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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeal), Pune-3 dated 21.09.2017 for the assessment year 2013-14 as per the following modified ground of appeal :
“1. The learned CIT(A) erred in law and on facts in confirming the levy of concealment penalty u/s.271(1)(c) of the I.T Act, 1961 amounting to Rs.2,54,865/ ( being 30.9% of Rs.8,24,805) levied on tax allegedly sought to be evaded on the amount of interest earned on income tax refund.”
The brief facts of the case are that the assessee is a firm engaged in construction activity as promoter & builders. The assessee-firm filed return of income for A.Y. 2013-14 on 30.9.2013 declaring total loss of Rs.6,34,608/-. The assessee during the assessment year 2012-13 completed a project approved under Slum Rehabilitation Authority (SRA) and out of the TDR received, TDR admeasuring 541 sq. mtrs was sold by the assessee during the year relevant to the assessment year under consideration the balance TDR, admeasuring 541 sq. mtrs. was shown as closing WIP and all the expenses incurred for 80lS as well as non-80IB projects was capitalized as WIP. During scrutiny assessment proceedings for A.Y. 2013-14 the assessee submitted before the Assessing Officer that the brokerage/commission expenses of Rs. 4,21,336/- had remained to be considered through oversight. The same was added being undervaluation of closing stock by the Assessing Officer. Further, the Assessing Officer observed that the ITS data showed receipt of refund including interest u/s.244A of Rs.70,66,735/- in June 2012 by the assessee however, the same was not offered for taxation during the year. Therefore, the Assessing Officer added the interest component to Rs.8,24,805/- to the total income declared. In respect of both the aforesaid additions the Assessing Officer initiated penal proceedings u/s.271(1)(c). During penalty proceedings the Assessing Officer found that there was no merit in the submission made by the assessee in response to notice u/s. 274 r.w.s. 271 (1)(c) relating to the penalty levied in respect of above two additions and concluded that had there been no scrutiny such concealment would have gone unnoticed. The Assessing Officer found the assessee's case to be fit case was levy of penalty u/s 271 (1)(c) of the Act and was satisfied that the assessee had concealed particulars of income to the extent of Rs.12,46,641/- [Rs.4,21,836/- + Rs. 8,24,805/-] and levied penalty @ 300% on the amount of tax sought to be evaded.
During First Appellate Proceedings, the Ld. CIT(Appeal) confirmed the action of the Assessing Officer against which the assessee is in appeal before the Tribunal.
At the time of hearing through video conference, the Ld. Counsel for the assessee submitted that in this case assessee received refund amounting to Rs.70,66,735/- and Rs.8,24,805/- included in the amount relates to the refund interest. Refund voucher and Form 26AS does not specify any interest amount against the refund related information which should be taxed in the year under consideration. Therefore, the assessee did not offer any amount to tax for the assessment year 2013-14. The Ld. Counsel for the assessee filed written arguments which extracted as under:
“4. Submissions before the Honorable ITAT a) Track record - Appellant is enclosing herewith a chart showing year- wise tax compliances, taxable income position and details of various proceedings. The said chart is marked as Annexure-3. Therefrom, it will transpire that, in the initial years, i.e. AY 2009-10 and AY 2010- 11, Appellant has offered to tax, large amounts of income; despite the fact that, the income arose from executing a SLUM REHABILITATION PROJECT. It is submitted, Appellant has paid few crores of taxes in earlier years. As such, possibility of any malafide act of concealment vis-a-vis much smaller interest amount of Rs.8,24,805 ought not to have been inferred in the first place. b) Non-addressal of absence of interest information in form 26AS - Appellant has been repeatedly submitting that, form 26AS did not contain any information of interest across the refund amount of Rs.70,66,735. Appellant also submitted that, at the rnax, there was a conflict between two documents generated from (PC / TIN systems, i.e.143(1) intimation showing interest and form 26AS not showing interest. All these points are simply not addressed either by the learned AO or by the learned CIT(A). c) Fallacy of 143(1) intimation dated 10-1-12 V. actual refund on 4-7-12 - Kindly appreciate, the 143(1) intimation dated 10-1-12 was not acted per se and, no any refund was received along with the 143(1) intimation. In fact, the refund was released by a crossed alc payee demand draft prepared manually by the learned AO in July 2012, that too, after some follow-up from Appellant's side. It transpires, the intimation dated 10-1-12 was lost sight of since, no any financial transaction took place on 10-1-12 in AY 2012-13. Rather, refund transaction took place only on 26-6-12 i.e. in AY 2013-14 and related form 26AS for AY 2013-14 did not contain any information of interest on refund at all. A copy of the refund demand draft dated 26-6-12 amounting to Rs.70,66,735 is enclosed herewith and marked as Annexure-4. d) Non-addressal of the key proposition as to non-concealment - As submitted from time to time, the information of interest payment vide 143(1) intimation was available already with the learned AO. As such, there is no any concealment of particulars if income from Appellant's side in this case. Even this issue has not been addressed by the learned I-T authorities and, penalty has been levied on an hyper-technical proposition. e) Reliance - Appellant relies on the following decisions of Honorable Tribunals wherein, concealment penalty on interest on tax refund has- been deleted. Copies of these decisions are enclosed herewith and marked as Annexure-5.
(i) Orissa Oil Industries Vs. DCIT-58 ITD 403 (Cuttack) (ii) Jayanti Super Construction Vs. DCIT- (iii) Steel Fab Building System Vs. ACIT-ITA No.6509/Mum/2018 f) Non-applicability of decision of Honorable Madras High Court - Learned AO has relied upon the decision in the case of Thirupathy Kumar Khemka V. (IT - 163 Taxman 591 wherein, penalty for interest on tax refund was sustained. Copy of the said decision is enclosed herewith as Annexure-6. The said case related to AY 1996-97. As per the manual systems in vogue along with refund, details of interest, etc. were typically communicated as a usual feature. Further, from facts of the said case, it transpires, the Honorable Court has concluded the entire issue on the basis of STRICT ClVI L LIABILITY and MENS REA as per the law then prevailing (i.e. dated 26/3/2007). Later on, Honorable Tribunal, in the case of ACIT V. Vijay Kiran Hotels -ITA No. 987 and 988 (CHD) has distinguished the said case and the strict ratio therein, by observing the clear position of law laid down by the apex court in the case of Dilip Shorff V. JClT – 291 ITR 519 (SC). Copy of the Honorable Chandigarh Tribunal (Supra) decision is enclosed herewith and marked as Annexure-7. g) Prayer - Appellant submits, for bonafide errors of accounting relating to information coming from I-T department itself, there ought not to be levied penalty for concealment of particulars of income. Appellant's boafide belief, Appellant's overall conduct and endeavour also deserves due consideration. Kindly allow the appeal of the Appellant and delete the penalty and oblige.”
4.1 The Ld. Counsel for the assessee further submitted that the assessee’s case is fully supported by the decision of the Co-ordinate Bench of the Tribunal, Ahmedabad in the case of Jayanti Super Construction ( Previously : Super Construction Co.) Vs. DCIT in for the assessment year 2014-15.
In reply, the Ld. DR for the Revenue submitted that the assessee is aware of the details of the amount of Rs.70,66,735/- through 142(1) intimation and therefore, he should have offered this amount to tax in the return of income.
We have perused the case record and heard the rival contentions on the issue of includability of the amount Rs.8,24,805/- as income for the year under consideration. We have also given considerable thought to the penalty of 300% levied by the Assessing Officer u/s.271(1)(c) of the Act. This amount of penalty is revised to 100% of the tax evaded by the Ld. CIT(Appeal) during First Appellate Proceedings. We find in the case of Jayanti Super Construction (Previously : Super Construction Co.) Vs. DCIT (supra.), the similar issue has been decided in favour of the assessee by observing as follows:
“5. We have carefully considered the rival submissions. Penalty proceedings under s.271(1)(c) of the Act were initiated for non- disclosure of interest received on excess amount of tax paid to the Income Tax Department in the instant case. It was pointed out on behalf of the assessee that it did not not have requisite details of interest embedded in refund amount and came to know about the same only from system generated Form 26AS. It was pointed out that there was no willful submission of false return with tested on the touchstone of preponderance of probabilities. It is submitted on behalf of the assessee that it is large taxpayer alleged and concealments is disproportionately miniscule which is an indicator that it is a bonafide error. We find merit in the circumstances narrated on behalf of the assessee. A bonafide error or mistake does not necessarily invite penalty proceedings in every case. It will not be out of context to recollect the observation of Honble Supreme
Court in the case of Hindusthan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) wherein it was held that penalty cannot be imposed merely because it is lawful to do so. In the absence of any Jayanti Super Construction vs. DCIT Asst. Year 2014- 15 intentional omission of the taxable income from the return of income as reasonably demonstrated on behalf of the assessee, we are disposed to hold that statutory discretion vested with the AO for imposition of penalty ought to have been exercised for the assessee. We see force in the plea of the assessee that a person of his stature diligently paying large taxes would not imagine to keep away something from the very Department which issued the refund and which would be making the assessees assessment. Such brazen behaviour on the part of the assessee or of any assessee for that matter, cannot at all be ordinarily postulated. It is only on verification of records generated from Income Tax site that the information towards interest component has come to the fore. Failure of the assessee to look into the aforesaid form at the time of filing return would not indicate any contumacious or obstinate conduct on the part of the assessee, but possibly reflect laxity or some carelessness. Under these circumstances, we are of the view that benefit of doubt should go to the assessee, more so where we have a case in hand for determination of penalty which is penal in nature. The order of the CIT(A) is accordingly set aside and the Assessing Officer is directed to cancel this penalty on this score.”
Considering the facts of the case as referred hereinabove, we are of the opinion that facts appeared in the present case in hand are similar to the case of Jayanti Super Construction (Previously : Super Construction Co.) Vs. DCIT (supra.). Therefore, we are of the considered view that it is not a fit case for levy of penalty. Therefore, the order of the Ld. CIT(Appeal) is accordingly set aside and the Assessing Officer is directed to cancel the penalty on this score.
In the result, appeal of the assessee is allowed.
Order pronounced on 11th day of June, 2020.