THE ITO, WARD - 2(2), Vijayawada V. Sri Satri Kambagiri Swamy, Vijayawada

ITA 294/VIZ/2013

• Counselvise Citation: 29425314 RSA 2013
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K V N CHARYA
• Keywords: Bonafide belief; Reasonable cause
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, VISHAKHAPATNAM BEFORE S/SHRI B. RAMAKOTAIAH (AM) & SAKTIJIT DEY (JM) I.T.A. NOS.290 - 294/ VIZ/2013 ASSESSMENT YEARS: 2002 - 03, 2004 - 05,2005 - 06,2006 - 07 & 2007 - 08 ITO, WARD - 2(2), CENTRAL REVENUE BUILDING, M.G.ROAD, VIJAYAWADA. VS. SRI SATRI KAMBAGIRI SWAMY, T - 1, VALBHAV TOWRS, MUNCIPAL EMPLOYEE COLONY, NEAR BENZ CIRCLE, VIJAYAWADA. PAN/GIR NO. : AVVPS 6803 M ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI C.SUBRAHMANYAM RESPONDENT BY : SHRI K.V.N.CHARYA DATE OF HEARING : 12/12/2013 DATE OF PRONOUNCEMENT : 13 /12/2013 O R D E R PER SAKTIJIT DEY, JM THESE APPEALS ARE FILED BY THE REVENUE AGAINST COMMON ORDER DATED 12.2.2013 OF THE CIT(A) - VIJAYWADA FOR THE ASSESSMENT YEARS 2002 - 03 AND 2004 - 05 TO 2007 - 08, RESPECTIVELY . 2. THE SOLE ISSUE IN THE PRESENT APPEALS IS WITH REGARD TO CIT(A) DELETING THE PENALT Y IMPOSED BY THE AO U/S.271(1)(C) OF THE ACT. 3. BRIEFLY STATED THE FACTS RELATING TO THE ISSUE ARE, THE ASSESSEE IS AN INDIVIDUAL. AS IS EVIDENT FROM THE FACTS ON RECORD, THE MAIN SOURCE OF INCOME OF TH E ASSESSEE IS FROM COMMISSION FROM REAL ESTATE BUSIN ESS. A SEARCH & SEIZURE OPERATION WAS CONDUCTED IN CASE O F ROWFIN REAL ESTATE PVT LTD., ON 5.4.2007. 2 CONSEQUENT THERETO SEARCH ACTION WAS ALSO INITIATED IN CASE OF THE ASSESSEE. AS A RESULT OF THE SEARCH, IT WAS NOTICE D THAT THE ASSESS EE WORKED AS COMMIS SION AGENT FOR THE AFORESAID COMPANY. THEREFORE, NOTICES U/S.153 A WERE ISSUED TO THE ASSESSEE CALLING FOR RE TURNS OF INCOME FOR ASSESSMENT YEARS 2002 - 03 AND 2004 - 05 TO 2007 - 08.. THE NOTICES WERE INITIALLY SERVED BY AFFIXTURE ON 7.8.2009. SINCE THERE WA S NO RESPONSE FROM THE ASSESSEE TO THE SAID NOTICES, THE AO AGAIN ISSUED NOTICE U/S.142(2) OF THE ACT , WHICH WAS SERVED ON THE ASSESSEE 8.9.2009. IN RESPONSE TO SAID NOTICE, ASSESSEE FILED RETURNS OF INCOME FOR THE CONCERNED ASSESSMENT YEARS ON 29.10.2009 DECLARING THE INCOME AS UNDER: A.Y. INCOME 2002 - 03 : RS. 42,791 2004 - 05 : RS.1,54,230 2005 - 06 : RS.1,18,989 2006 - 07 : RS. 2,92,672 2007 - 08 : RS.11,39,370 4. DURING THE ASSESSMENT PROCEEDINGS , THE AO ON VERIFICATION OF INFORMATION AVAILABLE WITH HIM NOTICED THAT HUGE AMOUNT WAS DEBITED TO PROFIT AND LOSS ACCOUNT TOWARDS SUB - AGENCY C OMMISSION FOR THE AFORESAID ASS ESSMENT YEARS. THE AO ULTIMATELY COMPLETED THE ASSESSMENT S BY DISALLOWING THE EXPENDIT URE CLAIMED TOWARDS SUB - AGENCY COMMISSION FOR THESE YEA RS. SIMULTANEOUSLY THE AO ALSO INITIATED PROCEEDINGS FOR IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALING PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. AGAI NST THE ASSESSMENT ORDER PASSED FOR ALL THE SE ASSESSMENT YEARS, ASSESSEE PREFERRED APPEALS BEFORE THE 3 CIT(A) . DURING THE APPEAL PROCEEDING BEFORE THE CIT(A), THE AS SESSEE SUBMITTED THE DETAILS OF SUB - AGENCY COMMISSION PAYMENT. THE CIT(A) ON VERIFICATION OF THE SAME CALLED FOR A REMAND REPORT FROM THE AO DIRECTING HIM TO EXAMINE RESPECTIVE SUB - AGENTS. THE AO DURING THE REMAND EXAMINED SOME OF THE SUB - AGENT S THROUGH HIS INSPECTORS AND SUBMITTED A REMAND REPORT. ON THE BASIS OF REMAND REPORT SUBMITTED B Y THE AO, THE CIT(A) ALLOWED SUB - AGENCY COMMISSION WHERE THE INSPECTOR WAS ABLE CONTACT THE CONCERNED SUB - BROKERS WHO ADMITTED OF HAVING RECEIVED THE COMMISSION. ON THAT BASIS, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE WHILE UPHOLDIN G THE ADDITION IN RES PECT OF SUB - BROKERS WHOM INSPECTOR COULD NOT MEET AS THEY WERE NOT AVAILABLE IN THE ADDRESSES PROVIDED BY THE ASSESSEE. DURING THE PENALTY PROCEEDINGS , THE ASSESSEE THOUGH SUBMITTED EXPLANATION BEFORE THE AO STATING THEREIN THAT THERE IS NO CONCEALMENT O F INCOME OR FURNISHING OF I NACCURATE PARTICULARS OF INCOME ON HIS PART SO AS TO L EVY PENALTY U/S.271(1)(C) OF THE ACT. THE AO HOWEVER, REJECTED ALL THE CONTENTION OF THE ASSESSE E AND PASSED ORDERS IMPOSING PENALTY U/S.271(1)(C) OF THE ACT FOR THE ASSESSM ENT YEARS UNDER DISPUTE AS UNDER . 2002 - 03 ; RS. 8,000 2004 - 05 : RS. 29,000 2005 - 06 : RS. 10,000 2006 - 07 : RS. 39,000 2007 - 08 : RS.5,00,000 5. BEING AGGRIEVED OF THE ORDER SO PASSED IMPOSING PENALTY FOR THE AFORESAID ASSESSMENT YEARS, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A). IN THE COURSE OF HEARING BEFORE CIT(A), THE ASSESSEE IN HIS WRITTEN SUBMISSIONS SUBMITTED AS UNDER: 4 'APPELLANT IS AN INDIVIDUAL EARNING INCOME FROM COMMISSIO N FROM REAL ESTATE BUSINESS AND OTHER SOURCES. CONSEQUENT TO SEARCH IN THE GROUP CASES OF ROWFIN REAL ESTATES (PRIVATE LIMITED APPELLANTSS PREMISES WAS SEARCHED ON 05.04 2007. IN HIS L INE OF ACTIVITY APPELLANTS USED TO SHARE COMMISSION WITH SUB AGENTS AND ARE OF THE SINCERE BELIEF THAT HIS INCOME IS BE LOW TAXABLE LIMIT AND HAVE NO OBLIGATION TO FILE THE RETURN OF INCOME. CONSEQUENT TO THE SEARCH REFERRED ABOVE HIS CHAIN OF SUB AGENTS BROKEN AND THEY L EFT IN SEARCH FOR THEIR LIVELIHOOD . AS THE AP PELLANT HAS TOOK NEW PREMISES FOR HIS LIVING , NOTICES SAID TO HAVE BEEN SERVED BY AFFIXTURE ON THE OLD ADDRESS, WAS NOT KNOW N TO APPELLANT. APPELLANT RECEIVED NOTICE U/S..142 (1) FOR THE ASSESSMENT YEAR 2007 - 08 ON 18.09.2009. APPELLANT FIL ED HIS RETURN OF INCOME IN RESPONSE TO NOTICE UNDER 142(1) ON 29.10.2009 ADMITTING A TOTAL INCOME OF RS .11,39,370/ - AND PAID THE TAXES DUE THEREON. HE CO - OPERATED WITH THE DEPARTMENT FOR THE COMPLETION OF A SSESSMENT WITHIN THE TIME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS APPELLANT WAS ASKED TO PRODUCE SUB AGENTS TO WHOM HE CLAIMED TO HAVE PAID THE COMMISSION. 'HOWEVER DUE TO DISRUPTION OF TRANSPORT SERVICES DINING THE AGITATION OF UNITED ANDHRA PRADESH AT THAT TIME, APPELL ANT EXPRESSED HIS INABILITY TO PRODUCE SUB AGENTS BEFORE THE ASSESSING OFFICER. TH E LEARNED ASSESSING OFFICER DISALLOWED THE CLAIM OF THE APPELLANT ON SUB - COMMISSION PAYMENTS AND COMPETED THE ASSESSMENT. DURING THE APPEAL BEFORE THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) THE LEARNED ASSESSING OFFICER WAS ASKED TO CONDU CT THE ENQUIRY REGARDING THE SUB COMMISSION PAYMENTS. TH E LEARNED ASSESSING OFFICER DEP UTED THE INSPECTOR OF INCOME TAX FOR VERIFICATION. THE INSPECTOR OF INCOME TAX CONTACTED MANY OF SUCH AGENTS AND OBTAINED THE CONFIRMATION LETTERS AND SUBMITTED HIS REPORT, HE IS UNABLE TO CONTACT SOME OF THE AGENTS SINCE THEY LEFT THEIR PLACE IN SEARCH OF THEIR LIVELIHOOD AND THEIR PRESENT ADDRESSES ARE NOT K NOWN. IT IS PERTINENT TO NOTE THAT NONE OF THE AGENTS WHOM THE INSPECTOR CONTACTED DENIED HAVING WORKED FOR THE APPELLANT . IN VIEW OF THIS FACT THAT APPELLANT SUBMITTED THAT ALL THE SUB COMMISSION PAYMENTS ARE TO BE ACCEPTED. HOWEVER RELIEF WA S GRANTED FOR THE CONFIRMATION LETTERS COLL ECTED BY THE INSPECTOR OF INCOME TAX. DURING THE PENALTY PROCEEDINGS IT HAS BEEN SUBMITTED BY THE APPELL ANT SINCE ALL THE SUB - COMMISSION AGENTS W HOM THE INSPECTOR OF INCOME TAX CONTACTED CONFIRMED THE RECEIPT OF COMMISSION FROM THE APPELLANT AND THE REST WERE NOT CONTACTED SINCE THEY LEFT THEIR PLACE AND A PERIOD OF 2 YEARS ELAPSED APPELLANT CAN NOT BE PENALIZED. IT IS ALSO SUBMITTED THAT 5 NONE OF THE PARTICULARS SUBMITTED BY THE APPELLANT WERE FOUND TO BE FAL SE OR INACCURATE. HOWEVER, THE AS SESSING OFFICER LEVIED THE PENAL TY FOR THE AD DITION CONFIRMED BY THE HONBLE COMMISSIONER OF INCOME TAX (A PPEALS) IN QUANTUM ASSESSMENT. IN THIS CONNECTION APPELLANT SUBMITS THAT HE FILED HIS RETURN OF INCOME PURSUANT TO N OTICE ISSUED U/S. 142 (1) OF THE INCOME TAX ACT, WHICH W AS SERVED ON THE APPELLANT ON 18.09.2009. HENCE IT IS RESPECTFULLY SUBMITTED THAT EXPLANATION 3 TO SEC.271 (1)(C ) OF THE INCOME ACT IS NOT APPLICABLE TO THE CASE OF THE APPELLANT FURTHE R IN THE COURSE OF SEARCH APPELLANT IS NOT FOUND TO B E THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS, THE EXPLANATION 5 TO SEC.271(L)(C) IS ALSO NOT APPLICABLE TO THE CASE OF THE APPELLANT.. THEREFORE, IT IS RESPECTFU LLY SUBMITTED THAT APPELLANT CANNOT BE SAID TO HAVE SUBMITTED INACCURATE PARTICULARS OF INCOME OR CONCEALED' INCOME FROM THE KNOWLEDGE OF THE DE PARTMENT, THERE IS NO CASE FOR L EVY OF PENAL TY AND THE PENAL T Y OF RS. .5,00,000/ - IMPOSED ON THE APPE LLANT F OR THE A SSESSMENT YEAR 2007 - 08 B E DELETED.' 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE PENALTY IMPOSED FOR ALL THE ASSESSMENT YEARS BY HOLDING AS UNDER: 5. I HAVE SEEN THE PENALTY ORDERS AND THE SUBMISSIONS MADE BY THE APPELLANT'S AR BESIDES PERUSING ALL OTHER INFORMATION AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE APPELLANT HAS WORKED AS BROKER WITH M/S ROWFIN REAL ESTATES (P) LTD AND RECEIVED COMMISSION FROM THE COMPANY ON THE BOOKINGS MADE THROUGH HIM. IT IS THE SUBMISSION OF THE APPELLANT THAT FOR THAT PURPOSE HE HAS ENGAGED NO. OF SUB BROKERS TO WHOM HE PAID AMOUNTS FOR WORKING UNDER HIM. SINCE, HE COULD NOT PRODUCE DETAILS OF SUCH SUB BROKE RS THE AO HAS DISALLOWED THE ENTIRE BROKERAGE AMOUNT CLAIMED AS EXPENDITURE IN HIS ACCOUNTS AND COMPLETED ASSESSMENT. IN THE QUANTUM APPEAL, THE THEN CIT(A) HAS ACCEPTED THE REQUEST OF THE APPELLANT AND REMANDED THE MATTER TO THE AO WITH A DIRECTION TO VER IFY THE SAME AND GIVE A REPORT. NOW, AS FAR AS THE INSPECTOR WAS ABLE TO ENQUIRE THE SUB BROKERS, THERE WAS NO ADVERSE FINDING AND ACCORDINGLY HE HAS RECOMMENDED FOR RELIEF. THUS, THE THEN CIT(A) HAS UPHELD THE 'ADDITION WHOM INSPECTOR COULD NOT MEET, AS S UCH PERSONS WERE NOT THERE AT THE ADDRESSES PROVIDED BY THE APPELLANT. IT WAS THE SUBMISSION OF THE APPELLANT THAT IN THE AFTERMATH OF THE ACTION UNDER SECTION 132(1), ALL THE SUB BROKERS OF M/S.ROWFIN REAL ESTATES (P) LTD WERE SCATTERED, AS THE BUSINESS O F THE 6 COMPANY STOPPED AND IN FACT SOME OF THE SUB BROKERS LEFT THE AREA AND WENT FOR OTHER AREAS IN SEARCH OF LIVELIHOOD, WHOSE WHEREABOUTS WERE NOT KNOWN TO HIM. IT IS ARGUED BY THE AR THAT THE ADDRESSES COULD NOT BE PRODUCED IN CASE OF THE SUB BROKERS, I N WHOSE CASES THE SUB BROKERAGE WAS DISALLOWED BY THE AO AS SUCH DETAILS WERE IN FACT NOT KNOWN TO HIS CLIENT. BY THIS YARD STICK, IT IS ARGUED THAT HIS CLIENT HAS NOT CONCEALED HIS INCOME NOR FURNISHED INACCURATE PARTICULARS AND AS SUCH CANVASSED FOR DELE TION OF CONCEALMENT PENALTY FOR ALL THE IMPUGNED ASSESSMENT YEARS UNDER CHALLENGE. I AGREE WITH THE AR THAT THE APPELLANT HAS NOT CONCEALED THE INCOME NOR FURNISHED ANY INACCURATE PARTICULARS. IN CASE OF SUB BROKERS, WHOSE LATEST ADDRESSES COULD NOT BE PRO DUCED AND IN CASE OF SUCH BROKERS WHOM THE INSPECTOR COULD NOT ENQUIRE DUE TO THE FACT THAT THEY LEFT IN SEARCH OF LIVELIHOOD TO NEW PLACES AND ACCORDINGLY TO NEW ADDRESSES, THE APPELLANT COULD NOT BE BRANDED AS FURNISHING INACCURATE PARTICULARS. THE APPEL LANT HAS ALREADY SUFFERED THE BURDEN OF TAX ON SUB BROKERAGE PAID BY HIM IN CASE OF THOSE SUB BROKERS WHOM THE INSPECTOR COULD NOT ENQUIRE. THUS, IN THE GIVEN BACKGROUND OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE AO WAS NOT JUSTIFIED IN LEVYING C ONCEALMENT PENALTY FOR ALL THE ASSESSMENT YEARS UNDER CHALLENGE AND ACCORDINGLY HE IS DIRECTED TO DELETE THE SAME. 7. BEING AGGRIEVED OF THE IMPUGNED ORDERS, THE DEPARTMENT IS IN APPEAL BEFORE US FOR ALL THE AFORESAID ASSESSMENT YEARS. 8. LD D.R. SUBMITTE D BEFORE US THAT THE CIT(A) WITHOUT PROPERLY APPRECIATING THE FACTS HAS DELETED THE PENALTY FOR ALL THE AFORESAID ASSESSMENT YEARS. IT WAS SUBMITTED THAT THE REASONS ASCRIBED IN PARA 5 OF THE IMPUGNED ORDER THOUGH MAY BE APPLICABLE FOR ASSESSMENT YEAR 2007 - 08 BUT SO FAR AS OTHER ASSESSMENT YEARS ARE CONCERNED, IT IS NOT APPLICABLE AS CONCEALMENT OF INCOME IS PROVED SINCE THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME VOLUNTARILY THOUGH HE HAD TAXABLE INCOME. IN THIS CONTEXT, LD D.R. SUBMITTED THAT ONLY AFTER THE SEARCH WAS CONDUCTED ON 5.4.2007 AND NO TICE U/S.153A WAS ISSUED ON 19.2.2008, THE ASSESSEE CAME FORWARD T O FILE HIS RETURN S OF INCOME FOR ASSESSMENT YEARS UNDER CONSIDERATION ONLY ON 29.9.2009 DECLARING THE INCOME. HE, THEREFORE, SUBMITTED THAT CONCEALMENT OF INCOME IN ALL THE ASSESSMENT YEARS IS PROVED. 7 9. LD A.R. ON THE OTHER HAND STRONGLY SUPPORTING THE O RDER OF THE CIT(A) SUBMITTED THAT IMPOSING OF PENALTY UNDER SECTION 271(1)(C) BY THE AO IS NOT VALID AS ASSESSEES CASE NEITHER COMES WITHIN THE EXPLANATION(3) OF SECTION 271 (C) NOR UNDER EXPLANATION 5 TO SEC.271(L)(C) . LD A.R. SUBMITTED THAT IN THE AFOR ESAID CIRCUMSTANCES, THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY. 10. WE HAVE H EARD THE RIVAL CONTENTIONS AND PERUSED THE RE C ORDS OF THE C ASE. AS CAN BE SEEN FROM THE SUBMISSION MA DE BEFORE THE CIT(A), ASSESSEE H A D STATED THAT HE RECEIVED COMMISSION FROM ROWFIN REAL ESTATES (P) LTD.,. IT WAS FURTHER STATED THAT IN THIS LINE OF ACTIVITIES , THE ASSESSEE USED TO SHARE COMMISSION WITH SUB - AGENTS. HE ALSO STATED THAT HE HAD BONAFIDE BELIEF THAT HIS INCOME WAS BELOW TAXABLE LIMIT, HENCE, HAD NO OBLIGATION TO FILE RETURN OF INCOME , HENCE HE DID NOT FILE RETURNS VOLUNTARILY. S O FAR AS NON - FILING OF RETURN S OF INCOME EVEN PURSUANCE TO NOTICE ISSUED BY THE AO. IT WAS STATED BY THE ASSESSEE THAT AFTER THE SEARCH SINCE ASSESSEE HAD TAKEN NEW PREMISES FOR HIS LI VING, NOTICE SERVED BY WAY OF AFFIX URE WAS NOT KNOWN TO HIM. ONLY AFTER THE ASSESSEE RECEIVED NOTICE U/S.142(1) FOR ASSESSMENT YEAR 2007 - 08 ON 18.9.2009, IT HAS FILED THE RETURN OF INCOME. IT HAS ALSO BEEN STATED BY THE ASSESSEE T H E FACT THAT THE ASSESSEE HAD PAID COMMISSION TO SUB - BROKERS H AS ALSO BEEN PROVED UPON EXAMINATION OF THE SUB - BROKERS AND PART OF COMMISSION HAS BEEN DISALLOWED ONLY BECAUSE THE INSPECTOR COULD NOT MEET THE CONCERNED SUB - BROKERS AS THEY WERE NOT AVAILA BLE IN THEIR LAST AVAILABLE AD DRESS ES KNOWN TO THE ASSESSEE . IT WAS THEREFORE CONTENDED THAT IN THESE CIRCUMSTANCES, ASSESSEE COULD NOT BE VISITED WITH PENALTY U/S.271(1)(C ) ON THE ALLEGATION OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WHEN ADMITTEDLY IN THE COURSE OF SEARCH, THE ASSESSEE WAS NOT FOUND TO BE THE OWNER OF MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS . AS CAN BE SEEN FROM THE CONTENTION OF THE ASSESSEE RAISED BEFORE THE CIT(A) AS WELL AS OTHER MATERIALS ON RECORD, IT IS NOT DISPUTED THAT D URING THE RELEVANT ASSESSMENT Y EARS, THE ASSESSEE RECEIVED COMMISSION ONLY FROM ROWFIN REAL ESTATES (P) LTD.,. SO FAR 8 AS PAYMENT MADE TO SU B - BROKERS IS CONCERNED, THE SAID FACT ALSO HAS BEEN PROVED IN THE ENQUIRY CONDUCTED DURING REMAND . THOUGH PART OF THE COMMISSION PAID WAS DISALLOWED DUE TO NON - AVAILABILITY OF SOME OF THE SUB - BROKERS WHO COULD NOT BE CONTACTED BY THE INSPECTOR BUT THAT DOES NOT TAKE AWAY FROM THE FACT THAT ASSESSEES CLAIM OF PAYMENT OF COMMISSION TO SUB - BROKERS IS COR RECT. . IN THESE CIRCUMSTAN CES, THE BONAFIDE OF THE EXPLA NATION SUBMITTED BY THE ASSESSEE CANNOT BE DENIED. MOREOVER, IT IS A FAC T ON RECORD THAT THE ASSESSEE WAS ONLY ACTING AS A BROKER OF ROWFIN REAL ESTATE (P) LTD., AND EARNED COMMISSION ON ACCOUNT OF REAL ESTATE BUSINESS OF THE COMPANY. THEREFORE, IT CAN BE PRESUMED THAT THE ASSESSEE BEING A BROKER IS NOT A WELL E DUCATED PERSON AND MAY NOT BE WELL CONVERSANT WITH THE P ROVISIONS OF INCOME TAX ACT AND, THEREFORE, ENTERTAINED A BELIEF THAT CONSIDERING THE COMMISSION EARNED BY HIM AND COMMISSION PAID TO SUB - BROKERS, IT MAY NOT BE NECESSARY TO FILE THE RETURNS. IN THESE CIRCUMSTANCES , HAD THE PAYER OF COMMISSION I.E. R OWFIN ROYAL ESTATE (P) LTD ., DEDUCTED THE TAX AT SOURCE ON COMMISSION PAYMENT TO THE ASSESSEE, THE ASSESSEE MIGHT HAVE BECOME AWARE TO FILE THE RETURN OF INCOME. THEREFORE, IN OUR VIEW THERE IS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE IN NOT FILING THE R E TURN IN TIME, WHICH H AS BEEN TREA T ED AS A REASON FOR THE AO TO COME TO THE CONCLUSION THAT THERE IS C ONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. SO FAR AS ASSESSME NT YEAR 2007 - 08 IS CONCERNED, WE HAVE ALREADY STATED EARLIER THAT THE ADDITION WAS ONLY ON ACCOUNT OF DISA LLOWANCE OF COMMISSION PAID TO SUB - BROKERS. HOWEVER, THE FACT OF PAYMENT TO SUB - BROKERS HAVE BEEN PROVED DURING THE PROCEEDINGS BEFORE THE CIT(A) THOUGH THERE MAY BE PART DISALLOWANCE OF COMMISSION TO SU B - BROKERS DUE TO NON - AVAILABILITY OF THE CONCERNED SUB - BROKERS FOR WHATEVER MAY BE THE REASON, BUT IT WOULD NOT TAKE AWAY FROM THE FACT THAT THE ASSESSEE HAS PAID COMMISSION TO SUB - AGENTS. IN THESE CIRCUMSTANCES , IN OUR VIEW, THE IMPOSITION OF PENALTY CANNOT SURVI V E. WE ARE FORTIFIED IN OUR VIEW BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. B VENKATESAM,349 ITR 419, WHEREIN, THE HONBLE HIGH COURT CONSIDERING THE FACT 9 THAT THE NON - DISCLOSURE OF INCOME WAS DUE TO THE CIRCUMSTANCES THAT THE ASSESSEE WAS AN UNEDUCATED AND ILLITERATE PETTY CONTRACTOR AND BELIEVED BONAFIDE THAT NO FURTHER TAX WAS REQUIRED TO BE PAID DELETED THE PENALTY . IN THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD CIT(A) IN DELETING THE PENALTY FOR ALL THE ASSESSMENT YEARS UNDER DISPUTE. 11. IN THE RESULT, APPEALS FILED BY THE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/12/2013 . SD/ - S D/ - (B.RAMAKOTAIAH ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER VISHAKHAPATNAM DATED 13 / 12/2013 PARIDA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : ITO, WARD - 2(2), CENTRAL REVENUE BUILDING, M.G.ROAD, VIJAYAWADA. 2. THE RESPONDENT. : SRI SATRI KAMBAGIRI SWAMY, T - 1, VALBHAV TOWRS, MUNCIPAL EMPLOYEE COLONY, NEAR BENZ CIRCLE, VIJAYAWADA 3. THE CIT(A) - VIJAYWADA 4. CIT , VIJAYWADA 5. DR, ITAT, VISHAKHAPATNAM 6. GUARD FILE. BY ORDER SR.PS, ITAT, VISHAKHAPATNAM //TRUE COPY//