M/S. LAXMINATH INFRASTRUCTURE PVT. LTD.,CHURU. vs. ACIT, CIRCLE, JHUNJHUNU

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ITA 385/JODH/2018Status: DisposedITAT Jaipur23 August 2022AY 2012-139 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 had voluntarily surrendered the interest income upon being specifically asked during assessment proceedings, and had offered it for taxation. The Tribunal found that the question of concealment of income did not arise in this context.

What were the facts?

The assessee declared a total income of Rs. 14,44,000. During scrutiny, the Assessing Officer (AO) assessed the total income at Rs. 1,72,90,280, making additions including interest on IT refunds not fully declared by the assessee. The AO initiated penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee voluntarily surrenders income upon being pointed out during assessment proceedings and there was no mention in Form 26AS.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 145(3),Section 274

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 385/Jodh/2018

For Appellant: Shri R.P. Sharma (C.A.) jktLo dh vksj ls@
Hearing: 26/07/2022Pronounced: 23/08/2022

vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal by the assessee is directed against the order dated 03.07.2018 of the learned Commissioner of Income Tax (Appeals) [hereinafter referred to as (CIT(A)], arising from penalty order passed U/s. 271(1)(c) of the Income Tax Act, 1961 (in short the “the Act”) for the AY 2012-13.

2. The assessee has raised the following grounds:- “1. That on the facts and in the circumstances of the case the ld. CIT(A) erred in upholding the validity of order of imposition of penalty u/s 271(1)(c) of the Act.

M/s Laxminath Infrastructure Pvt. Ltd.

2.

That on the facts and in the circumstances of the case the ld. CIT(A) erred in upholding the validity of notice u/s 274 of the Act which does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income.

3. That on the facts and in the circumstances of the case the ld. CIT(A) erred in sustaining penalty of Rs. 1,05,000/- under the provision of section 271(1)(c) of the Act. 4. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 5. The petitioner prays for justice & relief.”

3.

Brief facts of the case are that the assessee had e-filed its return of income on 30.09.2012 declaring total income of Rs. 14,44,000/-. Further the case was selected for scrutiny and the assessment was completed u/s 143(3) of the Act on 26.02.2015 at a total assessed income of Rs. 1,72,90,280/-. While completing the assessment, the AO made trading addition after invoking provisions of section 145(3) of the Act besides addition of interest income on FDRs. The AO had also observed that the assessee had derived interest on IT refund amounting to Rs. 4,20,289/- out of which the assessee company had declared interest on IT refund amounting to Rs. 97,669/- only and had not shown interest on IT refund amounting to Rs. 3,22,620/- in its total income. Therefore, the AO made addition of such interest income and had initiated the penal proceeding u/s 271(1)(c) of the IT Act, 1961. Aggrieved of this order, the assessee preferred an appeal before the Ld. CIT(A).

4.

The AO arrived the findings that on verification of details of fixed assets & depreciation chart as on 31.03.2012, it is seen that the assessee company has shown an addition on account of new vehicle Bolero SLX amounting Rs. 7,20,106/- purchased on 30.01.2012 during the year and claimed depreciation

M/s Laxminath Infrastructure Pvt. Ltd.

@ 7.5% of Rs. 54,008/-. During assessment proceedings the assessee was asked to produce the complete vouchers of new assets purchased along with Registration certificate for verification. The A/R of assessee company has furnished evidence of bills purchased and copy of RC issued by the DTO, Churu. On verification of RC issued by the DTO, Churu, it is revealed that vehicle was registered with DTO, Churu on 11.06.2012 after the relevant period. Looking to the registration certificate, it is very clear that the vehicle purchased by the assessee company has not put to use during the year under consideration because such vehicle was registered on 11.06.2012 relevant to the A.Yr. 2013-14, therefore, claim of depreciation on new Bolero SLX amounting Rs. 54,008/- for the year is not allowable. Thus, out of total depreciation claimed , a sum of Rs. 20,80,584/- (2134592-54008) is allowed for the year under consideration. Subject to the above remarks total income of the assessee company is computed as under:- 1. Contract income as discussed above as per para No. 5 Rs. 1,69,26,491/- Less:- i) Depreciation allowed as per para no. 8 as discussed above. Rs. 20,80,584/-

Net Contract income Rs. 1,48,45,907/- Add:- i) FDR interest income as per para no. 6 as discussed above Rs. 20,24,082/- ii) Interest income I.T. refund as as per para no. 7 as discussed above. Rs. 4,20,289/- Rs. 24,44,371/- Total taxable income Rs. 1,72,90,278/- R/o Rs. 1,72,90,282/-

M/s Laxminath Infrastructure Pvt. Ltd.

Assessed u/s 143(3) at Rs. 1,72,90,280/-. Charge interest u/s 234B, 234C and withdraw interest u/s 244A(3). Issue demand notice and challan. Show cause penalty notice u/s 271(1)(c) for furnishing of inaccurate particulars thereby concealing the income has separately been issue. Sent calculation sheet which forms part of this assessment order.

5 Being aggrieved by the assessment order, the assessee preferred an appeal before the ld CIT(A). Before the ld. CIT(A), the assessee has reiterated its arguments in written submission of the order. The CIT(A) for the reasons stated in his order has rejected the arguments and submissions made by the assessee. The ld. CIT(A), in his order in para 4.3 as held under :-

" 4.3 I have carefully considered the material before me. I find that appellant received refund of Rs. 30,00,080/- which includes the interest amount of Rs. 3,22,620/-. This fact is also accepted by the A/R of the appellant that department automatically adjusted the refund against the demand without giving any intimation to the assessee. These facts established that the appellant received interest of Rs. 3,22,620/- which was not shown appellant with intention to evade the tax on the interest income. Therefore I am the view that this is fit case for imposition the penalty u/s 271(1)(c) of the Income Tax Act, 1961. Hence, I confirm the penalty of Rs. 1,05,000/- u/s 271(1)(c) of the Income Tax Act, 196. These grounds are not allowed.”

6.

Aggrieved by the CIT(A) order, the assessee filed appeal before us against said penalty order.

7.

On the other hand, Ld. DR strongly supporting the order of the lower authorities.

M/s Laxminath Infrastructure Pvt. Ltd.

8.

We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Ground Nos. 1 and 2 are inter related, the ld. AR for the assessee submitted that the assessee has filed its return of income on 30.09.2012 declaring total income of Rs. 14,44,000/-. The case was selected for scrutiny and the assessment was completed u/s 143(3) of the Act, 1961 on 26.02.2015 and the total income was assessed at Rs. 1,72,90,280/-. On the completion of the assessment proceedings, the AO has observed that the assessee had derived interest on income tax refund amounting to Rs. 4,20,289/- out of which the assessee company had declared interest on income tax refund amounting to Rs. 97,669/- and the allegation of the Assessing Officer is that the assessee has not shown interest on IT refund amount to Rs. 3,22,620/- in its total income. Therefore, the assessee made addition of such interest income and initiated the penalty proceedings u/s 271(1)(c) of the Act. On perusal of the assessment order, the AO has failed to consider the reply of the assessee during the assessment proceedings relating to the business. The Assessing Officer gone through the reply of the assessee filed on 20.01.2015 and explained the reasons that there was not intimation about the interest on income tax refund and also there was no mentioned in Form 26AS about the interest on Income Tax Refund. Further, the ld. AR for the assessee submitted that as soon as the assessee came to know he offered the interest on refund for levy of income tax, he voluntary surrendered the interest on Income Tax Refund of Rs. 3,22,620/- for the year under consideration as income from other sources for tax purposes. We are of the view the question of concealment income does not arise in the present case where the assessee himself accepts and surrendered the interest income for tax refund and the assessee has deposited the tax accordingly and during the course of assessment proceedings, the assessee in his reply dated 20.01.2015 accepted its mistake that the amount of Rs. 3,22,620/- was surrendered for the taxation when the M/s Laxminath Infrastructure Pvt. Ltd.

assessee was asked specifically on this count. The ld. CIT(A) as observed in para 4.3, that the assessee has not given explanation during the course of proceedings, but from the assessment order the assessee has filed the reply dated 20.01.2015 and the assessee has accepted its mistake and surrendered the interest on Income Tax Refund of Rs. 3,20,620/- for the year under consideration as income from other sources for tax purposes. The ld. AR for the assessee submitted that before the ld. CIT(A) that reply filed by the assessee on 27.02.2017 which has not been considered by the ld. CIT(A). The ld. CIT(A) erred in upholding the order of the Assessing Officer where both the AO and ld. CIT(A) has failed to accept the submissions and the additional evidences filed before the AO hence, ground Nos. 1 and 2 are allowed.

9.

In ground No. 3 the ld. AR for the assessee submitted with the penalty of Rs. 1,05,000/- is unjustified and bad in law because the assessee repeatedly made submission that he has surrendered to the amount of interest on TDS refund, which was not shown in the return of income. During the course of assessment proceedings, when it was noticed by the assessee that there was a mistake, the assessee himself voluntarily surrendered the interest amount. The ld. AR for the assessee submitted that documentary proof in Form 26AS that there was no mention about the interest on IT Refund which is reproduced as under:-

M/s Laxminath Infrastructure Pvt. Ltd.

M/s Laxminath Infrastructure Pvt. Ltd.

M/s Laxminath Infrastructure Pvt. Ltd. Taking into consideration of the present facts and circumstances of the case we are of the opinion to delete the penalty and set aside the order of the ld. CIT(A). Taking strong reliance in case of K.C. Builders vs. ACIT (2006) 265 ITR 562, we allow the Ground No. 3 of the Appeal.

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

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