SEIKH BONI ISRAIL,HOWRAH vs. ITO, WARD - 46(4), KOLKATA, KOLKATA

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ITA 43/KOL/2015Status: DisposedITAT Kolkata02 February 2018AY 2009-20104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's explanation regarding reconciliation of party balances was bona fide and not found to be false by the AO. The mere acceptance of the discrepancy for assessment purposes does not automatically invite penalty.

What were the facts?

The assessee accepted a discrepancy of Rs. 86,454/- in contract payments during assessment proceedings for AY 2009-10, which was offered to tax. The AO levied a penalty of Rs. 30,000/- under Section 271(1)(c) on this accepted addition.

What were the issues?

Whether the levy of penalty under Section 271(1)(c) is justified when the assessee accepted an addition during assessment proceedings after providing a bona fide explanation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH : KOLKATA

Before: Hon’ble Shri N.V.Vasudevan, JM & Hon’ble Shri M.Balaganesh, AM ]

Hearing: 30.01.2018Pronounced: 02.02.2018

ORDER Per M.Balaganesh, AM

1.

This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-XXX, Kolkata [in short the ld CITA] in Appeal No. 66/CIT(A)-XXX/Wd-46(4)/2012-13 dated 23.09.2014 against the penalty order passed by the ITO, Ward-46(4), Kolkata[ in short the ld AO] under section 271(1)(c ) of the Income Tax Act, 1961 (in short “the Act”) dated 27.06.2012 for the Assessment Year 2009-10.

2.

The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the levy of penalty u/s 271(1)(c ) of the Act, in the facts and circumstances of the case.

2 Seikh Boni Israil A.Yr.2009-10 3. The brief facts of this issue is that the assessee is an individual earning income from business by doing contractual services to different sectors such as private, public, Government and semi-government sectors. The assessee had filed its return of income for the assessment year 2009-10 on 01.10.2009 declaring total income of Rs. 6,40,050/-. During the course of original assessment proceedings, the Ld. AO observed that the AIR information reported that the assessee has received contract payment from different persons as under:

The assessee stated before the Ld. AO that the party balances are to be reconciled. However for the sake of assessment proceedings the aforesaid discrepancies were accepted to be offered to tax and the same was taxed accordingly. The Ld. AO levied penalty u/s 271(1)(c ) of the Act on the said addition of Rs. 86,454/- which was accepted by the assessee in the assessment proceedings. The Penalty levied was in the sum of Rs. 30,000/-. The action of the ld. AO was upheld by the Ld. CIT(A). Aggrieved the assessee is in appeal before us on the following grounds: 1. That the impugned order of the Ld. Commissioner of Income Tax (Appeals)- XXX, Kolkata is an arbitrary, illegal and in excess of his jurisdiction while issuing the Order.

2. That the Assessment Authority based the penalty upon the statement of third party, not considered the view of the Appellant.

Therefore, your appellant prays to the Hon’ble Members of the Appellate Tribunal for deletion of penalty made by the Ld. Assessing Officer, confirmed by the Ld. Commissioner of Income Tax(Appeals).

The Appellant craves the leave of the Hon’ble Members of Income Tax Appellate Tribunal to urge further ground(s) at the time of hearing and to produce the documents in support of its argument, if required.

4.

We have heard the rival submissions. We find that the assessee had given proper explanation before the ld. AO that the party balances were subject to reconciliation as it was being carried over from earlier years. This bona fide explanation given by the assessee was not found to be false by the Ld. AO. However as a measure of cooperation the assessee had also come forward to offer to tax the said discrepancy during the assessment proceedings. In our considered opinion, the mere acceptance by the assessee alone would not invite the assessee from levy of penalty. In our opinion and in the facts and circumstances of the case the assessee had duly discharged his onus in terms of Explanation 1 to section 271(1)(c ) of the Act and hence this is not a fit case to levy of penalty u/s 271(1)(c) of the Act. Accordingly, we are inclined to cancel the same. Accordingly, grounds raised by the assessee are allowed.

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on 02.02.2018

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