IMPOSED ON CONCEALM ENT OF INCOME OR ON ITA 2764/MUM/2015 8 FURNISHING INACCURATE PARTICULARS OF INCOME, TRIBUN AL WAS JUSTIFIED IN SETTING ASIDE IMPUGNED PENALTY ORDER C) CIT V. SHRI SAMSON PERINCHERY - INCOME TAX APPEAL N O. 1154 OF 2014 DATED 5 TH JANUARY, 2017.(BOM. HC), WHEREIN IT WAS HELD THAT ORDER IMPOSING PENALTY HAS TO BE ON THE GROUND OF WHICH T HE PENALTY PROCEEDINGS HAD BEEN INITIATED, AND IT CANNOT BE ON A FRESH GRO UND OF WHICH TAX-PAYER HAS NO NOTICE 7. THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED UPON. WE HAVE OBSERVED THAT THE ASSESSEE IS AN INDIVIDUAL AND MANAGING DIR ECTOR OF M/S FAIRDEAL MULTIMEDIA PVT. LTD. THE ASSESSEE HAS RECEIVED MANA GEMENT BONUS OF RS. 19,37,552/- DURING RELEVANT PREVIOUS YEAR WHICH IS BASED UPON THE PERFORMANCE OF M/S FAIRDEAL MULTIMEDIA PVT. LTD. F OR THE FINANCIAL YEAR 2008- 09, WHICH DETERMINATION AND QUANTIFICATION OF BONUS WAS DONE IN THE MONTH OF SEPTEMBER 2009 BASED ON FINALIZED/AUDITED FINANC IAL ACCOUNTS OF M/S FAIRDEAL MULTIMEDIA PVT. LTD. FOR THE FINANCIAL YEA R 2008-09 WHICH WAS NOT OFFERED AS INCOME FOR TAXATION BY THE ASSESSEE DURI NG THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR 2009-10. WE FIND THAT THE SAID MANAGEMENT BONUS OF RS. 19,37,552/- PAYABLE TO THE ASSESSEE WAS QUANTIFIED AND DETERMINED ONLY IN THE MONTH OF SEPTEMBER, 200 9. THE SAID COMPANY M/S FAIRDEAL MULTIMEDIA PVT. LTD. DEDUCTED TAX AT S OURCE ON MANAGEMENT BONUS OF RS. 19,37,552/- PAYABLE TO THE ASSESSEE AT THE MAXIMUM MARGINAL RATE ON THE ENTIRE AMOUNT OF BONUS. THE ASSESSEE D ID NOT INCLUDED THE SAID MANAGEMENT BONUS OF RS. 19,37,552/- IN RETURN OF IN COME FILED BY HIM WITH THE REVENUE WHICH RETURN OF INCOME WAS FILED BELATE DLY U/S 139(4) ON 26.02.2010 WHILE DUE DATE OF FILING OF RETURN OF IN COME WAS 31-07-2009. IT IS ITA 2764/MUM/2015 9 ONLY WHEN POINTED OUT BY THE A.O. ON 11.10.2011, TH E ASSESSEE INCLUDED THE SAID MANAGEMENT BONUS OF OF RS. 19,37,552/- PAYABLE TO THE ASSESSEE IN THE REVISED COMPUTATION OF INCOME FILED WITH THE AO ON 21.10.2011. THE ASSESSEE HAS OFFERED AN EXPLANATION THAT SINCE MANAGEMENT BO NUS WAS QUANTIFIED ONLY IN THE MONTH OF SEPTEMBER 2009 BY M/S FAIRDEAL MULT IMEDIA PVT. LTD. BASED ON THEIR FINALIZED /AUDITED ACCOUNTS FOR THE FINANC IAL YEAR 2008-09 WHICH GOT FINALIZED ONLY IN THE MONTH OF SEPTEMBER 2009, THE ASSESSEE HAS SUBMITTED AN EXPLANATION THAT IT WAS UNDER A BONAFIDE BELIEF THAT THE SAID INCOME IS TO BE INCLUDED AND OFFERED FOR TAXATION AS INCOME FOR ASSESSMENT YEAR 2010-11 AND IN ANY CASE TAX WAS DEDUCTED AT SOURCE AT THE M AXIMUM MARGINAL RATE ON THE SAID MANAGEMENT BONUS BY EMPLOYER M/S FAIRDEAL MULTIMEDIA PVT. LTD. ON BEHALF OF THE ASSESSEE. IN OUR CONSIDERED VIEW, THIS IS A CASE OF BONAFIDE MISTAKE WHICH HAS TAKEN PLACE AS THE ASSESSEE WAS U NDER BONAFIDE BELIEF THAT THE SAID MANAGEMENT BONUS OF RS 19,37,552/- IS TO B E INCLUDED AS INCOME FOR THE ASSESSMENT YEAR 2010-11 AS DETERMINATION AND QU ANTIFICATION OF THE SAID MANAGEMENT BONUS WAS ONLY DONE IN THE MONTH OF SEPT EMBER 2009 BASED ON FINALIZED/ AUDITED ACCOUNTS OF M/S FAIRDEAL MULTIME DIA PVT. LTD. FOR THE FINANCIAL YEAR 2008-09 WHICH GOT FINALIZED/AUDITED IN SEPTEMBER 2009. NO PREJUDICE IS CAUSED TO THE REVENUE AS THE ENTIRE AM OUNT OF MANAGEMENT BONUS OF RS.19,37,552/- WAS SUBJECTED TO DEDUCTION OF TAX AT SOURCE AT MAXIMUM MARGINAL RATE BY THE EMPLOYER M/S FAIRDEAL MULTIMEDIA PVT. LTD. ON BEHALF OF THE ASSESSEE, AND THUS THE ENTIRE DUE TAXES HAD BEEN DEPOSITED TO THE CREDIT OF CENTRAL GOVERNMENT ALBEIT BY THE E MPLOYER. THE LD. D.R. AS WELL THE AUTHORITIES BELOW COULD NOT CONTROVERT THE SE CONTENTIONS OF THE ASSESSEE. CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE, IN OUR CONSIDERED VIEW, NO PENALTY U/S 271(1)(C) OF THE AC T CAN BE LEVIED UNDER THESE CIRCUMSTANCES WHEREIN THE ASSESSEE HAS COME FORWARD WITH AN BONAFIDE EXPLANATION . IT IS A CASE OF BONAFIDE MISTAKE O N THE PART OF THE ASSESSEE AND MORE SO REVENUE HAS GOT TAX DEDUCTED AT SOURCE AT M AXIMUM MARGINAL RATE ON THE ENTIRE MANAGEMENT BONUS AMOUNT OF RS. 19,37, 552/- ALBEIT PAID BY ITA 2764/MUM/2015 10 THE EMPLOYER ON BEHALF OF THE ASSESSEE. THUS, PENAL TY OF RS. 6,58,573/- LEVIED U/S 271(1)(C) OF THE ACT BY THE AO AND AS CONFIRMED BY LEARNED CIT(A) IS NOT SUSTAINABLE KEEPING IN VIEW BONAFIDE EXPLANATION OF FERED BY THE ASSESSEE AS DETAILED ABOVE AND HENCE PENALTY OF RS. 6,58,573/- LEVIED BY THE AO U/S 271(1)(C) OF THE ACT OF 1961 AS CONFIRMED BY LEARNE D CIT(A) IS HEREBY ORDERED TO BE DELETED. WE ORDER ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 2764/MUM/2015 FOR THE ASSESSMENT YEAR 2009-10 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2017. # $% &' 15-02-2017 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 15-02-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI I BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI