SH. NEERAJ KUMAR, AMRITSAR V. INCOME TAX OFFICER, WARD - 2(2), AMRITSAR

ITA 399/ASR/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9985 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 21-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: TDS
• Section: 271(1)(c); 244A; 205; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 399/ASR/2017 AS SESSMENT YEAR: 2013-14 NEERAJ KUMAR, PROP. NEERAJ KUMAR & CO., AKALI MARKET, AMRITSAR [PAN: ACWPK 5732H] VS. INCOME TAX OFFICER, WARD-5(3), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY : NONE (WRITTEN SUBMISSION S) RESPONDENT BY: SH. CHARAN DASS (SR. DR) DATE OF HEARING: 27.02.2019 DATE OF PRONOUNCEMENT: 23.05.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, AMRITSAR (' CIT(A)' FOR SHORT) DATED 25.4.2017, CONFIRMING THE LEVY OF PENALTY U/S. 271( 1)(C) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) BY THE ASSESSING OFFIC ER (AO) VIDE ORDER DATED 29.8.2016 FOR THE ASSESSMENT YEAR (AY) 2013-14. 2. NONE APPEARED FOR THE ASSESSEE-APPELLANT WHEN TH E APPEAL WAS CALLED OUT FOR HEARING DESPITE SERVICE OF NOTICE OF HEARING INASMU CH AS THE SAME, SENT PER RPAD, HAS NOT COME BACK UNSERVED. THE HEARING IN THIS CAS E HAS, SINCE THE FILING OF THE APPEAL ON 21/6/2017, BEEN CONTINUOUSLY ADJOURNED ON ACCOUNT OF EITHER NON- REPRESENTATION, OR REQUEST FOR ADJOURNMENT, BY AND ON BEHALF OF THE ASSESSEE, I.E., IN THE INTEREST OF JUSTICE, AS IT INDEED WAS ON THE LA ST DATE OF HEARING, I.E., 13/2/2019, ITA NO.399 /ASR/2017 (AY 2013-14) NEERAJ KUMAR V. ITO 2 FOR WHICH REFERENCE MAY BE MADE TO THE ORDER SHEET ENTRY OF THAT DATE. THE ASSESSEE HAS PLACED ON RECORD THE WRITTEN SUBMISSIONS BEFORE THE FIRST APPELLATE AUTHORITY AS WELL AS THE PAPER-BOOK. THE HEARING IN THE MATTER W AS ACCORDINGLY PROCEEDED WITH, FOR BEING DECIDED ON MERITS AFTER HEARING THE PARTY BEFORE US, AND CONSIDERING THE MATERIAL ON RECORD. 3. THE SHORT QUESTION ARISING IN THE INSTANT CASE I S IF THE PENALTY U/S. 271(1)(C), LEVIED AT 100% OF THE TAX SOUGHT TO BE EVADED, I.E. , RS. 83,073/-, IS SUSTAINABLE IN LAW IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, IN THE BUSINESS OF CLEARING & FORWARDING AGENTS & TRANSPORT, WAS DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS FOUND TO HAVE NOT DISCLOSED, PER HIS RE TURN OF INCOME FOR THE YEAR FILED ON 28.10.2013 (AT AN INCOME OF RS.6,25,720/-), INTE REST ALLOWED TO HIM U/S. 244A OF THE ACT ON INCOME-TAX REFUNDS FOR RS.1,85,920/- (FOR A.Y.2009-10) AND RS.16,74,870/- (FOR A.Y.2011-12) RECEIVED DURING TH E RELEVANT PREVIOUS YEAR, IN AUGUST & SEPTEMBER, 2012 RESPECTIVELY. THE SAME, AT A TOTAL OF RS.2,76,911/-, WAS ACCORDINGLY ASSESSED AS INCOME, AND PENALTY PROCEED INGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME INITIATED. THE ASSESSEES CAS E DURING THE PENALTY PROCEEDING, AS WELL AS THE APPELLANT PROCEEDINGS, WHICH THOUGH DID NOT FIND FAVOUR WITH THE REVENUE AUTHORITIES, WAS THAT THE FORM 26AS DOWNLOA DED FROM THE OFFICIAL WEBSITE ON 09.8.2013, I.E., AT THE TIME OF FILING T HE RETURN OF INCOME FOR THE YEAR, DID NOT DISCLOSE ANY AMOUNT OF INTEREST (PB PAGES 2 -6). FURTHER, THE ASSESSEES ACCOUNTS REFLECTED TDS RECEIVABLE AT RS.16,95,918/- AS ON 31.3.2012 (PB PGS. 1,15). THE REFUND OF RS.16,74,870/- WAS ADJUSTED TH ERE-AGAINST, LEAVING IN FACT A BALANCE OF RS.21,048/- (RS.16,95,918 - RS.16,74,870 ) AS STILL RECEIVABLE (PB PG.1). ITA NO.399 /ASR/2017 (AY 2013-14) NEERAJ KUMAR V. ITO 3 THERE WAS THUS NOTHING TO SUGGEST THAT THE ASSESSEE HAS IN FACT RECEIVED ANY AMOUNT AS INTEREST ALONG WITH THE REFUND. 5. THE ASSESSES CASE CONTINUES TO BE THE SAME BEFO RE ME AS WELL, BEING IN FACT MADE THROUGH WRITTEN SUBMISSIONS (BY WAY OF A PAPER -BOOK). THE REVENUES CASE, ON THE OTHER HAND, IS THAT SEC.244A CLEARLY POSTULA TES GRANT OF INTEREST ALONG WITH THE REFUND (OF PRINCIPAL). THAT IS, THERE COULD BE NO CASE OF REFUND WITHOUT CORRESPONDING INTEREST (UP TO THE DATE OF GRANT OF REFUND) BEING ALLOWED ALONG WITH. THE ASSESSEES PLEA IS, THUS, NOT MAINTAINABLE IN L AW. THE LD. DEPARTMENTAL REPRESENTATIVE (SR. DR), SH. CHARAN DASS, WOULD DUR ING HEARING CONTEND THAT A REFUND ADVICE IS, AS PER THE STANDARD OPERATING PRO CEDURE (SOP), SENT TO THE ASSESSEE, ADDUCING COPY OF TWO ADVICES, I.E., QUA REFUNDS FOR AYS. 2009-10 & 2011-12 (COPY ON RECORD). THE SAME MENTION THE INTE REST COMPRISED IN THE REFUND AMOUNT, I.E., AT RS. 2,68,905 (FOR A.Y.2009-10) AND RS. 8,006 (FOR A.Y.2011-12). HE WAS, HOWEVER, ON ASKING, FAIR TO ADMIT THAT THE INTEREST AMOUNT APPEARS TO HAVE BEEN MODIFIED TO A LOWER SUM OF RS. 1,38,294 FOR AY 2009-10, SO THAT IT IS ONLY THE CORRECT (REVISED) INTEREST, DESPITE BEING ASSESSED AT A HIGHER SUM, ON WHICH PENALTY WOULD STAND TO BE LEVIED. 6. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. PENALTY U/S. 271(1)(C) WOULD BECOME EXIGIBLE WHERE THE ASSESSEE DOES NOT EITHER OFFER AN EXPLANATION TOWARD THE NON-RETURNIN G OF THE INTEREST INCOME U/S. 244A, OR FURNISHES AN EXPLANATION WHICH IS FOUND FA LSE, OR FAILS TO SUBSTANTIATE THE SAME, OR EVEN WHERE HE IS NOT ABLE TO PROVE THE BONA FIDES OF HIS EXPLANATION, WITH ALL THE FACTS RELATING THERETO BEING NOT DISCLOSED ( EXPLANATION 1 TO SEC.271(1)(C)). THIS REPRESENTS TRITE LAW, EXPLAINED BY THE HONBLE APEX COURT PER A SERIES OF DECISIONS, AS WELL AS BY THE HONBLE JURISDICTIONAL HIGH COURT, VIZ. MAK DATA (P.) ITA NO.399 /ASR/2017 (AY 2013-14) NEERAJ KUMAR V. ITO 4 LTD. VS. CIT [2013] 358 ITR 593 (SC); UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 (SC); K.P. MADHUSUDHANAN VS. CIT [2001] 251 ITR 99 (SC); B.A. BALASUBRAMANIAM AND BROS V. CIT [1999] 236 ITR 977 (SC); ADDL. CIT VS. JEEVAN LAL SHAH [1994] 205 ITR 244 (SC); CIT VS. K. R. SADAYAPPAN [1990] 185 ITR 49 (SC); CIT V. LALCHAND TIRATH RAM [1997] 225 ITR 675 (P&H); PREM PAL GANDHI V. CIT (IN ITA NO. 353 OF 2009, DATED 22/7/2009). EXAMINING THE ASSESSEES EXPLANATION FROM THIS STAN DPOINT, THE ASSESSEES CLAIM OF NON-DISCLOSURE OF INTEREST INCLUDED IN THE REFUND AMOUNT/S IS THAT NO INTEREST STANDS SPECIFIED IN FORM 26AS. THE SAME IS WITHOUT MERIT. THIS IS AS FORM 26AS IS AN ANNUAL STATEMENT U/S. 203AA OF THE ACT. THE STATEMENT IS OF TAX DEDUCTED AT SOURCE. ADMITTEDLY, NO TAX HAS BEEN DED UCTED ON THE INTEREST COMPONENT OF THE REFUND/S NOR COULD POSSIBLY BE AS THE INTEREST FROM GOVERNMENT IS NOT LIABLE TO TAX DEDUCTION AT SOURCE (S.194A (1 )(VIII)). WHAT PURPOSE, THEN, ONE MAY ASK, DOES A REFERENCE TO THAT STATEMENT SERVE ? EVEN ASSUMING THAT THE SAID REFERENCE WAS MADE AS IT MAY SPECIFY THE INTEREST C OMPONENT OF THE REFUND/S, THE REMARKS N.A. IN THE INTEREST COLUMN DOES NOT SIGN IFY NIL INTEREST. ALL IT MEANS IS NOT AVAILABLE, AND NOTHING MORE. RATHER, THOUGH I N THE PRESENT CASE THE ASSESSEE HAS RECEIVED THE REFUND AMOUNT/S IN HIS BANK ACCOUN T, IN A GIVEN CASE, WHERE THE REFUND STANDS ADJUSTED AGAINST THE DEMAND DUE FROM AN ASSESSEE, IT IS ONLY THROUGH FORM 26AS THAT HE MAY COME TO KNOW OF THE REFUND HA VING BEEN GRANTED TO HIM. THE ASSESSEE HAS ALSO RELIED ON HIS ACCOUNTS, REFLE CTING TDS RECEIVABLE AT RS.16.95 LACS, AS THE REASON FOR THE NON-DISCLOSURE OF INTER EST INASMUCH AS THE AMOUNT RECEIVED WAS LOWER THAN THAT RECEIVABLE IN PRINCIPA L, I.E., EXCLUSIVE OF INTEREST, SO THAT HE CARRIED A BONA FIDE IMPRESSION OF THE REFUND AMOUNT BEARING NO INTERES T. THE EXPLANATION IS, TO MY MIND, AGAIN NOT BONA FIDE . IT OVERLOOKS THE FACT, AS ALSO NOTED BY THE LD. CIT(A), THAT INTEREST IS INTEGRAL TO REFUND WHEN THE SAME IS NOT LESS THAN 10% OF THE TAX AS DETERMINED. THAT IS, IT IS ONLY WHERE THE TAX REFUNDABLE ITA NO.399 /ASR/2017 (AY 2013-14) NEERAJ KUMAR V. ITO 5 (RS.16.96 LACS) IS SHOWN TO BE LESS THAN 10% OF THE TAX PAYABLE FOR THE YEAR, THAT HE COULD BE REGARDED AS HAVING A BASIS TO ENTERTAIN A BELIEF AS TO NON-RECEIPT OF ANY INTEREST THEREON AND, THUS, BONA FIDE . IN THE INSTANT CASE, THE TAX REFUNDABLE, FOR BOTH THE YEARS, IS, ON THE CONTRARY, MUCH HIGHER THAN TH E TAX LIABILITY FOR THE RELEVANT YEAR. FURTHER, THE TDS RECEIVABLE AS PER ACCOUNTS M AY BE AND WHICH APPEARS TO BE THE CASE, FOR MORE THAN ONE YEAR, WHILE REFUND I S YEAR-SPECIFIC. THE CREDIT TO THE TDS RECEIVABLE ACCOUNT (PB PG. 1) BEING ONLY IN RES PECT OF A SINGLE REFUND (I.E., RS. 16,74,870), THE BALANCE (RS. 21,048) IN THE SAI D ACCOUNT CANNOT BE SAID TO FAIRLY REPRESENT THE TAX REFUND DUE AS ON 31/3/2013, I.E., AS REFLECTED IN ACCOUNTS. THE ASSESSEE DOES NOT STATE THE ACCOUNT WHERE HE HAS AD JUSTED THE SECOND REFUND, I.E., FOR RS.1,85,920/- FOR A.Y.2011-12. THE TWO REFUNDS RECEIVED TOTAL TO RS.18,60,790; AS SUCH, ASSUMING THAT IT IS ONLY THE REFUNDS FOR T HESE TWO YEARS WHICH WERE OUTSTANDING IN AUGUST, 2012, ACCOUNTING FOR THE SAM E THE TDS RECEIVABLE BEING AT RS.16.96 LACS, WOULD IMPLY AN INTEREST RECEIPT OF R S.1.65 LACS (RS. 1.86 LACS RS. 0.21 LACS), WHILE THE ASSESSEE HAS NOT OFFERED ANY AMOUNT AS INTEREST INCOME PER HIS RETURN OF INCOME FOR THE YEAR. THE ASSESSEES CONDU CT, THUS, BETRAYS HIS STAND. CONTINUING FURTHER, THE QUESTION THEREFORE IS HOW D ID THE AO ASCERTAIN THE INTEREST AMOUNT COMPRISED IN THE TWO REFUNDS, AGGRE GATING TO RS.18.61 LACS, RECEIVED BY THE ASSESSEE DURING THE PREVIOUS YEAR? THE LD. SR. DR WOULD TOWARD THIS STATE THAT THE REFUND ADVICES ARE SENT TO THE ASSESSEE AS A PART OF THE SOP. IT IS, HE WOULD EMPHASIZE, ON THE BASIS OF THESE ADVICES T HAT THE AO FOUND THE INTEREST COMPONENT OF THE REFUNDS, WHICH MENTION BOTH THE OR IGINAL AS WELL AS THE REVISED INTEREST AMOUNT/S. THESE ADVICES, DULY COMMUNICATED TO THE ASESSEE, THUS, PUT PAYS HIS CASE. IN MY CLEAR VIEW, NOTWITHSTANDING THAT INTEREST U/S 244A IS INTRINSIC TO A TAX REFUND, PENALTY FOR NON-DISCLOSURE THEREOF PER THE RETURN OF INCOME, COULD BE LEVIED ITA NO.399 /ASR/2017 (AY 2013-14) NEERAJ KUMAR V. ITO 6 ONLY WHERE THE INTEREST AMOUNT COMPRISED IN THE REF UND IS IN SOME MANNER CONVEYED TO THE ASSESSEE. AS REGARDS THE AMOUNT AT WHICH THE PENALTY, WHERE SO, IS EXIGIBLE, THE SAME, EVEN IF LEVIED AT A HIGHER AMOU NT, WOULD STAND TO BE REDUCED CONSEQUENT TO THE REDUCTION IN THE AMOUNT OF INTERE ST IN-AS-MUCH AS THE TAX SOUGHT TO BE EVADED SHALL GET REDUCED. A CLOSER LOOK AT THESE ADVICES REVEAL THE SAME TO BE THE INFORMATION ON THE AOS SYSTEM QUA THE ORDERS US/. 154 FOR THE RELEVAN T YEARS, I.E., DATED 12/6/2012 (FOR AY 2011-12) AND 25/7/2012 (FOR AY 2009-10), DU LY SERVED ON THE ASSESSEE ON 17/6/2012 AND 30/7/2012 RESPECTIVELY. THEY ARE IN F ACT A SNAP SHOT THEREOF, BEARING ALL THE PARTICULARS BORNE OUT BY THESE ORDERS U/S. 154. THE REFUNDS RECEIVED SUBSEQUENTLY ARE IN PURSUANCE OF AND IN AGREEMENT W ITH THESE ORDERS. THE SAME, PRESUMABLY, ALSO EXPLAINS THE MODIFICATION IN THE I NTEREST AMOUNT FOR AY 2009-10 TO RS. 1,38,294. IN FACT, IT IS THIS SUM (OF INTERE ST) THAT IS INCLUDED IN THE REFUND AMOUNT OF RS. 16,74,870 FOR THAT YEAR. THERE IS, UN DER THE CIRCUMSTANCES, LITTLE DOUBT THAT THE ASSESSEE HAS BEEN DULY CONVEYED THE RELEVANT DETAILS, INCLUDING THE INTEREST COMPRISED IN THE TWO REFUNDS FOR RS. 18,60 ,790 RECEIVED DURING THE RELEVANT YEAR. THE TOTAL INTEREST PER THE SAID REFU NDS, THUS, IS AT RS. 1,46,300/- , (RS. 1,38,294 + RS. 8,006), WHICH IS LOWER THAN THE CRED IT OF RS.1,64,872/- THAT WOULD ARISE IN THE ACCOUNTS ON ACCOUNTING FOR THE REFUND OF RS. 1,85,920/-. WHY, FOR ALL WE KNOW, THESE RECTIFICATIONS MAY HAVE BEEN CARRIED OUT AT THE INSTANCE OF THE ASSESSEE. 7. IN VIEW OF THE FOREGOING, THE ASSSESSEE IS LIABL E FOR PENALTY U/S. 271(1)(C) ON THE INTEREST U/S. 244A RECEIVED DURING THE YEAR, I. E., RS. 1,46,300. THE ASSESSEE GETS PART RELIEF. THE ASSESSMENT OF THE SAID INTEREST AT A HIGHER AMOUNT OF RS. 2,76,911, IS CLEARLY A MISTAKE, I.E., ON THE BASIS OF THE REC ORD, FOR WHICH THE ASSESSEE MAY MOVE THE ASSESSING AUTHORITY, WHO HAS, IN ARRIVING AT A HIGHER SUM, AS IT APPEARS, ITA NO.399 /ASR/2017 (AY 2013-14) NEERAJ KUMAR V. ITO 7 DID NOT EXAMINE THE RECORD NOR RECONCILED THE REFUN D AMOUNT WITH THE PRINCIPAL AND INTEREST COMPONENTS THEREOF. I DECIDE ACCORDINGLY. 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN CO URT ON MAY 23, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 23.05.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: NEERAJ KUMAR, PROP. NEERAJ KUMAR & CO., AKALI MARKET, AMRITSAR (2) THE RESPONDENT: INCOME TAX OFFICER, WARD-2(2), AMRITSAR (3) THE CIT(APPEALS)-1, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER