LATHA.C.MOHAN,CHENNAI V. ACIT , CC-6(2), CHENNAI

ITA 140/CHNY/2021

AI Insights

The case involves appeals by Mrs. Latha C. Mohan against penalties imposed by the Assessing Officer (AO) for the assessment years 2009-10 and 2010-11, which were confirmed by the Commissioner of Income Tax (Appeals). The penalties were levied following a survey operation that revealed discrepancies between the assessee's reported turnover and the actual turnover. The AO argued that the assessee had concealed income by understating her turnover in the original returns. However, the Tribunal found that the penalties were based on estimated figures and did not clearly specify the amounts that were allegedly concealed. The Tribunal also considered the circumstances under which the assessee had to attend to her husband in the USA after an accident, which contributed to the delay in filing the appeals but did not affect the substantive merits of the case.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106946 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-09-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KEERTHI NARAYANAN
• Keywords: Condonation of delay; Revised return
• Section: 139

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे\tई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , \u000bाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद\t क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.582/Chny/2020 & ITA No.140/Chny/2021 िनधा\u000eरण वष\u000e/Assessment Years: 2009-10 & 2010-11 Mrs.Latha C. Mohan, 2nd & 3rd Floor, Saba House, No.209A, Opp. Crown Plaza Hotel Outer Gate, St. Marys Road, Alwarpet, Chennai-600 018. v. The ACIT, Corporate Circle-6(2), Chennai. [PAN:AABPL 3991 Q] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : None \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Mr. Keerthi Narayanan, JCIT सुनवाईक\u001aतारीख/Date of Hearing : 03.09.2024 घोषणाक\u001aतारीख /Date of Pronouncement : 22.11.2024 आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-2, (hereinafter in short \"theLd.CIT(A)”), Chennai, dated 17.12.2018 confirming the penalty of Rs.16 lakhs for AY 2009-10 & Rs.11 lakhs for AY 2010-11. None appeared for the assessee. However, we note that these appeals were filed in the year 2020 & 2021 and the matter couldn’t be heard due to ITA No.582/Chny/2020 (AY 2009-10) ITA No.140/Chny/2021 (AY 2010-11) Latha C. Mohan :: 2 :: frequent requests for adjournments. We note that the main grievance of the assessee is against the action of the Ld.CIT(A) confirming the penalty levied by the AO u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter in short \"the Act”) for concealment of income. 2. At the outset, there is a delay of ‘1358’ days in filing of the appeal for AY 2010-11 & ‘387’ days in filing of the appeal for AY 2009-10. In this regard, it is noted that the assessee has filed an affidavit along with petition for condonation of delay dated 22.04.2022. The affidavit of the assessee has been duly notarized and the assessee submits that the impugned order is dated 17.12.2018 and that she had to file appeal before 25.02.2019, which she couldn’t because her husband met with an accident in USA, and hence she went to USA to attend to him; and moreover, since, the papers relating to the appeals were misplaced and couldn’t be handed over to the Ld.AR before she left to USA, the delay happened. It is also noted that meanwhile the assessee was advised to file application under Vivad Se Viswas Scheme, 2020. However, the same was not entertained which led the assessee to approach the Hon’ble Madras High Court but it was withdrawn. Thus, assessee was seen pursuing remedy against the impugned action of penalty. We note that the assessee doesn’t gain any benefit by not filing appeal before this Tribunal. Taking into consideration the above facts, and especially the fact that assessee’s husband met with an accident at USA and she had to ITA No.582/Chny/2020 (AY 2009-10) ITA No.140/Chny/2021 (AY 2010-11) Latha C. Mohan :: 3 :: go to USA and couldn’t hand over the relevant documents to the Ld.AR, we are inclined to condone the delay in filing of both the appeals and proceed to hear the appeals on its own merits. 3. The brief facts in respect of appeal for AY 2009-10 as noted by the AO while rejecting penalty u/s.271(1)(c) of the Act are that the assessee was a Proprietor of Kanya Beauty Saloon who filed her return of income (RoI) on 29.09.2009. Later, a survey operation was conducted by the Department on the assessee’s business premise on 10.05.2013 (AY 2014- 15) wherein they found mismatch in turnover. In order to ascertain the genuineness of the mismatch found during the course of survey, the RoI of the assessee was re-opened by issue of notice u/s.148 of the Act on 24.11.2015. Pursuant to the notice, the assessee filed revised RoI and the AO passed Assessment Order u/s.143(3) read with sec.147 of the Act on 19.12.2016 accepting the income returned by the assessee. The AO also initiated penalty u/s.271(1)(c) of the Act (for concealment of particulars of income). According to the AO, during the penalty proceedings, the assessee was heard and thereafter, the AO levied penalty of Rs.16 lakhs as under: The assessee's original return failed to reflect the true state of affairs. The Assessee was understating her turnover and concealing her income. It was only through the survey action this concealment was brought on record. Also it is pertinent to mention that only when notice under 148 was issued a revised return was filed accommodating the findings of the survey. ITA No.582/Chny/2020 (AY 2009-10) ITA No.140/Chny/2021 (AY 2010-11) Latha C. Mohan :: 4 :: The AR made submission to the effect that Assessee made disclosures only to buy peace with the department and to avoid protracted litigation. It is true that Assessee has cooperated with the department and paid the tax liability raising out the revised return filed in reply to the notice u/s 148.However This will not absolve the assessee from penal action initiated for the concealment of income. The Assessee's original return failed to reflect the true state of affairs regarding assessee's income as assessee concealed the same and I am convinced that this attracts penalty as contemplated u/s 271(1)(c.). The maximum and minimum penalty in this case works out to Rs.15,27,269/- and Rs.45,81,807 respectively. I am convinced that this is a case of concealment of income on part of the assessee and as per section 271(1)(c.) of the act a penalty of Rs.16,00,000 is levied. This order is issued after getting approval of JCIT, NCR-1, Chennai. 4. On similar set of facts, penalty was levied to the tune of Rs.11 lakhs for AY 2010-11 by holding as under: The assessee's original return failed to reflect the true state of affairs. The Assessee was understating her turnover and concealing her income. It was only through the survey action this concealment was brought on record. Also it is pertinent to mention that only when notice under 148 was issued a revised return was filed accommodating the findings of the survey. The AR made submission to the effect that Assessee made disclosures only to buy peace with the department and to avoid protracted litigation. It is true that Assessee has cooperated with the department and paid the tax liability raising out the revised return filed in reply to the notice u/s 148. However, this will not absolve the assessee from penal action initiated for the concealment of income. The Assessee's original return failed to reflect the true state of affairs regarding assessee's income as assessee concealed the same and I am convinced that this attracts penalty as contemplated u/s 271(1)(c.). The maximum and minimum penalty in this case works out to Rs.10,49,071/- and Rs.31,47,213/- respectively. I am convinced that this is a case of concealment of income on part of the assessee and as per section 271(1)() of the act a penalty of Rs.11,00,000 is levied. This order is issued after getting the approval of JCIT, NCR-1, Chennai. ITA No.582/Chny/2020 (AY 2009-10) ITA No.140/Chny/2021 (AY 2010-11) Latha C. Mohan :: 5 :: 5. Aggrieved, by the aforesaid action of the AO levying penalty of Rs.16 lakhs for AY 2009-10 and Rs.11 lakhs for AY 2014-15, the assessee preferred appeals before the Ld.CIT(A) who was pleased to confirm the same. 6. Aggrieved, the assessee is in appeals before this Tribunal. 7. We have heard the Ld.DR representing the Department and having carefully perused the Assessment Order, penalty order and the impugned appellate order, we find the facts and Law are similar for both the appeals. Therefore, we take up the appeal for AY 2010-11 for adjudication and the result of which will be followed mutatis mutandis for AY 2009-10. 8. Having perused the Assessment Order for AY 2010-11, we note that the AO has merely stated that the assessee is an individual assessed to tax under the jurisdiction in Corporate Circle-1, Chennai and pursuant to survey operation conducted by Survey Team at her proprietary concern [Kanya Beauty salon] revealed increase in turnover than the books and which fact was accepted by the assessee and she duly filed revised return by including the surplus-turnover as discovered by the survey-team and offered tax thereof which was also paid. The AO merely states that the original return filed doesn’t reflect the true state of affairs and there was suppression of turnover by the assessee, so there was concealment on ITA No.582/Chny/2020 (AY 2009-10) ITA No.140/Chny/2021 (AY 2010-11) Latha C. Mohan :: 6 :: the part of the assessee and inaccurate particulars of income were furnished at the time of filing of original return. Having narrated the said facts, AO further noted about the notice issued u/s.148 of the Act on 24.11.2015 and assessee filing return on 02.12.2016 admitting total income of Rs.57,94,860/- and his action of accepting the RoI filed at Rs.57,94,860/- by Assessment Order dated 19.12.2016 u/s.143(3) read with sec.147 of the Act. Thereafter, he levied penalty of Rs.11 lakhs. On appeal, the Ld.CIT(A) noted the assessee’s explanation, wherein she submitted that the hard disk found during survey contained only projected finance of the business and in order to avoid protracted litigation, she admitted the turnover and paid the tax accordingly, upon receipt of notice u/s.148 of the Act. It is noted from the statement of fact based on the projected financials and statement recorded u/s.133A of the Act, the assessee had accepted the turnover and paid tax by including it in the revised return which has been accepted by the AO. Thus, the case of the AO to levy penalty on concealment of income is noted to hinge on the difference of income returned in the original return vis-à-vis that of the revised return after survey filed pursuant to notice u/s.148 of the Act. However, after having gone through the Assessment Order dated 19.12.2016 as well as the penalty order, we couldn’t find as to what amount has been concealed by the assessee. The AO has not bothered to at least bring on record the original returned income filed by the assessee ITA No.582/Chny/2020 (AY 2009-10) ITA No.140/Chny/2021 (AY 2010-11) Latha C. Mohan :: 7 :: for AY 2009-10 & for AY 2010-11 u/s 139 of the Act. The AO has merely made a bald statement to the effect that the assessee has understated her turnover and thus, concealed her income and that the assessee’s original return failed to reflect the true state of affairs. Thus, we find that neither the impugned order of the Ld.CIT(A) nor the Assessment Order/penalty order of the AO, doesn’t even spell out as to what amount assessee returned in the original return in both the years. The AO/Ld.CIT(A) didn’t bother to even point out how much amount the assessee has concealed. In other words, neither the Assessment Order nor the penalty order spells out as to what was the original returned income as well as the revised returned income. Therefore, merely based on projected financials contained in the hard disc found during survey and the statement which would have been recorded u/s.133A of the Act, can’t be the ground for levy of penalty, because, the AO failed to show that the assessee had deliberately under estimated her income. Survey team found the turnover not matching with books maintained by the assessee. Only the profit embedded in turnover can be brought to tax. Unless the assessee while estimating her income has deliberately suppressed her income by under estimating her income, an inference of concealment couldn’t have been drawn. 9. Bearing in mind the fact that the related quantum addition (accepted by the AO) was purely on estimated basis with inherent ITA No.582/Chny/2020 (AY 2009-10) ITA No.140/Chny/2021 (AY 2010-11) Latha C. Mohan :: 8 :: subjectivity involved, we are of the considered opinion that no penalty is warranted in both the appeals 10. In the result, appeals filed by the assessee are allowed. Order pronounced on the 22nd day of November, 2024, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे\tई/Chennai, !दनांक/Dated: 22nd November, 2024. TLN, Sr.PS आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ\r/Appellant 2. \u000e\u000fथ\r/Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड\u001eफाईल/GF "