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Income Tax Appellate Tribunal, JAIPUR BENCH ’SMC’, JAIPUR
Before: SHRI SHRI VIJAY PAL RAOvk;dj vihy la-@ITA No. 65/JP/2017
This appeal by the assessee is directed against the order dated 13.10.2016 of ld. CIT (Appeals) arising from penalty order passed under section 271(1)(c) of the I.T. Act for the assessment year 2006-07. The assessee has raised the following grounds of appeal :-
“ 1. On the facts and in the circumstances of the case the ld. CIT (A) has grossly erred in confirming the penalty levied u/s 271(1)(c) of the IT Act, 1961, ex-parte, without adducing enough opportunities to the appellant. Thus, the order passed is against natural justice, bad in law and deserves to be quashed.
2. That, the ld. CIT (A) has further erred in summarily ignoring the explanations given before the ld. AO and thereby confirming the penalty of Rs. 2,24,438/-. Thus, the action of ld. CIT (A) deserves to be held bad in law and the penalty u/s 271(1)(c) deserves to be deleted.
That the appellant craves the right to add, delete, amend or abandon any of the grounds of this appeal at the time or before the actual hearing of the case.”
At the time of hearing, the ld. A/R of the assessee has stated at Bar that the assessee does not press ground no. 1 of the appeal and the same may be dismissed as not pressed. The ld. D/R has raised no objection if the ground no. 1 of the assessee’s appeal is dismissed as not pressed. Accordingly, the ground no. 1 of the assessee’s appeal is dismissed being not pressed.
Ground no. 2 is regarding levy of penalty under section 271(1)(c) of the IT Act which was confirmed by the ld. CIT (A).
3. The assessee is an Individual and proprietor of M/s. Om Construction Company which is engaged in the business of contract activity for BSNL such as manual digging and Horizontal Direction Drilling and lying of telephone cable. In the scrutiny assessment, the AO made various additions/disallowances amounting to Rs. 22,60,831/-. The ld. CIT (A) deleted most of the additions made by the AO except an amount of Rs. 6,66,781/- which was not pressed by the assessee in respect of the contract receipts inadvertently not included in the gross receipts declared for the year. The AO initiated the penalty proceedings under section 271(1)(c) and levied a penalty of Rs. 2,24,438/- against the said addition of Rs. 6,66,781/- which was conceded by the assessee in the quantum proceedings. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed.
Before the Tribunal, the ld. A/R of the assessee has submitted that even in the quantum proceedings the assessee has explained the reasons for not including the said amount in the gross contract receipts due to bonafide and inadvertent mistake. The ld. A/R has submitted that the entire contract receipts was received from the BSNL and subjected to the TDS. Therefore, there was no question of concealment of the said amount. Even otherwise, the details of the said receipts were available with the department as it was subjected to TDS. When the assessee realized his mistake of not including the said amount in the gross receipts in the Profit & Loss account, it was conceded before the ld. CIT (A). There was no willful suppression of fact by the assessee but it is a genuine mistake and omission on the part of the assessee. The ld. A/R has pointed out that the AO has noticed this amount only from the TDS certificates filed by the assessee with the return of income which show the total contract receipts for the year under consideration.
Hence the ld. A/R has pleaded that a bonafide mistake which was corrected by the assessee by accepting the same in the assessment proceedings cannot be construed as furnishing of inaccurate particulars of income or concealment of income. In support of his contention he has relied upon the decision of Delhi Benches of the Tribunal dated 03.03.2016 in case of B.L. International vs. ACIT in ITA No. 1590/Del/2014.
On the other hand, the ld. D/R has submitted that the conduct of the assessee is not cooperative as the assessee has not appeared before the ld. CIT (A) despite 11 opportunities were given. It is a clear case of concealment of income as the assessee has not shown the contract receipts either in the books of account or in the return of income. She has relied upon the orders of the authorities below.
I have considered the rival submissions as well as the relevant material on record. The AO has made the addition of Rs. 6,66,781/- by giving the details of contract receipts and TDS in the assessment order as under :-
“ A. During the assessment proceeding it was noted that the assessee has shown gross receipts of contract rs. 5,69,87,392/-. During going through the contract receipt account in ledger, the total of receipts is also of the same as under :- Particulars Contract receipts TDS BSNL Jaipur 2,84,99,630 6,45,854 BSNL Jallandhar 2,35,56,026 5,04,570 BSNL Delhi 26,87,977 61,415 BSNL Lucknow 22,43,759 50,349 Total : 5,69,87,392 12,62,188
While with the return of income the assessee has enclosed five TDS certificates which include certificates from above four parties and from GMTD jodhpur showing payment of Rs. 6,66,781/- and TDS there upon of Rs. 15,003/-. The assessee has shown these receipts neither in the return of income nor in the book of accounts. It is noted that the amount of TDS of Rs. 15,003/- has been claimed by the assessee.”
Thus it is clear that the assessee has reported the total contract receipts of Rs. 5,69,87,392/- and all were subjected to TDS. It is also not in dispute that the entire contract receipts were received from BSNL Office. The amount of Rs. 6,66,781/- as received from GMTD Jodhpur was detected by the AO from the TDS certificate filed by the assessee. Thus it is clear that only from the record produced by the assessee, the AO noticed this discrepancy of Rs. 6,66,781/- not part of the contract receipts reported by the assessee. The accounts of the assessee are liable for audit as it is clear from the assessment order that audit report under section 44AB was filed by the assessee. Therefore, it is apparent that even the auditor could not detect this mistake of not including the contract receipt of Rs. 6,66,781/- whereas the TDS on the said receipt was duly reported by the assessee. Thus in the facts and circumstances of the case, when the assessee reported the contract receipts of Rs. 5,69,87,392/- and only one receipt of Rs. 6,66,781/- was remained unrecorded, then the explanation of the assessee that this happened only because of inadvertent and bonafide mistake cannot be disbelieved. Therefore, the assessee explained that it is not a willful suppression but due to genuine mistake and omission this amount was not included in the total contract receipts. This is otherwise only about 1% of the total contract receipts and, therefore, having regard to the peculiar facts and circumstances when the entire receipt is subjected to TDS and received from the BSNL, it cannot be held to be a case of concealment or suppression of the contract receipts. Accordingly, the explanation of the assessee falls in the ambit of reasonable and bonafide explanation as per the provisions of section 273B of the Act and consequently the penalty levied under section 271(1)(c) is deleted.
In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 30/09/2019.