DCIT 3(3)(2), MUMBAI V. UNIVERSAL CHEMICALS & INDUSTRIES P. LTD, MUMBAI

ITA 7160/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6890 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 18-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R N VASANI
• Assessee Lawyers: RAM TIWARI
• Keywords: Salary income; Reasonable cause
• Section: 143(3)

Judgement Text

1 ITA 7160/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI JOGINDER SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.7160 /MUM/2017 (ASSESSMENT YEAR: 2011-12) MISS KANCHAN H CHHABRIA 21, SANJAY PLAZA, A.B. NAIR ROAD, SILVER BEACH, JUHU, VILE VARLE (W), MUMBAI-49 PAN : AADPC19072E VS ACIT-21(1) / (NEW) ACIT-25(2), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI R.N. VASANI RESPONDENT BY SHRI RAM TIWARI DATE OF HEARING 05-06-2018 DATE OF PRONOUNCEMENT 20-06-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-37, MUMBAI DATED 28-09-2016 AND IT PERTA INS TO AY 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S)-37, COMMITTED A GROSS ERROR OF LAW AND FACTS IN CONFIRMING THE PENALTY OF RS. 55,7 13/- U/S. 271 (1) (C) IMPOSED BY THE A.C.I.T- 21 (I)/(NEW) A.C.I.T-25(2). (2) HE FAILED TO APPRECIATE THE FACTS THAT THE APPE LLANT IN THE COURSE OF ASSESSMENT PROCEEDING HERSELF POINTED OUT THE INADVERTENT OMIS SION OF ACCRUED INTEREST OF RS. 1,80,300/- ON 8% GOI BONDS AND OFFERED THE SAME FOR TAXATION WITHOUT BEING POINTED OUT BY THE ASSESSING OFFICER. (3) HE FAILED TO APPRECIATE THE FACTS THAT IN THE RETURN OF INCOME THE' RELATED TDS OF RS. 1S,030/- WAS ALSO NOT CLAIMED. (4) HE FAILED TO APPRECIATE THE FACTS THAT THE APPE LLANT'S CLAIM OF NON LEVIABLE OF PENALTY IS FULLY COVERED BY THE JUDICIAL PRONOUNCEMENTS CIT ED IN THE COURSE OF APPELLATE PROCEEDINGS. 2 ITA 7160/MUM/2017 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR AY 2011-12 ON 29-02- 2012 DECLARING TOTAL INCOME OF RS.54,14,966 , CONSISTING OF INCOME FROM SALARY, INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 06-01-2014 DETERMINING TOTA L INCOME AT RS.55,95,270 BY MAKING ADDITION TOWARDS INTEREST RE CEIVED FROM HDFC BANK LTD OF RS.1,80,300 FROM GOVERNMENT BONDS. TH EREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) FOR FUR NISHING INACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITION MADE T OWARDS INTEREST RECEIVED FROM HDFC BANK LTD AND ACCORDINGLY, ISSUED NOTICE U/S 274 R.W.S. 271(1)(C) AND CALLED UPON THE ASSESSEE TO EX PLAIN AS TO WHY PENALTY SHALL NOT BE LEVIED. IN RESPONSE TO NOTICE , THE ASSESSEE, VIDE LETTER DATE 27-01-2014 SUBMITTED THAT OMISSION TO I NCLUDE ACCRUED INTEREST FROM GOVERNMENT OF INDIA BONDS IS AN INADV ERTENT MISTAKE WHILE FILING THE RETURN OF INCOME AS THE ASSESSEE HAS NOT RECONCILED ITS TDS FROM AIR DATABASE. HOWEVER, AS SOON AS THE SAME HA S BEEN NOTICED, THE ASSESSEE HAS FILED REVISED STATEMENT OF TOTAL I NCOME ACCEPTING THE SAID RECEIPT, THEREFORE, THE SAME CANNOT BE CONSIDE RED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO LEVY PENA LTY U/S 271(1)(C). THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE A SSESSEE AND ALSO RELYING UPON THE DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE OF CIT 3 ITA 7160/MUM/2017 VS ZOOM COMMUNICATIONS PVT LTD 40 DTR 249 (DEL) HEL D THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME AND IT IS CLEAR THAT SHE HAS NO COGENT AND REASONABLE EXPLANATION F OR FAILURE TO OFFER INTEREST RECEIVED FROM GOVERNMENT OF INDIA BONDS IN HER RETURN OF INCOME. ACCORDINGLY, THE AO LEVIED PENALTY OF RS.5 5,713 U/S 271(1)(C) WHICH IS 100% OF TAX SOUGHT TO BE EVADED. 3. AGGRIEVED BY THE PENALTY ORDER, ASSESSEE PREFERR ED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE REITER ATED HER SUBMISSIONS MADE BEFORE THE AO. THE ASSESSEE FURTHER SUBMITTED THAT SHE HAS RECTIFIED THE INADVERTENT MISTAKE IN FILING RETURN OF INCOME BY FILING REVISED STATEMENT OF INCOME, INCLUDING INTEREST RECEIVED FR OM HDFC BANK LTD FROM GOVERNMENT OF INDIA BONDS VOLUNTARILY. THEREF ORE, THE AO WAS INCORRECT IN COMING TO THE CONCLUSION THAT THE ASSE SSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE FUR THER SUBMITTED THAT SHE HAS FILED THE RETURN WITHOUT MAINTAINING ANY BO OKS OF ACCOUNTS AND WHATEVER INCOME RECEIVED DURING THE YEAR HAS BEEN O FFERED TO TAX. BUT, INTEREST ACCRUED ON GOVERNMENT OF INDIA BONDS IS MI SSED HER ATTENTION AS SHE COULD NOT RECONCILE RETURN WITH AIR INFORMAT ION. THEREFORE, THERE IS AN INADVERTENT OMISSION WHILE FILING RETURN OF I NCOME, BUT, THE SAME HAS BEEN RECTIFIED BY FILING LETTER BEFORE COMPLETI ON OF ASSESSMENT AND ACCORDINGLY, THERE IS A REASONABLE CAUSE FOR NOT IN CLUDING THE INTEREST 4 ITA 7160/MUM/2017 INCOME WHILE FILING RETURN OF INCOME AND THE SAME C ANNOT BE CONSIDERED AS DELIBERATE ATTEMPT TO EVADE PAYMENT OF TAX. IN THIS REGARD, THE ASSESSEE RELIED UPON VARIOUS JUDICIAL PRECEDENTS IN CLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SURE SH CHANDRA MITTAL (2001) 251 ITR 9 (SC). 4. THE LD.CIT(A), AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND ALSO RELYING UPON VARIOUS JUDICIAL PRECEDENTS INCLU DING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUN ICATIONS PVT LTD (SUPRA) HELD THAT THE ASSESSEE HAD CONCEALED THE PA RTICULARS OF INCOME / FURNISHED INACCURATE PARTICULARS OF INCOME IN THE R ETURN OF INCOME IN RESPECT OF ACCRUED INTEREST ON GOVERNMENT OF INDIA BONDS EVEN THOUGH SUCH INCOME IS ACCRUED TO THE ASSESSEE FOR THE RELE VANT FINANCIAL YEAR. THE ASSESSEE FAILS TO OFFER AN EXPLANATION FOR NOT INCLUDING INTEREST INCOME IN HER RETURN OF INCOME. ALTHOUGH THE ASSESS EE HAS ADMITTED THE LAPSE BEFORE COMPLETION OF ASSESSMENT, THE FACT REM AINS THAT AS PER THE PROVISIONS OF SECTION 271(1)(C) WHERE IN RESPECT OF ANY FACTS OR MATERIAL TO THE COMPUTATION OF TOTAL INCOME BY ANY PERSON UN DER THE ACT AND SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN E XPLANATION WHICH IS FOUND TO BE FALSE, THEN THE AMOUNT DISALLOWED IN CO MPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSE OF THIS SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPEC T OF WHICH 5 ITA 7160/MUM/2017 PARTICULARS HAVE BEEN CONCEALED, THEREFORE, THE AO WAS RIGHT IN LEVYING PENALTY U/S 271(1)(C). AGGRIEVED BY THE ORDER OF C IT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) WAS ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) WITH OUT APPRECIATING THE FACT THAT OMISSION TO INCLUDE ACCRUED INTEREST ON G OVERNMENT OF INDIA BONDS IS AN INADVERTENT MISTAKE WHICH HAS BEEN RECT IFIED BY FILING REVISED STATEMENT OF TOTAL INCOME BEFORE COMPLETION OF ASSESSMENT, THEREFORE, THE SAME CANNOT BE CONSIDERED A FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. THE LD.CIT(A) FAILED TO APP RECIATE THE FACT THAT THE ASSESSEE NEITHER CLAIMED TDS DEDUCTED ON SUCH I NTEREST NOR RECONCILED THE AIR INFORMATION WITH THE RETURN OF I NCOME ON THE BONA FIDE BELIEF THAT INTEREST ON GOVERNMENT OF INDIA BONDS IS NOT RECEIVED DURING THE YEAR UNDER CONSIDERATION. WHEN THE SAID OMISSI ON IS NOTICED IMMEDIATELY, SHE HAS FILED REVISED STATEMENT OF INC OME AND ACCEPTED THE LAPSE, THEREFORE, PENALTY CANNOT BE LEVIED U/S 271(1)(C). 6. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSES SEE HAS NOT INCLUDED INTEREST RECEIVED ON GOVERNMENT OF INDIA BONDS IN H ER RETURN OF INCOME 6 ITA 7160/MUM/2017 FILED FOR THE RELEVANT ASSESSMENT YEAR. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE HAS FILED REVISED STATEMENT OF TOTAL I NCOME ON 30-12-2013 INCLUDING INTEREST RECEIVED ON GOVERNMENT OF INDIA BONDS BEFORE COMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT. TH E ASSESSEE ALSO EXPLAINED THE REASONS FOR NOT INCLUDING INTEREST RE CEIVED ON GOVERNMENT OF INDIA BONDS. ACCORDING TO THE ASSESSEE, THE SAI D MISTAKE IS AN INADVERTENT MISTAKE WITHOUT ANY MALA FIDE INTENTION TO EVADE PAYMENT OF TAX. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE SAID FACTS WERE BROUGHT TO THE NOTICE OF THE AO VOLUNTARILY. AS A MATTER OF FACT, THE TDS DEDUCTED ON SAID INTEREST AMOUNTING TO RS.18,030 WA S ALSO NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. THUS, IT IS VERY CLEAR THAT THE ASSESSEE HAS OMITTED TO INCLUDE INTEREST INCOME FRO M GOVERNMENT OF INDIA BONDS BY MISTAKEN BELIEF OF THE FACTS. THERE FORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO REASON FOR THE AO TO LEVY PENALTY U/S 271(1)(C) FOR FURNISHING INACCURATE OF INCOME, MORE SO, WHEN THE ASSESSEE HAS VOLUNTARILY FILED REVISED STATEMENT OF TOTAL INCOME INCLUDING INTEREST RECEIVED ON GOVERNMENT OF INDIA BONDS BEFO RE COMPLETION OF ASSESSMENT. THIS LEGAL PROPOSITION IS FURTHER SUPP ORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SURESH CHAN DRA MITTAL (SUPRA) WHEREIN THE HONBLE SUPREME COURT HELD THAT VOLUNTA RY SURRENDER OF INCOME CANNOT BE CONSIDERED S CONCEALMENT OF PARTIC ULARS OF INCOME OR 7 ITA 7160/MUM/2017 FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SURESH CHANDRA MITTAL (SUPRA), WE AR E OF THE CONSIDERED VIEW THAT PENALTY CANNOT BE LEVIED U/S 271(1)(C) IN RESPECT OF ADDITION MADE TOWARDS INTEREST RECEIVED FROM HDFC BANK LTD. THEREFORE, WE DIRECT THE AO TO DELETE PENALTY U/S 271(1)(C) OF TH E ACT. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 20 TH JUNE, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI