Sushil Kumar Bhati, Faridabad V. ITO, Ward- 2(4), Faridabad

ITA 2819/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2004 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VANSHIKA TANEJA
• Keywords: Revision of order; Salary income; Earning of tax free income; Revised return; TDS; FORM 26AS
• Section: 271(1)(c); 143(3); 201; 274; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2+SMC, NEW DELHI BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 2819/DEL/2018 : ASSTT. YEAR : 201 1-12 SUSHIL KUMAR BHATI, H.NO. 591, SECTOR-21B, FARIDABAD, HARYANA VS INCOME TAX OFFICER, WARD-2(4), FARIDABAD (APPELLANT) (RESPONDENT) PAN NO. A HFPB0420P ASSESSEE BY : MS. VANSHIKA TANEJA, ADV. REVENUE BY : SH. PRADEEP SINGH GAUTAM, SR. DR DATE OF HEARING: 27.02.2020 DATE OF PRONOUNCEMENT: 08.05.2020 ORDER PER DR. B.R.R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. CIT (A), FARIDABAD DATED 05.03.201 8. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. HON CIT(A) ERRED IN UPHOLDING THE ORDER OF HON AO PASSED UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT,1961 WHICH WAS OPENED AGAINST THE LAW U/S 263 O F THE INCOME TAX ACT, 1961 AND NOT CONSIDERED BY HON CIT(A). THE ASSESSEE HAS NOT CONCEALED ANY INCOME. PENALTY U/S 271 (1)(C) IS ILLEGALLY IMPOSED BY THE HON AO WHICH IS BAD-IN-LAW AND UNJUSTIFIED. IT MAY BE N OTED THAT HON AO DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) AGREED WITH OUR SUBMISSIONS AND HENCE HAD NO T INITIATED THE PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE INCOME TAX ACT,1961. LATER ON, THE PENALTY PROCEEDI NGS U/S 271 (1)(C) OF THE INCOME TAX ACT WAS INITIATED ILLEGALLY BY A DIRECTION U/S 263 OF THE INCOME TAX ACT, 1961. 2. ESOP INCOME OF RS.9,48,230/- IS A NON-CASH INCOM E, WHICH HAS BEEN DEPICTED IN 26AS AND WAS NOT MENTION ED ITA NO. 2819/DEL/2018 SUSHIL KUMAR BHATI 2 IN SALARY CERTIFICATE ISSUED BY THE EMPLOYER. HOWEV ER, TDS @ 30% WERE DEDUCTED ON THAT ESOP. THE ASSESSEE HAS NOT CONCEALED ANY INCOME AS IT HAS BEEN DEPICTE D IN 26AS BEARING A TDS AT HIGHER RATE OF 30% AND HENCE NO QUESTION OF CONCEALMENT PREVAILS. THE ASSESSEE HAS DECLARED ALL INCOMES WHICH COME TO OUR KNOWLEDGE. T HE ASSESSEE HAS CHANGED THREE JOBS DURING THE JOB PERI OD, ALL TAX HAS BEEN DEDUCTED AT SOURCE. THE ASSESSEE CONTINUOUSLY USED TO RESIDE OUTSIDE DURING THE COUR SE OF JOB. THE ASSESSEE FILED HIS RETURN OF INCOME THROUG H CONSULTANTS ON THE BASIS OF FORM 16 AND TDS AND WITHOUT THE KNOWLEDGE OF ESOP AND SOME DIFFERENCES OF SALARY IN RECONCILIATION OF SALARY SLIPS ON WHICH T DS ALREADY DEDUCTED BECAUSE HE WAS ON OUTSTATION JOB. THE ASSESSEE HAS NO INTENSION OF CONCEALMENT OF TAX AND HAS PAID ALL THE TAX DUES SUO-MOTO AS A RESPONSIBLE CIT IZEN. 3. THE ASSESSEE FILED RETURN OF INCOME DECLARING TO TAL INCOME OF RS.32,03,890/-. THE AO MADE ADDITION OF RS.14,61 ,332/- ON ACCOUNT OF SALARY AND BANK INTEREST RECEIVED BY THE ASSESSEE. ON CONCLUSION OF THE ASSESSMENT PROCEEDINGS, PENALT Y PROCEEDINGS WERE INITIATED ON THE DIRECTIONS OF THE LD. PCIT, FARIDABAD VIDE ORDER U/S 263(1) OF THE INCOME TAX A CT, 1961 DATED 17.03.2016. 4. IN ACCORDANCE WITH THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, A SHOW-CAUSE NOTICE UNDER SEC TION 274 READ WITH SECTION U/S 271 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 18-10-2016. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED REPLY DATED 20-10-2016 WHICH IS REPRODUCED AS UNDER: THE FACT OF THE ADDITIONAL INCOME OF RS.14,61,332/ - IN OUR SUBMISSION INCLUDES AS FOLLOWS: ESOP- SALARY FROM PEL RS.9,43,230.00 SALARY DIFFERENCE OF PHL ET ABBOTT RS.4,74,697.0 0 BANK INTEREST (DIFFERENCE) RS.38,158.00 TOTAL RS.1461332.00 ITA NO. 2819/DEL/2018 SUSHIL KUMAR BHATI 3 NOW, RS.9,48,230/- IS A NON-CASH TRANSACTION OF ESO P AND ON WHICH TDS OF RS.2,93,005/- HAS BEEN DEDUCTED BY PIRAMAL ENTERPRISES LIMITED AND DEPOSITED TO THE IN COME TAX DEPARTMENT. THE SAME WAS NOT IN THE KNOWLEDGE O F THE ASSESSEE AS THE ASSESSEE HAD LEFT THE JOB DURIN G THE YEAR AND WAS NOT ASSOCIATED WITH THE COMPANY DURING THE YEAR. THEREFORE, NON-CASH ESOP INCOME U/S 17(3) IS NOT REFLECTED IN OUR RETURN AT THE TIME OF FILING O F THE RETURN. HOWEVER, ON RECONCILIATION WITH 26AS THE TRANSACTION CAME TO OUR KNOWLEDGE AND WE SUO-MOTO FILED A REVISED RETURN IN FIRST HEARING WITH, HON. AO. THEREFORE, INITIATION OF PENALTY U/S 271(1)(C) IS N OT APPLICABLE AS THE HON. AO WAS CONVINCED WITH THE FA CTS OF THE SALARY OF RS.4,74,697/- HAS BEEN CREDITED TO OUR ACCOUNT AFTER DEDUCTING TDS AND AFTER LEAVING THE J OB FROM PEL AND NO SALARY CERTIFICATE WAS RECEIVED TIL L THE DATE OF FILING OF RETURN. THE ASSESSEE WAS OF THE IMPRESSION THAT THE SALARY CREDITED WAS TAX FREE IN COME ON ACCOUNT OF LEAVE ENCASHMENT AND RETIREMENT BENEF ITS. HOWEVER, ON RECONCILIATION WITH 26AS THE TRANSACTIO N CAME TO OUR KNOWLEDGE AND WE SUO-MOTO FILED A REVIS ED RETURN IN FIRST HEARING WITH HON.AO. THEREFORE, INI TIATION OF PENALTY U/S 27(1)(C) IS NOT APPLICABLE AS THE HO N AO WAS CONVINCED WITH THE FACTS OF THE SITUATION AT TH E TIME OF ASSESSMENT. THE HON AO AT THE TIME OF ASSESSMENT ALSO CONSIDERE D THE FOLLOWING FACT FOR NON-INITIATION OF U/S 271(1) (C) WHICH WAS CLEARLY SPECIFIED IN THE SALARY CERTIFICA TE ISSUED BY ABBOT AS UNDER: 'GROSS SALARY AS PER FORM 16 (POINT NO.1 OF PART B] ISSUED BY ABBOT TRUE CARE PHARMA PRIVATE LIMITED, I S INCLUSIVE OF GROSS SALARY INCOME RECEIVED BY AN EMPLOYEE FROM PHL PHARMA PVT. LTD. PREVIOUS EMPLOYE R, AS APPLICABLE. DUE TO SWITCH IN THE JOBS THE DIFFERENCE OF RS.38,1 58/- WAS ARISING IN THE AMOUNT OF SALARY WHICH WAS NOT T O THE KNOWLEDGE OF THE ASSESSEE. HOWEVER, ON RECONCILIATI ON ITA NO. 2819/DEL/2018 SUSHIL KUMAR BHATI 4 WITH 26AS THE TRANSACTION CAME TO OUR KNOWLEDGE AND WE SUO-MOTO FILED A REVISED RETURN IN FIRST HEARING WI TH HON.AO. THEREFORE, INITIATION OF PENALTY U/S 271(1) (C) IS NE& APPLICABLE AS THE HON AO WAS CONVINCED WITH THE FACTS OF THE SITUATION AT THE TIME OF ASSESSMENT. THE DIFFERENCE OF RS.247/- IN THE AMOUNT OF INTERES T WAS DUE TO UNAVAILABILITY OF COMPLETE BANK STATEMENT AT THE TIME OF FILING THE RETURN OF INCOME. THE ASSESSEE W AS UNDER THE IMPRESSION THAT INTEREST ON SAVINGS BANK WAS AN EXEMPT INCOME U/S 80L. THEREFORE, INITIATION OF PENALTY U/S 271(1)(C) IS NOT APPLICABLE AS THE HON. AO WAS CONVINCED WITH THE FACTS, OF THE SITUATION AT T HE TIME OF ASSESSMENT. AS MENTIONED IN YOUR NOTICE, WHEREIN A) 'SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER TO BE FALSE' ANS:- QUESTION OF FAILURE 'TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSI NG OFFICER TO BE FALSE' IS NOT ARISE DUE TO ALL THE DI FFERENCE INCOME IS OUR SUBMISSION AND WE HAVE, PA ID TAXES O N THAT AMOUNT BEFORE THE CASE IS FIXED UNDER SCRUTINY AND 1 ST . NOTICE IS ISSUED UNDER INCOME TAX ACT, 1961, WHIC H IS ALSO DEPICTED IN THE ASSESSMENT ORDER OF THE AO. B) 'SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE DISCLOSED BY HIM' ANS.:- A) ESOP OF RS.9,48,230/- WAS NON-CASH AND TD S WAS DEDUCTED ON IT, WHICH WAS SOWN IN 26AS. B) SALARY FROM PEL OF RS.4,74,697/- TDS WAS DEDUCTE D ON IT, WHICH WAS SOWN IN 26AS. ITA NO. 2819/DEL/2018 SUSHIL KUMAR BHATI 5 C) DIFFERENCE OF SALARY FROM PHL ET ABBOTT OF RS.38,158/- TDS WAS ON IT, WHICH WAS SHOWN IN 26AS . D) DIFFERENCE OF S/F INTEREST OF RS. 247/- IS MINO R INCOME. OUR EXPLANATION WAS BONA FIDE WHICH IS MENTIONED IN THE ASSESSMENT ORDER OF THE HONORABLE AO. ESOP INCOME O F RS.9,48,230/- IS A NON-CASH INCOME, WHICH HAS BEEN DEPICTED IN 26AS AND WAS NOT MENTIONED IN 'SALARY CERTIFICATE' ISSUED BY THE EMPLOYER. HOWEVER, TDS @ 30% WERE DEDUCTED ON THAT ESOP. WE HAVE NOT CONCEALED A NY INCOME AS IT HAS BEEN DEPICTED IN 26AS BEARING A TD S AT HIGHER SLAB RATE OF 30% AND HENCE NO QUESTION OF CONCEALMENT PREVAILS. WE HAVE DECLARED ALL INCOMES WHICH COME TO OUR KNOWLEDGE. THE ASSESSEE HAS CHANG ED THREE JOBS AND HAS DURING THE JOB PERIODS, ALL TAX HAS BEEN DEDUCTED AT SOURCE. HE CONTINUOUSLY USE TO RES IDE, OUTSIDE DURING THE COURSE OF JOB. HE FILED HIS RETU RN OF INCOME THROUGH CONSULTANTS ON THE BASIS OF FORM NO. 16 AND TDS AND WITHOUT THE KNOWLEDGE OF ESOP AND SOME DIFFERENCES OF SALARY IN RECONCILIATION OF SALARY S LIPS ON WHICH TDS ALREADY DEDUCTED BECAUSE HE WAS ON OUTSTATION JOB. HE HAS NO INTENTION OF CONCEALMENT OF TAX HE PAID ALL THE TAX DUES SUO-MOTO AS A RESPONSIBLE CITIZEN. THERE ARE VARIOUS CASE LAWS WHICH SUPPORTS OUR SUBMISSION THAT THERE IS NO DELIBERATELY DEFAULT, CONCEALMENT OF INCOME AND WE HAVE NOT SURRENDERED I N THE PRESSURE OF AO. IT IS OUR SUBMISSION ON WHICH T AX HAD ALREADY BEEN PAID. HENCE NO CONCEALMENT U/S 271(1)(C) IS ATTRACTED AND SECTION 263 IS NOT ATTRA CTED IN OUR CASE. IT IS VERY MUCH APPARENT AND NOT A CONCEALMENT MATTER. FOLLOWING EASES ARE QUOTED IN SUPPORT OF OUR SAYINS:- CIT VS. SANIA MIRZA [ORDER DATED 9/12/2012 IN 1TA N O. 526 OF 2011, CIT VS. SIDHARTHA ENTERPRISES 322 ITR 80, CIT VS. PITAMBARADS DULICHAND 273 ITR 271. ITA NO. 2819/DEL/2018 SUSHIL KUMAR BHATI 6 5. DURING THE ARGUMENT BEFORE US, THE LD. AR REITER ATED THE ARGUMENTS TAKEN UP BEFORE THE AUTHORITIES BELOW. TH E LD. DR RELIED ON THE ORDER OF THE LD. CIT (A). 6. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 7. WE FIND THAT THE ASSESSEE HAS BEEN OUT OF INDIA AND HAS BEEN RECEIVING SALARY FROM THREE DIFFERENT EMPLOYER S AND THE RETURNS HAVE BEEN PREPARED BY A CONSULTANT. THE TDS ON THE SALARY HAS BEEN ALREADY DEDUCTED AND DEPOSITED TO T HE DEPARTMENT. FURTHER, THE ESOP AMOUNT IS A NON-CASH TRANSACTION AND ON WHICH THE TDS HAS ALSO BEEN DEDU CTED AND THE FORM 26AS HAS CLEARLY SHOWN THE TDS DEDUCTED. K EEPING IN VIEW, THE FACTS OF THE CASE THAT THE ASSESSEE HAS B EEN IN DIFFERENT JOBS AND OUT OF INDIA, THE RETURNS HAVE B EEN PREPARED BY A CONSULTANT, THE EXPLANATION OF THE ASSESSEE CO ULD FAIRLY SUBSTANTIATE THAT SUCH EXPLANATION IS BONAFIDE AND MATERIAL RELEVANT TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY HIM. THE HONBLE MADRAS HIGH COURT IN THE CASE OF PITAMBAR DAS DULICHAND 273 ITR 271 HELD THAT NO PEN ALTY IS LEVIABLE IN SUCH CASE WHERE THERE IS NO EVEN AN IOTA OF EVIDENCE TO SUGGEST THAT THE MISTAKE WAS WITH THE C ONSENT AND KNOWLEDGE WOULD BE TREATED AS A DELIBERATE ACT. WE FIND THAT THE HONBLE HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY SUCH DELIBERATE ACT ON THE PART OF THE ASSESSEE, NO PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE. SIMILARLY, THE HO NBLE HIGH CURT OF ANDHRA PRADESH IN THE CASE OF CIT VS SANIA MIRZA IN ITA NO. 526/2011 HELD THAT AN ERROR COMMITTED BY THE AS SESSEE DOES NOT NECESSARILY ATTRACT THE PENALTY PROCEEDING S IF THAT ERROR WAS ACCEPTED AND THE AMOUNT WAS SURRENDERED T O TAX. ITA NO. 2819/DEL/2018 SUSHIL KUMAR BHATI 7 SINCE, THERE WAS NO INTENTION OF THE ASSESSEE TO CO NCEAL THE INCOME, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE HONBLE HIGH COURTS MENTIONED ABOVE, WE HEREBY DIRECT THAT PENALTY LEVIED BE DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/05/2020. SD/- SD/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 08/05/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR