Income Tax Officer, Ward-4(1), Hyderabad V. Sri Jyothi Murthy Mala, Hyderabad

ITA 466/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5997 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: K SREENIVASAN
• Keywords: Business income; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.466/HYD/2014 ASSESSMENT YEAR 2009-2010 THE INCOME TAX OFFICER, WARD-4(1), HYDERABAD. VS. SRI JYOTHI MURTHY MALA HYDERABAD. PAN AKPRM7125P (APPELLANT) (RESPONDENT) FOR REVENUE : MR. M. SITARAM FOR ASSESSEE : MR. K. SREENIVASAN DATE OF HEARING : 14.03.2016 DATE OF PRONOUNCEMENT : 17 .03.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-V, HYDERABAD DATED 20.11.20 13 IN DELETING THE PENALTY LEVIED BY THE A.O. UNDER SECTI ON 271(1)(C) OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF SERVICE CONTRACTOR, FILED HIS RETURN OF INCOME FOR THE A.Y. 2009-10 ON 30.09.2009 DECLARING INCOME OF RS.7,26,930. DURI NG THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, THE ASSESSEE WAS REQUIRED TO PRODUCE ITS BOOKS OF ACCOUNT AND OTHER DETAILS. ON PERUSAL OF THE SAID D ETAILS 2 ITA.NO.466/HYD/2014 SRI JYOTHI MURTHY MALA, HYDERABAD. AS WELL AS AIR DATA, THE A.O. OBSERVED THAT THE ASS ESSEE HAD RECEIVED CONTRACT RECEIPTS OF RS.30,46,742 FROM IJM CONCRETE PRODUCTS P. LTD., BUT THE SAME WAS NOT REF LECTED BY THE ASSESSEE IN HIS COMPUTATION OF INCOME. ON VERIFICATION OF THE COPIES OF THE TDS CERTIFICATES FILED, THE A.O. FOUND THAT THE ASSESSEE HAS NOT INCLUDED RECEI PTS OF RS.30,46,742 AND THE ASSESSEE, ON CONFRONTATION, SUBMITTED THAT THIS IS BECAUSE THIS MISSED HIS ATTE NTION. THEREFORE, THE SUM OF RSO.30,46,742 WAS BROUGHT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. THEREAFTER, THE A.O. INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T. ACT BY ISSUING A SHOW CAUSE NOTICE. HOWEVER, THERE WAS NO RESPONSE FROM THE ASS ESSEE AND SINCE THE ASSESSEE FAILED TO FILE ANY EXPLANATI ON, THE A.O. LEVIED THE PENALTY OF RS.10,59,558 BEING THE MINIMUM PENALTY LEVIABLE UNDER SECTION 271(1)(C) OF THE I.T. ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A) WHO DELETED THE SAME BY OBSER VING THAT THE ADDITION OF RS.30,46,742 HAS ALREADY BEEN DELETED BY HIM. AGAINST THE ORDER OF THE LD. CIT(A) , THE REVENUE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING, LD. D.R. SUPPORTED THE PENALTY ORDER AND ALSO PLACED RELIANCE UPON THE ASSESSMENT ORDER TO SUBMIT THAT THE ASSESSEE HAS OM ITTED TO RETURN OR DECLARE THE RECEIPTS RECEIVED FROM IJM CONCRETE PRODUCTS P. LTD., AND HAS ALSO FAILED TO F ILE ANY EXPLANATION AS TO WHY THE PENALTY UNDER SECTION 271 (1)(C) 3 ITA.NO.466/HYD/2014 SRI JYOTHI MURTHY MALA, HYDERABAD. OF THE ACT IS NOT LEVIABLE. HE SUBMITTED THAT THE R EVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE CIT(A) IN RESTRICTING THE ADDITION BUT THE SAME HAS BEEN DISM ISSED AS WITHDRAWN BY THIS TRIBUNAL ON ACCOUNT OF LOW TAX EFFECT. HE THEREFORE, ARGUED ON THE MERITS OF THE SUSTAINABILITY OF THE ADDITION AND SUBMITTED THAT T HE LD. CIT(A) HAS ERRED IN ESTIMATING THE INCOME FROM THE GROSS RECEIPT OF RS.30,46,742 IGNORING THE FACT THAT THE ASSESSEE IS A SERVICE CONTRACTOR AND THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE IN CARRYING ON HIS BUSINESS HAS ALR EADY BEEN CLAIMED AND ALLOWED BY THE DEPARTMENT AND THEREFORE, THERE IS NO QUESTION OF ESTIMATING THE I NCOME. FURTHER, HE HAS ALSO SUBMITTED THAT THE LD. CIT(A) HAS ERRONEOUSLY ACCEPTED THE CONTENTION OF THE ASSESSEE THAT PART OF THE RECEIPT OF RS.30,46,742 I.E., RS.10,53, 603 HAS BEEN DECLARED IN THE RETURN OF INCOME, IGNORING THE FACT THAT THIS SUM REPRESENTING MISCELLANEOUS INCOME EAR NED BY THE ASSESSEE. THUS, ACCORDING TO HIM, THE LD. CI T(A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE WITHOUT ANY VERIFICATION OF FACTS AND THEREFORE, THE PENALTY IS SUSTAINABLE. 4. LD. COUNSEL FOR THE ASSESSEE, MR. K. SREENIVASAN, ON THE OTHER HAND, SUPPORTED THE ORDER S OF THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD NO OTHER INCOME OTHER THAN THE RECEIPTS WHICH HAVE BEE N SUBJECT TO TDS REFLECTED IN THE ASSESSMENT ORDER AN D THE NON-DECLARATION OF THE SUM OF RS.30,46,742 WAS AN INADVERTENT MISTAKE AND NOT DUE TO ANY INTENTION TO EVADE 4 ITA.NO.466/HYD/2014 SRI JYOTHI MURTHY MALA, HYDERABAD. TAX. HE FURTHER SUBMITTED THAT OUT OF THE TOTAL SUM OF RS.30,46,742, THE ASSESSEE HAS ITSELF REFLECTED THE SUM OF RS.10,53,603 AND IT WAS THE ONLY THE BALANCE WHICH WAS ERRONEOUSLY OMITTED AND THE LD. CIT(A) HAS RIGHTLY CONSIDERED THE SAME FOR DELETING THE PENALTY. HE FU RTHER SUBMITTED THAT THE ASSESSEE DID NOT EARN ANY OTHER MISCELLANEOUS INCOME AS CONTENDED BY THE LD. D.R. H E FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HAS NOT FILED THE EXPLANATION BEFORE THE A.O., HE HAD FILED THE EXPLANATION BEFORE THE LD. CIT(A) WHO ACCEPTED THE SAME AS BEING GENUINE AND REASONABLE AND THEREFORE, THE PENALTY WAS RIGHTLY DELETED. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS F AILED TO REFLECT THE RECEIPT OF RS.30,46,742, THOUGH THE TDS WAS MADE ON THE SAME AS IS EVIDENT FROM THE AIR DATA RECEIVED BY THE ASSESSING OFFICER. ASSESSEE CONTEN DS THAT IT HAS REFLECTED PART OF THE RECEIPT ON RECEIPT BAS IS WHEREAS, ACCORDING TO LD. D.R., IT IS MISCELLANEOUS INCOME AND IS NO WAY CONCERNED WITH THE RECEIPT IN ISSUE. WE FIND THAT NONE OF THE AUTHORITIES HAVE VERIFIED THI S FACT NOR IS THE INFORMATION AVAILABLE BEFORE US. THE LD. CI T(A) HAS ACCEPTED THE PART DECLARATION AS BONAFIDE DECLARATI ON BY THE ASSESSEE AND HAS DELETED THE PENALTY. WE ARE OF THE OPINION THAT UNLESS AND UNTIL IT IS DEMONSTRATED TH AT THE ASSESSEE HAS WILLFULLY NOT DECLARED A PARTICULAR RE CEIPT, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. IF THE INCOM E OF RS.10,53,603 IS NOT PART OF RS.30,46,742 BUT IS IN FACT 5 ITA.NO.466/HYD/2014 SRI JYOTHI MURTHY MALA, HYDERABAD. MISCELLANEOUS INCOME, THEN THE ASSESSEES CONTENTIO N THAT HE HAS DECLARED PART OF THE INCOME WOULD BE INCORRE CT. THEREFORE, WE DEEM IT FIT AND PROPER TO REMIT THIS ISSUE TO THE FILE OF THE A.O. ONLY FOR VERIFICATION AS TO WH ETHER THE SUM OF RS.10,53,603 IS THE MISCELLANEOUS INCOME OF THE ASSESSEE OR A BUSINESS RECEIPT OF THE ASSESSEE. IF IT IS FOUND THAT IT IS A BUSINESS RECEIPT OF THE ASSESSEE AND FORMS PART OF THE RECEIPT OF RS.30,46,742, THEN NO PENALTY IS LEVIABLE ON THE ASSESSEE. OTHERWISE, THE A.O. SH ALL TREAT ONLY THE INCOME PORTION FROM THE GROSS RECEIPT OF RS.30,46,742 AS THE INCOME FOR LEVY OF PENALTY. THE APPEAL OF THE REVENUE IS ACCORDINGLY TREATED AS ALLOWED FO R STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17.03.2016. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 17 TH MARCH, 2016 VBP/- COPY TO : 1. THE INCOME TAX OFFICER, WARD - 4(1), 5 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. SRI JYOTHI MURTHY MALA, FLAT NO.107, 1 - 10 - 245, SHIVA TOWERS, ASHOKNAGAR, HYDERABAD. 3. CIT(A) - V, HYDERABAD. 4. CIT - IV, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE