ACIT, Visakhapatnam V. KV Narasimha Rao, Visakhapatnam

ITA 58/VIZ/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50155 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 05-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: C KAMESHWARA RAO
• Keywords: Salary income
• Section: 271(1)(c); 68

Judgement Text

ITA NO 58 OF 2009 KV NARASIMHA RAO, VISAKHAPATNAM PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.58/VIZAG/2009 ASSESSMENT YEAR: 2004-05 ACIT, CIRCLE-3(1) VISAKHAPATNAM VS. K.V. NARASIMHA RAO, VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO:AHCPK 4037 C APPELLANT BY: SHRI R.K. SINGH, DR RESPONDENT BY: SHRI C. KAMESHWARA RAO, CA ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 25- 11-2008 PASSED BY LD CIT(A-1), VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2004-05. 2. THE PENALTY OF RS.4,14,777/- LEVIED BY THE AS SESSING OFFICER U/S 271(1)(C) OF THE ACT, HAVING BEEN PARTIALLY DELETED BY LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US CHALLENGING THE SAID DECISION OF LD CIT(A). 3. THE FACTS RELATING TO THE SAID ISSUE ARE STA TED IN BRIEF. THE ASSESSEE IS A QUALIFIED MARINE ENGINEER. HE WAS WORKING WIT H SHIPPING CORPORATION OF INDIA (SCI) AND LATER RESIGNED FROM THAT COMPANY AND STARTED HIS OWN PROFESSIONAL PRACTICE. HE OFFERED THE PROFESSIONAL RECEIPTS UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. DURING THE C OURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS WORKING IN A SHIP NAMED MSV SAMUDRA WHILE WORKING WITH SCI. LATER THE SCI SUB- LET THE WORK TO ANOTHER COMPANY NAMED M/S EVANGROVE SHIPPING PVT. LTD. THE ASSESSEE RESIGNED THE JOB WITH SCI AND JOINED T HE ABOVE SAID M/S ITA NO 58 OF 2009 KV NARASIMHA RAO, VISAKHAPATNAM PAGE 2 OF 3 EVANGROVE SHIPPING PVT. LTD. AS PROFESSIONAL CONSUL TANT AND CONTINUED TO WORK IN THE SAME SHIP. IN VIEW OF THE ABOVE, THE A SSESSING OFFICER TOOK THE VIEW THAT THE AMOUNT RECEIVED BY THE ASSESSEE AS PR OFESSIONAL RECEIPTS IS IN THE NATURE OF SALARY ONLY. ACCORDINGLY THE ASSESSI NG OFFICER ASSESSED THE SAID RECEIPTS UNDER THE HEAD INCOME FROM SALARY. CONSEQUENTLY THE EXPENSES CLAIMED BY THE ASSESSEE AGAINST THE PROFES SIONAL RECEIPTS WERE DISALLOWED. THE ASSESSING OFFICER ALSO ADDED CERTA IN CASH CREDITS U/S 68 OF THE ACT. ON THE INCOME SO ENHANCED, THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A). THE FIRST APPELLATE AUTHORITY CONFIRMED THE PENALTY ON CASH CREDITS AND DELETED THE PENALTY ON OTHER ADDITIONS. AGGRIEVED BY THE SAID ORDER OF LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE FACTS OF THE CASE REVEAL THAT THE ASSESSEE HAS CLAIMED THE AMOUNT RECEIVED BY HIM M/S EVANGROVE SHIPPING PVT. LTD AS HIS PROFESSIONAL RECEIPTS AND CLAIMED EXPENDITURE AGAINST IT. HOWEV ER, THE ASSESSING OFFICER HAS TAKEN THE VIEW THAT THE SAID RECEIPTS SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM SALARY AND ACCORDINGLY ASSESSED THE SAID RECEIPTS UNDER THE SAID HEAD. CONSEQUENTLY THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS DISALLOWED RESULTING IN ENHANCEMENT OF INCOME. THE MOOT QUESTION IS WHETHER THE CHANGE IN THE HEAD OF INCOM E EFFECTED BY THE ASSESSING OFFICER WOULD ATTRACT PENALTY U/S 271(1)( C) OF THE ACT. THERE IS NO DISPUTE THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. IN THE INSTANT CASE, THE ASSESSEE HAD ST ARTED CONSULTANCY SERVICES AND OFFERED THE INCOME DERIVED THERE FROM UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. HOWEVER, SIN CE HE CONTINUED TO PROVIDE HIS SERVICES TO THE SAME SHIP WHEREIN HE WA S PROVIDING HIS SERVICE WHILE IN EMPLOYMENT WITH SCI, THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE IS ONLY RECEIVING SALARY IN THE GUISE OF C ONSULTANCY CHARGES. ITA NO 58 OF 2009 KV NARASIMHA RAO, VISAKHAPATNAM PAGE 3 OF 3 THUS, THERE CANNOT BE ANY DISPUTE THAT THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME AND THERE WAS ALSO NO FURNISH ING OF INACCURATE PARTICULARS OF INCOME. HENCE, IN OUR VIEW, THE PENA LTY U/S 271(1)(C) CANNOT BE LEVIED FOR MERE CHANGE IN THE HEAD OF INCOME IN WHICH A PARTICULAR RECEIPT IS ASSESSABLE. THE ASSESSING OFFICER HAS N OT POINTED OUT ANY CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN DELETING THE PENALTY RELAT ABLE TO THE CHANGE IN THE HEAD OF INCOME. ACCORDINGLY WE UPHOLD HIS ORDER. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 12-04-2011 COPY TO 1 THE ACIT CIRCLE-3(1) VISAKHAPATNAM 530 020 2 SHRI K.V. NARASIMHA RAO, 1-68-41, SECTOR-3 MVP CO LONY, VISAKHAPATNAM 3 4. THE CIT I, VISAKHAPATNAM THE CIT(A)-I VISAKHAPATNAM , 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM