Leela Philip, Kollam V. ITO, Kollam

ITA 566/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61447 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 03-11-2010
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: R KRISHNAN
• Keywords: Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 566/COCH/2010 ASSESSMENT YEAR : 2003-04 LEELA PHILLIP, PARTNER, HIMA TOURIST HOME, SAKTHIKULANGARA P.O., KOLLAM-691 581. [PAN : AEXPP 5835R] THE INCOME TAX OFFICER, WARD-2, KOLLAM. (ASSESSEE-APPELLANT) (REVENUE - RESPONDENT) ASSESSEE BY SHRI R. KRISHNAN, CA REVENUE BY SHRI ABHIMANYU SINGH YADAV, JR. DR DATE OF HEARING 23/04/2012 DATE OF PRONOUNCEMENT 27/04/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 16-06-2010 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND IT RELAT ES TO THE ASSESSMENT YEAR 2003-04. PENALTY OF RS. 1 LAKH LEVIED U/S. 271(1)(C) OF THE ACT, HAVING BEEN CONFIRMED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 2. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LI MITATION BY 75 DAYS. THE ASSESSEE HAS MOVED A PETITION WITH A PRAYER TO CONDONE THE D ELAY. WE HAVE GONE THROUGH THE SAID PETITION AND HAVING REGARD TO THE SUBMISSIONS MADE THEREIN, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. ITA NO. 566/COCH/ 2010 2 3. THE FACTS RELATING TO ISSUE UNDER CONSIDERATION ARE STATED IN BRIEF. THE ASSESSEE IS A PARTNER IN A PARTNERSHIP FIRM NAMED M/S. HIMA TOURIST HOME, KOLLAM. SHE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONS IDERATION, DECLARING A TOTAL INCOME OF RS. 1,89,540/-, WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. DURING THE COURSE OF INCOME TAX PROCEEDINGS CARRIED IN THE HANDS OF THE HUSBAND OF THE ASSESSEE, IT CAME TO LIGHT THAT THE ASSESSEE AND HER HUSBAND HAD PURCHAS ED 15 CENTS OF LAND FOR A DOCUMENTED VALUE OF RS.3.00 LAKHS. IT APPEARS THAT THE HUSBAND OF THE ASSESSEE FILED A CASH FLOW STATEMENT AND IN THE SAID STATEMENT THE A BOVE SAID INVESTMENT MADE IN THE LAND WAS OMITTED TO BE DISCLOSED. ACCORDINGLY, THE AO RE-OPENED THE ASSESSMENT OF THE ASSESSEE HEREIN AND ADDED A SUM OF RS. 1,70,000/- P ERTAINING TO THE ABOVE SAID INVESTMENT. THEREAFTER, THE AO INITIATED PENALTY P ROCEEDINGS U/S. 271(1)(C) OF THE ACT AND IMPOSED A PENALTY OF RS.1 LAKH. THE ASSESSEE C OULD NOT SUCCEED IN THE APPEAL FILED BEFORE THE LD. CIT(A), HENCE THE ASSESSEE IS IN APP EAL BEFORE US. 4. THE LD. AR SUBMITTED THAT THE ASSESSEE DID NOT M AINTAIN REGULAR BOOKS OF ACCOUNTS. DURING THE COURSE OF CERTAIN INCOME TAX PROCEEDINGS IN THE HANDS OF THE HUSBAND OF THE ASSESSEE, THE CASH FLOW STATEMENT OF THE HUSBAND AS WELL AS THAT OF THE ASSESSEE WERE FILED. THE SAID CASH FLOW STATEMENTS WERE PREPARED BY AN ACCOUNTANT AND HE OMITTED TO INCLUDE THE IMPUGNED INVESTMENT I N THE CASH FLOW STATEMENTS. IT WAS SUBMITTED THAT A LODGING HOUSE WAS BUILT UP ON THE ABOVE SAID LAND BY A PARTNERSHIP FIRM NAMED M/S. HIMA TOURIST HOME, IN W HICH THE ASSESSEE WAS ALSO ONE OF THE PARTNERS. THE ACCOUNTANT WAS UNDER ERRONEOUS PRESUMPTION THAT THE LAND BELONGED TO THE PARTNERSHIP FIRM CITED ABOVE AND HE NCE HE DID NOT INCLUDE THE VALUE OF LAND IN THE CASH FLOW STATEMENT. ON THE CONTRARY T HE LD D.R SUBMITTED THAT THERE WAS OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE TH E INVESTMENT MADE BY HER IN THE LAND AND HENCE PENALTY IS LEVIABLE ON THE SAID CONCEALME NT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. IN OUR VIEW, THE EXPLANATION 1 GIVEN IN S. 271(1) GOVERNS T HE ISSUE UNDER CONSIDERATION. ACCORDING TO CLAUSE (A) OF THE SAID EXPLANATION, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF A PERSON, SHALL BE DE EMED TO REPRESENT INCOME IN ITA NO. 566/COCH/ 2010 3 RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED IF SUCH A PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH FOUND TO BE FALSE. IN THE INSTANT CASE, THE ASSESSEE HAS OFFERED FOLLOWING EXPLANATIONS DURING THE COURSE OF PENALTY PROCEEDINGS:- I) THAT AN INADVERTENT ERROR WAS CREPT IN WHILE DRA WING UP THE CASH FLOW STATEMENT BY THE ACCOUNTANT FOR THE FINANCIAL YEARS 2001-02 TO 2005-06 IN CONNECTION WITH THE ASSESSMENT IN THE C ASE OF THE ASSESSEES HUSBAND SHRI I. PHILIP FOR THE ASSESSMEN T YEAR 2006-07 IN NOT INCLUDING HALF SHARE OF THE INVESTMENT IN THE L AND AT NEEDAKARA JOINTLY PURCHASED WITH THE ASSESSEES HUSBAND ON T HE BONAFIDE BELIEF THAT THE LAND IN QUESTION BELONGS TO M/S. HI MA TOURIST HOME AS A BUILDING OF THE FIRM WAS BEING CONSTRUCTED IN THE S AID LAND. II) THAT THE OMISSION WAS ACCIDENTAL AND UNINTENTIO NAL WITHOUT ANY ULTERIOR MOTIVE TO DEFRAUD THE REVENUE. THE VERY FACT THAT THE ASSESSEE HAD TO FILE CASH FL OW STATEMENT SHOWED THAT THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS. THUS IT IS NOT THE CASE WHERE THE ASSESSEE HAS OMITTED TO RECORD THE INVESTMENT IN TH E REGULAR BOOKS OF ACCOUNTS BUT IT IS ONLY A CASE OF OMISSION TO DISCLOSE THE SAID INVEST MENT IN THE CASH FLOW STATEMENT. THE EXPLANATION OF THE ASSESSEE THAT THE ACCOUNTANT OF THE ASSESSEE WAS UNDER BONAFIED BELIEF THAT THE LAND BELONGED TO THE PARTNERSHIP FI RM AND HENCE DID NOT INCLUDE THE SAME IN THE CASH FLOW STATEMENT WAS NOT FOUND TO BE FALSE. THUS, THE ASSESSEE HEREIN HAS OFFERED AN EXPLANATION AND THE SAID EXPLANATION WAS NOT FOUND TO BE FALSE. HENCE, IN OUR VIEW, NO PENALTY IS REQUIRED TO BE LEVIED IN VIEW OF THE EXPLANATION (1) TO S. 271(1)(C) REFERRED SUPRA. ACCORDINGLY, WE SET ASID E THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S. 271 (1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. PRONOUNCED ACCORDIN GLY ON 27-04-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 27TH APRIL, 2012 GJ ITA NO. 566/COCH/ 2010 4 COPY TO: 1. LEELA PHILIP, PARTNER, HIMA TOURIST HOME,. SAKTH IKULANGARA P.O., KOLLAM-691 581. 2. THE INCOME TAX OFFICER, WARD-2, KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM.. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN