SHRI DILIP OOMMEN,SURAT vs. THE ACIT, CIRCLE-7, SURAT

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ITA 530/AHD/2015Status: DisposedITAT Surat11 January 2019AY 2010-113 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 the assessee's explanation of a bonafide belief regarding the taxation of interest income at maturity, coupled with the fact that the FD details were available, meant the income could not be considered concealed. Therefore, the penalty was not maintainable.

What were the facts?

The assessee offered interest income of Rs. 7,91,853/- for taxation when confronted with Form 26AS, stating a bonafide belief that such income was taxable at maturity. The Assessing Officer levied penalty under Section 271(1)(c) for concealment of income, which was confirmed by the CIT(A).

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when income is offered upon being confronted with information and the assessee claims a bonafide belief regarding the timing of taxation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SMT. DIVA SINGH & SHRI O.P.MEENA

Hearing: 11.01.2019

Page 1 of 3 Dilip Oomen Vs. ACIT, Circle-7, Surat /ITA No.530/Ahd/2015/A.Y.2010-11 आयकर अपीलीय अिधकरण,सुरत �यायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT �ीमती िदवा िसंह, �ाियक सद� तथा �ी ओ.पी.मीना, लेखा सद� के सम� BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A. No.530/Ahd/2015 िनधा�रण वष�/Assessment Year : 2010-11 Shri Dilip Oomen, Vs. The Assistant Commissioner D-3/4, Nand Niketan, Essar of Income Tax, Township, Hazira, Surat – 394 270. Circle-7, Surat. [PAN: AAHPP 0679 F] अपीलाथ� Appellant ��यथ�/Respondent Shri P.M.Jagasheth – CA िनधा�रती क� ओर से /Assessee by Shri P.S.Choudhary – Sr.DR राज�व क� ओर से /Revenue by 09.01.2019 सुनवाई की तारीख/ Date of hearing: 11.01.2019 उ�ोषणा क� तारीख/Pronouncement on आदेश /O R D E R PER DIVA SINGH, JM: 1. The present appeal has been filed by the assessee assailing the correctness of the order dated 03.11.2014 of CIT(A)-V, Surat on the pertaining to 2010-11 assessment year the following grounds: “1. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income tax (Appeals) has erred in confirming the action of the assessing officer in levying penalty of Rs.3,31,264/- u/s.271(1)(c) of the Income Tax Act, 1961. 2. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper.” 2. The ld.AR inviting attention to the assessment order dated 25.03.2013 submitted that the assessee has declared an income of Rs.1.73 crores odd. The assessee working as Chief Executive Officer in S.R.Steel Limited, Hazira in the course of assessment proceedings was required to explain vide questionnaire dated 26.10.2012 to furnish Form 26AS. Referring to para 3 of the assessment order it was submitted that assessee vide reply dated 26.12.2012 offered the amount for tax stating as under : “From the form 26AS we came to know that some interest income on FDs has been accrued which escaped while filing the return of income.

Page 2 of 3 Dilip Oomen Vs. ACIT, Circle-7, Surat /ITA No.530/Ahd/2015/A.Y.2010-11 The assessee was in the impression that accrued interest on FDs etc. is taxable at the time of maturity therefore not taken into account. Therefore the assessee offered income for taxation amounting to Rs.7,91,853/- and necessary tax amount Rs.2,29,030/- has already been deposited vide challan dated 25.12.2012.”

3.

The AO, on account of this fact levied penalty u/s.271(1)(c) after issuing notice and discarding the explanation offered. The said order was confirmed in appeal by the CIT(A). In the said background theld.AR invited attention the explanation offered before the AO and the CIT(A). The assessee it was submitted has argued that he was under the bonafide impression that the interest on FD was only to be taxed at the time of maturity. It was also submitted by the ld.AR on query that it is the first time penalty u/s.271(1)(c) has been levied and the assessee is not a habitual offender. Accordingly, relying upon the consistent explanation offered before the AO and the CIT(A) relying upon the case law paper book wherein the assessee placed reliance upon the case laws it was his prayer that penalty may be quashed. 1. CIT VS. SURESH CHANDRA MITTAL (2001) 170 CTR 0182 (SC OF INDIA) 2. CIT VS. LAKHDHIR LAL Jl ITA NO. 15 OF 1970 (HC OF GUJARAT) 3. CIT VS. MANU ENGINEERING WORKS (1979) 8 CTR 0141 (HC OF GUJARAT) 4. CIT VS. SAMSON PERNCHERY ITA NO. 1154 OF 2014 (HC OF BOMBAY) 5. PR. CIT-7 VS. HARPREET SINGH ITA NO.689/2017 (HC OF NEW DELHI) 6. CIT VS. GLOBE SALES CORPORATION (2005) 196 CTR 0187 (HC O DELHI) 7. KARAMJIT SINGH DHANJAL VS. JCIT, NEW DELHI ITA N0.290/DEL/2014 (ITAT, NEW DELHI) 8. SHRI SWAMI SARAN GARG VS. ITO, WARD-2(3), NEW DELHI ITA N0.4549/DEL/2011 (ITAT, NEW DLEHI) 4. Reliance was further placed upon the case of ACIT vs Ashok Rajnath [2012] 34 CCH 007 Del. Trib it was submitted that all the necessary details were made available and it is not a case where the specific amount was unearthed by the Department. Accordingly the penalty order in the peculiar facts it was submitted that may be quashed. 5. The ld.Sr.DR on the other hand, submitted that the assessee in the facts of the present case has offered the amount for taxation only when confronted with the questionnaire. In the facts of the present case it was his submission notice u/s.143(2) was issued on 31.08.2012 and the assessee thereafter made no efforts to correct its stand. Accordingly, it was his submission that the penalty may be upheld.

Page 3 of 3 Dilip Oomen Vs. ACIT, Circle-7, Surat /ITA No.530/Ahd/2015/A.Y.2010-11 6. We have heard the submissions and perused the material available on record. Considering the facts that the assessee not being a habitual offender; having consistently offered the explanation that he was under the bonafide belief that interest on FD’s was taxable only at the time of maturity, when the said explanation is considered in the facts that the returned income of the assessee as compared to the interest income not reflected initially under the bonafide belief and also considering the very nature of the income we hold that in the peculiar facts cannot be said to be concealed income as the factum of FD’s maintained by the assessee were available. Relying upon the decision Apex Court in the case of Reliance Petro Products Ltd. 32 ITR 158 (SC) we are of the view that in the facts and circumstances of the present case penalty u/s.271(1)(c) in the light of the explanation consistently available on record the levy of penalty is not maintainable. The impugned order accordingly set-aside and the penalty is directed to be quashed. 7. In the result, appeal of the assessee allowed. The order pronounced in the open court on 11-01-2019. 8.

Sd/- Sd/- (ओ.पी.मीना/O.P.MEENA) (�ीमती िदवा िसंह /DIVA SINGH) लेखासद�यकेसम� /ACCOUNTANT MEMBER (�याियकसद�यतथा/JUDICIAL MEMBER) सुरत/ Surat, �दनांक Dated: 11th January, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat

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