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Income Tax Appellate Tribunal, A BENCH, MUMBAI
order : 28.04.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant/Assessee has challenged the order, dated 05.02.2020, passed by the Ld. Commissioner of Income Tax (Appeals), [hereinafter referred to as „the CIT(A)‟] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as „the Act‟] in appeal [CIT(A) 5, Mumbai/10052/2018-19] pertaining to the Assessment Year 2015-16 whereby the CIT(A) had dismissed the appeal filed by the Assessee against the penalty order, dated 25.06.2018, passed under section 271(1)(c) of the Act.
Assessee has raised the following ground of appeal:
1. On the facts and circumstances of the case and in law, the Commissioner of Income Tax – (Appeals) has erred in confirming a concealment penalty levied u/s. 271(1)(c) of the Assessment Year: 2015-16 Income Tax Act, of Rs. 2,76,776/-. The penalty levied may please be cancelled.
Brief facts of the case are that the Appellant, a doctor, filed return of income on 30.09.2015 declaring total income of INR 28,62,260/-. The case of the Appellant was selected for limited scrutiny. During the assessment proceedings, the Appellant was asked to provide reconciliation of receipt as appearing in Form 26AS with the receipts as shown in the Books of Accounts. On reconciliation, it was seen that the Appellant had not offered certain receipts to tax during the relevant Assessment Year but had claimed tax deducted at source in respect of the same. This resulted in excess claim of tax deducted at source of INR 32,689/- which was disallowed by the Assessing Officer (AO). Further, it was also noticed that the Appellant had received INR 7,33,362/- from Birla Life Insurance Company Ltd. on surrender of insurance policy. Credit of tax deducted at source by Birla Life Insurance Company Ltd. in respect of the same was claimed by the Appellant but the corresponding receipt was not offered to tax. In response to query from the AO the Appellant stated that on re- verification of all the documents it was noticed that the surrender value of the insurance policy was liable to tax in case less than 5 premiums were paid. Since the Appellant had paid only 3 premiums, the surrender value was being offered to tax. Accordingly, an addition of INR 7,33,362/- was made by the AO. Still further, it was also noticed that interest income of INR 1,97,817/- (earned on savings bank account, fixed deposits and postal deposits), and rental income of INR 61,409/- were added to the capital account and not included in taxable income. During the assessment proceedings, when this was brought to the notice of the Appellant, and the Appellant again offered the same to tax. The assessment was completed under Section 143(3) of the Act vide order dated 26.12.2017 and, thereafter, in the above circumstances, penalty Assessment Year: 2015-16 proceedings under Section 271(1)(c) of the Act were initiated against the Appellant.
During the penalty proceedings, the Appellant submitted that he was heavily dependent upon the chartered accountant handling his affairs who inadvertently committed bonafide mistakes in filing the return of income. The Appellant had no malafide intentions and committed no deliberate act to exclude any income. The Appellant got to know about the mistakes committed during the assessment proceedings and agreed to remedy the same. The excess claim for tax deducted at source was withdrawn and income inadvertently not included in total income was offered to tax. However, the AO rejected the explanation provided by the Appellant as the AO was of the view that if the case of the Appellant had not been selected for scrutiny, the omissions and discrepancies in the return of income would not have been discovered. Accordingly, AO levied penalty of INR 2,76,776/- under Section 271(1)(c) of the Act.
Being aggrieved, the Appellant preferred appeal before CIT(A), however, the CIT(A) confirmed the levy of penalty holding as under:
“3.3 I have carefully gone through the assessment order as well as the penalty order and the written submission of the appellant. The assessee is doctor by profession and therefore, he is a highly education person. It is inconceivable that such a person would not know the extent of income he is earning in a particular year. It has been mentioned in the order of the AO that the appellant has taken credit for the TDS deducted against the interest income received by him, but failed to include the same interest income in his computation of income. Further, it is wrong on the part of the appellant to say that the error of omission was suo moto rectified by him because after his case was selected for scrutiny, notice u/s 143(2) of the Act was issued on 20.09.2016, whereas return of income was filed by the appellant on 30.09.2015. Thus Assessment Year: 2015-16 for almost a year the so called error or omission was not realized by the assessee and the income was offered to tax only when he received notice by the Department. Therefore, it is obvious that the factum of concealment of income is clearly established in this case. The case laws cited by the appellant are not relevant 'because in all the cited cases, the assessee had either claimed wrong deduction, or made a computation error, whereas in the case of the assessee, there is deliberate concealment of income considering the totality of the facts, I have come to a conclusion that the AO has rightly imposed penalty in this case and consequently penalty order u/s. 271(1)(c) of the Act dated 25.06.2018 passed by the lTO- 16(2)(4), Mumbai, is confirmed. Therefore, ground of appeal no. 1 is dismissed.
Being aggrieved, the Appellant/Assessee has preferred the present appeal. The Authorised Representative of the Assessee appearing before us reiterated the submissions before lower authorities and emphasized on the fact that the Appellant is a doctor and was heavily dependent upon the consultant to file his tax of return. The Appellant had no malafide intentions. The receipts as well as tax deducted at source were reflected in the Form 26AS. The underreporting of income and excess claim of tax deducted at source were on account of inadvertent mistakes committed by the consultant, who has been replaced by the Appellant. Further, the Appellant had suo moto offered the relevant income to tax when it came to his knowledge in the assessment proceedings. The Appellant could not have filed a revised return as the return filed by the Appellant was belated. Per contra, Ld. Departmental Representative submitted that there was deliberate concealment of income as the Appellant had claimed credit of tax deducted at source in respect of receipts but had not offered the same to tax. Similarly, rental income and interest income were credited to the capital account and not offered to tax. He relied upon the orders passed by the lower authorities to contend that this was a fit case for levy of penalty under Section 271(1)(c) of the Act.
Assessment Year: 2015-16 7. We have heard the rival contentions, perused the records and considered the legal position. We note that Appellant is an individual, who was about 62 years of age on the date of filing return of income, i.e. 30.09.2015. Though Appellant is a doctor, keeping in view his age under relevant time his submission that he was heavily dependent upon the consultant to file the return of income cannot be rejected outright. The fact that the return was filed belatedly on 30.09.2015 also suggests that the consultant was not diligent, and that the Appellant could not have filed a revised return. In our view, the fact that mistakes could be discovered merely on reconciliation of receipts and tax deducted at source as reflected in Form 26AS with those recorded in the Books of Account also suggests that these were inadvertent mistakes committed by a consultant who has since been replaced by the Appellant. While the explanation offered by the Appellant was rejected by the lower authorities, we find the same to be reasonable in the facts and circumstances of the present case. The explanation offered by the Appellant is bonafide and stands substantiated by his conduct during the assessment proceedings which support his stand that inadvertent mistakes were committed by the consultant while preparing return of income.
In view of the above, we reverse the order of AO and CIT(A) and delete the penalty of INR 2,76,776/- levied under Section 271(1)(c) of the Act.
In result, the present appeal is allowed.