BHAGIRATH MAL, JHUNJHUNU V. INCOME TAX OFFICER WARD 2, JHUNJHUNU

ITA 9/JPR/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2582 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 09-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income
• Section: 147; 148; 271(1)(c); 139; 143(3)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, ‘’SMC” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 9 &10/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2016-17 & 2017-18 Shri Bhagirath Mal 03, VPO Rajota, The Khetri Distt Jhunjhunu – 333 001 cuke Vs. The ITO Ward -2 Jhunjhunu LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ARJPM 7400 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Manish Agarwal, CA jktLo dh vksj ls@ Revenue by: Shri A.S. Nehra, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 14/06/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 27 /07/2022 vkns'k@ ORDER PER: SANDEEP GOSAIN, JM Both these appeals have been filed by the assessee against two different orders of the ld. CIT(A) dated 12-11-2021 and 16-11-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment years 2016-17 & 2017-18 with regard to penalty orders u/s 271(1)(c) and 270A of the Act passed by the AO vide its two different orders dated 23-03-2020 for the 2 ITA NO. 9/JP/2022 BHAGIRATH MAL VS ITO, WARD-2, JHUNJHUN assessment year 2016-17 and 2017-18 respectively. The Grounds of appeal raised by the assessee in both the appeals are as under:- ITA No. 9/JP/2022 – A.Y. 2016-17 ‘’1. On the faclts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the penawlty of Rs.71,350/- of the Income Tax Act arbitrarily. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the penalty of Rs.71,350/- by brushing aside the fact that though penalty proceedings were initiated for furnishing inaccurate particulars of income, eventuality penalty was imposed for underreporting of income by suppressing. Appellant prays the provision of under reporting as embedded in Section 270A are not applicable in the year under consideration. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the penalty by ignoring the settled judicial position that penalty proceedings are separate and distinct proceedings and conclusion drawn in assessment proceedings, though relevant could not be solely8 relied upon for imposing penalty. 3.1 That the ld. CIT(A) has further erred in confirming the penalty by not considering the fact that necessary documents were given to erstwhile counsel for furnishing return of income who filed the return with incorrect figures. Appellant prays that it is only on receipt of notice u/s 148, another counsel was approached who informed that earlier return was not correct and filed return of income in response to notice u/s 148 (after rectifying the mistake in earlier return) which was accepted by the AO, therefore, assessee should not be penalized for fault of counsel. 3.2 That the ld. CIT(A) has further erred in confirming the penalty without considering the fact that the assessee rectified his mistake at the very first opportunity. Therefore, there is neither concealment nor any inaccurate particulars of income were furnished and penalty of Rs.71,350/- deserves to be deleted. Without prejudice to grounds of appeal No. 1 to 3.1 above and in the alternative. 3 ITA NO. 9/JP/2022 BHAGIRATH MAL VS ITO, WARD-2, JHUNJHUN 4. On the facts and circumstances of the case and in law the ld. CIT(A) has grossly erred in confirming the imposition of penalty @ 200% of tax sought to be evaded which is excessive more particularly when assessee suo moto rectified the return of income as soon as mistake was brought to his notice in the return of income filed in response to notice u/s 148. Appellant prays that the most, penalty deserves to be restricted to100% of tax sought to be evaded.’’ ITA No. 10/JP/2022 – A.Y. 2017-18 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the penalty of Rs.3,16,688/- u/s 270A of the Income Tax Act arbitrarily. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the penalty by ignoring the settled position that penalty proceedings are separate and distinct proceedings and conclusion drawn in assessment proceedings, though relevant could not be solely relied upon for imposing penalty. 3. That ld. CIT(A) has further erred in confirming the penalty by not considering the fact that necessary documents were given to erstwhile counsel for furnishing return of income who filed the return with incorrect figures. Appellant prays that it is only on receipt of notice u/s 148, another counsel was approached who informed that earlier return was not correct and filed return of income in response to notice u/s 148 (after rectifying the mistake in earlier return) which was accepted by the AO, therefore, assessee should not be penalized for fault of counsel. 3.2 That the ld. CIT(A) has further erred in confirming the penalty without considering the fact that the assessee rectified his mistake at the very first opportunity. Therefore, there is neither concealment nor any inaccurate particulars of income were furnished and penalty of Rs.3,16,688/- deserves to be deleted.’’ 4 ITA NO. 9/JP/2022 BHAGIRATH MAL VS ITO, WARD-2, JHUNJHUN 2.1 Brief facts for both the years are broadly same and grounds so taken by the assessee are also broadly same except one more ground taken in A.Y. 2016-17 as alternative ground. Since issue involved in the appeal before us same in both the years, facts related to A.Y. 2016-17 are mentioned being the initial year. Facts for A.Y. 2017-18 are also same except the change in figures / quantum. In this case that assessee, individual, derives income mainly from salary and he was employed with M/s Hindustan Copper Ltd., Khetri from where he received salary. The assessee provided all the documents for filing of the return of income to his counsel to file return declaring salary income at Rs. 4,09,935/- and total income of Rs. 2,59,940/- and refund of Rs. 35,680/- was claimed for AY 2016 17. Later on, assessment proceedings were initiated by issue of notice u/s 148 r.w.s. 147 of the Act. On receiving such notice, the assessee consulted another counsel for preparing return of income who informed the assessee that there were certain mistakes in the return filed u/s 139. Accordingly, while furnishing return of income in response to notice u/s 148, total income was correctly computed at Rs. 5,48,180/- and same was accepted by the AO in the order passed u/s 143(3) r.w.s. 147 of the Act, without making any addition. However, penalty proceedings u/s 271(1)(c) were also initiated. It was submitted by the ld. AR before us that during the course of penalty proceedings, it was requested before the AO that mistake in the original return of income was un-intentional and same stood rectified at the very first 5 ITA NO. 9/JP/2022 BHAGIRATH MAL VS ITO, WARD-2, JHUNJHUN opportunity when the same was brought to the notice of the assessee by way of notice u/s 148. Therefore, penalty may not be imposed. However, AO imposed penalty of Rs. 71,350/-. Ld. CIT(A) also did not appreciate the submission of appellant and confirmed the penalty order. It was submitted before us that no sooner it came to the knowledge of appellant that total income shown in the return filed u/s 139 was incorrect, the appellant suo-motu disclosed correct total income in the return filed in response to notice u/s 148 and paid due taxes along with interest. It was submitted that appellant is not well versed with the complicated provisions of the taxation and acted in the good faith on the advice of previous tax consultant, and therefore appellant may not be penalized for such mistake. Reliance was placed on the judgment of Hon'ble Apex Court in the case of M/s Price Water House Coopers Pvt. Ltd. Vs. CIT, Calcutta-1 reported in 348 ITR 306. Relevant operating para of the aforesaid judgment is reproduced in the written submission, wherein the Court has held that though the assessee is reputed firm and has great experience available with it but not withstanding this, it is possible that even assessee could make silly mistakes. It appears that through a bonafide and inadvertent error the assessee failed to add the provision for gratuity to its total income. This can only be described as a human error and the calibre and expertise of the assessee has nothing to do with the inadvertent error. The Hon'ble Court further went to observe that the assessee should have been careful cannot be 6 ITA NO. 9/JP/2022 BHAGIRATH MAL VS ITO, WARD-2, JHUNJHUN doubted but absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars of income or attempting to conceal its income. The Hon'ble Supreme Court finally held that given the peculiar facts of this case, the imposition of penalty on the assessee is not justified. 2.2 It was submitted by the ld. AR before us that the instant case of the appellant is far better than that of the aforesaid cited case, in as much as that the appellant is not having any great expertise in the taxation field vis-à-vis M/s Price Water House Coopers Pvt. Ltd. The ld. AR has cited various other case laws also before us through his written submision. For AY 2016-17, Ld. AR has also taken alternative ground that in the penalty order, the AO has imposed the penalty by coming to the conclusion that penalty imposed on account of under reporting of the income, whereas the provisions of penalty to be imposed on under recording of the income by the assessee came into effect from Ay 2017-18. Thus, penalty order for A.Y.2016-17 suffers from aforesaid vital defect and deserves to be quashed on this ground. 2.3 On the other hand, the ld. DR supported the orders of the ld. CIT(A) 2.4 We have heard both the parties and perused the materials available on record. As discussed above, there was certain mistakes so committed by the 7 ITA NO. 9/JP/2022 BHAGIRATH MAL VS ITO, WARD-2, JHUNJHUN previous counsel while filing the return of income of the assessee and when it came to the knowledge of the assessee through another counsel at the time of furnishing return/ reply for notice u/s 148, at the very first opportunity, the assessee furnished the return declaring correct income. Moreover, AO accepted the return income so now filed and no additions were made while computing the income in the assessment order passed u/s 143(3) r.w.s. 147. Considering that assessee is salaried person, the argument of ld. AR that assessee is not well versed in taxation laws, cannot be brushed aside. Considering the judgment of Hon'ble Apex Court in the case of M/s Price Water House Coopers Pvt. Ltd., so cited by the ld. AR as above, and judgment of Hon'ble Rajasthan High Court in the case of J.P. Sharma & Sons Vs. CIT reported in 151 ITR 333 (so cited by ld. AR), we are of the opinion that it is a case where benefit of doubt is to be given to the assessee that it was an inadvertent and bonafide error on the part of assessee without knowing the nitty- gritty of the taxation laws and it was not a case of assessee trying to conceal its income. Considering the facts and in the circumstances of the case and the case laws so cited penalty order passed by AO is cancelled and appeal of the assessee is allowed for AY 2016-17. It is reiterated that facts and the grounds so taken in AY 2017-18 are also same as that of in AY 2016 17 and accordingly the appeal for AY 2017-18 is also allowed. 8 ITA NO. 9/JP/2022 BHAGIRATH MAL VS ITO, WARD-2, JHUNJHUN 3.0 In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 27/07/2022. Sd/- Sd/- ¼ jkBksM deys'k t;UrHkkbZ ½ ¼lanhi xkslkbZ½ (Rathod Kamlesh Jayantbhai) (Sandeep Gosain) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 27/07/2022 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Bhagirath Mal, Jhunjhunu 2. izR;FkhZ@ The Respondent- ITO, Ward -2, Jhunjhunu 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 9/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar