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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-1’, NEW DELHI
Before: Sh. N. K. Saini
ORDER This is an appeal by the assessee against the order dated 08.12.2015 of ld. CIT(A)-XXXII, New Delhi.
The only grievance of the assessee in his appeal relates to the confirmation of penalty of Rs.1,34,365/- levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act).
Facts of the case in brief are that the assessee filed the return of income on 07.02.2011 declaring an income of Rs.3,12,232/- which was processed u/s 143(1) of the Act. Thereafter, the case was selected for scrutiny. During the course of assessment proceedings, the AO asked the assessee to furnish reconciliation of receipts as per TDS certificates 2 Mina Gandhi and as shown in the return of income. The assessee furnished the requisite information and stated that inadvertently interest amounting to Rs.4,97,424/- earned on FDR with SBI was skipped to be included and that the TDS deducted thereon amounting to Rs.49,743/- was also not claimed. The AO made the addition of Rs.4,97,424/- but allowed the credit for TDS amounting to Rs.49,743/-. The AO also initiated penalty proceedings u/s 271(1)(c) of the Act. The AO levied the penalty of Rs.1,34,365/- by passing the ex-parte order and observed that the assessee had knowingly, intentionally and fraudulently concealed particulars of income on account of bank interest and penalty was to be levied @ 100% of the tax sought to be evaded for furnishing inaccurate particulars of income and thereby concealment of income.
Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that there was a sufficient and reasonable cause for alleged non-compliance of the notice of hearing as circumstances were beyond the control of the assessee because the counsel of the assessee looking after the case was out of the town and the same was informed to the AO. It was further submitted that the assessee filed her return of income on the basis of TDS certificate showing interest earned and TDS deducted thereon by the respective bank. It was further submitted that the assessee received TDS certificate in respect of interest earned 3 Mina Gandhi from The Royal Bank of Scotland & ICICI Bank Ltd. for a sum of Rs.4,00,192.91 on which TDS of Rs.40,020/- was deducted. However, no TDS certificate was received from SBI and non-receipts of TDS certificates from SBI resulted in short reporting of taxable income amounting to Rs.4,97,424/-. It was stated that the aforesaid mistake occurred owing to the facts that the TDS certificate was not received by the assessee at the time of filing of the return of income and this mistake came to the knowledge of the assessee, only during the course of assessment proceedings when reconciliation of income and TDS as per ITR vis-à-vis as per Form No. 26AS was done. It was further submitted that the aforesaid income was included in next assessment year since the assessee had received the TDS certificate. In support of the above contention, copy of the acknowledgement of income for the assessment year 2011-12 was furnished. It was also submitted that during the course of assessment proceedings, when this mistake came to the notice of the assessee, she herself offered for taxation which strengthen the point that mistake was inadvertent and not with real intention. The reliance was placed on the following case laws:
� Sir Shadilal Sugar and General Mills Ltd. (1987) 168 ITR 705 (SC) � J.V. Appadurai Chettiar Co. (1997) 137 CTR 510 (Mad.) � C.J. Rathnaswamy (1996) 89 Taxman 509 (Mad.) � Sant Das Nihal Chand (1996) 135 CTR 174 (Raj.) � Navnitlal Pochalal (1995) 213 ITR 69 (Guj.) � Nuruddin and Bros. (1990) 1985 ITR 481 (Cat) � Gridharlal Soni (1989) 179 ITR 111 (Cal)
4 Mina Gandhi � Haji Gaffar Haji Dada Chini (1988) 169 ITR 33 (Bom) � Punjab Tyres (1986) 162 ITR 517 (MP) � M. George & Bros. (1986) 160 ITR 511 (Ker) � Smt. Hema Malini (1993) 45 TTJ 77 (Bom) (AT) 5. It was further submitted that the AO has not given a clear finding as to whether the assessee concealed the particulars of income or furnished inaccurate particulars of income. The reliance was placed on the following case laws: � Ashok Raj Nath, Panipat Vs DCIT ( ITAT Del) � Sri T. Ashok Pal Vs CIT, dated 18.05.2007 (SC) � K.C. Builder5s & Anr. Vs ACIT (2004) 265 ITR 562 (SC) � CIT Vs Manjunatha Cotton and Ginning Factory, (Kar.) � CIT VS Miles Cables Industries 261 ITR 675 � New Sorathia Engineering Co. Vs CIT, dated 25.01.2006 (Guj.) � CIT Vs Manu Engineering Works (Guj.) 6. It was further submitted that the AO wrongly calculated the amount of penalty levied u/s 271(1)(c) of the Act because the final tax liability after adjusting the TDS came to Rs.58,451/- and not Rs.1,34,365/-.
The ld. CIT(A) after considering the submissions of the assessee observed that the assessee is a regular tax payee and had interest income from the FDRs and when she filed the return of income for the assessment year 2011-12 on 29.03.2012, she had already received notice u/s 143(2) of the 5 Mina Gandhi Act for the assessment year 2010-11. As such she could have revised her return of income if her mistake was bonafide. Since she had only one source of income, so it was well within her knowledge as to how much interest she was getting on her FDRs. He further observed that when the assessee filed the return of income for the assessment year 2010-11, she was aware that the interest income being disclosed was much less than the actual interest received by her. Therefore, the argument that in the absence of Form 16A, she was not aware of interest received from SBI, was not convincing. Accordingly, the ld. CIT(A) held that the assessee knowingly did not disclose interest income from FDRs with SBI while filing the return of income and to that extent she filed inaccurate particulars of income and tried to conceal income of Rs.4,97,424/-. The ld. CIT(A) also did not find merit in this submission of the assessee that the AO had not given a clear cut finding as to whether the case of the assessee was of furnishing of inaccurate particulars or of concealment of income.
Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that during the year under consideration the assessee earned total interest income 6 Mina Gandhi of Rs.8,97,616.91 on FDRs with various banks and TDS amounting to Rs.89,763/- was deducted by the banks on this interest income, break-up of which was as under:
Sl. Name of the Bank with Amount of Tax No. whom FDR’s operated Interest Deducted earned thereon 1. The Royal Bank of 4,00,192.91 40,020.00 Scotland & ICICI Bank Ltd.
2. State Bank of India 4,97,424.00 49,743.00 Total (Rs.) 8,97,616.91 89,763.00 9. It was submitted that the assessee received TDS certificate in respect of interest income of Rs.4,00,192.91 and included the said amount in her income and that she did not receive any TDS certificate from SBI mentioned at Serial No. 2 in the aforesaid table and accordingly she skipped to include this interest and TDS certificate thereon in her Income Tax Return for the assessment year under consideration. However, during the course of assessment proceedings when the assessee reconciled the income and TDS as per ITR and as per Form No. 26AS then only the mistake came to the knowledge of the assessee and she surrendered the same for taxation before the AO. Therefore, there was a sufficient and reasonable cause for not showing the income in the year under consideration and the penalty u/s 271(1)(c) of the Act was not leviable. It was further 7 Mina Gandhi submitted that the assessee included the income in the succeeding year on the basis of the TDS certificate and also claimed the tax deducted at source. It was also submitted that the penalty u/s 271(1)(c) of the Act could not have sustained in the absence of the clear cut finding by the AO while levying the penalty because it was incumbent upon the AO while passing the penalty order to state as to whether penalty was being levied for concealment of income or furnishing the inaccurate particulars of income. The reliance was placed on the judgment of Hon’ble Gujarat High Court in the case of New Sorthia Engineering Co. Vs CIT order dated 25.01.2006. It was also submitted that the AO wrongly calculated the final tax liability because he has not adjusted the TDS deducted on the interest income while working out the tax liability.
In his rival submissions the ld. DR supported the orders of the authorities below.
I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee had earned interest from The Royal Bank of Scotland & ICICI Bank Ltd. amounting to Rs.4,00,192.91 on which TDS was deducted at Rs.40,020/-. The assessee 8 Mina Gandhi obtained the TDS certificate in respect of the aforesaid amount and disclosed the same as income in her return of income. However, no TDS certificate was received in respect of interest earned from State Bank of India amounting to Rs.4,97,424/- on which TDS was deducted at Rs.49,743/-. In the absence of TDS certificate, the amount of interest was not included in the income by the assessee. However, when the TDS certificate was received, the assessee included the interest income in the income relating to the assessment year 2011-12 and also claimed the credit for tax deducted at source. In the present case, it is not clear as to whether the same income for which TDS certificate was received in the subsequent year has been accepted by the department or not. It is also noticed that the AO did not allow proper opportunity of being heard to the assessee as the penalty order was passed ex-parte. It is well settled that nobody should be condemned unheard as per the maxim audi alteram partem. In the present case, it also appears that the amount of final tax liabilities was wrongly calculated by the AO. I, therefore, considering the totality of the facts deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
9 Mina Gandhi 12. In the result, the appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 30/05/2016)