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Income Tax Appellate Tribunal, DELHI BENCHES : B : NEW DELHI
Before: SHRI R.S. SYAL & SHRI K. NARASIMHA CHARY
Date of Hearing : 18.04.2018 Date of Pronouncement : 23.04.2018 ORDER PER R.S. SYAL, VP: This appeal filed by the Revenue arises out of the order passed by the CIT(A) on 02.03.2016 deleting the penalty of Rs.88,24,746/- imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2012-13.
Briefly stated, the facts of the case are that the assessee filed his return on 30.03.2013 declaring total income of Rs.2,65,400/-. The case was selected for scrutiny. Notice u/s 143(2) was issued firstly on 7.8.2013 and then later. On 08.09.2014, Shri Giriraj Singh Saini appeared along with his Advocate intimating the death of the assessee on 26.06.2014. List of legal heirs along with their affidavits etc. was filed. On perusal of the bank statement of the assessee, it was observed by the AO that interest of Rs.2,86,93,220/- was earned by the assessee on account of compulsory acquisition of the property which was not declared. Similarly, there was some bank interest of Rs.1,18,428/- which was also not declared in the original return by the late assessee. The legal heirs revised the return declaring interest income earned from bank as well as from Land acquisition officer. Assessment was completed by making addition of Rs.2,86,93,220/-, being, interest received from Land acquisition officer and Rs.1,00,431/-, being, interest from Canara Bank. Thereafter, penalty was imposed, which came to be deleted in the first appeal. The Revenue is aggrieved against the deletion of the penalty.
We have heard both the sides and perused the relevant material on record. It is noticed that the assessee expired on 26.06.2014 at the age of roughly 90 years. Though he filed return of income on 30.03.2013, but, the amount of interest as discussed above was not included. The legal heirs of the assessee revised the return by including the amount of interest. It is pertinent to mention that the assessee received interest on which tax was deducted at source @ 10% as has been tabulated on page 2 of the assessment order. The assessee entertained a bona fide belief that interest income was not required to be shown separately as tax was deducted at source. Not only the interest income was not offered for taxation, but, no credit was also taken for the amount of tax deducted at source on such interest. Given the fact that the assessee was an old man, aged, around 90 years, who expired after filing the return of income and his legal heirs, when confronted, immediately revised the return offering the requisite income, it can be very well said that the assessee was under a bona fide belief that the amount of interest under the present circumstances was not separately chargeable to tax. It is more so in view of the judgment dated 19.10.2016 of the Hon'ble jurisdictional High Court in Principal CIT vs. Jagdeep Singh Chanda [ITA 309-2016 (OM)], a copy of which has been placed on record, in which it has been held that penalty should not be imposed u/s 271(1)(c) in respect of interest income not offered for taxation in view of the judgment in CIT vs. Ghanshyam (2009)
315 ITR 1 (SC) and corresponding amendment to section 56(2)(viii) charging such amount to tax w.e.f. the assessment year 2011-12. The Hon'ble jurisdictional High Court was also dealing with the assessment year 2011-12, covering the period post amendment, in which no substantial question of law was held to be arising from the order of the Tribunal deleting penalty u/s 271(1)(c) in similar circumstances. Respectfully following the precedent and in view of the peculiar facts and circumstances stated above, we uphold the impugned order deleting the penalty.
In the result, the appeal filed by the Revenue is dismissed.
The order pronounced in the open court on 23.04.2018.