KRISHNA KUMAR GUPTA,JAIPUR vs. ACIT, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh HkkxpUn] ys[kk lnL; ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 819/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2008-09 cuke Shri Krishna Kumar Gupta The ACIT Vs. E-78, Atish Market Circle- 5 Tripolia Bazar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACIPG 2043 D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by: Shri Tanuj Agarwal, CA jktLo dh vksj ls@ Revenue by :Smt. Poonam Rai, DCIT- DR lquokbZ dh rkjh[k@ Date of Hearing : 02/02/2017 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 06/02/2017 vkns'k@ ORDER PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(A)-2, Jaipur dated 20-06-2016 for the assessment year 2008-09 raising therein solitary ground as under:- ‘’That on the facts and in the circumstances of the case and in law, the ld. CIT(A) grossly erred in sustaining penalty u/s 271(1)(c) of the I.T. Act, 1961 amounting to Rs. 27,759/-.’’

2 ITA No. 819/JP/2016 Shri Krishna Kumar Gupta vs. ACIT, Circle- 5, Jaipur . 2.1 Apropos solitary ground of the assessee, the facts as emerges from

the order of the ld. CIT(A) is as under:-

2.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. Penalty of Rs. 27,759/- was levied by the Assessing Officer as the deduction on interest on housing loan had been claimed at Rs. 2,39,832/- as against Rs. 1,50,000/- allowable by law. It was submitted that during the assessment proceedings, the mistake was detected by the Authorized Representative and he advised the appellant to rectify the mistake and pay the taxes by filing a revised return. Thus, a revised computation was submitted during the assessment proceedings. The Authorized Representative’s submission is that since revised computation has been submitted and the income has been voluntarily returned by the assessee no penalty in leviable. The Assessing Officer noted in the penalty order that in spite of adequate opportunity no submission were made before him in the penalty proceedings and the penalty of Rs. 27,759/- was levied. In the present proceedings, it is claimed that the income was voluntarily offered and hence no penalty is leviable. It is seen from the record that in the notice issued on 21.01.2010 and 16.07.2010, by the Assessing Officer during the assessment proceedings, queries had been made regarding deductions made under Chapter VIA and proofs of the same had been called for. The assessee has filed the revised computation on 21.10.2010, thus the assessee’s claim that the revised computation is filed suo moto is not correct. The same has been filed only after a specific query was raised by the Assessing Officer on the issue. The second plea taken by the assessee is of ignorance of law. Since, assessee is assisted by trained professionals, this plea cannot be accepted and anyway ignorance of law cannot be an excuse. Importantly, the issue is that but for the case being taken up for scrutiny and the specific query and investigation by Assessing Officer, this amount would have escaped assessment. The Apex Court in the case of MAK Date has clearly held that plea of the assessee lie ‘voluntary disclosure, buy peace, avoid litigation to

3 ITA No. 819/JP/2016 Shri Krishna Kumar Gupta vs. ACIT, Circle- 5, Jaipur . explanation its conduct are not recognized by the statue under the Explanation 1 to section 271(1)(c). It is trite laws that voluntary disclosure does not release the assessee from the mischief of penal proceedings under section 271(1)(c). The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. Further, it was observed that it is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. In the light of the above observations of the Hon’ble Court, it is clear that the assessee, has neither made a voluntary disclosure nor recorded its transactions properly in its books of account and also not declared the same in the return filed by it. It is also important to note that but for the detection of this transaction in the assessment proceedings, in consequence to the specific notice, issued by the Assessing Officer, the undisclosed income would not have got unearthed at all. Reliance is place on the following observations in the case of 60 taxmann.com 352 (Madras) in the case of Lanxess India (P) Ltd. ‘’Here is a case where the appellant-assessee had claimed the deduction for the royalty payment for the second time, when it was in fact claimed in the preceding assessment year and allowed, and the said error of computation was unearthed during the course of the assessment proceedings u/s 143(3) by the original authority for which a notice was issued u/s 143(2) and the order of the original authority dated Marc 28,2005, as extracted in the earlier portion of this order, clearly shows that when the TDS certificates in respect of the royalty paid to M/s. Bayer AG Germany was asked to be furnished, after verifying the details, it was noticed that some of the TDS certificates pertained to the earlier year and part of the royalty payment attributed to these certificates had already been claimed and allowed as deduction to the assessee in the earlier years. Thereafter, when the assessee was further questioned, with a cryptic reply by way of the letter dated Marc 14,2005, no cogent and reliable evidence were shown by the assessee, as such a huge amount could not have been claimedas deduction by inadvertence for the second time. T said plea has also been repelled by the Supreme Court in MAK Data (P) Ltd.’s case (supra),as the assessee should first show by cogent and reliable evidence that there was neither concealment of particulars of income nor furnished inaccurate particulars of income. We find that the plea taken by the assessee in the letter dated Marc 24, 2005, is only cursory and does not give any

4 ITA No. 819/JP/2016 Shri Krishna Kumar Gupta vs. ACIT, Circle- 5, Jaipur . acceptable explanation for the wrong computation, as the error was detected by the original authority during the proceedings u/s 143(3) and she has also recorded a categorical finding that the assessee suppressed the income by making a wrong claim of royalty payment, which actually pertained to earlier assessment years, which was claimed and allowed and therefore, thought it fit to levy penalty u/s 271(1)© of the Act.’’ In view of the discussion as above, since the disclosure made by the assessee cannot be said to be voluntary and also no reasonable cause could be demonstrated by the assessee the penalty levied u/s 271(1)(c) is confirmed. ‘’

2.2 During the course of hearing, the ld. AR of the assessee

prayed for deletion of penalty of Rs. 27,759/- u/s 271(1)© of the Act

confirmed by the ld. CIT(A) for which the ld. AR of the assessee filed

the written submission and the same has also been taken into

consideration.

2.3 The ld. DR relied on the orders of the lower authorities.

2.4 I have heard the rival contentions and perused the materials

available on record. It is noted from the assessment order dated 29-12-

2010 that the AO made disallowance of Rs. 89,832/- out of interest on

housing loan by observing as under:-

‘’3(a) During the course of assessment proceedings, it is noticed that the assessee has claimed housing loan interest of Rs. 2,39,832/- in the head of ‘Income from House Property’’. AR of the assessee has been asked to produce the details of the loan and property details. Perusal of the reply of the assessee, it is found that the assessee has wrongly claimed interest on housing loan u/s 24(b) of Rs. 2,39,832/-

5 ITA No. 819/JP/2016 Shri Krishna Kumar Gupta vs. ACIT, Circle- 5, Jaipur . on self occupied property. As per the Section 24(b) of the Income tax Act assessee is only entitle interest on housing loan of Rs. 1,50,000/- on self occupied property. The assessee has accepted the mistake vide letter dated 21-10- 2010 and filed revised return of income and paid the tax on difference amount. But revised return is not treated as regular return because this return is not filed on due time. Credits of the taxes are allowed to the assessee. Therefore, Rs. 89,832/- is added to the total income of the assessee.

Since the assessee has concealed its income and has filed inaccurate particulars of income, therefore, penalty proceedings u/s 271(1)© are being initiated separately.

2.4.1 In penalty proceedings, ACIT vide his order dated 28-06-2011

imposed the penalty of Rs. 27,759/- by observing as under:-

‘’…… Despite the opportunity provided vide this office show cause notice dated 14-06-2011 and fixed on 20- 06-2011 for hearing neither the assessee nor his A/R present nor he filed any written reply which shows that the assessee has nothing to say in this regard as he himself had admitted during the course of assessment proceedings the mistake committed by him. Therefore, I am of the view that the assessee has committed a default within the meaning of Section 271(1)© of the Act and furnished inaccurate particulars of income of Rs. 89,832/- by claiming excess interest in housing loan with a motive to pay less tax therefore, I am left with no alternative other than to impose a penalty of Rs. 27,759/-.

Working of penalty is as under:-

Tax on concealed income or tax sought to be evaded Rs. 27,759/- Minimum Penalty imposable @ 100% Rs. 27,759/- Maximum Penalty imposable@ 300% Rs. 83,277/- Penalty imposed u/s 271(1)© Rs. 27,759/-‘’

6 ITA No. 819/JP/2016 Shri Krishna Kumar Gupta vs. ACIT, Circle- 5, Jaipur . 2.4.2 In first appeal, the ld. CIT(A) confirmed the penalty of

Rs. 27,759/- u/s 271(1)(c) of the Act. During the course of hearing, the ld.

AR of the assessee submitted that the assessee had bonafidely claimed the

entire interest of Rs. 2,39,832/- as deduction u/s 24 of the I.T. Act under

the head income from house property (assessee's paper book page 1 to 4).

The ld. AR of the assessee further submitted that the deduction is

available to the extent of Rs. 1.50 lacs only. The ld. AR of the assessee

submitted the assessee appointed him as authorized representative in his

case who advised the assessee to rectify this mistake and pay the due

taxes by filing the revised return. The assessee filed the revised return by

paying the balance tax and brought to the notice of the AO during

assessment proceedings by letter dated 21-10-2010. The ld. AR of the

assessee submitted that the AO has not pointed out this mistake but it was

detected by him. It is also noted that the AO in the assessment order

mentioned that on perusal of the reply of the assessee, it is found that the

assessee has wrongly claimed interest on housing loan u/s 24(b) of Rs.

2,39,832/- on self occupied property. It thus appears that the AO has not

detected the mistake but it is noticed by the AO only after perusing the

reply of the ld. AR of the assessee. It is further noticed that the assessee

had filed the revised return of income by paying the balance due tax on

7 ITA No. 819/JP/2016 Shri Krishna Kumar Gupta vs. ACIT, Circle- 5, Jaipur . the amount excessive claimed against the restriction of deduction to the

extent of Rs. 1.50 lacs under head income from house property. It is also

noticed that this is the first year of the assessee claiming such deduction

u/s 24(b) of the Act. It is also noticed that during the course of hearing,

the ld. AR of the assessee relied on following case laws to this effect.

Hence, taking into consideration all the facts, circumstances of the case

and the case laws relied upon by the ld. AR of the assessee (supra), I feel

that the ld. CIT(A) is not justified in confirming the penalty of

8 ITA No. 819/JP/2016 Shri Krishna Kumar Gupta vs. ACIT, Circle- 5, Jaipur . Rs. 27,759/- u/s 271(1)(c) of the Act which is directed to be deleted. Thus the solitary ground of the assessee is allowed. 3.0 In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 06 /02/2017.

Sd/- ¼HkkxpUn½ (Bhagchand) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06 /02/ 2017 *Mishra आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Krishna Kumar Gupta, Jaipur izR;FkhZ@ The Respondent- The ACIT, Circle- 5, Jaipur 2. 3. vk;dj vk;qDr¼vihy½@ CIT(A). vk;dj vk;qDr@ CIT, 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA No. 819/JP/2016) vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत