Dy.CIT, Circle-3(2), Hyderabad V. Sri B Krishna Rao, Hyderabad

ITA 839/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82249 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MOHAN REDDY
• Assessee Lawyers: K A SAI PRASAD
• Section: 147; 148; 139; 143(3); 142(1); 133A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.839/HYD/14 : ASSESSMENT YEAR 2007 - 08 ITA NO.840/HYD/14 : ASSESSMENT YEAR 2008 - 09 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(2), HYDERABAD V/S. SHRI B.KRISHNA RAO , HYDERABAD (PAN - AAMBP 5633 Q ) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI R.MOHAN REDDY RESPONDENT BY : SHRI K.A.SAI PRASAD DATE OF HEARING 27 .0 8 .2014 DATE OF PRONOUNCEMENT 27.08.2014 O R D E R PER BENCH: THESE TWO APPEALS ARE PREFERRED BY THE REVENUE AGAINST A COMMON ORDER OF THE LEARNED CIT(A) IV, HYDERABAD DATED 14.2.2014, WHEREBY HE CANCELLED THE PENALTIES OF RS.6,33,222 AND RS.5,26,908 IMPOSED BY THE ASSESSING OFFICER UNDER S.271(1)(C) FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 RESPECTIVELY. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL, WHO IS MANAGING DIRECTOR OF M/S. SKM TECHNOLOGY PVT. LTD. A S URVEY UNDER S.133A WAS CARRIED OUT IN THE CASE OF THE SAID COMPANY ON 19.8.2009. DURIN G THE COURSE OF SURVEY, I T WAS FOUND THAT THE COMPANY, VIZ. M/S. SKM TECH NOLOGY PVT. LTD. AS WELL AS THE ASSESSEE HAD NOT FIL E D THEIR RETURNS OF INCOME FOR THE Y E ARS UN D E R C ONSIDERATION, I.E. ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09. THE ASSESSING OFFICER THER EFORE, ISSUED NOTICES UNDER S.148, IN RESPONSE I TA NO. 839 - 840/H YD/201 4 SHRI B.KRISHNA RAO, HYDERABAD 2 TO WHICH THE ASSESSEE FIL E D HIS RETURNS OF INCOME FOR THE YEARS UNDER CONSIDERATION DECLARING THE FOLLOWING INCOMES - AY 2007 - 08 AY 2008 - 09 SALARY 37,70,400 16,70,400 HOUSE PROPERTY INCOME 1,34,400 1,34,400 OTHER SOURCES 12,872 1,811 TOTAL 39,17,700 18,06,611 IN THE ASSESSMENTS COMPLETED UNDER S.143(3) READ WITH S.147, THE INCOMES AS DECLARED BY THE ASSESSEE IN HIS RETURNS OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION WAS ACC E PT E D BY THE ASSESSING OFFICER. HE, HOWEVER, INITIATED PENALTY PROCEEDINGS UNDER S.271(1)(C) AND ALTHOUGH THE ASSESSEE OFFERED HIS EXPLANATION IN RESPONSE TO THE SHOW CAU S E NO T I C ES ISSUED BY THE ASSESSING OFFICER, DURING THE COURSE OF TH E SAID PROCE ED INGS, THE SAME WAS NO T FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORD IN G TO HIM, THE ASSESSEE HAD FILED HIS R ETURNS OF INCOME FOR TH E Y E ARS UNDER C ONSIDERATION ONLY BECAU S E OF THE SURVEY CARRIED ON UNDER S.133A IN THE CA S E OF M/S. SKM TECHNOLOGY PVT. LTD. AND HAD SUCH SURVEY NOT B E EN C ARRIED OUT, THE ASSESSEE WOULD NOT HAVE FILED THE SAID R ETURNS. THE ASSESSING OFFICER ALSO NOTED THAT THE TIME LIMIT PRESCRIBED UNDER S.139(1) FOR FILIN G THE RETURN OF INCOME FOR THE YEARS UN D ER CONSIDE RATION HAD ALREADY EXPIRED, WHICH AGAIN WAS SUFFICIENT TO P R OVE THE INTENTION OF TH E ASSESSEE NOT TO FILE THE RETURNS OF INCOME FOR THE YE A RS UNDER CONSIDERATION VOLUNTARILY. THE ASSESSING OFFICER ACCORDINGLY PROCEEDED TO IMPOSE THE PENALTIES UNDER S.271(1)(C) FOR BOTH THE YEARS UN D ER CON S I D ERATION IN RESP E CT OF THE INCOMES DECLARED BY THE ASSESSEE IN THE RETURNS FI L ED IN RESPONSE TO THE I TA NO. 839 - 840/H YD/201 4 SHRI B.KRISHNA RAO, HYDERABAD 3 NOTICES ISSUED UNDER S.148, WHICH WAS ACCEPTED BY HIM I N THE ASSESSMENT ORDERS PASSED UNDER S.143(3) READ WITH S .147. 3. THE PENALTIES IMPOSED BY THE ASSESSING OFFICER UNDER S.271(1)(C) BY THE ASSESSING OFFICER WERE CHALLENGED BY THE ASSESSEE IN TH E APPEALS FILE D BEFORE THE LEARNED CIT(A) AND AFTER CON S IDERIN G TH E SUBMI S SION S MADE BY THE ASSESSEE AS WELL AS THE M A TE R IAL AVAILABLE ON RECORD, THE LEARNED CIT(A) CANCELL E D THE PENALTIES IMPOSED BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPHS 7 AND 8 OF THE IMPUGNED ORDER - 7. I HAVE CONSIDERED THE FACTS ON RECORD AND THE SUBMISS I ONS OF THE AR. IN TH E CA S E OF CHAGANLAL SUTERIYA VS. ITO (2011 )337 ITR 350(GUJ), THE COURT RECOGNIZED THAT A M E RE FAILURE TO FURNISH A RETURN OF INCOME DOES NO T AMOUNT TO CONCEALMENT U/ S . 271(1)(C) OF TH E INCOME TAX ACT,1961. HOWEVER, THE IN T RODU C T I ON OF EXPLANATION 3 TO SEC.271(1) ( C)WITH EFFECT FROM APRIL 1, 1976, HAD CHANGED THE L AW ON THE POINT. FOR THE PURPOSE O F FALLING WITHIN THE PU R VIEW OF EXPLANATION 3, (1) A PERSON S HOU L D HAVE FAIL E D WITHOUT REASONABL E CAU S E TO FURNISH A RETURN OF INCOME WITHIN TWENTY - ONE MONTHS FROM THE END OF THE ASSESSMENT YEAR CONCERNED; (II) NO NOTICE SHOULD HAVE BEEN ISSUED TO HIM U/S. 142(1) OR SEC.148 OF THE AC T TILL THE EXPIRY O F TWO Y E AR PERIOD AND (II I ) THE CONCERNED OFFICER IS SATI SFIED THAT IN RESPE C T OF SUCH ASSESSMENT YEAR, SUCH PERSON HAD TAXABLE INCOME. IN SUCH CASES, EXPLANATION 3 PROVIDES THAT SUCH PERSON SHALL BE DEEMED TO HAVE CONCE A L E D THE PARTICULARS OF HIS IN C OM E WITHIN THE MEANING OF CLAU S E (C) OF SEC.271(1)(C) OF TH E A C T FOR SUCH ASSESSMENT YEAR. I N SUCH AN EVENTUALITY, E VEN IF THE PERSON CONCERNED FILES A RETURN AFTER THE EXPIRY O F THE PERIOD O F TWO YEARS IN PURSUANCE OF A NO T I C E U/S. 148 OF THE ACT, THE DEEMING P R OVI SI ON S OF EXPLANATION 3 SHALL STILL HAVE APPLICATIO N. TH E COU R T ALSO HELD IN THIS CASE THAT THE REQUIREMENTS OF THE EXPL N . 3 WERE CUMULATIVE AND IT WAS NECESSARY THAT ALL TH E CONDITION S SPECIFIED TH E REIN SHOULD B E SATISFIED FOR LEVY OF PEN A L T Y. 8. IN THE APPELLANTS CASE, THO U GH THE APPELLANT HAD NO T FIL E D ANY RETURN OF INCOME TILL THE PERIOD SPECIFIED U/S. 153(1) OF THE AC T, A NOTICE U/S. 148 HAD BEEN ISSUED TO THE APPELLANT ON 2.09.2009, I.E., BEFORE THE PERIOD SP E CIFIED U/S. 153(1) OF TH E ACT FOR THE AYS 2007 - 08 AND 2008 - 09. SIN C E ONE O F THE CON D I T IONS SPECIFIED UNDER EXPL.3 TO SEC. 271(1)(C) IS NOT APPLICABLE TO THE APPELLANT, THE EXPLANATION CANNOT BE SAID TO APPLY TO TH E APPELLANT FURTHER, RELYING ON THE DECISION IN THE CASE OF CHAGANLAL SUTERIYA, IT IS HELD FOR I TA NO. 839 - 840/H YD/201 4 SHRI B.KRISHNA RAO, HYDERABAD 4 THE A . YS 2007 - 08 AND 2008 - 09 TH AT MERE FAILURE TO FILE A RETURN OF IN C OM E CANNOT BE HELD TO BE A CASE OF CONCEALMENT OF INCOME. THE PENALTY L E VIED U/S.271(1)(C) I S THEREFORE, DIRECTED TO BE DELETE D FOR THESE TWO Y E ARS AND THE APPE A L IS ALLOWED. 4. AGGRI E VED BY THE ORDER OF TH E LEARNED CIT(A) CANCELLING THE PENALTIES IMPOSED BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CONSIDERATION, REVENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND ALSO PERUSED THE RELEVANT MATERIAL O N RECORD. AS AGREED BY THE LEARNED REPRESENTATIVES OF BOTH SIDES, THE ISSUE INVOLVED IN THE PRESENT APPEALS OF THE REVENUE IS SQU A RELY COVERED IN F A VOUR O F THE ASSESSEE AND A GA IN S T THE REVENUE BY THE DECISION OF THE COORDINATE BENCH OF THIS T R IBUNAL IN TH E CASE OF ACIT V/S. M/S. SKM TECHNOLOGY PVT. LTD. RENDERED VIDE ORDER DATED 23.4.2014 IN ITA NO.122/HYD/2013, WH E REIN A SIMILAR PENALTY IMPOSED BY THE ASSESSING OFFICER UN D ER S.271(1)(C) FOR ASSESSMENT YEAR 2007 - 08, WAS HELD TO BE NOT SUSTAINABLE BY THE TR IBUNAL FOR THE FOLLOWING REASON S GIVEN IN PARAGRAPHS NO.5 AND 6 OF ITS ORDER - 5. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UP ON BY THE PARTIES. IT IS NOT DISPUTED THAT FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME WITHIN THE TIME ALLOWED U/S 139 OF THE ACT. THE ASSESSEE FILED ITS RETURN OF INCOME ONLY IN PURSUANCE TO NOTICE ISSUED U/S 148 O F THE ACT. HOWEVER, FACT REMAINS THAT THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED IN PURSUANCE TO THE NOTICE ISSUED U/S 148 OF THE ACT WAS ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED U/S 143(3) READ WITH SECTION 14 7 OF THE ACT WITHOUT ANY VARIATION. THAT BEING THE CASE, THERE CANNOT BE ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SO FAR AS THE PRESUMPTION OF THE ASSESSING OFFICER THAT THE ASSESSEE WOULD NOT HAVE FILED RETURN OF IN COME BUT FOR THE SURVEY OPERATION CONDUCTED U/S 133A OF THE ACT, WE ARE OF THE VIEW THAT SUCH PRESUMPTION IS WITHOUT ANY BASIS. IT IS A FACT ON RECORD I TA NO. 839 - 840/H YD/201 4 SHRI B.KRISHNA RAO, HYDERABAD 5 THAT ON THE DATE OF SURVEY, THE FINAL ACCOUNTS OF THE ASSESSEE ARE READY. IT IS ALSO A FACT THAT THE A SSESSEE HAS FIELD ITS RETURN OF INCOME DECLARING INCOME OF RS.61,74,645/ - . IN THE ASSESSMENT ORDER PASSED , THE ASSESSING OFFICER HAS NOT MADE ANY ALLEGATION THAT THE INCOME DECLARED IN THE RETURN OF INCOME IS NOT IN CONSONANCE WITH THE FINAL ACCOUNTS FILE D AT THE TIME OF SURVEY OPERATION. 6. THERE IS ALSO NO ALLEGATION EITHER IN THE ASSESSMENT ORDER OR PENALTY ORDER THAT ANY INCRIMINATING MATERIAL WAS FOUND AT THE TIME OF SURVEY TO INDICATE EITHER SUPPRESSION OR CONCEALMENT OF ANY INCOME. IN THE AFOR ESAID CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE HAS INDULGED IN CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO BRING IT WITHIN THE MISCHIEF OF SECTION 271(1)(C) OF THE ACT. FURTHER, IT WILL BE APPARENT FROM THE ASSESSMENT ORDER THAT THOUGH THE TAX LIABILITY OF THE ASSESSEE IS RS.17,86,910 BUT THE ASSESSEE HAS PAID SELF ASSESSMENT TAX OF RS.1 LAKH AND THE BALANCE AMOUNT OF TAX ALONG WITH INTEREST CHARGED U/S 234A, 234B AND 234C WAS PAID BY THE ASSESSEE AFTER C OMPLETION OF THE ASSESSMENT IN TERMS WITH THE DEMAND NOTICE ISSUED BY ASSESSING OFFICER. THIS TO SOME EXTENT PROVES THE FACT THAT THE EXPLANATION OF THE ASSESSEE THAT IT WAS FACING SERIOUS FINANCIAL DIFFICULTIES IS BELIEVABLE AND THAT MAY BE THE REASO N FOR THE ASSESSEE FOR NOT FILING THE RETURN OF INCOME WITHIN THE STIPULATED TIME AS IT WAS NOT IN A POSITION TO PAY THE IT LIABILITY EVEN AS PER ITS DECLARED INCOME. IN THE AFORESAID CIRCUMSTANCES, IT CANNOT BE SAID THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT VALID. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE CIT (A) WAS CORRECT IN DELETING THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. ACCORDINGLY, WE DISMISS THE GROUND RAISED BY THE DEPARTMENT. AS THE ISSUE INVOLVED IN THE PRESENT CA S E AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CA S E OF M/S. SKM T EC HNO LO GY P V T. LTD., WE RESPECTFULLY FOLLO W IN G THE DECISION OF THE COORDINATE BENCH O F THIS TRIBUNAL RENDER ED IN THE SAID CASE UPHOLD THE IMPUGN E D ORDER OF THE LEARNED CIT(A) CANCELLING THE PENALTIES IMPOSED BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CON S I D ERATION. I TA NO. 839 - 840/H YD/201 4 SHRI B.KRISHNA RAO, HYDERABAD 6 6. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF HEARING ON 27.08.2014 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 27 TH AUGUST, 2014 COPY FORWARDED TO: 1. SHRI B.KRISHNA RAO , H.NO.F - 59, D.NO.8 - 3 - 224/7, MADHURA NAGAR, S.R. NAGAR, HYDERABAD 2 . DY. COMMISSIONER OF INCOME - TAX CIRCLE 3 ( 2 ), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV , HYDERABAD 4 . COMMISSIONER OF INCOME - TAX II I HYDERABAD 5 . DEPARTMENTAL REPR ESENTATIVE, ITAT, HYDERABAD. B.V.S