Challappa Santosh Kumar, Hyd, Hyderabad V. ITO, Ward-8(3), Hyd, Hyderabad

ITA 311/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6322 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: MANOJ KUMAR PROHIT
• Keywords: Revised return
• Section: 148

Judgement Text

ITA NO 311 OF 2016 CHALLAPPA SANTOSH KUMAR HYDERABA D. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B (SM) BENCH, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.311/HYD/2016 (ASSESSMENT YEAR: 2006-07) SHRI CHALLAPPA SANTOSH KUMAR HYDERABAD PAN: AFLPC 5916 P VS. I NCOME TAX OFFICER WARD 8(3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MANOJ KUMAR PROHIT FOR REVENUE : SHRI K.J. RAO, DR DATE OF HEA R ING : 20.07.2016 DATE OF PRONOUNCEMENT : 12 .08.2016 O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2006-07. IN T HIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE CIT (A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)( C). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, WHO IS IN THE BUSINESS OF EXECUTING CONTRACT WORK I N THE NAME OF R.R. ENGINEERS, FILED HIS RETURN OF INCOME FOR THE A.Y 2006-07 ON 31.10.2006 DECLARING A TOTAL INCOME OF RS.2,84,075. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT. SUBS EQUENTLY, IT CAME TO THE NOTICE OF THE AO THAT THE WORK CONTRACT PROCEEDS SHOWN BY THE ASSESSEE AT RS.1,35,11,012 WERE SHORT DECLARED AND THAT THE ACTUAL RECEIPTS DURING THE RELEVANT PE RIOD WERE RS.1,40,10,058. OBSERVING THAT THE ASSESSEES INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, A NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH, THE ITA NO 311 OF 2016 CHALLAPPA SANTOSH KUMAR HYDERABA D. PAGE 2 OF 4 ASSESSEE HAS FILED A REVISED RETURN OF INCOME ON 26 .6.2010 BY ADDING A DIFFERENCE OF RS.4,99,047. IT WAS THE CONT ENTION OF THE ASSESSEE THAT HE HAS HONESTLY DISCLOSED WHATEVER HE RECEIVED TOWARDS THE WORKS EXECUTED DURING THE PREVIOUS YEAR AND AFTER A GAP OF ALMOST 5 YEARS, IT IS DIFFICULT TO HAVE RECO NCILIATION OF CONTRACT RECEIPTS FROM THE RELEVANT COMPANIES AND T HAT HIS ACCOUNTANT, WHO WAS IN SERVICE AT THE RELEVANT PERI OD OF TIME, LEFT HIS SERVICES SEEKING EMPLOYMENT ABROAD AND THEREFOR E, THE REVISED RETURN IS FILED ONLY TO BUY PEACE WITH THE DEPARTMENT. THE AO ACCEPTED THE REVISED RETURN FILED BY THE ASS ESSEE AND BROUGHT THE SAME TO TAX. THERE IS NO MENTION ABOUT (FOR THE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME) INITIATION OF PROCEEDING U/S 271(1)(C) OF THE ACT. 3. SUBSEQUENTLY NOTICE U/S 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN REPLY TO THE SAME, THE ASSESSEE FI LED A LETTER DATED 20.01.2012 STATING THAT HE WAS HAVING ONLY A PART-TIME ACCOUNTANT DURING THE RELEVANT FINANCIAL YEAR AND S INCE THE MATTER IS 5 YEARS OLD, IT IS VERY DIFFICULT TO FOLL OW UP WITH THE COMPANIES AND GET THE ERRORS IN UPLOADING THE TDS D ATA OF FIVE YEARS BACK CORRECTED. IT WAS SUBMITTED THAT THE ASS ESSEE HAS FILED THE REVISED RETURN OF INCOME FOR THE A.Y 2006 -07 VOLUNTARILY ADDING THE ENTIRE DIFFERENCE IN RECEIPTS AS INCOME AND OFFERED IT TO TAX ONLY TO SETTLE THE MATTER CORDIALLY WITH THE DEPARTMENT WITHOUT ANY FURTHER PENAL ACTION IN THE MATTER AND PRAYED THAT THE PENALTY PROCEEDINGS MAY BE DROPPED. AO HOWEVER, WAS NOT CONVINCED WITH ASSESSEES CONTENTIONS AND LEVIED TH E MINIMUM PENALTY OF RS.1,74,700 U/S 271(1)(C) OF THE ACT. AG GRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A), WH O CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN 2 ND APPEAL BEFORE ME. ITA NO 311 OF 2016 CHALLAPPA SANTOSH KUMAR HYDERABA D. PAGE 3 OF 4 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITE RATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW PLACE D RELIANCE UPON THE DECISION OF THE COORDINATE BENCH OF THIS T RIBUNAL IN THE CASE OF K. DEEDAR AHMED VS. INCOME TAX OFFICER REPO RTED IN 2005 (97 ITD 0240) WHEREIN THE TRIBUNAL HAS OBSERVED THE ASSESSEE THEREIN HAS ADMITTED A MISTAKE AND FILED THE REVISE D RETURN IN RESPONSE TO NOTICE U/S 148 AND THEREFORE, IT CANNOT BE SAID THAT REVISED RETURN WAS FILED AFTER DETECTION BY THE DEP ARTMENT. IT WAS HELD THAT THE INCOME RETURNED IN RESPONSE TO NOTICE U/S 148 BEING ASSESSED ON PROTECTIVE BASIS, SHOWS THAT ON T HE DATE OF FILING THE REVISED RETURN, THE AO HAS NOT DETECTED THE CONCEALMENT OF INCOME AS THE RETURNS OF THE INCOME WERE FILED BY THE ASSESSEE VOLUNTARILY AND HE COOPERATED WITH THE AO IN ALL THE RESPECT IN COMPLETION OF THE ASSESSMENT. IT WAS HEL D THAT THE AO WAS IN CONFUSION TO IMPOSE OR NOT TO IMPOSE PENALTY AND IN THE CIRCUMSTANCES OF THAT CASE, THE PENALTY WAS LIABLE TO BE CANCELLED. THE LEARNED DR, HOWEVER, SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW AND TRIED TO DISTINGUISH THE CASE LAW ON FACTS. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE REVISED RETURN FILED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE AO AND THERE IS NO MENTION OF THE INITIATION OF THE PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER EITHER IN FORM OR IN SUBSTANCE AS THERE IS NO OBSERVATION OF THE A O THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME OR HAS CONCEALED THE INCOME. THE HON'BLE MADHYA PRADESH HI GH COURT IN THE CASE OF CIT VS. S.V. ELECTRICALS (P) LTD REP ORTED IN (2005) 274 ITR 0334, HELD THAT THE ASSESSEE HAVING SURREND ERED INCOME, THERE IS NO QUESTION OF ANY CONCEALMENT ON ITS PART AND ITA NO 311 OF 2016 CHALLAPPA SANTOSH KUMAR HYDERABA D. PAGE 4 OF 4 THEREFORE, IS NOT A CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE CASE BEFORE US ALSO, I FIND THAT TH E ASSESSEE HAS DECLARED THE DIFFERENCE OF GROSS RECEIPTS TO TAX, S TATING THAT THE DIFFERENCE IS BEING ACCEPTED AS THE ASSESSEE IS NOT ABLE TO CONTACT THE COMPANIES AND RECONCILE THE CONTRACT RECEIPTS. THUS, IT CAN BE SEEN THAT THE ASSESSEE HAS NOT MADE ANY ATTEMPT TO CONCEAL OR FURNISH INACCURATE PARTICULARS OF INCOME, BUT HA S DECLARED TOTAL INCOME IN RESPONSE TO THE NOTICE U/S 148. ASS ESSEE HAS FILED ITS REPLY TO THE NOTICE U/S 271(1)(C) AND THE AO HAS NOT CONCLUDED THAT THE EXPLANATION OFFERED BY THE ASSES SEE IS NOT CORRECT OR BONAFIDE AND NOT SUBSTANTIATED. IN VIEW OF THE SAME, I AM INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSE E AND DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ASSESS EES APPEAL IS ACCORDINGLY ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2016. S D/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 12 TH AUGUST, 2016. VNODAN/SPS COPY TO: 1. M.K.PUROHIT & CO. CAS, 31A, 1 ST FLOOR, MCH COMPLEX, PUTLIBOWLI, KOTHI, HYDERABAD 500095 2. INCOME TAX OFFICER WARD 8(3) IT TOWERS, MASAB TANK, HYDERABAD 3. CIT(A) -2 HYDERABAD 4. PR. CIT -2 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER