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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri P.M Jagtap & Shri S.S. Viswanethra Ravi
ORDER Shri S.S.Viswanethra Ravi, JM:
This appeal by Assessee is against the order dt. 06-03-2014 of CIT(A), XXIV, Kolkata for the assessment year 2006-07, wherein he confirmed the impugned penalty of Rs.27,225/- imposed by the AO u/s. 271(1)(c) of the Act.
The only issue in this appeal is to be decided as to whether the CIT- A justified in confirming the impugned penalty of Rs.27,225/- imposed by the AO u/s. 271(1)(c) of the Act in the facts and circumstances of the case.
The brief facts of the case are that the assessee is an individual and filed his return of income declaring total income of Rs.5,06,340/-. A claim of Refund was allowed and respondent revenue issued intimation u/s. 143(1) of the Act. Thereafter on examination of Form 16A, the AO found that the assessee received an income of Rs.36,920/- under the head ‘rent individual employee’. Accordingly, the assessment was reopened by issuing a notice u/s. 148 of the Act. In response to which, the assessee filed rectified return on 22-06-2007 showing an income sum of Rs.36,920/- under the head ‘ Income from House Property’. Basing on 1 Tejbir Singh Bhandari which, the AO determined the total income of the assessee at Rs.6,97,610/-. Thereafter, the assessee filed application u/s. 154 of the Act before the AO, which was accepted and accordingly, the total income was assessed at Rs.5,95,310/- and assessee paid a sum of Rs.3,410/- towards tax.
The penalty proceedings were initiated on the ground that the assessee intentionally omitted to disclose the receipt of Rs.36,920/- under the head ‘rent individual employee’ with a desire to conceal the said income. In response to which, the assessee submitted mere omission from the return of an item of receipt does not attract the conditions of concealment of income or furnishing of any inaccurate particulars of income and placed his reliance on the decision of the Hon’ble Supreme Court in the case of K.C. Builders (2004) 265 ITR 562(SC). The AO did not accept the contentions of assessee and by rejecting the same imposed penalty of Rs.27,225/- u/s. 271(1)(c) of the Act.
Before the CIT-A the assessee contended that due to misjudgment of salary certificate receipt under self lease scheme from the employer, was mistakenly not disclosed in the original return. Subsequently, in the reopening proceeding the assessee disclosed the same and paid taxes thereon. The assessee further submitted that he cooperated in the re- opening proceeding and disclosed the lease rental income as soon as the mistake came to the knowledge of the assessee. The CIT-A did not consider the submissions of the assessee and confirmed the impugned penalty by stating as under:-
“I have carefully considered the material before. I found that the appellant not shown income of Rs.36,920/- as self occupied H.P income. The argument of the appellant that there was no deliberate suppression or concealment of income of facts is not correct because the appellant one side taking the credit of TDS and another side he is not showing the correct income. The appellant at the time of filing original return the assessee submitted Form 16A issued by the employer showing the nature of payment as ‘Rent Individual Employee ‘. The Form 16A also showed the date of payment, amount credited, income tax deducted. So, there was enough evidence to show that the omission is attributable to an intention or desire on the part of the assessee to conceal the income so as to avoid the imposition of tax thereon. When the assessee has knowledge that he has earned some income it was his obligation to pay tax thereon, particularly when he has claimed TDS of Rs.20,350/- in the original return, which was deducted by his employer, while issuing a certificate in Form 16A to comply with the provisions of Sec.
194J of I.T Act, 1961. The assessee failed to disclose his income, but did not forget to claim TDS on the undisclosed income. This is hard to believe.
From the above facts it is clearly established that appellant deliberately not shown the income. Therefore, I am of the view that the AO rightly imposed the penalty of Rs.27,225/- u/s. 271(1) (c) of the I.T Act. Hence, I confirm the penalty imposed by the AO of Rs.27,225/- u/s. 271(1) (1) ( c) of the I.T Act. These grounds are not allowed.”
Heard rival submissions and perused the material available on record. It is noticed that the AO imposed the impugned penalty of Rs. 27,225/- for concealment of inaccurate particulars of income and as such, the CIT-A confirmed the same. It is also observed that the assessee offered the questioned amount in his revised return filed in response to notice issued u/s. 148 of the Act and paid taxes thereon with interest.
The offence of concealment is a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. In the instant case the Ld. AR has claimed that there was no deliberate act on the part of the assessee for the concealment of the income but the assessee on misconception omitted to incorporate the above stated income in the original return, but, rectified the same in reopening proceeding.
At this juncture we find important to reproduce the provisions as specified in explanation 1 to section 271 (1) of the Act which reads as under "Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate (and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him) then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed".
The above Explanation makes it clear that the statute visualized the assessment proceedings and penalty proceedings to be wholly distinct and independent of each other. The above stated Explanation 1 comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1, the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by assessee will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed the income or furnished inaccurate particulars thereof is available to be drawn. However in the instant case the assessee has explained the reasons for not including the particulars of income as discussed above which appears to be bonafide considering the facts and circumstances of the case.
We are, therefore, of the view that the assessee could not be said to have filed "false" return when it did not include the amount of Rs.36,920/- under lease rental income in the taxable income in the above facts & circumstances. we also find force in the submissions of the Ld.AR that the assessee misjudged the form 16A and disclosure of amount in revised return and payment of taxes thereon with interest and taking into consideration the submissions, facts and circumstances of the case and we cancel the impugned penalty of Rs.27,225/- imposed by the AO and confirmed by the CIT-A. Therefore, this ground of assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 24 -05-2017