RAMADURAI RAVICHANDRAN,CHENNAI vs. ACIT, CHENNAI

आदेश / O R D E R

PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

This is an appeal filed by the assessee against the Order dated 26.07.2016 of Commissioner of Income Tax (Appeals)-5, Chennai, in for the AY 2012-13.

ITA No.2673/Mds/2016 :- 2 -:

2.0 All the grounds of the appeal are related to the levy of penalty u/s.271(1)(c) of Income Tax Act (in short ‘Act’). The assessee was employed with M/s.Intel Technology India Pvt. Ltd., for the period from April, 2011 to January 2012 and joined Intel Technology Asia in February, 2012 and received the salary of Rs.1,95,91,901/- and filed the return of income declaring total income of Rs.1,95,32,489/-. Subsequently, the assessee revised the return of income on 26.10.2013 admitting total income of Rs.1,35,35,920/- and claimed a refund of Rs.19,96,270/-. The revised return of income was selected for scrutiny and the assessment was completed on total income of Rs.1,99,18,810/- and initiated penalty u/s.271(1)(c) of the Act. During the penalty proceedings, the assessee submitted Explanation stating that the revised return of income was filed under the impression that the salary received outside India was exempted as per the treaty. Further, the interest income was voluntarily offered by the assessee during the course of assessment proceedings and requested the AO to drop the penalty proceedings. Not being convinced with the Explanation offered by the assessee, the AO imposed penalty of Rs.11,06,988/- being 100% amount of tax sought to be evaded.

3.0 Aggrieved by the order of the AO, the assessee went on appeal before the Ld.CIT(A) and the Ld.CIT(A) confirmed the penalty imposed by the AO and dismissed the assessee’s appeal.

ITA No.2673/Mds/2016 :- 3 -:

4.0 Aggrieved by the Ld.CIT(A)’s Order, the assessee is in appeal before us.

Appearing for the assessee, the Ld.AR argued that the assessee has filed the original return of income disclosing all the particulars admitting the total salary received as income. Subsequently placing reliance on the India and Singapore tax treaty the assessee has revised the return of income excluding the salary received in Singapore which was taxed in Singapore under the wrong impression. The assessee’s employer is resident of Singapore and as per the DTAA, the salary received from the resident of the Singapore is liable to be taxed in Singapore but not in India. Therefore, the assessee’s A.R has vehemently argued that there is no case for levy of penalty u/s.271(1)(c). Further, the assessee also relied on the decision of the Hon’ble Karnataka High Court in the case of CIT v. Manjunatha Cotton Ginning 35 taxmann.com 25 and argued that the AO has issued notice u/s.271(1)(c) without striking the irrelevant column relating the relating to the reason for initiating penalty causing a confusion whether the penalty was initiated for inadequate particulars or the concealment of income and argued that the notice issued u/s.271(1)(c) is invalid and consequent penalty required to be quashed.

On the other hand, the Ld.DR relied on the orders of the lower authorities. 5.0 We heard both the parties and perused the material placed before us. ITA No.2673/Mds/2016 :- 4 -:

5.1 During the appeal, the Ld.A.R argued that the assessing officer not intimated the nature of offence for initiating the penalty by striking irrelevant column whether the penalty is initiated for furnishing inaccurate particulars or concealment of income. We have gone through the penalty order. The Assessing Officer imposed the penalty for furnishing inaccurate particulars or concealment of income and hence according to the AO penalty was initiated for furnishing inaccurate particulars and concealment of income, hence no column need to be strucked off from the printed notice and this argument of the assessee cannot hold waters and dismissed.

5.2 The assessee has filed original return of income disclosing all the particulars. The assessee has filed the revised return of income under the impression that the income received from the employment at Singapore was not taxable in India as per the DTAA and accordingly, filed the revised return of income claiming the relief to the extent of the salary received in Singapore. The AO has selected the revised return of income for scrutiny and completed the assessment without considering the original return of income filed on 31.07.2012. By the time, the revised returns was selected for scrutiny, all the particulars are available with the AO and the AO has not made out a case for penalty. There was a DTAA with the Singapore which gives relief to the assessee on payment of taxes in the contract state. Therefore, it is apparent that the claim was made by the assessee with a mistaken impression. Therefore, we hold that revised return of ITA No.2673/Mds/2016 :- 5 -: income was filed with a bona fide mistaken impression that the salary received at Singapore was exempted from tax. Even otherwise also the entire information was available with the AO in the form of original return of income and there was no case for furnishing of inaccurate particulars or concealment of income to the extent of salary received at Singapore. The AO did not make any discussion regarding the additions made and the reasons for the additions so made in the assessment order. Therefore, we hold that the Revenue has not made out a case for imposing penalty u/s.271(1)(c) and accordingly, the penalty levied u/s.271(1)(c) representing the difference amount of salary is cancelled and orders of the lower authorities to the extent of penalty on amount of Rs.59,97,565/- are set-aside.

5.3 During the assessment proceedings, the AO found that the assessee has received interest income of Rs.3,86,316/- for which also penalty was imposed u/s.271(1)(c), relating to interest receipts from the bank.

Though, the assessee has stated that the said income was voluntarily admitted in the assessment proceedings, the assessee has neither admitted the interest in the original return of income nor the revised return of income. The assessee has admitted the interest income only in scrutiny assessment proceedings after detection of omission from Form- 26AS. Therefore, the Ld.AR’s argument that the income was offered voluntarily is not acceptable. The assessee has failed to include the income relating to interest though it is taxable in the year under ITA No.2673/Mds/2016 :- 6 -: consideration. If the case is not selected for scrutiny, the income would have escaped from assessment. Therefore, the addition of Rs.3,86,316/- is a clear concealment of income and the penalty imposed u/s.271(1)(c) on the addition of Rs.3,86,316/- is confirmed and we uphold the orders of the Ld.CIT(A).

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

Order pronounced in the Open Court on 3rd May, 2017, at Chennai.