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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-1 : NEW DELHI
Before: SHRI R.S. SYAL
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-1 : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER Assessment Year : 2011-12 Ashish Pal Singh Arneja, ITO, BH-45, Poorvi Shalimar Bagh, Vs. Ward-72(4), New Delhi. Civic Centre, New Delhi. PAN: AFIPA6803L (Appellant) (Respondent) Assessee By : Shri R.S. Singhvi, CA Department By : None Date of Hearing : 23.11.2016 Date of Pronouncement : 23.11.2016 ORDER
This appeal by the assessee relating to the assessment year 2011- 12 arises out of the order passed by the CIT (Appeals) on 28.03.2016 upholding the penalty of Rs.3,31,433/- imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’)
Succinctly, the assessee is a salaried employee who filed his return declaring total income of Rs.4,54,966/-. On perusal of the Form 26AS, it was observed that there was difference in the amount of TDS as actually deducted and the amount of TDS as declared in the return of income.
Further investigation transpired that the assessee received salary from two employees, namely, M/s IBM India and M/s Syntel. Salary received from IBM India was declared along with the claim for the amount as per the TDS certificate. However, the salary received from M/s Syntel amounting to Rs.9,48,080/- was not offered for taxation and, in the like manner, credit for TDS on such salary amounting to Rs.1,57,182/-, was also not claimed. On being confronted, the assessee surrendered such amount and the AO added salary of Rs.9,48,080/- in the income and also allowed credit for the tax deducted at source. Thereafter, penalty was imposed on such addition, which came to be affirmed in the first appeal.
There is no appearance on behalf of the Revenue. After considering the submissions of the ld. AR and perusing the relevant material on record, it is noticed that the assessee earned salary from two employers during the year, namely, M/s IBM and M/s Syntel. Salary from the later employment of IBM was properly declared. However, salary received from the earlier appointment with M/s Syntel was not shown in the return of income and, simultaneously, no credit for TDS was taken on such salary. The reasons for such default have been explained, being, the court proceedings pending against the assessee and his parents due to divorce proceedings with his wife, which led to the mental harassment and the consequential furnishing of return by the assessee himself declaring improper particulars. This fact is apparent from the copy of the order passed by the Court directing the assessee to pay a particular amount as maintenance to his estranged wife. In my considered opinion, there was a reasonable and bona fide ground for the assessee in not disclosing the correct income of salary and, simultaneously, not taking credit for the TDS on such amount. The Hon’ble Supreme Court in Pricewater House Coopers Pvt. Ltd. vs. CIT (2012) 348 ITR 306 (SC), has held that no penalty u/s 271(1)(c) should be imposed for a bona fide mistake or a normal human error. Similar view has been reiterated by the Hon’ble Bombay High Court in CIT vs. Somany Evergree Knits Ltd. (2013) 352 ITR 592 (Bom). The ld. AR has also placed on record a copy of the order dated 27.7.2016 passed by the 3 Delhi Bench of the Tribunal in Aditya Malla vs. ITO (ITA No.2457/Del/2016), in which penalty u/s 271(1)(c) imposed because of the assessee omitting to include salary from his previous employer on which deduction of tax at source was made, came to be deleted. In view of the foregoing circumstances, I am convinced that the penalty on the undisclosed but surrendered salary income of Rs.9,48,080/- was wrongly imposed and confirmed. The same is directed to be deleted.
The other issue on which penalty has been imposed is an addition of Rs.2,20,500/-, being, the amount of cash deposit by the assessee in his saving bank account. On being called upon to explain the source of this amount, the assessee submitted that he borrowed money from his friends and relatives and even selling household goods in order to provide immediate payment to his estranged wife. Not convinced, the AO made addition for this sum and, thereafter, imposed penalty on the same. The ld. CIT(A) confirmed such penalty.
On going through the relevant material on record, it is seen that the assessee was passing through a traumatic phase of his life because of the on-going divorce proceedings, in which he was directed to make payment to his estranged wife. A copy of Court order in respect of payment of maintenance expenses is available on page 6 of the paper book. In order to comply with the direction of the Court for paying the maintenance charges, the assessee sold his household articles and also raised funds from his family, friends and relatives which amount was deposited in the bank for the purpose of onward payment to the estranged wife. In my considered opinion, this addition, for lack of adducing necessary evidence in support of the claim about the source of deposit, cannot be a good ground for imposition of penalty. It is a settled position that the criteria for making an addition in quantum proceedings and imposing penalty are different. Simply because the assessee could not satisfactorily explain his case during the course of assessment proceedings, cannot be a ground for automatic imposition of penalty on such disallowance. Under the given circumstances, I am satisfied that the present facts do not warrant the imposition of penalty u/s 271(1)(c) in respect of this addition. The same is directed to be deleted.
In the result, the appeal is allowed.
The order pronounced in the open court on 23.11.2016.