SURYA NARAYAN SAHA,PAKUR V. INCOME TAX OFFICER, DEOGHAR

ITA 70/RAN/2023

AI Insights

The case involves Surya Narayan Saha, the appellant, who appealed against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, concerning the Assessment Year 2014-15. The primary issue was the disallowance of agricultural income claimed as exempt, which was initially set at Rs. 5 lakh but later reduced to Rs. 2 lakh by the Assessing Officer (AO) during reassessment proceedings under sections 143(3) and 147 of the Income Tax Act, 1961. The AO imposed a penalty under section 271(1)(c) for furnishing inaccurate particulars of income, which was upheld by the CIT(A). The Tribunal found that the assessee had not adequately represented his case or provided sufficient documentary evidence to support his claims during the initial hearings, leading to the decision to remand the case for a thorough re-examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 46663 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 13-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reassessment proceedings; Principle of natural justice; Earning of tax free income
• Section: 148; 143(3); 271(1)(c)

Judgement Text

"आयकर अपीलीय अधिकरण र ांची 'एसएमसी' पीठ, र ांची में IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI ‘SMC’ BENCH, RANCHI श्री प र्थ स रर्ी चौिरी, न्य धयक सदस्य क े समक्ष Before SRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER I.T.A. No.: 70/RAN/2023 Assessment Year: 2014-15 Surya Narayan Saha..............................................................Appellant [PAN: AQGPS 8467 F] Vs. ITO, Deoghar……..................................................................Respondent Appearances: Assessee represented by: None. Department represented by: Khubchand T. Pandya, Sr. DR. Date of concluding the hearing : October 22nd, 2024 Date of pronouncing the order : October 23rd, 2024 ORDER Per Partha Sarathi Chaudhury, Judicial Member: This appeal preferred by the assessee emanates from the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as 'ld. CIT(A)'] dated 16.02.2023 for Assessment Year 2014-15 as per the grounds of appeal on record. 1.1. The relevant facts of the case are that the assessee's case was reopened for scrutiny and notice u/s 148 of the Income Tax Act, 1961 (hereinafter the 'Act') was issued for A.Y. 2014-15. In response to the said notice, the assessee filed return of income disclosing total income of Rs. 10,34,950/- and agricultural income of Rs. 5 lakh claimed as exempt income. That the reassessment proceedings u/s 143(3) read with Section 147 of the Act was completed disallowing the exempt agricultural income claimed to the extent of Rs. 3 lakh and treating the same as income from I.T.A. No.: 70/RAN/2023 Assessment Year: 2014-15 Surya Narayan Saha. Page 2 of 4 undisclosed sources and penalty proceedings u/s 271(1)(c) of the Act were initiated. That during the penalty proceedings, the Assessing Officer (hereinafter referred to as the 'AO') noted that the assessee could not provide any documentary evidences to prove the entire exempt income claimed of Rs. 5 lakh from agricultural activities. The AO disallowed such income to the extent of Rs. 3 lakh and subsequently, penalty was imposed of Rs. 92,700/- u/s 271(1)(c) of the Act for reporting inaccurate particulars of income. 1.2. In this background, the arguments of the assessee have been two-fold; first, that the addition was made by the AO on the basis of estimation and second, that the penalty u/s 271(1)(c) of the Act has levied by the AO for furnishing of inaccurate particulars of income could have been actually been made for concealment of income. The ld. CIT(A) after considering the submissions of the assessee along with documents on record rejected the contentions of the assessee and upheld the findings of the AO for levying of penalty in respect of furnishing of inaccurate particular of income u/s 271(1)(c) of the Act. That at the appellate stage also, the assessee could not justify the entire amount of agricultural income claimed as exempt income. 1.3. At the time of hearing, none appeared for the assessee nor any adjournment petition has been filed. The fact of the matter is the notice was served on the assessee as per the registered given address. Keeping in mind the directives of the Hon'ble Apex Court that the adjournment should not be given in a routine manner, the submissions of the ld. DR are recorded, the documents have been given careful consideration and the case is heard on merits. In this case, the assessee had filed return of income in response to notice u/s 148 of the Act and therein had claimed Rs. 5 lakh as agricultural income and same being exempt income. During the reassessment proceedings, it was observed by the AO that the assessee could not justify the entire claim of exempt income of Rs. 5 lakh and accordingly, the AO disallowed income to the extent of Rs. 3 lakh and added in the hands of the assessee. Similarly, penalty proceedings were initiated u/s 271(1)(c) of the Act and finally levied as per the penalty order dated 10.06.2021 for furnishing of inaccurate particulars of income. That even in the First I.T.A. No.: 70/RAN/2023 Assessment Year: 2014-15 Surya Narayan Saha. Page 3 of 4 Appellate stage, the assessee could not provide satisfactory documentary evidences in support of the entire exempt income claimed as agricultural income and resultantly, the ld. CIT(A) had upheld the addition made by the AO and at the same time upheld the penalty for furnishing inaccurate particulars of income. 2. I am of the considered view that the Revenue has taken the correct limb in imposing the penalty since it is the case of furnishing inaccurate particulars of income in which the penalty has rightly been initiated and levied. Now, whether the penalty is maintainable that is altogether a different issue but regarding the correctness of the limb, it is observed that the assessee had disclosed already in his return of income Rs. 5 lakh as an agricultural income, hence, claiming 100% exemption. He was unable to prove the entire exempt income and therefore, the Department had added back Rs. 3 lakh to his income. Therefore, it is a case of furnishing of inaccurate particulars of income for which the penalty has been initiated and levied. As stated earlier, there was no representation from the assessee at the time of hearing irrespective of correct service of the notice. 2.1. Considering the entire facts and circumstances, if one final opportunity is provided to the assessee to place his case on merits at the ld. CIT(A) level for providing documentary evidences in respect of the agricultural income claimed, showing agricultural activities and the income earned from therein etc., in such scenario the position of the Revenue would also not be jeopardized. Rather principles of natural justice would be satisfied that before levying the penalty, a final opportunity was given to the assessee to furnish all relevant documents and details which perhaps he was unable to provide at the first round of hearing. In view thereof, I set aside the order of the ld. CIT(A) and remand the matter back to his file for de novo adjudication as per law and at the same time direct the assessee to comply with the hearing notices, furnish relevant documents and represent his case on merits. Needless to say that the assessee shall be given opportunity of hearing. As per the above terms, the grounds of appeal stand allowed for statistical purposes. I.T.A. No.: 70/RAN/2023 Assessment Year: 2014-15 Surya Narayan Saha. Page 4 of 4 3. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 23rd October, 2024. Sd/- [Partha Sarathi Chaudhury] Judicial Member Dated: 23.10.2024 Bidhan (P.S.) Copy of the order forwarded to: 1. Surya Narayan Saha, C/o Anand Nursing Home, Hiranpur, Pakur, Jharkhand, 816107. 2. ITO, Deoghar. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Ranchi Benches, Ranchi. //True copy // By order Private Secretary (On Tour) ITAT, Ranchi Benches Ranchi "