Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘I-2+SMC’, NEW DELHI
Before: Ms. Suchitra KambleDr. B. R. R. Kumar
Per Dr. B.R.R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT (A), Faridabad dated 05.03.2018.
Following grounds have been raised by the assessee: “1. Hon CIT(A) erred in upholding the order of Hon AO passed under section 271 (1)(c) of the Income Tax Act,1961 which was opened against the law u/s 263 of the Income Tax Act, 1961 and not considered by Hon CIT(A). The assessee has not concealed any income. Penalty u/s 271 (1)(c) is illegally imposed by the Hon AO which is bad-in-law and unjustified. It may be noted that Hon AO during the assessment proceedings u/s 143(3) agreed with our submissions and hence had not initiated the penalty proceedings u/s 271 (1)(c) of the Income Tax Act,1961. Later on, the penalty proceedings u/s 271 (1)(c) of the Income Tax Act was initiated illegally by a direction u/s 263 of the Income Tax Act, 1961. 2. ESOP income of Rs.9,48,230/- is a non-cash income, which has been depicted in 26AS and was not mentioned
2 ITA No. 2819/Del/2018 Sushil Kumar Bhati in salary certificate issued by the employer. However, TDS @ 30% were deducted on that ESOP. The assessee has not concealed any income as it has been depicted in 26AS bearing a TDS at higher rate of 30% and hence no question of concealment prevails. The assessee has declared all incomes which come to our knowledge. The assessee has changed three jobs during the job period, all tax has been deducted at source. The assessee continuously used to reside outside during the course of job. The assessee filed his return of income through consultants on the basis of Form 16 and TDS and without the knowledge of ESOP and some differences of salary in reconciliation of salary slips on which TDS already deducted because he was on outstation job. The assessee has no intension of concealment of tax and has paid all the tax dues suo-moto as a responsible citizen.”
The assessee filed return of income declaring total income of Rs.32,03,890/-. The AO made addition of Rs.14,61,332/- on account of salary and bank interest received by the assessee. On conclusion of the assessment proceedings, penalty proceedings were initiated on the directions of the ld. PCIT, Faridabad vide order u/s 263(1) of the Income Tax Act, 1961 dated 17.03.2016.
In accordance with the penalty proceedings under section 271(1)(c) of the Act, a show-cause notice under section 274 read with section u/s 271 of the Act was issued to the assessee on 18-10-2016. In response to the said notice, the assessee filed reply dated 20-10-2016 which is reproduced as under:
“The fact of the additional income of Rs.14,61,332/- in our submission includes as follows: ESOP- Salary from PEL Rs.9,43,230.00 Salary difference of PHL Et Abbott Rs.4,74,697.00 Bank Interest (difference) Rs.38,158.00 Total Rs.1461332.00
3 ITA No. 2819/Del/2018 Sushil Kumar Bhati Now, Rs.9,48,230/- is a non-cash transaction of ESOP and on which TDS of Rs.2,93,005/- has been deducted by Piramal Enterprises Limited and deposited to the Income Tax Department. The same was not in the knowledge of the assessee as the assessee had left the job during the year and was not associated with the company during the year. Therefore, non-cash ESOP income u/s 17(3) is not reflected in our return at the time of filing of the return. However, on reconciliation with 26AS the transaction came to our knowledge and we suo-moto filed a revised return in first hearing with, Hon. AO. Therefore, initiation of penalty u/s 271(1)(c) is not applicable as the Hon. AO was convinced with the facts of the Salary of Rs.4,74,697/- has been credited to our account after deducting TDS and after leaving the job from PEL and no salary certificate was received till the date of filing of return. The assessee was of the impression that the salary credited was tax free income on account of leave encashment and retirement benefits. However, on reconciliation with 26AS the transaction came to our knowledge and we suo-moto filed a revised return in first hearing with Hon.AO. Therefore, initiation of penalty u/s 27(1)(c) is not applicable as the Hon AO was convinced with the facts of the situation at the time of assessment.
The Hon AO at the time of assessment also considered the following fact for non-initiation of u/s 271(1)(c) which was clearly specified in the salary certificate issued by Abbot as under: "Gross Salary as per Form 16 (Point No.1 of Part B] issued by Abbot True Care Pharma Private Limited, is inclusive of Gross Salary income received by an employee from PHL Pharma Pvt. Ltd. previous employer, as applicable.”
Due to switch in the jobs the difference of Rs.38,158/- was arising in the amount of salary which was not to the knowledge of the assessee. However, on reconciliation
4 ITA No. 2819/Del/2018 Sushil Kumar Bhati with 26AS the transaction came to our knowledge and we suo-moto filed a revised return in first hearing with Hon.AO. Therefore, initiation of penalty u/s 271(1)(c) is ne& applicable as the Hon AO was convinced with the facts of the situation at the time of assessment.
The difference of Rs.247/- in the amount of interest was due to unavailability of complete bank statement at the time of filing the return of income. The assessee was under the impression that interest on savings bank was an exempt income u/s 80L. Therefore, initiation of penalty u/s 271(1)(c) is not applicable as the Hon. AO was convinced with the facts, of the situation at the time of assessment.
As mentioned in your notice, wherein
A) "Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer to be false"
Ans:- Question of failure "to offer an explanation or offers an explanation which is found by the Assessing Officer to be false" is not arise due to all the difference income is our submission and we have, pa id taxes on that amount Before the case is fixed under scrutiny and 1st. Notice is issued under Income Tax Act, 1961, which is also depicted in the Assessment order of the AO. B) "Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have disclosed by him"
Ans.:- a) ESOP of Rs.9,48,230/- was non-cash and TDS was deducted on it, which was sown in 26AS. b) Salary from PEL of Rs.4,74,697/- TDS was deducted on it, which was sown in 26AS.
5 ITA No. 2819/Del/2018 Sushil Kumar Bhati c) Difference of Salary from PHL Et Abbott of Rs.38,158/- TDS was on it, which was shown in 26AS. d) Difference of S/F interest of Rs. 247/- is minor income.
Our explanation was bona fide which is mentioned in the assessment order of the honorable AO. ESOP income of Rs.9,48,230/- is a non-cash income, which has been depicted in 26AS and was not mentioned in "Salary certificate" issued by the employer. However, TDS @30% were deducted on that ESOP. We have not concealed any income as it has been depicted in 26AS bearing a TDS at higher slab rate of 30% and hence no question of concealment prevails. We have declared all incomes which come to our knowledge. The assessee has changed three jobs and has during the job periods, all tax has been deducted at source. He continuously use to reside, outside during the course of job. He filed his return of income through consultants on the basis of Form No. 16 and TDS and without the knowledge of ESOP and some differences of salary in reconciliation of salary slips on which TDS already deducted because he was on outstation job. He has no intention of Concealment of tax he paid all the tax dues suo-moto as a responsible citizen.
There are various case laws which supports our submission that there is no deliberately default, concealment of income and we have not surrendered in the pressure of AO. It is our submission on which tax had already been paid. Hence no concealment u/s 271(1)(c) is attracted and section 263 is not attracted in our case. It is very much apparent and not a concealment matter. Following eases are quoted in support of our sayins:-
CIT vs. Sania Mirza [order dated 9/12/2012 in 1TA no. 526 of 2011, CIT vs. Sidhartha Enterprises 322 ITR 80, CIT vs. Pitambarads Dulichand 273 ITR 271….…”
6 ITA No. 2819/Del/2018 Sushil Kumar Bhati 5. During the argument before us, the ld. AR reiterated the arguments taken up before the authorities below. The ld. DR relied on the order of the ld. CIT (A).
Heard the arguments of both the parties and perused the material available on record.
We find that the assessee has been out of India and has been receiving salary from three different employers and the returns have been prepared by a consultant. The TDS on the salary has been already deducted and deposited to the department. Further, the ESOP amount is a non-cash transaction and on which the TDS has also been deducted and the Form 26AS has clearly shown the TDS deducted. Keeping in view, the facts of the case that the assessee has been in different jobs and out of India, the returns have been prepared by a consultant, the explanation of the assessee could fairly substantiate that such explanation is bonafide and material relevant to the computation of the total income have been disclosed by him. The Hon’ble Madras High Court in the case of Pitambar Das Dulichand 273 ITR 271 held that no penalty is leviable in such case where there is no even an iota of evidence to suggest that the mistake was with the consent and knowledge would be treated as a deliberate act. We find that the Hon’ble High Court has held that in the absence of any such deliberate act on the part of the assessee, no penalty u/s 271(1)(c) of the Act is leviable. Similarly, the Hon’ble High Curt of Andhra Pradesh in the case of CIT Vs Sania Mirza in ITA No. 526/2011 held that an error committed by the assessee does not necessarily attract the penalty proceedings if that error was accepted and the amount was surrendered to tax.
7 ITA No. 2819/Del/2018 Sushil Kumar Bhati Since, there was no intention of the assessee to conceal the income, respectfully following the judgments of the Hon’ble High Courts mentioned above, we hereby direct that penalty levied be deleted.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 08/05/2020.
Sd/- Sd/- (Suchitra Kamble) (Dr. B.R.R. Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08/05/2020 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR