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Facts
The assessee, a salaried employee, initially filed a return of income for AY 2016-17 declaring Rs. 5,39,190/-. Following information about excess deductions, a revised return was filed declaring Rs. 6,53,600/-. The AO imposed a penalty of Rs. 56,350/- u/s 271(1)(c) for concealment of income.
Held
The Tribunal held that the assessee, being from a technical background, completely relied on his tax consultant who claimed excess deductions. The assessee paid the due tax with interest voluntarily before the notice u/s 148 was issued. Therefore, the penalty was not justified.
Key Issues
Whether the penalty u/s 271(1)(c) is leviable when the assessee relied on a tax consultant who committed fraud, and the assessee subsequently paid the dues before the notice was issued.
Sections Cited
271(1)(c), 147, 148, 270A, 250, 144B, 133A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2016-17 Yogesh Shivaji Shinde, Vs. ITO, National Faceless H. No.377, MHB Colony, Assessment Centre, Satpur, Nashik- 422007. Delhi. PAN : AEKPS3129Q Appellant Respondent Assessee by : Shri Mahesh Pagare (Virtual) Revenue by : Shri Ganesh B. Budruk Date of hearing : 28.04.2025 Date of pronouncement : 08.05.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 21.11.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2016-17.
The appellant has raised the following grounds of appeal :-
1. The learned Commissioner of Income Tax is not justified in levying penalty u/s 271(1)(c) of Rs. 56,350/- on the ground that the assessee had under reported and mis reported his income. In consequence of misreporting without appreciating that the said levy of penalty was not justified in law.
2. The learned Commissioner of Income Tax failed to appreciate that before the Commissioner of Income Tax, the assessee had duly explained that under reporting of income in his case was attributable to wrong action of tax consultant and all the material facts relating thereto along with substantiating evidences in form of complaint filed against Tax Consultant before Economic Wing of Police Department etc. were also furnished by the assessee and therefore, the levy of penalty u/s 271(1)(c) without rebutting the explanation offered by the assessee was not justified in view of provisions of the said Act.
3. The learned Commissioner of Income Tax ought to have appreciated that the bona fides of the explanation offered by assessee were established from the fact that the assessee, being salaried employee from technical background, was totally dependent upon the tax consultant for filing income tax return and therefore, the levy of penalty u/s 270A was not justified in view of the explanation offered by the assessee.
The learned Commissioner of Income Tax passes the order under section 250 of Income Tax Act, 1961 without giving us any further opportunity to produce any explanation or documentary evidence.”
Facts of the case, in brief, are that the assessee is an individual salaried employee filed return of income for the assessment year 2016-17 declaring taxable income of Rs.5,39,190/- after claiming various deductions of Rs.1,78,378/- under Chapter VI-A. The Assessing Officer, on the basis of information received from the Income Tax Officer, (Investigation) Nashik, that the assessee has claimed excess deductions, initiated proceeding u/s 147 of the IT Act after obtaining approval from the authorities & accordingly, a notice u/s 148 was issued on 03-03-2020. The assessee furnished 148 of the IT Act, declaring taxable income of Rs.6,53,600/- after claiming deductions under Chapter VI-A. The assessment was completed u/s 147 r.w.s. 144B of the IT Act on 15.09.2021 by accepting the income returned in response to notice u/s 148 of the IT Act. Subsequently, vide order dated 15.12.2021 the Assessing Officer imposed penalty of Rs.56,350/- u/s 271(1)(c) of the IT Act for concealing the particulars of income.
4. After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal and confirmed the penalty of Rs.56,350/- imposed u/s 271(1)(c) of the IT Act. It is this order against which the assessee is in appeal before this Tribunal.
Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR submitted before us that as soon as the fact of claiming excess refund by the tax consultant came in the knowledge of the assessee he immediately paid the due tax along with interest on 27-05-2019 whereas the notice u/s 148 was issued to him on 03-03-2020, however the revised return could not be filed voluntarily since the date was over. Accordingly, it was requested Rs.56,350/- imposed u/s 271(1)(c) of the IT Act.
Ld. DR submitted before us that the appellant has not filed correct return of income voluntarily & therefore the appellant is liable for penalty. It was therefore requested by Ld. DR to confirm the penalty order passed by Assessing Officer & sustained by Ld. CIT(A)/NFAC.
We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that the assessee is a salaried employee & belongs to technical background. The return of most of the employees of CEAT LTD, Bosch Company, HAL & M & M including that of the assessee was filed by a tax consultant namely Kishor Patil. We further find that the assessee came to know from other employees in company that Mr. Kishor Patil with his expertise is able to legally calculate lower tax, resulting in refund of TDS deducted by employer. The assessee was unaware about the contents of the Income Tax Return filed by Kishor Patil & truly believed that the returns are filed legally as per the provisions of the Income Tax Act. The assessee being from technical background does not understand ABCD of Income Tax & therefore completely relied on the above named tax consultant, who without informing him & others, claimed excess deduction under chapter VI-A of the IT Act & claimed refund. It was Kishor Patil who cheated all the employees & claimed excess deduction in their returns without informing them for his own benefit. The fact of the cheating came in light when a survey u/s 133A was conducted at the premises of Mr Kishor Patil. When the fact that this kind of fraud was made in the name of number of persons all of them complaint to the Economic Offence Wing of Police Nashik, against the tax consultant Kishore Patil. The news regarding fraud committed by Kishore Patil also flashed in the daily news paper of Nashik. It is also apparent that there is no mistake of the assessee but it was the hidden interest of the tax consultant who triggered the gun by using shoulders of the assessee & many more for his own benefit. It is also found that as soon as the fact of excess deduction claimed, came to the knowledge of the assessee he immediately paid the due tax with interest, even before the issue of notice u/s 148 of the IT Act & contacted another genuine tax consultant who prepared and furnished correct return in response to the notice u/s 148 of the IT Act. We find that the Assessing Officer has levied penalty u/s 271(1)(c) of the IT Act of Rs.56,350/- on the basis of the fact that the correct income was not returned voluntarily but only after issue of notice u/s 148 of the IT Act. It is also found that when the notice u/s 148 was issued the appellant has disclosed his correct income & paid the due tax before issue of notice. We also find that the Assessing Officer has accepted the return as it is which was furnished by the appellant in response to the notice u/s 148 of the IT Act. We cannot accept the contention of Ld. DR that the revised return was not voluntary therefore the penalty u/s 271(1)(c) of the Act is inevitable. In this regard, the contention of Ld. counsel is also important wherein he stated that the due tax along-with interest was already paid before the issue of notice u/s 148 of the IT Act & admittedly the return of income could not be filed as the due date was already over. We find force in the arguments of the Ld. counsel of the assesse that the amount of tax & interest was deposited voluntarily much prior to the issue of notice u/s 148 of the IT Act since the income tax with interest was deposited by the assesse on 27-05-2019 whereas the notice u/s 148 was issued on 03-03-2020. Considering the totality of the facts of the case, we are of the considered opinion that this is not a fit case to impose penalty u/s