MANOJ S. GUGALE,,AHMEDNAGAR vs. INCOME-TAX OFFICER,,

The assessee has raised the following grounds of appeal:-

The issue raised in the present appeal is against levy of penalty under section 271(1)(c) of the Act at ₹ 4,39,162/-.

Briefly, in the facts of the case, the assessee for the year under consideration had furnished return of income declaring total income of ₹ 4,52,640/-. The case of assessee was picked up for scrutiny. The Assessing Officer noted that there was difference of TDS as per 26AS statement and the TDS declared in the return of income. In order to verify the same, the Assessing Officer called for the details. On perusal of 26AS statement, the total TDS was ₹ 6,43,191/- and as per return of income filed by assessee, the TDS was shown at ₹ 35,020/-. The assessee was asked to explain the same. Further, on perusal of return of income, the Assessing Officer also noted that the assessee had only declared salary income, whereas as per 26AS statement, there were total receipts of ₹ 4,40,25,087/-. The assessee thus, was asked to explain as to why the said receipts should not be treated as concealed income and even penalty proceedings under section 271B of the Act

Before the CIT(A), the assessee furnished written submissions which are reproduced in the order of CIT(A). However, penalty levied by Assessing Officer was upheld by CIT(A) since the additional income was offered only during the assessment proceedings, when the same were confronted by the Assessing Officer and the learned Authorized Representative for the assessee admitted to the same. Reliance was placed on the ratio laid down by the Hon'ble Supreme Court in the case of MAK Data (P.) Ltd. Vs. CIT reported in

The assessee is in appeal against the order of CIT(A) and pointed out that income from business, short term capital gain and interest on dividend as well as TDS on the same was remained to be disclosed in the return of income. He further stated that as against total income declared in the return of income at ₹ 4,52,637/-, the Assessing Officer had assessed the income at ₹ 20,05,450/- and once the credit for TDS was allowed, then no further tax had to be paid by assessee. The learned Authorized Representative for the assessee pleaded that the income from business which was earned in earlier year also was not shown in the return of income but was shown in the revised computation filed during the course of assessment, in which the assessee makes claim of TDS at ₹ 6,43,191/-, which was not claimed in the original return of income. After the adjustment of TDS, refund was due to the assessee, hence it was not case where the assessee had defaulted in payment of tax. The next plea of assessee before us was that where the receipts from business of advertising agency were deposits in the bank, from which tax was deducted, then it cannot be said that the assessee was having malafide intention of not disclosing the said receipts in the return of income. The said error was through oversight and the mistake of assessee in not declaring the additional income was not the intention to evade tax liability and hence, there was no question of any concealment of particulars of income by the assessee. The learned Authorized Representative for the assessee has filed written note and has reiterated his stand that omission or non-disclosure of income from different heads was only due to the mistake or inadvertency and was not with a view to evade tax and has given various explanations. In this regard, he pleaded that penalty proceedings were distinct from assessment proceedings

The learned Authorized Representative for the assessee has also distinguished the reliance placed upon by the CIT(A) on different decisions.

The learned Departmental Representative for the Revenue placing reliance on the order of CIT(A), placed heavy reliance on the decision of the Hon'ble Supreme Court in the case of MAK Data (P.) Ltd. Vs. CIT (supra).

We have heard the rival contentions and perused the record. The assessee is an individual and as admitted and pointed out by the learned Authorized Representative for the assessee, was filing the returns of income for earlier years also. The assessee was asked to file copies of return of income and financial statements for assessment years 2010-11 and 2011-12. The year under appeal before us is assessment year 2010-11. First, we shall look at the financials and return of income filed for assessment year 2010-11, copy of which is placed at pages 22 to 26 of Paper Book. In the return of income, the assessee had declared gross income of ₹ 16,02,200/-. The assessee has also attached Profit and Loss Account of M/s. Classic Advertising i.e. the concern in which the assessee was earning commission and incentive to the tune of ₹ 25,26,716/- and advertising receipts of ₹ 14,22,530/-. The assessee has

Now, let us look at the return of income filed for assessment year 2011- 12, which is placed at pages 15 and 16 of Paper Book. The assessee has filed computation of income and only has declared salary income from Classic Publicity Pvt. Ltd. at ₹ 5,60,000/-. The assessee has not declared any income from business of proprietary concern, which admittedly, he was carrying on during the year under consideration also. The assessee has enclosed the copy of Balance Sheet and Profit and Loss Account for the year ending 31.03.2011, in which commission was to the tune of ₹ 29.71 lakhs and advertising receipts to the tune of ₹ 16.19 lakhs. The assessee has declared net profit of ₹ 15,13,660/- in Profit and Loss Account. In other words, the assessee was carrying on the business of same scale as in earlier year. The assessee had declared business income in the return of income filed for earlier year but during the year under consideration, he failed to declare business income.

Now, let us look at Form No.26AS for assessment year 2011-12. In Form No.26AS, there are details of tax deducted at source under section 192 of the Act i.e. salary receipts from Classic Publicity Pvt. Ltd. to the tune of ₹ 5 lakhs and then there is tax deducted at source of Axis Bank on account of interest on several deposits under section 194A of the Act and then there are various deductions under section 194(3) of the Act and Form No.26AS is placed at pages 27 to 44 of Paper Book, wherein various parties have deducted

Let us now come to the next stand of assessee that in any case, TDS has been deducted and no demand is due from the assessee. Once we consider the figures of receipts in Form No.26AS, which totaled ₹ 4,40,25,087/-, the assessee has explained and the Assessing Officer has noted the same in para 4 and total receipts of ₹ 4.40 crores should not be considered as his concealed income. He has prepared Balance Sheet and Profit and Loss Account and offered income of ₹ 14,55,987/-. This exercise has been carried out only once the assessment proceedings have been initiated. Further, on the income from short term capital gain, there is no question of any TDS being deducted, may be on interest income, some TDS has been deducted but that does not absolve the assessee from the levy of penalty for concealment under section 271(1)(c) of the Act. The plea of no tax due after including the concealed income cannot absolve the assessee from its obligation to declare total income earned in the year and such non-declaration makes the assessee liable to levy of penalty for concealment.

The Hon'ble Supreme Court in the case of MAK Data (P.) Ltd. Vs. CIT (supra) has held that even voluntary disclosure does not release the assessee from mis-chief of penal proceedings under section 271(1)(c) of the Act. It has further been held that the Assessing Officer shall not be carried away by the

Applying the said ratio to the facts of present case, we hold that there is no merit in the plea of assessee of having no liability to pay tax and hence, no liability to any penalty for concealment. The learned Authorized Representative for the assessee has relied on various case laws. The first is the Bangalore Bench of Tribunal in DCIT Vs. Smt. Prabhavathi Dharam Singh (supra), wherein the ratio laid down is in respect of tax deducted at source out of salary income and it was held that omission to declare salary income was due to inadvertency or mistake. The Tribunal held that where no deliberate or conscious intention on the part of assessee was proved, so the plea of inadvertency could not be rejected. This is the case where the employer had deducted tax from salary and the said deduction is on the prevalent market rates. However, in the case of assessee, it is not salary which was not declared but it was business receipts of assessee on which TDS was deducted and total receipts were not taxable in the hands of assessee. The claim of assessee was as per Income & Expenditure Account which needs to be verified and then net income was to be added in the hands of assessee. In such circumstances, it cannot be said to be a case of inadvertency.

Similar is the ratio laid down in other decisions of Calcutta Bench of Tribunal in Anandmoy Bhattacharjee Vs. ITO (supra), which is also case of salary income being covered by TDS deduction and the Pune Bench of Tribunal in ITO Vs. Smt. Madhuri Satish Misal (supra), wherein also it was case of TDS out of interest earned on fixed deposits. Another point to be noted in the decision of Pune Bench of Tribunal is that addition was made in the hands of assessee on account of transaction of assessee’s husband and she agreed

Now, coming to the last reliance on the decision of the Hon’ble Bombay High Court in CIT Vs. Smt. Madhuri Satish Misal (supra), which upheld the decision of Pune Bench of Tribunal and as pointed out the factual aspects are different and hence the reliance is misplaced. Upholding the order of CIT(A), we dismiss the grounds of appeal raised by assessee.

In the result, the appeal of assessee is dismissed.