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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
ORDER
Per Shri A.T.Varkey, JM
This is an appeal filed by the assessee against the penalty order confirmed by the Ld. CIT(A)-XXIV, Kolkata dated 20.08.2014 for AY 2011-12.
None appeared for the Revenue. However, after going through the records we are of the opinion that it can be disposed off without hearing the Ld. DR. So we proceed to adjudicate the penalty order confirmed by the Ld. CIT(A). 3. Brief facts of the case are that the assessee is an employee of M/s. Garden Reach Ship Builders & Engineers Ltd., Kolkata which is an undertaking of Ministry of Defence. The assessee is an Engineer and has filed his return of income showing a gross total income of Rs.9,69,116/-. Later the case was taken up for scrutiny based on ITS 26AS. Return was processed u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) and refund was given to the assessee. As per the ITS data 26AS, the AO noted that the assessee has received a total amount of Rs.14,85,591/- on account of salary and interest from bank. Thereafter, notice u/s. 148 of the Act was issued and the assessment was reopened. The AO notes that the assessee has shown only Rs.7,26,209/- as salary income whereas he has received a total salary of Rs.12,41,040/- as per Form 16 issued by M/s. GB Marine Services Ltd. and M/s. GRSE Ltd. The AO also noted that the assessee has received a total amount 2 Dilip Datta, AY, 2011-12 of Rs.16,524/- as pension during the relevant assessment year but he has not disclosed the same. Thereafter, the AO treated the same as undisclosed income of the assessee. According to AO, when the assessee was confronted as to why both the undisclosed income i.e. Rs.5,14,831/- and Rs.16,524/- should not be treated as his concealed income and the penalty should not be imposed u/s. 271(1)(c) of the Act the assessee could not give any satisfactory reply, therefore, he levied the penalty @ 100% of the tax sought to be evaded u/s. 271(1)(c) read with section 274 of the Act and levied penalty of Rs.1,64,189/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to confirm the same. Aggrieved, assessee is before us.
4. We have heard Ld. AR and gone through the facts and circumstances of the case. We note that assessee is an Engineer who retired from M/s. GRSE Ltd., a Govt. of India Undertaking under the Ministry of Defence in April, 2009. The assessee has filed the return of income without the help of any professional. In the year under consideration, the assessee received gratuity amount of Rs.6,50,000/- which he thought was not taxable and, therefore, he did not add it to the salary which he received from M/s. GRSE Ltd. The Ld. AR for the assessee contended that in the financial year under consideration, the Parliament made an amendment in the Payment of Gratuity Act, 1972 by an amendment No. 15/2010 wherein section 4 of the Payment of Gratuity Act, 1972 was amended by substituting the word Rs.3,50,000/- to Rs. 10,00,000/-. This fact the assessee came to know from the newspaper and TV. The Ld. AR urged before us that before 2010, the gratuity amount up to Rs.3.5 lacs was out of tax net. However, by an amendment i.e. the Payment of Gratuity (Amendment) Act, 2010, section 4 of the Act 39 of 1972 was amended and in place of Rs.3.5 lacs the word Rs.10 lacs was substituted. Therefore, the assessee was under the bonafide impression that in this relevant assessment year, the amount of Rs.6,50,000/- which was below Rs. 10 lakhs was not taxable. The Ld. AR took our attention to the notification made by the Govt. of India dated 17.05.2010 wherein the fact of Gratuity Amendment Act, 2010 has raised the limit of payment of gratuity outside taxable net upto Rs. 10 lacs was notified by the Govt. of India which means, though the Parliament enacted the law of raising the ceiling of Rs.3.5 lakh to Rs.10 lakh out of tax net in the relevant assessment year, however, the notification in the official gazette was published only in May, 2010, therefore, it was applicable for next year onwards. In such a scenario, according to 3 Dilip Datta, AY, 2011-12 Ld. AR, the assessee who is an Engineer by profession and who has filed the return of income himself without the assistance of any professional cannot be faulted and there is a reasonable cause as envisaged in section 273B of the Act for committing the mistake which is in the facts and circumstances is bonafide. We find force in the argument of the Ld. AR that the assessee was on a bonafide belief that the gratuity which he received from the employer which was admittedly below Rs. 10 lacs was exempted for computation of tax and, therefore, on that bonafide belief the gratuity amount was not included by the assessee in his return. We also take note that from the reconciliation filed from page 2 of the paper book, we note that the pension amount of Rs.16,524/- has also been included by the assessee in computing the total income of Rs.9,69,116/- and not Rs.7,26,209/- as held by the AO. So, from the facts and circumstances narrated above we hold that since there is a reasonable cause for the assessee in not reflecting the gratuity amount in his return of income no penalty u/s. 271(1)(c) of the Act was warranted. So, we direct deletion of the penalty imposed by the AO and confirmed by the Ld. CIT(A). Appeal of assessee is allowed.
In the result, appeal of assessee is allowed.
Order is pronounced in the open court on 4th October, 2017 Sd/- Sd/- (M. Balaganesh) (Aby. T. Varkey) Accountant Member Judicial Member 4th October, 2017 Dated : Jd.(Sr.P.S.) Copy of the order forwarded to: Appellant – Shri Dilip Datta, C/o D. J. Shah & Co., Kalyan Bhavan, 2, 1. Elgin Road, Kolkata-700 020. Respondent – ITO, Ward-21(3), Kolkata. 2 The CIT(A), Kolkata 3. 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order,
Sr. Pvt. Secretary