M/S RAMESHTH CONSTRUCTION ,JHANSI vs. DCIT,CIRCLE-2(3)(1) , JHANSI

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ITA 90/AGR/2023Status: DisposedITAT Agra12 February 2025AY 2010-117 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 not concealed particulars of income and had disclosed them in Schedule No. 13 before the Assessing Officer. The Tribunal observed that the assessee had disclosed both the interest income of Rs. 1,97,809 and the insurance claim of Rs. 2,10,993 in the computation of income filed with the department along with the return of income. Since these issues had suffered taxation as per the documents produced, and penalty can only be levied under Section 271(1)(c) if the assessee has concealed particulars of income or furnished inaccurate particulars, the appeal of the assessee is liable to be allowed. Consequently, the penalty levied against the assessee is liable to be deleted. The Tribunal allowed the appeal of the assessee and deleted the penalty accordingly.

What were the facts?

The assessee, Rameshth Construction, a partnership firm, filed its return of income for Assessment Year 2010-11 on October 14, 2010, declaring a total income of Rs. 37,17,564. The assessment was initially completed under Section 143(3) at Rs. 47,51,370. Subsequently, the case was reopened under Section 147, and an assessment was completed on April 28, 2015, with an addition of Rs. 4,08,802. Penalty proceedings under Section 271(1)(c) were initiated. The assessee appealed to the CIT(A), who dismissed the appeal. The ITAT, in a prior quantum appeal, partly allowed the assessee's appeal by deleting an addition of Rs. 1,97,809 on account of interest on FDR and remanding another issue for fresh adjudication. Following this, the Assessing Officer passed a penalty order under Section 271(1)(c) levying a penalty of Rs. 1,26,320. The assessee's appeal against this penalty order was dismissed by the CIT(A) (NFAC) on April 26, 2023.

What were the issues?

1. Whether the learned CIT(A) NFAC erred in upholding the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, of Rs. 1,26,320, without appreciating the ITAT's order in the quantum appeal which allowed relief to the appellant, and whether the penalty is liable to be deleted? 2. Whether the penalty of Rs. 1,26,203 under Section 271(1)(c) of the Income Tax Act, 1961, worked out on additions that were either deleted (interest on FDR Rs. 1,97,809) or set aside for fresh adjudication (insurance claim Rs. 2,10,993) by the Honourable ITAT, should have been deleted or reduced? 3. Whether an addition/disallowance per se implies concealment or furnishing of inaccurate particulars of income, making the penalty under Section 271(1)(c) leviable? 4. Whether the learned CIT(A) NFAC erred in ignoring that the penalty under Section 271(1)(c) was imposed for twin charges of concealment and furnishing inaccurate particulars, whereas the assessment order initiated penalty for a single charge of concealment? Assessee's contentions: - The additions made in the assessment order, on which the penalty was levied, were set aside by the Tribunal. Therefore, the penalty cannot be levied. - The assessee did not conceal any income and disclosed all income in Schedule No. 13 before the AO. - Relied on Shri T. Ashok Pai v. CIT [2007] 292 ITR 11 (SC) and Dilip N. Shroff v. JCIT 291 ITR 519 (SC) for the distinction between concealment and furnishing inaccurate particulars, emphasizing that concealment is a deliberate act. - Relied on CIT vs. Bengal Jute Mills Co. Ltd. [1988] 174 ITR 402, where a penalty based solely on an addition deleted by the Tribunal was held invalid. Revenue's contentions: - The Learned DR supported the order of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH: AGRA

For Respondent: Shri ShildndraShrivastava , Sr. DR
Hearing: 15.01.2025Pronounced: 12.02.2025

ORDER PERSUDHIR KUMAR, JUDICIAL MEMBER: The assessee preferred the captioned appeal, challenging the order dated 26.04.2023 passed by the Ld. Commissioner of Income Tax(Appeals) (“Ld. CIT(A) for short”)/National Faceless Appeal Centre (NFAC) Delhi pertaining to penalty order for Assessment year 2010-11 and arises out of the penalty order dated 24.11.2017 passed under Sections 271(1)(c) of the Income Tax Act, 1961 (“The Act for short”).

2.

The brief facts of the case are that the assessee is a partnership firm, engaged in the business of civil contract work in various departments. The assessee has e-filled his return of income on 14-10- 2010 declaring total income at Rs 37,17,564/. The assessment was completed u/s 143(3) of the Act at total income Rs 4751370/- on 31- 12-2012. The case of assessee was reopened u/s 147 of the Act and notice u/s 148 of the Act was issued on 31-10-2014 and properly served to the assessee. The A.O has completed the assessment on 28- 04-2015 after making the addition of Rs 4,08,802/- and penalty proceeding was also initiated against the assessee. Aggrievedfrom the order of the AO the assessee has filed the appeal before the Ld.CIT(A), who dismissed the appeal against which the assessee preferred the appeal before the Tribunal, and Tribunal vide order dated 02-03-2021 partly allowing the appeal, deleted the addition of Rs.1,97,809/- on account of interest on FDR and matter was sent back for fresh adjudication. The AO passed the penalty order u/s 271(1)(c) of the Act levied the penalty of Rs 1,26,320/-.

3.

Aggrieved the order of the AO, the assessee has filed the appeal before the Ld. CIT(A) who vide his order dated 26-04-2023 dismissed the appeal against which the assessee is in appeal before us on the following grounds;

1.

That having regard to facts and circumstances of the case the learned CIT(A) NFAC has erred both on facts and in law in dismissing the appeal and upholding the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 of Rs. 1,26,320, without appreciating the order passed by the Honourable ITAT in the quantum appeal allowing relief to the appellant. The penalty imposed is liable to be deleted. 2.That having regard to facts and circumstances of the case the addition of interest on FDR Rs. 1,97,809 as income from other sources stands deleted by the Honourable ITAT and addition of Insurance claim Rs. 2,10,993 was set aside for fresh adjudication before the learned CIT(A) as per order of the Honourable ITAT dated 02.03.2021. The penalty of Rs. 1,26,203 under section 271(1)(c) of the Income Tax Act, 1961 worked out on these additions should have been deleted/reduced.

3.That having regard to facts and circumstances of the case the addition/disallowance per se cannot mean that the appellant has concealed and/or furnished inaccurate particulars of income. Accordingly, penalty under section 271(1)(c) of the Income Tax Act, 1961 is not leviable. 4.That having regard to facts and circumstances of the case the learned CIT(A) NFAC has erred both on facts and in law in ignoring that the penalty under section 271(1)(c) of the Income Tax Act, 1961 was imposed for twin charges of concealment and furnishing inaccurate particulars of income whereas per the assessment order dated 28.04.2015 this penalty was initiated for single charge of concealment of income. 5.That having regard to facts and circumstances of the case the order passed by learned CIT(A) NFAC dated 26.04.2023 upholding the penalty under section 271(1)(c) of the Income Tax Act, 1961 without considering the submissions filed is bad in law. 6.That the appellant craves the leave to add, amend, modify, delete any grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other.

4.

The ld. AR has submitted that the additions made in the assessment order on which basis the penalty levied, wasset aside by the Tribunal.

The assessee has not concealed any income and disclosed all the income in schedule no 13 (paper book page no 58) before the AO. Where the assessment order was set aside, on that basis penalty cannot be levied. The reliance placed in the case of Shri T. Ashok pai v. CIT [2007]292 ITR 11 (SC)in this the Hon’ble court held that “22. Concealment of income and furnishing of inaccurate particulars carry different connotations. Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppression veri or suggestion falsi. Dilip N shroff V, JCIT 291 ITR 519 (SC) the Hon’ble court held that 43. The expression “Conceal” is of great importance. According to law Lexicon , the word ‘Conceal means : ‘to hide or keep secret. The word “conceal” is con+celarewhich implies to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of; to withhold knowledge of. The offence of concealment is, thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the income tax authorities.” In Webster’s Dictionary “inaccurate” has been defined as : “not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy of transcript.”

44.

It signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars.” In the case of Commissioner of Income -Tax vs Bengal jute Mills Co. Ltd, [1988] 174 ITR 402 “where penalty was imposed solely on the basis of an addition of Rs 4 lakhs to the assessee’s total income and addition was deleted by the Tribunal. Held,” that it was evident from the material on record that the penalty had been imposed solely on the basis of the addition of Rs 4 lakh to the assessee’s income. If the addition was deleted the charge of concealment of income could not be sustained. Imposition of penalty under section 271(1)( c) of the Income-tax Act 1961 was, therefore,not valid.” 5. The Learned DR has supported the order of the lower authorities. 6. We have heard rival submissions of both the parties and examined the relevant material available on record. 7. In the present case the assessee has not concealed the particulars of income and disclosed the particulars in schedule no 13 (paper book page no 58) before the AO. As we observed that the assessee has disclosed both the interest income of Rs.197809/- and insurance claim of Rs.2,10,993/-in the computation of income filed with department alongwith return of income and hence, both the aforementioned issue have suffered taxation as per documents produced before us. The penalty can be levied u/s. 271(1)(c) against the assessee if he has concealed the particulars of his income or furnished inaccurate particulars of such income. Therefore, the appeal of the assessee is liable to be allowed and the penalty levied against the assessee is liable to be deleted and deleted accordingly.

8.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 12/02/2025.

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