G. ASHOK REDDY, HYDERABAD,HYDERABAD vs. ITO, WARD-4(1), HYDERABAD, HYDERABAD

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ITA 564/HYD/2017Status: DisposedITAT Hyderabad29 September 2020AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalty was not leviable on the deleted addition of Rs. 10 Lakhs. For the remaining additions, it was found that there was no concealment or furnishing of inaccurate particulars, considering the exemption for FDR interest and the timing of income recognition for gross receipts.

What were the facts?

The assessee filed his return of income, and during assessment, additions were made. The ITAT deleted a major addition of Rs. 10 Lakhs but confirmed others. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) for undeclared interest, gross receipts variance, and unexplained cash credits.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when additions are deleted or when there is no deliberate concealment or furnishing of inaccurate particulars of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD

Before: SMT. P. MADHAVI DEVI

BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER Assessment Year: 2009-10 G.Ashok Reddy, The Income Tax Officer, HYDERABAD Vs Ward-4(1), [PAN: AEOPG8648C] HYDERABAD (Appellant) (Respondent) For Assessee : Shri S. Rama Rao, AR For Revenue : Shri Kiran Katta, DR Date of Hearing : 17-09-2020 Date of Pronouncement : 29-09-2020 O R D E R This is assessee’s appeal for the AY.2009-10, directed against the order of the Commissioner of Income Tax (Appeals)–1, Hyderabad, dated 29-12-2016, against confirmation of penalty levied by the Assessing Officer (AO) u/s.271(1)(c) of the Income Tax Act [Act].

2.

Brief facts of the case are that the assessee, an individual engaged in the business of distribution of Amway Products, filed his return of income for the AY.2009-10 on 31-08-2009, declaring income of Rs.2,34,464/-. During the assessment proceedings u/s.143(3) of the Act, the AO made various additions, against which the assessee filed an appeal before the CIT(A), who granted partial relief to the assessee.

2.1. Against the said order of CIT(A), the assessee preferred further appeal before the ITAT and ITAT deleted the major addition of Rs.10 Lakhs and confirmed the addition to the extent of Rs.27,482/-, Rs.1,54,172/- and Rs.1,52,596/-. In the meantime, the AO has initiated penalty proceedings u/s. 271(1)(c) of the Act in respect of interest on FDR’s not declared in the return of Rs.10,862/-, gross receipts declared less by Rs.1,75,052/- and un-explained cash credits u/s.68 of the Act of Rs.10 Lakhs totalling to Rs.11,85,914/-. The assessee submitted his explanation and requested for dropping of the penalty proceedings. However, the AO levied the penalty.

3.

Aggrieved, the assessee preferred an appeal before the CIT(A), who confirmed the order of AO and therefore, the assessee is in second appeal before the ITAT, raising the following Grounds:

“1. The order of the learned CIT(A) is erroneous both on facts and in law.

2. The learned CIT(A) erred in confirming the levy of penalty of Rs.4,68,519/-.

3. The learned CIT(A) ought to have seen that thee is no concealment of income or furnishing of inaccurate particulars of income.

4. The learned CIT(A) ought to have considered the fact that the Assessing Officer did not specify the reasons for initiation of proceedings u/s.271(1)(c) of the I.T.Act.

5. Any other ground or grounds that may be urged at the time of hearing”.

4.

The case is taken up for hearing on 17-09-2020 through video conferencing and both the parties were heard.

5.

As regards the first addition which has been confirmed by the Tribunal i.e., interest on FDR of Rs.10,862/- not declared in the return of income of the assessee, the Ld.Counsel for the assessee submitted that a sum of Rs.10,000/- is exempt from tax and only the amount of Rs.862/- is to be brought to tax and the assessee has not contested the issue due to the smallness of the amount. It is submitted that there is no furnishing of inaccurate particulars or failure or concealment of income by the assessee.

5.1. As regards the variance in gross receipts declared by the assessee as per Form-26AS, it is submitted that the Amway Products had credited the assessee’s account in the relevant P.Y. but made the payment in the months of June and July after making TDS and therefore the assessee has offered the income in the subsequent assessment year and there is no concealment of income or furnishing of inaccurate particulars of income.

5.2. As regards the addition of Rs.10 Lakhs, it is submitted that the Tribunal has deleted this addition, therefore no penalty is to be levied on this sum.

6.

Ld.DR, however, submitted that the assessee has not declared the income in its return of income and it is only during the assessment proceedings that the said incomes have come to light and therefore, there is concealment of income and furnishing of inaccurate particulars by the assessee and the penalty to the extent of the said additions confirmed by the ITAT should be confirmed.

7.

Having regard to the rival contentions and material on record, I find that the Tribunal has deleted the additions of Rs.10 Lakhs and therefore, the penalty on the said sum is not leviable. As regards the other two additions also, I am convinced that there is no furnishing of inaccurate particulars or concealment of income. The interest on FDR is exempt upto a sum of Rs.10,000/- and only the balance of Rs.862/- has not been declared in the return which alone can be considered for levy of penalty. But due to the smallness of the amount, I do not consider it fit to confirm the penalty on this amount. As regards the difference in gross receipts, I find that the assessee has paid the taxes in the subsequent year and the variance in the commission declared by the assessee and Form-26AS is on account of entries made by the payer and not the assessee. Therefore, I am convinced that the penalty is not sustainable on this issue as well. Accordingly, it is deleted.

8.

In the result, the appeal of assessee is allowed.

Order pronounced in the open court on 29th September, 2020

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