OM PRAKASH AGARWAL, Jaipur V. ACIT, Jaipur

ITA 366/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5104 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 20-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DAGUR CIT DHK
• Keywords: Bonafide belief; Bonafide mistake
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 366/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. SHRI OM PRAKASH AGARWAL, F-9A, VINAY PATH, BANI PARK, JAIPUR. CUKE VS. THE ACIT, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABHPA 4348 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE (WRITTEN SUBMISSION) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DAGUR (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22.08.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 05/09/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I, JAIPUR DATED 08.01.2015 PERTAINING TO ASSESSMENT YE AR 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN HOLDING THAT THE CONCEALED INCOME IS TO BE TAKEN AT RS. 95,281/- AND FURTHER DIRECTING THE ASSESSING OFFICER TO LEVY A PENALTY O N THE SAID AMOUNT. THE SAID ACTION IS ILLEGAL. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT (APPEALS) WAS NOT JUSTIFIED IN HOLDING THAT THE PRO VISIONS OF SECTION 271(1)(C) ARE APPLICABLE IN RESPECT OF AMOUNT OF RS . 95,281/- AND SUSTAINING THE PENALTY IN RESPECT OF THE SAID AMOUN T. THE PENALTY SUSTAINED IS ILLEGAL, UNJUSTIFIED AND EXCESSIVE. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS REOPENED AND ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED 2 ITA NO. 366/JP/2015 SHRI OM PRAKASH AGARWAL TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 28.11.20 11 AND ASSESSED THE INCOME AT RS. 1,27,65,190/- AS AGAINST RETURNED INCOME OF RS. 1,25,98,790/-. AT THE TIME OF RE- ASSESSMENT, THE AO MADE ADDITION ON ACCOUNT OF DIFF ERENCE IN GROSS RECEIPTS AND INTEREST INCOME OF RS. 1,15,680/-. THE AO ALSO INIT IATED PENALTY PROCEEDINGS AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVI ED OF RS. 39,320/-. THE ASSESSEE AGGRIEVED BY THIS ORDER, PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS MODIFIED THE ORDER OF T HE AO AND DIRECTED HIM TO MODIFY THE CONCEALED AMOUNT AT RS. 95,281/- AND LEVY MINIM UM PENALTY AT 100% THEREON INSTEAD OF CONCEALED INCOME AS TAKEN BY THE AO AT R S. 1,15,680/-. THE LD. CIT (A) TREATED THE SAME AT RS. 95,281/-. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, NO ONE APPEARED ON BEHAL F OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS ARE FILED. THE WRITTEN SUBMISSI ONS SO FILED ARE AS UNDER :- IN THIS APPEAL THE ASSESSEE HAS OBJECTED TO THE A CTION OF THE LEARNED CIT (APPEALS) IN HOLDING THAT CONCEALED INCOME IS T O BE TAKEN AT RS. 95,281/- AND SUSTAINING PENALTY UNDER THE PROVISION S OF SECTION 271(1)(C) OF THE IT ACT. THE ASSESSEE IN THIS CASE IS A CIVIL CONTRACTOR AND FILED HIS RETURN OF INCOME ON 28.09.2009 DECLARING TOTAL INCOME OF RS. 1,25,98,790/-. ASSESSMENT PROCEEDINGS WERE TAKEN UP UNDER THE PROV ISIONS OF SECTION 143 AND ORDER WAS PASSED UNDER THE PROVISIONS OF SE CTION 143(3) VIDE ORDER DATED 28.11.2011. IT HAS BEEN MENTIONED BY TH E ASSESSING OFFICER THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE ASSESSEE WAS ASKED TO FURNISH RECONCILIATION STATEMENT OF GR OSS RECEIPTS AS PER FORM NO. 26AS, ITS DETAILS AND AS PER ASSESSEES BO OKS OF ACCOUNTS. IT HAS FURTHER BEEN MENTIONED THAT AS PER THE STATEMEN T CONTRACT RECEIPTS OF RS. 95,281/- AND INTEREST OF RS. 20,399/- WERE N OT SHOWN IN THE RETURN OF INCOME BY THE ASSESSEE AND THEREFORE, THE SAID AMOUNT WAS ADDED TO ASSESSEES INCOME. 3 ITA NO. 366/JP/2015 SHRI OM PRAKASH AGARWAL THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PR OCEEDINGS UNDER THE PROVISIONS OF SECTION 271(1)(C) IN RESPECT OF ABOVE MENTIONED AMOUNTS AND IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESS EE HAS FILED WRITTEN REPLY WHICH HAS BEEN REPRODUCED BY THE ASSE SSING OFFICER ON PAGES 1 & 2 OF THE PENALTY ORDER. IT WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT REASON FOR DIFFERENCE IN CONTRACT RECEIPT OF RS. 95,281/- WAS ON ACCOUNT OF MOBILIZATION ADVANCE RECEIVED BY THE ASSESSEE AND THE ASSESSEE HAS SURRENDERED THE DIFFE RENCE AMOUNT TO AVOID DELAY IN ASSESSMENT PROCEEDINGS AND IT WAS RE QUESTED THAT PENALTY MAY NOT BE IMPOSED. THE ASSESSING OFFICER, HOWEVER, HAD NOT ACCEPTED THE CONTENTION OF THE ASSESSEE AND HAD WOR KED OUT THE CONCEALED INCOME AT RS. 1,15,680/- (RS. 95,281/- PL US RS. 20,399/-) AND LEVIED PENALTY OF RS. 39,320/- UNDER THE PROVIS IONS OF SECTION 271(1)(C) OF THE ACT. THE LEARNED CIT (APPEALS) HAS DISCUSSED THE ISSUE IN PARA 3.3 OF THE ORDER AND IT HAS BEEN HELD BY HIM THAT NO PENALTY IS IMPOSABLE IN RESPECT OF INTEREST ON FDR AND HE, THEREFORE, DIRECTED THE ASSESSING OFFICER TO MODIFY THE CONCEA LED AMOUNT AT RS. 95,281/- AND LEVY MINIMUM PENALTY AT 100% THEREOF. IN THIS CONNECTION, IT IS SUBMITTED THAT THERE WAS NO JUSTIFICATION FOR LEVY OF ANY PENALTY. ATTENTION IS INVITED TO THE FA CT THAT THE ASSESSEE HAS SHOWN GROSS TURNOVER OF RS. 17.69 CRORES AND HA D DECLARED A NET PROFIT OF RS. 96,11,076/-. THE ADDITION HAS BEEN M ADE TO THE INCOME OF THE ASSESSEE SIMPLY ON THE BASIS OF AMOUNT SHOWN IN FORM NO. 26AS AND THE DIFFERENCE WAS ONLY OF RS. 95,281/-. T HUS, THE DIFFERENCE WAS ONLY ON ACCOUNT OF THE FACT THAT THE ASSESSEE H AS NOT TAKEN INTO CONSIDERATION THE MOBILIZATION ADVANCE WHILE WORKIN G OUT THE CONTRACT RECEIPTS AND THIS AMOUNT IS TAKEN INTO CONSIDERATIO N WHEN THE WORK IS COMPLETED. THE ASSESSEE IS PAYING TAX IN THE HIGHES T SLAB OF RATE AND THERE IS NO DIFFERENCE IN LIABILITY OF TAX. ATTENTION IN THIS REGARD IS INVITED TO THE DECISION OF ITAT, HYDERAABAD BENCH IN THE CASE OF ZELAN PRODUCTS (P) LTD. VS. DC IT REPORTED IN 63 TAXMAN.COM 334. IN THE SAID CASE IT HAS BEEN HELD T HAT WHEN THE ASSESSEE HAD RECEIVED MOBILIZATION ADVANCE AND CONT RACT WAS NOT FULLY EXECUTED DURING THE YEAR UNDER CONSIDERATION THE AS SESSEE WAS JUSTIFIED IN NOT SHOWING THE AMOUNT AS INCOME. IT W AS HELD THAT THERE WAS NO MISTAKE IN THE ORDER OF THE ASSESSING OFFICE R ALLOWING CREDIT FOR THE TAX DEDUCTED AT SOURCE AS THE COMMISSIONER SOUG HT TO REVISE THE ASSESSMENT ON THE GROUND THAT TDS WAS ALLOWABLE TO BE GIVEN ONLY IN RESPECT OF INCOME WHICH WAS ASSESSABLE TO TAX IN RE LEVANT YEAR. IT IS SUBMITTED THAT EVEN IF THE SAID AMOUNT HAD BE EN CONSIDERED AS INCOME OF THE ASSESSEE ONLY NET PROFIT RATE COULD H AVE BEEN APPLIED ON THE SAME AND THE ASSESSEE HAS DECLARED NP RATE OF 6 .4% AND HENCE, THE TAXABLE INCOME ON THE SAID AMOUNT WOULD WORK OU T TO ONLY RS. 4 ITA NO. 366/JP/2015 SHRI OM PRAKASH AGARWAL 6,098/-. FURTHER, THE ASSESSEE WAS UNDER THE BONAFI DE BELIEF THAT MOBILIZATION ADVANCE IS NOT TO BE TAKEN INTO RECEIP TS UNLESS THE WORK IS COMPLETED AND THEREFORE, HE HAS NOT SHOWN THE SAME IN HIS RECEIPTS. RELIANCE IS PLACED ON THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. DHOOLIE TEA COMPANY LIMITED REPORTED IN 231 ITR 65. IN THE SAID CASE IT HAS BEEN HELD THAT WHERE THE ASSESSEE BONAFIDE BELIEVED THAT HIS INCOME WAS NOT TAXABLE AND HE FAILED TO DI SCLOSE SUCH INCOME UNDER BONAFIDE BELIEF NO PENALTY SHOULD BE IMPOSED ON THE ASSESSEE U/S 271(1)(C) OF THE IT ACT. RELIANCE IS ALSO PLACE D ON THE DECISION IN THE CASE OF PRICE WATERHOUSE COOPER P. LTD., REPORT ED IN 348 ITR 306 (SC). IN THE SAID CASE THE SUPREME COURT HELD THAT WHERE THE ASSESSEE HAD COMMITTED A GENUINE MISTAKE NO PENALTY SHOULD B E IMPOSED UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. IT WAS HELD THAT ANY ABSENCE OF DUE CARE DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OF INCOME OR TO C ONCEAL ITS INCOME. IT WAS THEREFORE HELD THAT IMPOSITION OF PENALTY ON AS SESSEE UNDER THE PROVISIONS OF SECTION 271(1)(C) WAS NOT JUSTIFIED. SIMILARLY IN THE CASE OF CIT VS. MS. SANIA MIRZA RE PORTED IN 40 TAXMAN.COM 17 IT WAS HELD THAT WHERE THE ASSESSEE H AD NOT DISCLOSED CERTAIN INCOME ON THE GROUND OF BONAFIDE MISTAKE TH ERE WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE AMOUNTS AND PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C) W AS NOT IMPOSABLE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES IT IS SUBM ITTED THAT THERE WAS NO JUSTIFICATION FOR LEVY OF ANY PENALTY IN THIS CA SE AND THE PENALTY LEVIED UNDER THE PROVISIONS OF SECTION 271(1)(C) DE SERVES TO BE DELETED. 4.1. ON THE CONTRARY, THE LD. D/R OPPOSED THE SUBMI SSIONS AND SUBMITTED THAT THE ASSESSEE OUGHT TO HAVE FURNISHED TRUE AND CORRECT P ARTICULARS OF INCOME. FROM THE RECORD IT IS CLEAR THAT THE ASSESSEE IS GUILTY OF N OT FURNISHING THE TRUE AND CORRECT PARTICULARS OF INCOME. THEREFORE, THE AUTHORITIES B ELOW HAVE RIGHTLY IMPOSED THE PENALTY. 4.2. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) IN PARA 3.3 OF HIS ORDER HA S SUSTAINED THE PENALTY BY OBSERVING AS UNDER :- 5 ITA NO. 366/JP/2015 SHRI OM PRAKASH AGARWAL 3.3. I HAVE DULY CONSIDERED SUBMISSIONS OF THE AP PELLANT AND AOS CONTENTION. I HAVE ALSO PERUSED THE MATERIAL ON REC ORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO T HE APPLICABLE LEGAL POSITION. THE BREAK-UP OF RS. 1,15,680/- IS DIFFERENCE BETWEE N GROSS RECEIPT AND INCOME REFLECTED IN FORM 26AS AMOUNTING TO RS. 95,2 81/- AND RS. 20,399/- ON ACCOUNT OF DIFFERENCE IN INTEREST ON FD R BOOKED IN BOOKS OF ACCOUNT AND FORM 26AS. IT IS ALSO SUBMITTED THAT ASSESSEE IS MAINTAINING HIS REGULAR BOOKS OF ACCOUNTS AND RECOR DING TRANSACTIONS ON MERCANTILE SYSTEM OF ACCOUNTING. REGARDING THE D IFFERENCE OF RS. 95,281/-, ASSESSEE SUBMITS THAT THE MAIN REASON FOR DIFFERENCE IN GROSS RECEIPT IS ON ACCOUNT OF MOBILIZATION ADVANCE ADJUS TMENT AND ASSESSEE HAS SURRENDERED THE DIFFERENCE AMOUNT JUST TO AVOID DELAY IN ASSESSMENT PROCEEDINGS. IN VIEW OF THIS, AR OF THE ASSESSEE HAS REQUESTED NOT TO LEVY PENALTY ON THE SAME AS IT IS NOT THE CONCEALED INCOME BUT THE SAID ADDITION OF RS. 95,281/- IS A G ROSS RECEIPTS AND IF WE CONSIDER ANY AMOUNT OF NET INCOME THAN THAT WILL BE 6.40% OF GROSS CONTRACT RECEIPT OF RS. 95,281/- WHICH WILL B E 6,098/- ONLY. IN VIEW OF THE ABOVE SUBMISSIONS IT IS REQUESTED TO DR OP THE PENALTY PROCEEDINGS AND ALTERNATIVELY, IT IS FURTHER REQUES TED THAT IF PENALTY IS STILL TO BE LEVIED THAT IS SHOULD BE LEVIED ON THE NET INCOME AS EXPLAINED ABOVE AND NOT ON THE GROSS RECEIPTS. WITH REGARD TO INTEREST ON FDR, IT IS SEEN THAT FDR IS ALREADY SUBJECTED TO TDS, HENCE, IN TRUE SENSE INTEREST EARNED CANNOT BE CONSTRUED AS CONCEALED INCOME. IN CASE OF GROSS RECEIPT, ASSESS EES EXPLANATION IS NOT TENABLE, HENCE IT WILL BE ATTRACTED BY THE PROV ISION OF SECTION 271(1)(C) OF THE ACT. IN VIEW OF FACTS AND CIRCUMST ANCES OF THE CASE, AO IS DIRECTED TO MODIFY THE CONCEALED AMOUNT TO RS . 95,281/- AND LEVY MINIMUM PENALTY @ 100% THEREOF. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E AO NOTICED DIFFERENCE BETWEEN THE RECEIPTS DECLARED BY THE ASSESSEE AND DEDUCTION OF TAX. THE CONTENTION OF THE ASSESSEE IS THAT ENTIRE GROSS RECEIPTS CANNOT BE TA XED. IT IS NECESSARILY A SUBJECT MATTER OF QUANTUM PROCEEDINGS. THE QUANTUM PROCEEDI NGS AND PENALTY PROCEEDINGS ARE TWO DIFFERENT AND DISTINCT. THE AUTHORITIES BEL OW HAVE BROUGHT ON RECORD THAT THE ASSESSEE HAS NOT DECLARED CONTRACT RECEIPTS AND THE INTEREST OF RS. 20,399/-. THE LD. 6 ITA NO. 366/JP/2015 SHRI OM PRAKASH AGARWAL CIT (A) DELETED THE PENALTY ON THE INTEREST ON SOME FDRS ON THE BASIS THAT FDR IS DIRECTLY SUBJECTED TO TDS HENCE CANNOT BE TREATED A S CONCEALED INCOME. IN OUR CONSIDERED VIEW, THE ASSESSEE OUGHT TO HAVE RECONCI LED THE FIGURE AND OFFERED THE SAME FOR TAXATION BEFORE NOTICED BY THE AO. THEREFO RE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A), THE SAME IS HEREBY UPHELD. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/09/2016. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 05/09/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI OM PRAKASH AGARWAL, JAIPUR . 2. THE RESPONDENT- THE ACIT, CIRCLE-3, JAIPUR. 3. THE CIT 4. THE CIT (A) 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 366/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 366/JP/2015 SHRI OM PRAKASH AGARWAL