R.Chandrasekar, CHENNAI V. ITO, CHENNAI

ITA 772/CHNY/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5012 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-01-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AR V SREENIVASANJCITD R
• Assessee Lawyers: N V BALAJI
• Keywords: Salary income; Bonafide belief; Question of law; Bonafide mistake

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI, M. BALAGANESH ACCOUNTANT MEMBER ./ I.T.A.NO.772/MDS./2016 / ASSESSMENT YEAR :2011-12 MR. R.CHANDRASEKAR , 25A,1 ST MAIN ROAD, RAMA PLAZA,NANGANALLUR, CHENNAI 600 061. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-18, CHENNAI. [PAN AGDPR 9480 N ] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : MR.N.V.BALAJI,ADVOCATE /RESPONDENT BY : MR.AR.V.SREENIVASAN,JCIT,D.R /DATE OF HEARING : 17-01-2018 /DATE OF PRONOUNCEMENT : 25-01-2018 /O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-4, CHENNA I DATED 07.01.2016 PERTAINING TO ASSESSMENT YEAR 2011-12 CO NFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ITA NO.772/MDS./2017 :- 2 -: 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE C ASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS A SALARIED EMPLOYEE WORKING WITH M/S INFOSYS TECHNOLOGIES LIMI TED AND ADMITTED SALARY INCOME ONLY FROM THE SAID COMPANY. DURING TH E ASST YEAR UNDER APPEAL, THE ASSESSEE HAD SHIFTED HIS EMPLOYMENT FRO M M/S KPIT CUMMINS INFO SYSTEMS LTD TO M/S INFOSYS TECHNOLOGIE S LTD AND THE SALARY DERIVED FROM THE FORMER EMPLOYER WAS INFORME D DULY TO THE NEW EMPLOYER TO BE INCLUDED IN THE FORM 16. THE NEW EMP LOYER DID NOT INCLUDE THE SALARY COMPONENT FROM M/S KPIT CUMMINS INFO SYSTEMS LTD, WHICH RESULTED IN UNDERASSESSMENT OF SALARY IN COME. THIS WAS BROUGHT TO THE NOTICE OF THE ASSESSEE IN THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS. THE ASSESSEE IMMEDIATELY RE CTIFIED THIS MISTAKE BY OFFERING THE SALARY FROM FORMER EMPLOYER AND PAID THE REQUISITE TAXES WITH INTEREST THEREON BEFORE THE CO MPLETION OF ASSESSMENT. THE ASSESSEE PLEADED THAT THE ORIGINAL RETURN WAS FILED BASED ON THE FORM 16 ISSUED BY THE NEW EMPLOYER AND HE WAS UNAWARE OF THE FACT THAT THE SALARY FROM FORMER EMP LOYER WAS NOT INCLUDED IN THE SAID FORM 16 AND ACCORDINGLY PLEADE D THAT IT WAS ONLY A BONAFIDE MISTAKE ON HIS PART WHICH DESERVES TO BE C ONDONED AS THE ITA NO.772/MDS./2017 :- 3 -: ASSESSEE HAD ALREADY PAID THE NECESSARY TAXES AND I NTEREST BEFORE THE COMPLETION OF ASSESSMENT. THE LD AO HOWEVER, LEVIED PENALTY U/S 271(1)(C ) OF THE ACT FOR THE SAID DEFAULT ON THE P ART OF THE ASSESSEE TO THE TUNE OF ` 2,29,552/-. THIS ACTION OF THE LD AO WAS UPHELD BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE U S ON THE FOLLOWING GROUNDS:- 1. THE PENALTY ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL) IS TOTALLY CONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN NOT APPRECIATING THE FACT THAT APPELLANTS HAS DISCLOSED ALL THE INC OME IN HIS COMPUTATION OF TOTAL INCOME. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN NOT APPRECIATING THE FACT THAT THE APPELLANT HAD INFORMED THE PRESEN T EMPLOYEE TO TAKE THE INCOME OF THE PREVIOUS EMPLOYMENT IN THE FORM 16. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN NOT APPRECIATING THE FACT THAT THE APPELLANT ON BONAFIDE BELIEF THOU GHT THAT THE PREVIOUS EMPLOYMENT INCOME IS ALSO INCLUDED IN THE FORM 16. THIS ACT OF THE APPELLANT WILL NOT AMOUNT TO CONCEALMENT OF INCOME. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN NOT APPRECIATING THE FACT THAT VARIOUS HIGH COURTS HAVE HELD THAT LE VY OF PENALTY IS NOT AUTOMATIC CONSEQUENCE OF AN ADDITION TO INCOME AND PENALTY IS NOT LEVIABLE WHERE THE TAX PAYER IS ABLE TO PROVIDE A R EASONABLE EXPLANATION THAT IS NOT FOUND TO BE FALSE BY THE TAX AUTHORITIE S. 4. THE LD AR ARGUED THAT THE SHOW CAUSE NOTICE ISS UED BY THE LD AO U/S 274 READ WITH SECTION 271(1)(C ) OF THE ACT WAS DEFECTIVE IN AS MUCH AS IT DID NOT CONTAIN THE OFFENCE COMMITTED BY THE ASSESSEE I.E. WHETHER THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME OR ITA NO.772/MDS./2017 :- 4 -: HAD FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THERE WAS NO SPECIFIC CHARGE MADE OUT BY THE LD AO IN THIS REGAR D ON THE ASSESSEE IN THE SAID SHOW CAUSE NOTICE. ACCORDINGLY, THE LD AR PRAYED FOR CANCELLATION OF THE PENALTY BY PLACING RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 DATED 23.11.2015 WHI CH WAS LATER APPROVED BY THE HONBLE SUPREME COURT BY DISMISSAL OF SPECIAL LEAVE PETITION (SLP) BY THE REVENUE IN C.C NO. 11485/2016 DATED 05.8.2016. IN RESPONSE TO THIS, THE LD DR VEHEMENTLY RELIED ON THE ORDER OF THE LD LD AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE PENALTY NOTICE U/S 274 R.W.S 271(1)(C ) OF THE ACT DOES NOT SPECIFY THE CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE VIZ WHE THER IT HAD CONCEALED THE PARTICULARS OF INCOME OR IT HAD FURNI SHED INACCURATE PARTICULARS OF INCOME. HENCE THE SAID NOTICE IS TO BE HELD AS DEFECTIVE. NOW THE SHORT QUESTION THAT ARISES FOR CONSIDERATIO N IS AS TO WHETHER THE PENALTY COULD BE VALIDLY LEVIED BASED ON THE DE FECTIVE SHOW CAUSE NOTICE. THIS ISSUE HAS BEEN ADDRESSED BY THE HONBL E KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS I N ITA NO. 380 OF 2015 DATED 23.11.2015 WHICH IN TURN PLACED RELIANCE ON ANOTHER JUDGEMENT OF THE SAME COURT IN THE CASE OF CIT VS M ANJUNATHA COTTON ITA NO.772/MDS./2017 :- 5 -: AND GINNING FACTORY REPORTED IN 359 ITR 565 (KAR). IN THE SAID DECISION, THEIR LORDSHIPS OF HONBLE KARNATAKA HIGH COURT HELD THAT :- 3. THE TRIBUNAL HAS ALLWOED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SE CTION 274 READ WITH SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY W HICH LIMB OF SECTION 271(1)(C ) OF THE ACT, THE PENALTY PROCEEDI NGS HAD BEEN INITIATED I.E , WHETHER FOR CONCEALMENT OF PARTICUL ARS OF ICNOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CA SE OF COMMISSIONER OF INCOME TAX VS MANJUNATHA COTTON AND GINNING FACTORY REPORTED IN (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG EMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 5.1. WE FIND THAT THE REVENUE HAD PREFERRED A SLP B EFORE THE HONBLE SUPREME COURT AGAINST THIS JUDGEMENT WHICH WAS DISM ISSED IN CC NO. 11485/2016 DATED 5.8.2016 BY OBSERVING AS UNDER:- UPON HEARING THE COUNSEL, THE COURT MADE THE FOLLOW ING ORDER DELAY CONDONED. WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPEC IAL LEAVE PETITION IS , ACCORDINGLY DISMISSED. PENDING APPLICATION, IF ANY, STANDS DISPOSED OF. 5.2. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS, WE CANCEL THE LEVY OF PENALTY IN THE FACTS AND CIRCUMS TANCES OF THE CASE. ITA NO.772/MDS./2017 :- 6 -: SINCE THE LEVY OF PENALTY HAS BEEN CANCELLED ON THI S TECHNICAL ISSUE, NO DECISION IS HEREBY RENDERED ON MERITS OF THE ADDITI ON. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 25 TH JANUARY, 2018 AT CHENNAI . SD/- SD/- ( ! . . ! . '# ) ( N.R.S. GANESAN) / JUDICIAL MEMBER ( !$ % & '# ) (M. BALAGANESH) ' / ACCOUNTANT MEMBER '( /CHENNAI, )* /DATED: 25 TH JANUARY, 2018 K S SUNDARAM *# +, -, /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. . ( ) /CIT(A) 4. . /CIT 5. ,/' 0 /DR 6. '1 2 /GF