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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI P.K. BANSAL & SHRI AMARJIT SINGH
PER AMARJIT SINGH, J.M.
The assessee has filed the present appeal against the order dated 12th November 2014, passed by the learned Commissioner (Appeals)-
II, Nagpur, relevant to the assessment year 2009-10, in which the
penalty levied by the Assessing Officer under section 271(1)(c) of the
Income Tax Act, 1961 (for short “the Act”) to the tune of ` 13,76,195,
was confirmed.
Brief facts of the case are that the assessee filed her return of income for the assessment year 2009-10 on 30th September 2009,
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declaring total income to the tune of ` 50,70,151. Thereafter, the case
was selected for scrutiny under CASS and order under section 143(3) was passed on 30th December 2011 assessing total income to the tune
of ` 84,87,684. The Assessing Officer raised the additional income to
the tune of ` 24,17,542 and accordingly, penalty to the tune of `
8,21,720 was levied. The assessee filed an appeal before the learned
Commissioner (Appeals) who deleted the penalty upon the addition
except an amount of ` 13,76,195, which was claimed by the assessee
as expenditure but subsequently issued the Debit Note. Since the
assessee was not satisfied, therefore, the present appeal filed before
us.
We have heard the rival contentions and perused the material
available on record. At the time of assessment under section 143(3) of
the Act, the Assessing Officer demanded the evidence in support of the
expenditure to the tune of ` 13,76,195. The assesee had issued Debit
Note with regard to the amount and explained that the expenditure
was claimed wrongly. Thereafter, the assessee himself offered the said
amount as his income. The Assessing Officer after the completion of
assessment under section 143(3) of the Act initiated the penalty
proceedings on account of addition to the tune of ` 24,17,542 which
includes the said amount to the tune of ` 1376195. The learned
Commissioner (Appeals) deleted the penalty upon the other additions,
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however, upheld the penalty upon the addition the tune of `
13,76,195. The contention of the assessee is that the amount of `
13,76,195 was wrongly claimed as expenditure whereas the assessee
had issued the Debit Note of this amount. Finding mistake, the
assessee corrected the mistake and offered the said amount as income
to the assessee. The learned Counsel for the assessee has argued that
the mistake in the accounts book is not a concealment of income or
furnishing of inaccurate particulars of income, therefore, in the said
circumstances, no penalty is leviable in view of the order passed by
the Co-ordinate Bench of the Tribunal, Mumbai Bench, in the case of
Heranba Industries Ltd. v/s DCIT, ITA no.2292/Mum./2013, order dated 8th April 2015. On the other hand, the learned Departmental
Representative strongly relied upon the order passed by the learned
Commissioner (Appeals) in question. The factual position is not in
dispute. The Tribunal in the case of Heranba Industries Ltd. (supra)
has held that the mistake cannot be said to be deliberate attempt to
evade the tax. The relevant finding of the said law is hereby
reproduced below:-
“4. We have considered rival contentions, carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by ld. DR & AR during the course of hearing before us. From the record we found that at the very first instance share application money was surrendered by assessee with a request not to initiate any penalty proceedings. The AO passed order u/s.143(3) adding surrendered amount
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u/s.69A on the plea that assessee has surrendered amount only after issue of notice. It is not disputed by the department that sum which was added u/s.69A was one which was surrendered by the assessee itself. Neither there was any detection nor there was any information in the possession of the department except for the amount surrendered by the assessee and in these circumstances it cannot be ITA No.2292/13 said that there was any concealment. In case of CIT vs. Suresh Chandra Mittal251 ITR 9 (SC), Hon'ble Supreme Court observed that if the assessee has offered the additional income to buy peace of mind and to avoid litigation penalty u/s.271(1)(c) of the Act cannot be levied. In the instant case, there was no malafide intention on the part of the assessee and the AO had not brought any evidence on record to prove that there was concealment of income. At the time of surrender itself contention of not initiating any penalty proceedings was there. No additional matter was discovered to prove that there was concealment of income. The AO has included the amount of share capital in the total income of assessee merely on the basis of assessee's declaration/surrender. The AO did not point out or refer any evidence or material to show that the amount of share capital received by the assessee was bogus. It is also not the case of the revenue that material was found at the assessee's premises to indicate that share application money received was an arranged affair to accommodate assessee's unaccounted money. Thus there was no detection by the AO that share capital was not genuine. The surrender of share capital after issue of the notice u/s.143(2) could not lead to any inference that it was not voluntary. Admittedly the assessee has offered the amount of share capital for taxation voluntarily and it was not the case of revenue that the same was done after its detection by the department. It is quite clear from the record that this entire transaction was not detection of the AO that the share capital was not genuine and that the assessee had offered the amount without any specific query. EvenITA No.2292/13 surrender of amount by the assessee after receipt of questionnaire could not be lead to any inference that it was not voluntary, in the absence of any material on record to suggest that it was bogus or untrue. The contention that in every case where surrender is made inference of concealment of income must be drawn under S.58 of Evidence Act, cannot be accepted in view of the decision of Punjan & Haryana High Court in the case of Careers Education & Infotech (P) Ltd., (2011) 336 ITR 257 (P&H). Not an iota of evidence was narrated to support the addition made except the surrender made by the assessee itself. When no concealment was ever detected by the AO, no penalty was impossible. Recently, Hon'ble Punjab & Haryana High Court in the case of Siddharth Enterprises vide order dt. 14th July, 2009 held after considering the decision of Hon'ble Supreme Court in the case of Union of India & Ors. vs. Dharamendra Textile Processors
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& Ors. (2008) 306 ITR (SC) 277 that the judgment of Hon'ble Supreme Court in the case of Dharmendra Textiles (supra) cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. What has been laid down is that qualitative difference between criminal liability under s. 276C and penalty under s. 271(1)(c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, concept of penalty has not undergone change by virtue of the said judgment. It was categorically observed that penalty should be imposed only when there is some element of deliberate default and not a mere mistake. This being the ITA No.2292/13 position, the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax. Hon'ble Supreme Court in the case of CIT vs. Suresh Chandra Mittal 251 ITR 9 (SC) observed that where assessee has surrendered the income after persistence queries by the AO and where revised return has been regularized by the Revenue, explanation of the assessee that he has declared additional income to buy peach of mind and to come out of waxed litigation could be treated as bona fide, accordingly levy of penalty under s. 271(1)(c) was held to be not justified.”
In view of the findings of the Tribunal cited supra, we are of the
view that the factual position of the present case is also the same. The
assessee has shown the expenditure to the tune of ` 13,76,195 in his
books of account, however, he had issued the Debit Note in connection
with the said expenditure. After raising the question, the assessee
admitted his mistake and offered the said amount as his income.
Showing expenditure in the books of account is a mistake, however,
Debit Note had already been issued which was on record at that time.
The finding of the case in Heranba Industries Ltd. (supra) is quite
applicable to the facts of the present case, therefore, in the said
circumstances, we are of the view that the learned Commissioner
(Appeals) has wrongly confirmed the penalty on the amount of `
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13,76,195, which is not liable to be sustainable in the eyes of law. We
set aside the finding of the learned Commissioner (Appeals) on this
issue and delete the penalty. The grounds raised by the assessee are
allowed.
In the result, assessee’s appeal is allowed.
Order pronounced in the open Court on 29.06.2017
Sd/- Sd/- P.K. BANSAL AMARJIT SINGH VICE PRESIDENT JUDICIAL MEMBER
NAGPUR, DATED:
Copy of the order forwarded to:
(1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Nagpur City concerned; (5) The DR, ITAT, Nagpur; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary
(Dy./Asstt.Registrar) ITAT, Nagpur