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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAMIT KOCHAR
सुनवाई क" तार"ख /Date of Hearing : 10-08-2016 घोषणा क" तार"ख /Date of Pronouncement : 25-10-2016 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 14th November, 2014 passed by learned Commissioner of Income Tax (Appeals)- 28, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2010-11, the appellate proceedings before the learned CIT(A) arising from the order of penalty dated 31st July, 2013 passed by the learned Assessing Officer (hereinafter called “the AO”) u/s 271(1)(c) of the Income Tax Act,1961 (Hereinafter called “the Act”).
ITA 792/Mum/2015 2
The grounds of appeal raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called “the Tribunal”) read as under:-
1. The learned CIT (A) is erred in upholding the penalty of Rs. 401135/- without considering the bonafide and proper hearing and without considering all the grounds. 2. The learned CIT (A) has not appreciated the fact tax evasion is only Rs. 132198/- and not Rs. 401135/-.
At the time of hearing before us, none appeared on behalf of the 3. assessee. Therefore, we proceed to dispose of the appeal after hearing the learned D.R.
The brief facts of the case are that the assessee is an individual and during the course of assessment proceedings u/s. 143(3) of the Act, it was observed by the A.O. that the assessee had received interest amounting to Rs.22,82,196/- in his bank account , while the assessee has offered Rs. 17,46,736/- as interest income in his return of income filed with the Revenue. Thus, there was an addition of Rs.6,89,982/- to the returned income by the AO in quantum assessment. Similarly, it was observed by the AO that the assessee had offered salary income of Rs.47,98,998/- received from one employer i.e. M/s. Delhi International Airport Pvt. Ltd., whereas he had also received salary income of Rs.6,08,723/- from M/s. ICOMM Tele Ltd. also during the financial year , which was not declared to the Revenue and hence the same was added to the total income of the assessee due to the failure of the assessee to report the same in his return of income for the assessment year 2010-11 filed with the Revenue. Show cause notice was issued to the assessee by the AO asking as to why penalty u/s 271 (1)(c) of the Act should not be levied. The assessee submitted that the assessee’s case ITA 792/Mum/2015 3 was selected for scrutiny and salary income from previous employer of Rs. 6,08,190/- on which TDS of Rs. 1,77,479/- had been deducted was not included in the return of income filed with the Revenue and the assessee has offered the same for taxation during quantum assessment . Similarly, interest income from SBI amounting to Rs. 6,89,952/- on which TDS of Rs. 76,409/- was deducted was inadvertently not shown as income in the return of income filed with the Revenue and the same had been offered to tax during the quantum assessment . The assessee submitted that he joined M/s ICOMM Tele Limited in the month of February, 2009 and resigned in May, 2009. The total salary received was Rs. 6 lacs and TDS was required to be deducted to the tune of Rs. 79,407/- , against which TDS of Rs.1,77,479/- was already deducted by the employer and hence the assessee inadvertently ignored to include the said salary income. Similarly, interest of Rs. 6,86,952/- was credited in the assessee account and the required TDS of Rs. 76,409/- had been deducted and it was submitted that the assessee had not claimed the TDS amount with respect to both the additions in the return of income filed with the Revenue.
The A.O. rejected the contention of the assessee and observed that the assessee had earned salary income of Rs.6,08,190/- and the bank interest income of Rs. 6,86,952/- and the assessee himself had not voluntarily offered salary and interest income as per return of income filed and also failed to correct the inaccurate claims made in his return of income filed with the Revenue. No satisfactory explanations has been offered by the assessee for not showing this income in the original return of income filed with the Revenue but only stated that the said income remained to be taxed as Form No. 16 was not received or due to omission/oversight. When the assessee was confronted, the assessee submitted the details from which the details of undisclosed income have been added. Further , the AO observed that the contention of assessee that the assessee has offered the said income during ITA 792/Mum/2015 4 the course of assessment proceedings was also not correct as the same has been done by the assessee after the case was selected for scrutiny. The A.O. observed that the assessee has accepted the order u/s.143 (3) of the Act and paid the tax determined in the assessment order and he has also not filed any appeal before the learned CIT(A) against the assessment order in quantum which proved that the assessee has admitted that the particulars of income in the return were furnished inaccurately in the return of income filed with the Revenue. The A.O. held that it is mandatory on part of the assessee to furnish the particulars of income in the return of income correctly as per provisions of the Act which the assessee failed to do so. It was observed by the AO that the case of CIT v. Reliance Petroproducts Private Limited (2010) 322 ITR 158 (SC) relied upon by the assessee is not applicable in the case of the assessee as the assessee did conceal the income and filed inaccurate particulars of income.It was observed by the AO that men-rea is not to be prove as penalty proceedings are civil proceedings and willful concealment is not an essential ingredient for attracting civil liability The A.O. accordingly levied penalty of Rs. 4,01,135/- u/s 271(1)(c) of the Act which is 100% of the tax sought to be evaded vide penalty order dated 31-07-2013 passed by the AO u/s 271(1)(c) of the Act.
5.Aggrieved by the penalty order dated 31-07-2013 passed by the A.O. u/s 271(1)(c) of the Act, the assessee filed first appeal before the ld. CIT(A).
Before the ld. CIT(A), the assessee submitted that he had earned salary from ICOMM Tele Limited for the month of April and May, 2009 of Rs. 6,08,190/- out of which TDS deducted was Rs. 1,77,479/- @ 29.18%. It was submitted that the assessee is working with Delhi International Airport Private Limited(DIAL) and the salary income from DIAL was duly declared to the Revenue in the return of income filed. Similarly it was submitted that interest income from SBI was Rs. 6,86,952/- on which TDS deducted was ITA 792/Mum/2015 5 Rs. 76,409/- @ 11.12%. The assessee submitted that inadvertently the interest income from SBI of Rs. 6,86,952/- and the tax of Rs. 76409/- deducted at source on this income was not claimed in the return of income filed with the Revenue . However, on realizing the same the assessee suo- motu has filed revised computation of income before the A.O. vide letter dated 30-10-2012 and offered both the income and claimed TDS already so deducted. The assessee accordingly prayed that penalty levied is both illegal and bad in law.
The ld. CIT(A) rejected the contention of the assessee and observed that the claim of the assessee that the assessee was under a bonafide belief that tax had been correctly deducted at source by the other employer ICOMM Tele Limited for April/May 2009 and hence there was no need to show in the return of income filed with the Revenue cannot be accepted as it goes against the conduct of the assessee. The ld. CIT(A) held that the assessee’s claim that this was an inadvertent mistake/ommision cannot be accepted without any valid explanation. No valid reasons were offered by the assessee for not showing these income in the return of income filed with the Revenue . It was observed that the revised computation was submitted only after the case was picked up for scrutiny and specific reasons were put to the assessee, hence, it could not be said that the assessee has voluntarily offered the said income to tax before it was pointed out by the A.O. to the assessee. It was observed that filing of revised computation of income during assessment proceedings does not absolve the assessee from the charge of filing of inaccurate particulars in the return of income filed with the Revenue. The ld. CIT(A) accordingly held that since the bonafides of the explanation furnished by the assessee has not been established and also all the facts material to the computation of income have not been furnished in the return of income filed with the Revenue , the penalty levied by the A.O. was upheld/sustained by learned CIT(A) vide appellate orders dated 14-11-2014 . The learned CIT(A) also rejected the ITA 792/Mum/2015 6 contentions of the assessee that the penalty be restricted keeping in view the tax so already deducted at source on salaries and interest , but the learned CIT(A) rejected contentions of the assessee as the penalty is to be levied u/s 271(1)(c) of the Act on the tax sought to be evaded in explanation 4 to Section 271(1)(c) of the Act and vide clause (c) of the explanation 4 clearly brings out that tax sought to be evaded means the difference between the tax on the total income assessed and tax that would have been chargeable had such total income been reduced by the amount of income on respect of which particulars have been concealed or inaccurate particulars have been furnished.
Aggrieved by the appellate orders dated 14-11-2014 passed by the ld. CIT(A), the assessee is in appeal before the Tribunal.
None appeared for the assessee . The ld. D.R. submitted that penalty u/s 271(1)(c) of the Act was levied by the AO and sustained by learned CIT(A) as the income earned from salary from ICOMM Tele Limited for April/May 2009 of Rs. 6,08,190/- was not declared in the return of income filed with the Revenue. The TDS was deducted of Rs. 1,77,479/- @ 29.18% on salary income from ICOMM Tele Limited. Similarly, the assessee has not disclosed the interest income from SBI of Rs. 6,86,952/- in the return of income filed with the Revenue. It was submitted that tax of Rs. 76,409/- was deducted on this interest income from SBI was not claimed in the return of income filed with the Revenue . The tax was deducted at source on these incomes however the same was not included in the return of income filed with the Revenue. The penalty u/s 271(1)(c) of the Act was rightly levied by the A.O. The ld. D.R. also relied on the order of the ld. CIT(A).
We have heard the ld. D.R. and also perused the material available on record including the case laws. We have observed that the assessee was ITA 792/Mum/2015 7 working for a short period i.e. from February to May, 2009 with ICOMM Tele Ltd. whereby the assessee has earned salary income of Rs. 6,08,190/- for April/May 2009 on which tax was deducted at source. After May, 2009, the assessee was working with Delhi International Airport (P) Ltd.(DIAL) and the assessee has duly declared the salary income from DIAL in the return of income filed with the Revenue. While computing the income from salary, inadvertently the assessee had not included the salary received for two months from ICOMM Tele Ltd. of Rs.6,08,190/- for April/May 2009 and also the TDS of Rs.1,77,479/- was also not claimed which was deducted on salary income from ICOMM Tele Limited. The assessee has also earned interest income from SBI which to the tune of Rs. 6,86,952/- which was not declared in the return of income filed with the Revenue and tax deducted at source of Rs. 76,409/- deducted at source on the interest income from SBI was also not claimed in the return of income filed with the Revenue . On being confronted, the assessee duly included the said income in revised computation of income filed with the AO. The due taxes along with applicable interest were paid to the Revenue and assessment order in quantum was accepted by the assessee and no appeal was filed by the assessee before learned CIT(A) against quantum assessment order. On being asked by the authorities below, the assessee has submitted that it is inadvertent mistake/ommision and the assessee was under a bonafide belief that tax having deducted at source , and hence there was no need to show the same in the return of income filed with the Revenue. In our considered view based on peculiar facts of the case, the assessee has committed the mistake inadvertently for which explanation has been given by the assessee before the authorities below which is a bonafide explanation . The assessee filed revised computation of income before the AO including the above income during the assessment proceedings and claimed the tax deducted at source on these two income and paid the differential due taxes to the Revenue along with applicable interest. The assessee has come forward with bonafide explanation and therefore the penalty u/s 271(1)(c) of ITA 792/Mum/2015 8 the Act levied by the A.O. on the assessee is not justified and is hereby ordered to be deleted as the case is covered by explanation 1 to Section 271(1)(c) of the Act. We order accordingly.
In the result, appeal filed by the assessee in 2010-11 is allowed.