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Income Tax Appellate Tribunal, KOLKATA BENCH (D
Before: Shri P.M. Jagtap & Shri S. S. Godara, JM]
order
: April 24, 2019 ORDER
Per P.M. Jagtap, Vice President
This appeal filed by the assessee is directed against the order of Ld. CIT(A) – 9, Kolkata dated 28.03.2018 whereby he confirmed the penalty of Rs. 1,28,416/- imposed by the AO u/s 271(1)(c) of the Income Tax Act, 1961.
The assessee in the present case is a company which is engaged in the business of electric supplier and contractor. The return of income for the year under consideration was filed by it on 17.09.2011 declaring a total income of Rs. 4,44,860/-. During the course of assessment proceedings, two balance sheets and trading and profit and loss accounts were submitted by the assessee, one for the period from 01.04.2010 to 31.05.2010 and the other for the period from 01.06.2010 to 31.03.2011. A consolidated computation of total income for the said two periods was also submitted by the assessee showing a total income for the previous year relevant to A.Y. 2011-12
2 S.F. Engg. Works Assessment Year: 2011-12 at Rs. 7,96,343/-. Since the total income of the assessee as declared in the return of income was only Rs. 4,44,816/-, the AO required the assessee to explain the difference. In reply, it was submitted on behalf of the assessee that the difference of Rs. 3,51,483/- had already been voluntarily disclosed for taxation in response to the notice received u/s 143(2). This explanation of the assessee was not found acceptable by the AO. According to him, the difference of Rs. 3,51,483/- was not declared as its income of assessee’s firm voluntarily and it was only as a result of the notice issued u/s 143(2) that the same was offered to tax. He accordingly treated the said amount of Rs. 3,51,483/- as the concealed income of the assessee and imposed penalty u/s 271(1)(c) of the Act.
The penalty imposed by the AO u/s 271(1)(c) was challenged by the assessee in the appeal filed before the Ld. CIT(A) and the submission made before the AO was reiterated on behalf of the assessee in support of its case that the amount of Rs. 3,51,483/- having been offered to tax voluntarily, the AO was not justified to impose penalty u/s 271(1)(c). The Ld. CIT(A) did not find merit in the submissions made on behalf of the assessee. He held that the assessee had concealed its income of Rs. 3,51,483/- which could not have been revealed had the case was not selected for scrutiny. He accordingly confirmed the penalty imposed by the AO u/s 271(1)(c) of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.
3 S.F. Engg. Works Assessment Year: 2011-12
The learned counsel for the assessee submitted that there was an inadvertent mistake committed by the assessee in declaring less income in the return. He submitted that the assessee firm itself however prepared and furnished a consolidated computation of total income prepared on the basis of consolidated profit and loss account and offered the additional income voluntarily to tax. He contended that the Assessing Officer on the basis of these consolidated statements prepared and furnished by the assessee raised the issue of difference in the income returned and there being no case of detection by the AO of such income, addition made to the total income of the assessee on the basis of assessee’s own working furnished during the assessment proceedings cannot be treaed as its concealed income to attract the penalty u/s 271(1)(c) of the Act.
The learned DR, on the other hand, submitted that the assessee did not file any revised return to declare the amount in question as additional income. He contended that it was not an inadvertent mistake of the assessee as claimed by the learned counsel for the assessee and since this fact of understatement of income had come to the light as a result of selection of the case of the assessee for scrutiny, it was a clear case of concealing of inaccurate particulars of income by the assessee attracting penalty u/s 271(1)(c) of the Act.
We have considered the rival submissions and also perused the relevant material available on record. It is observed that two sets of profit and loss account were prepared by the assessee, one for the period from 01.04.2010 to 30.05.2010 and the other for the period
4 S.F. Engg. Works Assessment Year: 2011-12 from 01.06.2010 to 31.03.2011. In the return of income filed for the year under consideration, total income of Rs. 4,44,680/- was declared by the assessee as reflected in the profit and loss account for the period from 01.04.2010 to 30.05.2010 and as submitted on behalf of the assessee before the authorities below as well as before us, it was a bonafide mistake committed inadvertently by the assessee. During the course of assessment proceedings, the assessee however submitted both the profit and loss accounts and also prepared and filed a consolidated computation of total income showing its total income for the entire year under consideration at Rs. 7,96,343/-. He also offered the difference of Rs. 3,51,483/- which represented the profit for the period from 01.06.2010 to 31.03.2011 as its income for tax. As rightly contended by the learned counsel for the assessee, there is nothing on record to indicate that this additional income was offered by the assessee as a result of any investigation or detection made by the AO and since the addition of Rs. 3,51,483/- was made by the AO on the basis of the financial statements prepared and furnished by the assessee, we find merit in the contention of the learned counsel for the assessee that the additional income of Rs. 3,51,483/- was offered by the assessee voluntarily to rectify the bonafide mistake committed inadvertently. Keeping in view all these relevant facts of the case, we are of the view that the assessee cannot be said to have concealed particulars of his income or furnished inaccurate particulars of such income so as to attract the penal provision of section 271(1)(c) of the Act. In that view of the matter, we cancel the penalty imposed by the AO u/s 271(1)(c) and confirmed by the Ld. CIT(A) and allow this appeal of the assessee.
5 S.F. Engg. Works Assessment Year: 2011-12
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 24th April, 2019.