ANISH DHIRAJ MEHTA,MUMBAI vs. INCOME TAX OFFICER WARD-10(3)(3), MUMBAI

This appeal, filed by assessee, being 22.12.2017 in appeal no. CIT(A) -17/IT-106/10685/16-17, passed by learned Commissioner of Income Tax (appeals)-17, Mumbai (hereinafter called “the CIT(A)”), for assessment year(ay) 2013-14, the appellate proceedings had arisen before learned CIT(A) from penalty order dated 29.07.2016 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter called “the Act”) for ay:2013-14.

The solitary issue in this appeal is regarding challenge to penalty of Rs. 5,14,145/- levied by the AO u/s 271(1)(c) which was later confirmed by learned CIT(A). The facts are within narrow compass. The assessee filed its return of income on 27.03.2014 declaring income of Rs. 1,26,63,460/- . The assessee has , inter-alia, shown income of Rs. 15,00,000/- from salary from Pace Aftermarket Private Limited (hereinafter called „Pace‟) on which income-tax was deducted at source u/s 192 of the 1961 Act of Rs. 3,00,000/- which was claimed in the aforesaid return of income filed by the assessee with the department. The said employer has also issued Form No. 16 dated 20.07.2013 declaring that salary of Rs. 15,00,000/- was paid to the assessee and income-tax was deducted at source on the said salary of Rs. 3,00,000/-. The said Form No. 16 is placed in paper book filed by assessee with tribunal .The assessee based on aforesaid Form No. 16 filed return of income with Revenue. The said company also filed Statement of income-tax deducted at source on salaries in Form No. 24Q wherein assessee salaries were shown to be Rs.15,00,000/- and income-tax was deducted at source to be Rs. 3,00,000/- on behalf of the assessee by Pace . Later revised certificate in Form No. 16 dated 19.12.2013 was issued by said employer Pace stating that total salary income of the assessee to be Rs. 31,63,897/- including additional salary income of Rs. 16,63,897/- and total income-tax deducted at source of Rs. 8,00,000/- u/s 192 of the 1961 Act on behalf of the assessee. The said company Pace also revised its statement of TDS in form no. 24Q on 29.11.2013 showing revised salary of Rs. 31,63,897/- and total TDS of Rs. 8,00,000/- deducted on behalf of the assessee u/s 192 of the 1961 Act. The said company Pace paid additional salary to assessee of Rs. 16,63,897/- on which additional income-tax was deducted at source u/s 192 of the 1961 Act of Rs. 5,00,000/- on 24.09.2013 on behalf of the assessee. Thereafter, the said salary of Rs. 31,63,897/- was reflected in Form No. 26AS. The assessee vide revised computation filed on 18.01.2016 before being asked by the AO during the course of assessment proceedings conducted by the AO declared the said additional salary income and additional TDS deposited by Pace on behalf of the assessee. The AO completed assessment proceedings vide assessment order dated 29.01.2016 passed u/s 143(3) of the 1961 Act., wherein the additions of Rs. 16,63,897/- towards aforesaid additional salary was made by the AO which stood accepted by the assessee as it was voluntarily disclosed by assessee during assessment proceedings conducted by the AO u/s 143(3) read with Section 143(2) albeit the said disclosure was made after issuing of notice u/s. 143(2) and 142(1) of the 1961 Act by the AO. The AO did not consider this as bonafide declaration and penalty u/s 271(1)(c) of the 1961 Act was levied by the AO against assessee to the tune of Rs. 5,14,145/- as at the time of filing of return of income on 27.03.2014, the assessee was having details of additional salary and TDS as well the assessee was in possession of new TDS certificate in form no.

The said additional salary as well additional TDS was duly reflected in Form no. 26AS by the time assessee filed its return of income in the month of March 2014. Thus, the assessee based on old TDS certificate in form no. 16 filed its return of income. However, it is an admitted position that the assessee did not declare additional salary of Rs. 16,63,897/- nor claimed additional TDS of Rs. 5,00,000/- while filing its original return of income in the month of March 2014. The assessee filed first appeal with learned CIT(A) against penalty levied by the AO u/s 271(1)(c), who also was of the view that penalty of Rs. 5,14,145/- was rightly levied by the AO u/s 271(1)(c) of the 1961 Act and hence learned CIT(A) confirmed the aforesaid penalty levied by the AO u/s 271(1)(c) of the 1961 Act.

Now, the assessee has filed an appeal before the tribunal and we have heard both the rival parties. We have perused the material on record including orders of authorities below. We have observed that the assessee has filed its return of income on 27.03.2014 declaring total income of Rs. 1,26,63,460/- . The assessee has , inter-alia, shown income of Rs. 15,00,000/- from salary from Pace on which claim of income-tax deducted at source u/s 192 of the 1961 Act of Rs. 3,00,000/- was made in the aforesaid return of income filed by the assessee with the department. The said employer has also issued Form No. 16 dated 20.07.2013 declaring that salary of Rs. 15,00,000/- was paid to the assessee and income-tax was deducted at source on the said salary of Rs. 3,00,000/- within provisions of Section 192 of the 1961 Act. The assessee based on aforesaid Form No. 16 filed its return of income with Revenue. The said company also filed Statement of tax-deducted at source on salaries in Form No. 24Q wherein assessee salaries were shown to be Rs.15,00,000/- and income-tax was deducted at source to be Rs. 3,00,000/- on behalf of the assessee u/s 192 of the 1961 Act . Later revised certificate in Form No. 16 dated 19.12.2013 was issued by said employer Pace stating that total salary income of the assessee to be Rs. 31,63,897/- including additional salary of Rs. 16,63,897/- and income-tax deducted at source of Rs. 8,00,000/- u/s 192 of the 1961 Act. The said company Pace also revised its statement of TDS in form no. 24Q on 29.11.2013 showing revised salary of Rs. 31,63,897/- and TDS of Rs. 8,00,000/- . The said company paid additional salary to assessee of Rs. 16,63,897/- on which additional income-tax was deducted at source of Rs. 5,00,000/- on 24.09.2013 u/s 192 of the 1961 Act. Thereafter, the said salary of Rs. 31,63,897/- was reflected in Form No. 26AS. The assessee filed its return of income in March 2014 based on old TDS certificate which was no doubt an error on the part of the assessee. Further, the assessee did not filed revised return of income with revenue but rather when the case was selected for scrutiny by Revenue, it is claimed that the said error came to notice of the assessee and it voluntarily filed revised computation of income on 18.01.2016 before the AO during the course of assessment proceedings wherein said additional income of Rs. 16,63,897/- and additional TDS of Rs. 5,00,000/- deposited by Pace was included in the total income and prepaid taxes declared before the AO . In our considered view, the explanation offered by assessee is bonafide to take it out of clutches of the penalty proceedings as no attempt is made by assessee to furnish inaccurate particulars of income nor an attempt is made by assessee to conceal his income more-so there is no prejudice to the Revenue as further income-tax of Rs. 5,00,000/- was deducted at source by employer Pace u/s 192 on behalf of assessee on additional salary income of Rs. 16,63,897/- paid to assessee on 24.09.2013 for impugned ay: 2013-14 within provisions of Section 192 of the 1961 Act. The said Pace duly filed revised statement of income-tax deducted at source u/s 192 of the 1961 Act in quarterly returns filed with Revenue in Form No. 24Q wherein all the information pertaining to additional salary of Rs. 16,63,897/- and additional TDS paid of Rs. 5,00,000/- stood disclosed to Revenue. The assessee never made an attempt to claim entire TDS of Rs. 8,00,000 deducted by Pace while on the other hand declaring initial salary of Rs. 15,00,000/- rather it only claimed credit of TDS of Rs. 3,00,000/- in return of income filed with Revenue on 27.3.2014. This showed bonafide of the assessee and it is a case of bonafide and genuine error on the part of the assessee while filing of its return of income in the month of March 2014 and once the said error came to notice of the assessee when assessment proceedings were started by the AO, it immediately filed revised computation of income declaring additional salary of Rs. 16,63,897/- and additional TDS of Rs. 5,00,000/- on 18.01.2016 .The assessment was completed by the AO on 29.1.2016. The relevant TDS certificates , Form No. 26AS and TDS returns filed by Pace ( both original and revised) are placed in paper book filed by the assessee . Thus, we accept explanation offered by assessee to be bonafide and genuine and accordingly ordered deletion of penalty of Rs. 5,14,145/- levied by the AO u/s 271(1)(c) of the 1961 Act which stood later confirmed by learned CIT(A) as the case of the assessee is covered by Explanation 1 to the provisions of Section 271(1)(c) of the 1961 Act which takes it out of clutches of the penalty u/s 271(1)(c) of the 1961 Act. We ordered accordingly.

In the result, appeal of the assessee in 2013-14 is allowed. Order pronounced in the open court on 05.09.2019. आदेश की घोषणा खुऱे न्यायाऱय में ददनांकः 05.09.2019 को की गई Sd/- Sd/- (C.N.PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER