SHRI UDAY SINGH PALAWAT,JAIPUR vs. INCOME TAX OFFICER, WARD-7-1, JAIPUR

PER VIJAY PAL RAO, JM :

This appeal by the assessee is directed against the order dated 15th March,

2018 of ld. CIT (A)-3, Jaipur arising from the penalty order passed under section

271(1)(c) of the I.T. Act for the assessment year 2013-14. The assessee has raised

the following grounds :-

“ 1. Under the facts and circumstances of the case, the order passed u/s 271(1)(c) is illegal and bad in law.

2 ITA No. 556/JP/2018 Shri Uday Singh Palawat, Jaipur.

bank deposits. The assessee filed his return of income on 20.07.2013. During the

scrutiny assessment, the AO noted that the assessee has shown interest income of

Rs. 3,51,977/- in his return of income. However, as per 26AS the interest income

earned by the assessee during the year is Rs. 4,14,719/-. When this discrepancy

was pointed out, the assessee accepted the additional income of Rs. 28,348/-. The

AO accordingly made an addition of Rs. 28,348/- while completing the assessment

and also initiated the proceedings for levy of penalty under section 271(1)(c). The

AO finally levied the penalty of Rs. 9,150/- being 100% of tax sought to be evaded

in respect of the said amount of Rs. 28,348/-. The assessee challenged the action of

the AO levying the penalty under section 271(1)(c) before the ld. CIT (A) but could

not succeed.

the return, the assessee has declared the interest income as per the record available

with the assessee and accordingly the TDS credit was also claimed only in respect of

the said income of Rs. 3,51,977/-. Subsequently, as per the Form 26AS, the correct

amount of interest was revealed and the AO pointed out the discrepancy in the

interest income declared by the assessee and as per the Form 26AS. Thus it was

only due to non-availability of correct amount of interest on FDR, the assessee

declared the income of Rs. 3,51,977/-. The AO has not disputed the fact that the

assessee claimed the TDS credit of Rs. 38,664/- whereas as per the Form 26AS the

TDS credit was Rs. 41,492/-. Hence, the ld. A/R has submitted that it is only

because of incomplete details and inadvertent mistake on the part of the assessee

3 ITA No. 556/JP/2018 Shri Uday Singh Palawat, Jaipur.

which do not fall in the category of either concealment of income or furnishing

inaccurate particulars of income. The ld. A/R has further submitted that even

otherwise the AO in the show cause notice dated 26.10.2015 issued under section

271(1)(c) has not specified the ground for levy of penalty and therefore, the said

notice suffers from illegality in view of the decision of the Hon’ble Karnataka High

Court in the case of Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar.).

3.1. On the other hand, the ld. D/R has submitted that it is a clear case of

concealment of income as the assessee has understated the interest income in the

return of income which was detected by the AO and, therefore, the AO is justified in

levying the penalty. He has relied upon the orders of the authorities below.

record. The assessee has declared the interest income of Rs. 3,51,977/- and also

claimed TDS credit of Rs. 38,664/-. The AO made an addition of Rs. 28,348/- due to

the discrepancy found in the interest income declared by the assessee and the

interest income appearing in Form 26AS. It is not the case of the assessee that the

assessee has not shown the correct income in its books of accounts or the record

which belonged to the assessee only but the interest income on the FDR is with the

bank and, therefore, the record of interest income and TDS deducted by the bank on

the said income is available with the AO which was considered by the AO while

making this addition. Therefore, when the entire details of interest income was

available in the form 26AS, then the discrepancy of Rs. 28,348/- is only because of

the miscalculation of the interest income by the assessee. There was no scope of

concealing the said income as it is already available with the department in Form

26AS which was beyond the control of the assessee and, therefore, when the

4 ITA No. 556/JP/2018 Shri Uday Singh Palawat, Jaipur.

assessee has explained the reasons of declaring less income which were not found

to be malafide, then while considering the explanation of the assessee that the

interest income was declared as per the details available with the assessee at that

point of time and further the assessee has claimed the TDS only against the said

income clearly made out a case of bonafide explanation in terms of clause-B of

Explanation-1 to section 271(1)(c). In the case of the assessee, the entire interest

income was subjected to TDS and, therefore, in the facts and circumstances of the

case, we find that the penalty levied by the AO is not sustainable and the same is

cancelled.

Order is pronounced in the open court on 02/08/2018.

Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Jaipur Dated:- 02/08/2018. Das/

आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

5 ITA No. 556/JP/2018 Shri Uday Singh Palawat, Jaipur.