Arun Gupta (HUF), Hyd, Hyderabad V. ACIT, Circle-6(1), Hyderabad, Hyderabad

ITA 516/HYD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4852 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 29-09-2020
• Assessment Year: 2004-2005
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS. 523, 524, 516, 704/HYD/2016 ASST. YEARS: 2002 - 03, 2003 - 04, 2004 - 05, 2007 - 08 SRI ARUN GUPTA (HUF), HYDERABAD. PAN: AAHHA 7572 A VS. ACIT, CIRCLE - 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P. MURALI MOHAN RAO REVENUE BY: SHRI RAVI BABU DR DATE OF HEARING: 29/09/2020 DATE OF PRONOUNCEMENT: 0 5 / 10 /2020 ORDER PER BENCH : ALL THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT(A) 9, HYDERABAD IN APPEAL NOS. 0 077, 0103, 0130/ACIT, CIRCLE - 6(1)/2015 - 16, DATED 29/01/2016 FOR THE AYS 2002 - 03, 2003 - 04 & 2004 - 05 RESPECTIVELY AND IN APPEAL NO.0916/2014 - 15/CIT( A) - 6/16 - 17, DATED 10/02/2017 FOR THE A.Y. 2007 - 08 PASSED U/S. 271(1)(C) R.W.S 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ALL ITS APPEALS HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN 2 UPHOLDING THE PENALTY LEVIED BY THE LD. AO INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH & SEIZURE OPERATIONS WERE CONDUCTED IN THE CASE OF ARUN GUPTA ON 14/12/2007. DURING THE COURSE OF SEARCH , IT WAS OBSERVED THAT SRI A RUN GUPTA AND HIS SPOUSE SMT. PUSHPA GUPTA HAD JOINTLY PURCHASE A HOUSE PROPERTY AT A - 108, JOURNALIST COLONY, JUBILEE HILLS, HYDERABAD FOR A PURCHASE CONSIDERATION OF RS. 2,25,00,000/ - . IT WAS ALSO REVEALED THAT THE ASSESSEE HAD PAID ON MONEY OF RS. 1,54, 00,000/ - FOR THE SAME TRANSACTION. ON QUERY, THE ASSESSEE HAD EXPLAINED THAT SOME FUNDS FROM THE HUF OF THE ASSESSEE WAS ALSO UTILISED FOR THE PURCHASE OF THE HOUSE PROPERTY. IN THE ABOVE BACKGROUND NOTICE U/S. 153C WAS ISSUED IN THE CASE OF THE ASSESSEES HUF. IN RESPONSE THE ASSESSEE HUF FILED ITS RETURNS OF INCOME. THE RELEVANT DETAILS OF THE RETURN OF INCOME ARE EXTRACTED HERE UNDER FOR REFERENCE: - SL NO A.Y. INCOME ADMITTED IN THE ORIGINAL ROI INCOME ADMITTED IN THE ROI U/S. 153C INCOME ASSESSED RS. 1. 2002 - 03 ROI NOT FILED 69,210 69,210 2. 2003 - 04 ROI NOT FILED 77,090 77,090 3. 2004 - 05 ROI NOT FILED 1,42,490 1,42,490 4. 2007 - 08 ROI NOT FILED 4,71,960 4,71,960 3 4. THEREAFTER, ASSESSMENT U/S. 143(3) R.W.S 153C OF THE ACT WAS COMPLETED ACCEPTING THE RETURN OF INCOME FILED BY THE ASSESSEE. SUBSEQUENTLY, THE LD. AO INVOKED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AND LEVIED PENALTY ON THE ASSESSEE FOR RS.2,899/ - , R S. 4,639, RS. 17,498/ - AND RS. 93,420/ - FOR THE AY S: 2002 - 03, 2003 - 04, 2004 - 05 AND 2007 - 08 RESPECTIVELY BY REJECTING THE PLEA OF THE ASSESSEE THAT INADVERTENTLY THE INTEREST INCOME EARNED BY THE ASSESSEE WAS OMITTED TO BE TAKEN INTO ACCOUNT. THE LD. AO HAD OPINED THAT ONLY AS A RESULT OF SEARCH THE INTEREST EARNED ON FIXED DEPOSITS MAINTAINED BY THE ASSESSEE IN VARIOUS BANKS WAS REVEALED AND IT WAS A WILFUL AND CONSCIOUS ACT OF THE ASSESSEE FOR CONCEALING THE PARTICULARS OF INCOME IN ORDER TO EVADE TAX. ON APPEAL, THE LD. CIT (A) AGREED WITH THE VIEW OF THE LD. AO AND BY PLACING RELIANCE IN SECTION 5A INTRODUCED BY FINANCE ACT, 2007 W.E.F 1/6/2007 CONFIRMED THE ORDER OF THE LD. AO. 5. AT THE OUTSET, WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD. REVENUE AUTHORITIES FOR IMPOSING PENALTY ON THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. FROM THE FACTS OF THE CASE, IT APPEARS THAT IT IS ONLY AN INADVERTENT OMISSION ON THE PART OF THE ASSESSEE FOR NOT TAKING INTO ACCOUNT OF THE INTEREST ACCUMULATED ON THE FDS MAINTAINED WITH VARIOUS 4 BANKS. THE AMOUNT OF FDS IS ALSO NOT PHENOMENAL. IT IS ALSO OBVIOUS THAT THE BANKS WOULD HAVE DEDUCTED TAX AT SO URCE FOR THE INTEREST EARNED BY THE ASSESSEE ON ITS FIXED DEPOSITS. IT IS ALSO APPARENT THAT AS SOON AS THE ASSESSEE REALISED ITS OMISSION, IT HAD FILED THE RETURN OF INCOME AND THE SAME WAS ACCEPTED WITHOUT ANY ADDITION. IN THIS SITUATION, WE ARE REMIN DED OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF PRICE WATER HOUSE COOPERS PVT LTD VS. CIT AND OTHERS REPORTED IN 348 ITR 306 WHEREIN IT WAS HELD THAT THE FAILURE ON THE PART OF THE ASSESSEE TO INCLUDE THE PROVISION FOR GRATUITY TO ITS TOTAL INCOM E IN THE RETURN OF INCOME DOES NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 6. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT APPEALS BEFORE US , WE ARE OF THE CONS IDERED VIEW THAT THE RATIO LAID DOWN BY THE HONBLE APEX COURT CITED HEREIN ABOVE IS SQUARELY APPLICABLE TO THE PRESENT CASES BEFORE US. IT IS QUITE NATU RAL THAT WHEN INDIVIDUALS / HUF MAINTAIN FIXED DEPOSIT S IN PIECEMEAL WITH VARIOUS BANKS, THE INTEREST EARNED ON THE FIXED DEPOSITS MIGHT BE LOST SIGHT OF F AS THE INTEREST GETS AUTOMATICALLY ACCUMULATED WITH THE DEPOSITS . THE NEED TO EVALUATE TH OSE FIXED DEPOSITS WILL ARISE ONLY WHEN FUNDS ARE REQUIRED FOR A SP ECIFIC 5 PURPOSE. IN THE CASE OF THE ASSESSEE - HUF IT APPEARS THAT THE ASSESSEE TOOK STOCK OF THE FIXED DEPOSIT S WHEN THEY WERE IN THE PROCESS OF PURCHASING THE HOUSE PROPERTY AND THE INTEREST EARNED BY THOSE FIXED DEPOSIT WAS INADVERTENTLY OMITTED TO BE TAKEN INTO ACCOUNT . HENCE, WE ARE OF THE VIEW THAT IT IS ONLY AN UNINTENDED OMISSION ON THE PART OF THE ASSESSEE. IT IS PERTINENT TO MENTION THAT THE DECISIONS RELIED ON BY THE LD. DR ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THESE CASES BEFORE US. THEREFORE, IN THE INTEREST OF JUSTICE, WE HEREBY SET ASIDE THE ORDERS OF THE LD. CIT (A) AND FURTHER DIRECT THE LD. AO TO DELETE THE PENALTY IMPOSED ON THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT IN ALL THE SE CASE S FOR THE RELEVANT ASSESSMENT YEARS. 7. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASSESSEE ARE ALLOWED IN ITS FAVOUR. PRONOUNCED IN THE OPEN COURT ON 0 5 TH OCTOBER , 2020. SD/ - SD/ - (SMT. P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 0 5 TH OCTOBER , 2020. OKK COPY TO: - 6 1) SRI ARUN GUPTA (HUF) , C/O. CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, STREET NO.1, ASHOKNAGAR, HYDERABAD 500 020. 2) THE ACIT, CIRCLE - 6(1), I.T. TOWERS, 6 TH FLOOR, A.C. GUARDS, HYDERABAD. 3) THE CIT(A) - 9 , HYDERABAD (II) ADDL. CIT, RANGE - 14, HYDERABAD. 4) THE PR. CIT - 6 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE