Ram Mihir Sen, Kolkata V. ITO Wd-24(2), Kolkata, Kolkata

ITA 67/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4501 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2014
• Court: TRIBUNAL
• Department Lawyers: A K SINHA
• Assessee Lawyers: ALOK KUMAR DAS CA LD
• Keywords: Salary income; Principle of natural justice
• Section: 143(3)

Judgement Text

ITA NO. 67/KOL/14 RAM MIHIR SEN 1 IN THE INCOME TAX APPELLATE TRIBUNAL,A BENCH, KOLKATA BEFORE SHRI M.BALAGANESH, ACCOUNTANT MEMBE R AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 67/KOL/2014 A.Y: 2006-07 RAM MIHIR SEN VS. I.T.O WARD 24(2), PAN: ADUPS 7327R KOLKATA (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI ALOK KUMAR DAS, CA, LD.AR FOR THE ASSESSEE SHRI A.K. SINHA, JCIT, SR. D.R FOR THE REVENUE DATE OF CONCLUDING THE HEARING : 13-07- 2016 DATE OF PRONOUNCING THE ORDER : 21-09-2016 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01-10-2013 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS),XIV, KOLKATA, WHEREIN HE CONFIRMED THE P ENALTY IMPOSED BY THE AO U/SEC 271(1)(C) OF THE ACT FOR TH E ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING EFFECTIVE GROUNDS:- 1. LD. CIT(APPEAL) AND ITO 24(2)/KOL ACTED IN A VINDIC TIVE MANNER AND MADE/CONFIRMED THE PENALTY RS.8996/- REL ATING TO ALLEGED BOGUS INTEREST INCOME. THEIR ACTION WAS AGAINST NATURAL JUSTICE RESULTING IN UNDUE HARDSHIP TO THE ASSESSEE. THE ENTIRE ASSESSMENT U/S. 271(1)( C) IS LIABLE TO BE QUASHED. ITA NO. 67/KOL/14 RAM MIHIR SEN 2 2. THAT YOUR ASSESSEE ALREADY PAID TAX ON REC BOND IN TEREST (ACCRUED) INCOME DURING THE F.Y 2004-05 AND ASSESSE D ACCORDINGLY BY LD. ITO 24(2)/KOL. 3. THAT THE LD. ITO 24(2)/KOL CHARGED TAX AGAIN ON SAM E INTEREST INCOME (RECEIVED AND ENCASHED) BY THE ASSE SSEE DURING THE F.Y 2005-06. 4. THAT YOUR ASSESSEE THUS PAID TAX TWICE ON SINGLE IN TEREST INCOME ON REC BOND IN TWO DIFFERENT FINANCIAL YEAR. 5. AS SUCH ASSESSEE SHOULD NOT BE FURTHER ASSESSED U/S . 271(1)( C). 3. THE ASSESSEE IS AN INDIVIDUAL AND A SENIOR CITIZ EN DERIVES INCOME FROM SALARY AND OTHER SOURCES. THE ASSESSEE FILED HIS RETURN DECLARING HIS TOTAL INCOME AT RS.1,55,490/- AND UNDER SCRUTINY NOTICE U/SEC 143(2) OF THE ACT WAS ISSUED, IN RESPONSE TO WHICH, THE ASSESSEE FILED BANK ANALYSIS STATEMEN T, DETAILS OF INVESTMENT AND MUTUAL FUNDS. THE AO FOUND DISCREPAN CY IN RESPECT OF INTEREST ON REC BOND, WHERE THE ASSESSEE SAID TO HAVE DISCLOSED THE SAID INTEREST AT RS.97,503/- UND ER THE HEAD INCOME FROM OTHER SOURCES IN HIS RETURN, BUT, ACC ORDING TO AO IT SHOULD HAVE BEEN AT RS.1,71,124/-. UNDER SHOW CA USE, THE ASSESSEE HIMSELF AGREED TO ADD SUCH AMOUNT TO HIS T OTAL INCOME, THE A.O. COMPLETED ASSESSMENT AND TO THAT E FFECT PASSED AN ORDER DT:26-09-2008 U/S. 143(3) OF THE AC T DETERMINING THE TOTAL INCOME AT RS.2,29,106/- AND T HE ASSESSEE PAID TAX ON ASSESSED INCOME. 4. THEREAFTER, THE AO INITIATED PENALTY PROCEEDING U/SEC 271(1)(C) OF THE ACT, WHEREIN THE ASSESSEE FILED WR ITTEN SUBMISSIONS DENYING TO HAVE CONCEALED ANY INCOME NO R FURNISHED INACCURATE PARTICULARS OF INCOME AND FILE D A CHALLAN SHOWING PAYMENT OF TAX ON ASSESSED INCOME AND URGED TO DROP PENALTY PROCEEDINGS SYMPATHETICALLY. THE A.O. NOT S ATISFIED ITA NO. 67/KOL/14 RAM MIHIR SEN 3 WITH THE EXPLANATION OFFERED BY THE ASSESSEE AND WA S OF THE OPINION THAT THE ASSESSEE DELIBERATELY AND WILFULLY SUPRESSED THE INTEREST INCOME EARNED FROM REC BOND TO EVADE T AX AND TREATED THE SAME AS CONCEALMENT OF INCOME AND FURNI SHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY IM POSED PENALTY OF RS.8,996/- BY HIS ORDER DT:02-03-2009 U/ S 271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE ACTION OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT-A AND CONTENDED THAT ASSES SEE ENCASHED REC BOND AND INTEREST THEREON WAS RS. 1,59 ,189/- BUT, NOT RS. 1,71,124/- AS FOUND BY THE AO DURING T HE F. Y: 2005-00 OF WHICH RS. 97,875/- IS RELATED TO THE PER IOD F. Y. 2004-05 AND RS.61,314/- IS RELATED TO THE PERIOD F. Y. 2005-06. FURTHER CONTENDED THAT THE ASSESSEE SHOWN RS. 97,87 5/- AS INTEREST INCOME IN HIS RETURN OF INCOME FOR THE F. Y. 2004-05 AND PAID TAX ON SUCH INCOME AND WRITTEN SUBMISSION OF WHICH IS REPRODUCED BELOW FOR BETTER UNDERSTANDING: 1. MR. RAM MIHIR SEN WAS HEARD BY LD ITO WARD 24(2 ), U/S.143(3) AND SUBMITTED HIS SUMMERY OF BANK STATEM ENT PERSONAL BALANCE SHEET AS AT 31. 03.2006.XEROX COPY ENCLOSED. 2. YOUR ASSESSEE HAD ENCASHED REC BOND INTEREST RS. 1,59,189/- (NOT RS. 1,71,124/-) AS CLAIMED BY ID. I TO) DURING THE F. Y: 2005-00 OF WHICH RS. 97,875/- IS RELATED TO THE PERIOD F. Y. 2004-05-AND RS.61,314/- IS RELATED TO THE PERIOD F. Y. 2005-06. XEROX COPIES ENCLOSED. 3. YOUR ASSESSEE ALREADY SHOWED RS. 97,875/- REC BO ND INTEREST IN THE F. Y. 2004-05 IN HIS RETURN OF INCO ME FOR F. Y. 2004-05 AND HAS ALREADY PAID TAX ON THIS INCOME IN THE F. Y. 2004=-5. XEROX COPY ENCLOSED. 4. LD. ITO BY MISTAKE, TREATED REC BOND INCOME 2005 -06 AS RS. 1,71,724/-, INSTEAD OF RS. 61,314/- IGNORING THE FACT THAT THE ASSESSEE HAD ALREADY SHOWN RS. 97,875/- AS INTEREST INCOME IN HIS RETURN OF INCOME FOR THE F. Y. 2004-0 5. ITA NO. 67/KOL/14 RAM MIHIR SEN 4 5. TAXING INTEREST INCOME RS. 97,875/- IN THE F. Y. 2004- 05 AND AS WELL AS IN THE F. Y. 2005-06 IS BAD IN LA W, THOUGH THE ASSESSEE PAID DUE DEMANDED TAX IN FULL RS. 11,8 66/- TO AVOID FURTHER LITIGATION. AS SUCH THERE IS NO HIDING OF INCOME IN THE F. Y. 2 005-06 AND THAT ALSO AROSE DUE TO MISCONCEPTION ON ID ITO'S PA RT YOUR ASSESSEE IS THEREFORE CLAIMING THAT THERE WAS NO HI DING OF INCOME AND SEC.271(1)(C) DOES NOT STAND IN THIS CAS E.' 6. THE CIT-A HAVING EXAMINED AND CONSIDERED THE WRI TTEN SUBMISSION FOUND A DISCREPANCY IN THE COMPUTATION O F TOTAL INCOME AND THAT THERE WAS NO VOLUNTARY DISCLOSURE B Y THE ASSESSEE AND CONFIRMED THE ACTION OF THE AO IN IMPO SING THE PENALTY. 7. BEFORE US, IN THIS SECOND APPEAL, THE LD.AR SUBM ITS THAT THE AO ARBITRARILY IMPOSED PENALTY AND THE ASSESSEE PAID EXCESS TAX IN ORIGINAL ASSESSMENT FOR THE YEAR UNDE R CONSIDERATION. THE CIT(A) DID NOT CONSIDER THE SUBM ISSIONS AND MATERIAL DOCUMENTS FILED BEFORE THE FIRST APPELLATE PROCEEDINGS IN PROPER PERSPECTIVE AND CONFIRMED THE PENALTY IMP OSED BY THE AO. THE LD.AR PRAYED TO TAKE INTO CONSIDERATION THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT-A. HE ALSO REITERA TED THE SAME SUBMISSIONS AS MADE BEFORE THE CIT-A. THE LD. DR RE LIED ON THE ORDERS OF THE AUTHORITIES BELOW. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL EVIDENCE AVAILABLE ON RECORD INCLUDING THE PAPER BOOK AS FILED BY THE ASSESSEE BEFORE US. THE CONTENTION OF THE LD.AR IS THAT THE ASSESSEE ENCASH ED TWO CHEQUES TO THE EXTENT OF RS.15,09,189 OF RURAL ELECTRIFICATION COR PORATION BONDS DURING THE FY 2005-06 RELEVANT TO THE AY 2006-07 I.E UNDER CON SIDERATION. WE FIND THAT OUT OF SUCH AMOUNT OF INTEREST TO THE EXTENT O F RS.97,875/- WAS EARNED FOR THE PERIOD FROM 29-10-2002 TO 31-3-2004, WHICH IS VERIFIABLE FROM THE ITA NO. 67/KOL/14 RAM MIHIR SEN 5 COMPUTATION OF INCOME FOR THE AY 2005-06 PLACED AT PAGE 6 OF THE P.B. FURTHER, THE ASSESSEE TO SUPPORT HIS CONTENTION FIL ED THE COPY OF INTEREST WARRANT DATED 31-3-2004 ISSUED BY REC [RURAL ELECTR IFICATION CORPORATION LTD ] TO SHOW THAT THE DETAILS OF BONDS PURCHASE, D ATE OF ALLOTMENT AND DURATION FOR WHICH THE INTEREST WAS EARNED. THEREFO RE, IT IS CLEAR FROM THE EVIDENCE AS AVAILABLE ON RECORD THAT THE INTEREST T O THE EXTENT OF RS.97,875/- WAS DECLARED BY THE ASSESSEE IN THE AY 2005-06 AND AGAIN THE SAME AMOUNT WAS SHOWN AS INTEREST EARNED DURING THE YEAR UNDER CONSIDERATION. IN THE ASSESSMENT PROCEEDINGS THE IN TEREST EARNED FROM REC BONDS SHOULD HAVE BEEN SHOWN AS RS.1,71,124/- INSTE AD OF RS.97,503 AS SHOWN BY THE ASSESSEE IN HIS RETURN FILED FOR THE Y EAR UNDER CONSIDERATION. THE AO TREATED/ADDED THE SAME [RS.1,71,124/-] AS DI SCREPANCY FOUND BY HIM IGNORING THE FACT TO THE EXTENT OF RS.97,875/- AS INCOME DECLARED BY THE ASSESSEE IN THE AY 2005-06 BY THE ASSESSEE. IT IS PERTINENT TO NOTE, ACCORDING TO AO, THAT THE ASSESSEE HAS NOT OBJECTED TO ADD SUCH AMOUNT TO HIS TOTAL INCOME. THE ASSESSEE HAS ALSO PAID TAX ON SUCH AMOUNT AS DETERMINED BY THE AO FOR THE YEAR UNDER CONSIDERATI ON. 9. IT IS OBSERVED FROM THE PENALTY PROCEEDINGS THAT THE FACT OF DISCLOSING THE AMOUNT AS SHOWN IN THE AY 2005-06 WAS BROUGHT T O THE NOTICE OF THE AO. INSPITE OF IT, THE AO HELD THAT THE ASSESSEE HA S CONCEALED HIS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS ALSO OBSERVED FROM THE IMPUGNED ORDER DATED 1-10-2013 PASSED BY THE CIT-A THAT THE ASSESSEE BROUGHT TO THE NOTICE OF THE CIT-A THE FACT IN RESP ECT OF SAID INTEREST AMOUNT WAS RETURNED IN THE AY 2005-06 AND THE ASSES SEE HAS ALSO PAID TAX THEREON. THE ASSESSEE HAS AGITATED THE MISTAKE OF T HE AO ON IGNORING THE SAID FACT WHILE IMPOSING THE IMPUGNED PENALTY U/S. 271(1) ( C) OF THE ACT. IT IS CLEAR THAT THE ASSESSEE HAS FILED THE EVIDENC E BEFORE THE AUTHORITIES BELOW REGARDING PENALTY PROCEEDINGS. BUT, HOWEVER, NEITHER THE CIT-A NOR AO COULD APPRECIATE THE FACT IN THE CIRCUMSTANCES O F THE CASE. IT IS RELEVANT TO NOTE THAT THE PROCEEDINGS OF ASSESSMENT AND PENA LTY ARE INDEPENDENT TO ITA NO. 67/KOL/14 RAM MIHIR SEN 6 EACH OTHER. ANY NEW EVIDENCE/MATERIAL CAN BE PRODUC ED BEFORE THE PENALTY PROCEEDINGS AND NON CONSIDERATION OF SUCH EVIDENCE AND THE PENALTY THEREON, IS LIABLE TO BE CANCELLED. 10. IN THE PRESENT CASE, THE ASSESSEE FILED THE REQ UIRED EVIDENCE BEFORE THE CIT-A TO SHOW THAT THE INTEREST AMOUNT TO THE E XTENT OF RS.97,365/- WAS SHOWN IN THE AY 2005-06. BUT, THE CIT(A) DID NO T CONSIDER THE SAME IN THE RIGHT PERSPECTIVE. THE ASSESSEE HAS ALSO FILED THE COMPUTATION OF INCOME RELATING TO THE AY 2005-06, WHERE IT IS CLEA RLY REFLECTED THE AMOUNT SHOWN ON REC BONDS IN THE COMPUTATION OF INCOME FOR A.Y 05-06, WHICH IS PLACED AT PAGE 6 OF THE P.B. THEREFORE, BOTH THE AU THORITIES DID NOT CONSIDER THE EVIDENCE OF THE ASSESSEE IN SUPPORT OF HIS CONT ENTION. THUS, THE ORDER OF PENALTY IS LIABLE TO BE QUASHED. 11. IN RESPECT OF ANOTHER CONTENTION OF THE AO IS T HAT THE ASSESSEE AGREED TO ADD SUCH AMOUNT AS FOUND BY THE HIM AS DI SCREPANCY AND THE ASSESSEE DID NOT PREFER ANY APPEAL BEFORE THE HIGHE R AUTHORITIES AND IT WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES BELOW E ITHER TO INITIATE PENALTY PROCEEDING OR TO IMPOSE PENALTY. IN OUR VIEW THAT THE ASSESSEE HAS OFFERED EXPLANATION, WHICH HAS BEEN SUBSTANTIATED BY WAY O F MATERIAL/EVIDENCES BEFORE THE AUTHORITIES, WHICH IS FOUND TO BE BONAFI DE RELATING TO COMPUTATION OF TOTAL INCOME. THEREFORE, NO PENALTY IN THIS REGARD CAN BE IMPOSED. THEREFORE, IN VIEW OF THE DISCUSSION ABOVE , THE PENALTY IMPOSED AND AS CONFIRMED BY THE CIT-A IS HEREBY CANCELLED. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO. 67/KOL/14 RAM MIHIR SEN 7 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016 SD/- SD/- M. BALAGANESH S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21/09/2016 1. THE APPELLANT/ ASSESSEE: RAM MIHIR SEN C/O RITA BANERJEE 3 BALLYGUNGE TERRACE, GROUND FLOOR, KOL-29. 2 . THE RESPONDENT/ DEPARTMENT: THE INCOME - TAX OFFICER W 24(2) 169 AJC BOSE ROAD, KOL-14. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR ** PRADIP SPS INCOME TAX APPELLATE TRIBUNAL KOLKAT A BENCHES, KOLKATA COPY OF THE ORDER FORWARDED TO:-