Shri Samrat Dipakkumar Chauhan, Gandhinagar V. The ITO, Ward-4, Mehsana

ITA 503/AHD/2020

AI Insights

The case involves an appeal by Samrat Dipakkumar Chauhan against the order of the Commissioner of Income-Tax (Appeals), Gandhinagar, which confirmed the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961. The penalty was imposed due to alleged concealment of income, specifically regarding a discrepancy in contract receipts shown in the assessee's books compared to those reflected in the TDS certificate. The Tribunal noted that the addition of Rs.2,58,747 was based on incorrect facts, as the original difference in contract receipts was Rs.29,36,085, which had been reconciled and reduced in subsequent assessments. The Tribunal found that the assessee had provided detailed reconciliations which were ignored by the lower authorities, leading to the conclusion that the penalty was improperly levied.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133600 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-11-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 12-10-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion; TDS; Set aside
• Section: 271(1)(c)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SMT. MADHUMITA ROY, JUDICIAL MEMBER, JUDICIAL MEMBER ITA No.503/Ahd/2020 Assessment Year :2007-08 Samrat Dipakkumar Chauhan 90/91, Jay Bhavani Row Housing Society, B/h. Railway Station Kalol, Gandhinagar 382 721. PAN : AGUPC 9408 N Vs. ITO, Ward-4 Mehsana. 0 अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri Palak Manek, AR Revenue by : Shri Sanjaykumar, Sr.DR स ु नवाई क तार ख/Date of Hearing : 17/11/2022 घोषणा क तार ख /Date of Pronouncement: 13/02/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld.Commissioner of Income-Tax(A), Gandhinagar [hereinafter referred to as “ld.CIT(A)”] dated 11.8.2020under section 250(6) of the Income Tax Act, 1961 ("the Act" for short)pertaining to Asst.Year2007-08, confirming the levy of penalty u/s 271(1)(c) of the Act. 2. The grounds raised by the assessee read as under: 1) The CIT(A) has erred in holding the penalty levied u/s 271(l)(c) of The Income Tax Act, 1961 for concealment of income by virtue of explanation of sec 271(l)(c), as Penalty is leviable. 2) The CIT(A) has erred in holding penalty proceedings u/s 271(l)(c) of The Income Tax Act, 1961 were initiated for concealing income and Furnishing ITA No.503/Ahd/2020 2 Particulars of Income. The Income Tax Officer Ward 4 Mehsana has erred in stating that show cause notice was issued on 20/02/2014 which was duly served and in response the assesse did not reply, in para 2 last line of his order. Thought the same was replied by the appellant wide his letter dated 22/05/2014 on 23/05/2014 which was ignored by the department. 3) The CIT(A) has also erred in holding penalty proceeding u/s 271(1)(C) of The Income Tax Act, 1961 which was initiated again for the addition of Rs. 2,58,747/-. Same was considered as concealment of income. The said addition was reduced from Rs. 32,31,085/- to Rs. 2,58,747/- after the case was set aside and sent for back to Assessing Officer to decide the matter a fresh by Honorable TRIBUNAL vide order No. ITA No 3548/Ahd/2015 dated 27/09/2017. Holding further by the income tax officer Ward 4 Mehsana that the assessee did not comply to show cause notice in para 5 last line of his order, Thought the same was also replied vide letter dated 19/02/2019 on 21/02/2019 which was again ignored by the department. 4) The CIT(A) has erred in confirming Penalty levied illegally by stating as the Assesse did f not comply in response to show cause notice dated 23/05/2014 and second being 21/02/2019, which is not considered by AO. She(CIT(A)) has not taken any cognizance of our replies .However and on the contrary she is allowing appeal as mentioning on page 9 last para no.6 of her order vide para 5 of his order. 5) The CIT(A) has erred in disregarding the detailed submission dated 28/07/2020, where in it was categorically mentioned the fact of reply to show cause notices twice first on 23/05/2014 (Reply dated 22/05/2014) and second on 21/02/2019 (Reply dated 19/02/2019) copies were placed on second by separate attachments. 6) The Learned CIT(A) has also erred in not considering the submission which is purely a change of opinion for income of Rs. 2,58,747/- for levying penalty of Rs. 83,766/- and ignoring the judicial pronouncement quoted in our reply dated 28/07/2020. The learned CIT(A) Gandhinagar has erred in passing the order confirming the penalty levied by the ITO Wd 4 Mehasana of Rs. 83,766/-. At the same time add in allowing the appeal as mentioned on page no.9 para 6 of her order stating "IN THE RESULT, APPEAL IS ALLOWED". 7) Both the lower authorities has failed to appreciate that the proceeding u/s 271(l)(c) was invalid an unlawful being the conditions were not satisfied.” 3. As transpires from orders of the authorities below, penalty has been levied on the additionmade to the income of the assessee of Rs.2,58,747/- on account of short contract receipts shown by the assessee in his books of accounts as opposed to that reflected in the TDS certificate/ITS information available with the Department. ITA No.503/Ahd/2020 3 4. We have noted that initially in the first round before the AO, the addition made on account of short receipt amounted to the Rs.29,36,085/-, which was confirmed by the ld.CIT(A) in the first round, and when the matter went upto the ITAT, it was restored back to the AO to adjudicate it afresh considering reconciliation filed by the assessee to the authorities below. In the second round before the AO, we have noted fromthe assessment order in the second round dated 28.9.2018, that the AO after recording the fact that initially addition was made on account of difference in contract receipts of Rs.29,36,085/- and that thisissue had been restored backto the file of the AO by the ITAT, thereafter, the AO went on to record totally different facts with regard to the contract receipts at para-5 of the order, noting that difference in contractual receipts amounted to Rs.2,58,747/- and thereafter held that in the absence of any proper explanation filed by the assessee, the addition was being confirmed. Para-1 of the assessment order is reproduced herein, which notes the fact of initial difference in contract receipt of Rs.29,36,085/-: ITA No.503/Ahd/2020 4 5. and para-5 of the assessment order noting a different figure of difference in contractual receipts of Rs.2,58,747/- is reproduced herein under: 6. There is nothing in the assessment order demonstrating as to how the difference in contractual receipts was reduced from Rs.29,36,085/- to Rs.2,58,747/- by the AO. Further, the ld.counsel for the assessee has produced before us copy of reconciliation filed to the AO at PB Page No.64 reconciling the difference of Rs.29,36,085/- in the contractual receipts. The receipts reflected in the books being Rs.1,73,50,423/- and that in the TDS certificate being Rs.2,02,86,508/- , the difference of two being Rs.29,36,085/-. The said reconciliation is as under: ITA No.503/Ahd/2020 5 7. In this reconciliation also, we find that there is no figure of Rs.2,58,747/-. Apparently, the AO has proceeded to frame ITA No.503/Ahd/2020 6 assessment assuming incorrect facts both with regard to the difference in the contractual receipts and the fact that the assessee had filed general reply, noted at para 5.1 of the order while confirming the addition by the AO. While in fact the assessee had filed detailed reconciliation of the difference which were noted even by the ITAT while restoring the issue to the AO in the first round. Penalty, we find, has been levied based on addition made of Rs.2,58,747/- in this assessment order on the basis of incorrect facts. This fact, noted by us, during the course of hearing was brought to the notice of both the parties before us, and they were unable to explain how the difference was reduced by the AO from Rs.29,36,085/- to Rs.2,58,747/-. The assessment framed therefore in the present case and the addition made as consequence thereof of Rs.2,58,747/- is blatantly incorrect, and therefore also levy of penalty on this addition. In view of the above, we have no hesitation in deleting penalty levied on the addition of Rs.2,58,747/- made to the income of the assessee. 8. Since the levy of penalty was noted to be untenable on the merits of the case itself, no arguments on the legal ground raised by the assessee were heard. 9. In the result, the appeal of the assessee is allowed in above terms. Order pronounced in the Court on 13 th February, 2023 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 13/02/2023