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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI RATNESH NANDAN SAHAY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the assessee against the order dated 29.09.2023, impugned herein, passed by the Ld. National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2015-16.
In this case the assessee had declared his total income of Rs.54,27,680/- by filing original return of income on 23.09.2015 which was selected for scrutiny under CASS selection and consequently statutory notices were issued to the assessee, in response to which the assessee filed the relevant details. On perusing the same the Assessing Officer (AO) observed that during the year under consideration the activity of the assessee was investment in shares, mutual funds, future/options etc. and the assessee has also earned income from salary, capital gains and from other sources.
The AO further observed that on going through the AIR details for undisclosed TDS for the assessment year under consideration the assessee company has claimed TDS of Rs.1,61,277/- instead of Rs.2,67,938/-, which is appearing in undisclosed TDS column in A.Y. 2015-16. As per 26AS the assessee has received interest of Rs.4,93,520/- from M/s. Hitech Electro Components Pvt. Ltd. and Rs.5,73,077/- from M/s. Neotroniks Pvt. Ltd. with TDS deduction of Rs.49,352/- and Rs.57,308/- respectively. The AO further observed that in the instant assessment year the assessee neither offered his interest income nor claimed TDS of the same and therefore the assessee was show caused to reconcile the AIR information. The assessee, vide reply dated 29.05.2017, before the AO mainly claimed that the assessee has not received any interest for the last three years but was offering the interest income in anticipation of the receipt of the interest. However, looking at the condition of the companies from whom interest to be 3 Gangoli Ramesh Shenoy received, receiving interest in near future is very thin and therefore the assessee did not offer interest from said companies and has also not claimed TDS but in fact carried forward the same. The assessee in addition to the above submission also submitted letters from the aforesaid companies for making request to carry forward the TDS amount of the assessee. The AO, though considered the claim/reply of the assessee but not found acceptable mainly on the reason that the assessee follows mercantile accounting system, hence the TDS of interest and income of the assessee cannot be carried forward and consequently disallowed the interest income to the tune of Rs.10,66,597/- as appearing in AIR information and in the form 26AS, however, given the tax credit of Rs.1,06,660/- to the assessee. The AO in the assessment order itself also initiated the penalty proceedings under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income and vide penalty order dated 05.03.2020 ultimately levied the penalty to the tune of Rs.3,29,578/- @ 100% of the tax sought to be evaded on the income of Rs.10,66,597/-.
The assessee being aggrieved against the imposition of penalty, preferred first appeal before the Ld. Commissioner but could not get succeeded and therefore being aggrieved, the assessee is in appeal before us.
The Ld. Counsel Ms. Jigna Jain and Ms. Mitali Parekh demonstrated before us, that from the quantum appeal order 4 Gangoli Ramesh Shenoy dated 22.10.2018 it clearly appears that the Assessee has submitted that the Assessee has been following cash accounting system. The assessee before us also filed a statement of profit & loss account dated 16.09.2015 for the year ended 31.03.2015 relevant to the assessment year under consideration, in order to show that the assessee is following cash accounting system.
On the contrary, the Ld. D.R. Shri Manoj Kumar Singh refuted the claim of the assessee and submitted that the impugned neither suffers from any perversity, impropriety and/or illegality and therefore no interference is required.
Having heard the parties and giving thoughtful considerations to the peculiar facts and circumstances of the case, we observe, though prima-facie, the case of the assessee “that the TDS on interest income was carried forward and therefore the same was not claimed in the year under consideration. Further no interest income infact has been received by the assessee from the aforesaid companies as both the aforesaid companies have suffered huge losses and therefore there is no question of availing benefit by claiming interest as deduction and avoiding tax. The assessee has also till date not received interest income nor the same has been credited to their loan accounts. Subsequently, the companies have returned back interest income in their profit and loss accounts and therefore levy of penalty on an income which has, in fact, not received by the assessee till date and not likely to be received and for which the 5 Gangoli Ramesh Shenoy tax has been paid twice by the assessee, is totally unjustified and unlawful”, as demonstrated by the Ld. Counsels Ms. Jigna Jain and Ms. Mitali Parekh appears to be logical and plausible, however, still if we approve the case of the assessee as wrong or not maintainable as done by the authorities below, still we are not convinced for sustaining the penalty under section 271(1)(c) of the Act for filing or deliberately furnishing of inaccurate particulars of income, as the Hon’ble Apex Court in the case of Commissioner of Income Tax vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC) has categorically held that a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made with the return cannot amount to the inaccurate particulars of income. Recently Hon’ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax vs. ICICI Bank Ltd. (2024) 161 taxmann.com 454 (Bom.) also dealt with the levy of penalty, wherein there was variance in the deductions allowable due to change in determination of business profit and the assessee has not claimed deductions in the return of income and the Hon’ble High Court held that it cannot be said that the assessee has furnished inaccurate particulars of income or concealment of inaccurate particulars of income. Even otherwise we do not find any reason and/or material to sustain the levy of penalty and therefore considering the peculiar facts and circumstances of the case in totality, we are inclined to delete the penalty as sustained by the Ld. Commissioner. Consequently, the penalty is deleted.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 30.04.2024.