NARGIS S. SHAIKH,MUMBAI vs. ITO IT 2(1), MUMBAI

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ITA 3707/MUM/2015Status: DisposedITAT Mumbai09 September 2016AY 2007-085 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's sister, acting on her behalf, bona fide relied on the bank's certificate. Considering the peculiar facts and the assessee's medical condition, the intention to conceal or furnish inaccurate particulars was not established.

What were the facts?

The assessee, a Canadian resident suffering from multiple sclerosis, filed her return through her sister. The sister relied on a bank certificate for interest income, which differed from the bank's TDS return, leading to an addition and penalty. The assessee argued the reliance on the bank certificate was bonafide.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee bona fide relied on a bank certificate, despite a discrepancy with the TDS return, due to her medical condition.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI

Before: SHRI R.C. SHARMA & SHRI SANDEEP GOSAIN

For Appellant: Shri G.C. Kaka
For Respondent: Shri Neil Philip
Hearing: 21/07/2016Pronounced: 09/09/2016

The present appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-57, Mumbai (in short ‘CIT(A)’) dated 15.04.2015 for A.Y 2010-11 on the following grounds of appeal :

“1. The C.I.T(A) 57, upheld the order passed u/s 271(1)(c) by the Assessing Officer on the only ground that the same was in the knowledge of the Appellant and the same was not inadvertent.

2.

The C.I.T(A) 57 failed to take into consideration that the Appellant filed the return on the basis of interest certificate issued by the Bank and had no intention to defraud the revenue as she has voluntarily paid advance tax of Rs.4,50,000/-.

3. The C.I.T(A) 57 failed to accept the explanation offered by the Appellant as bonafide.”

2. The brief facts of the case are that the assessee had filed a return of income on 8.2.2011 determining total income at Rs.11,46,660/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short ‘the Act’) and subsequently the case was selected for scrutiny through CASS as assessee has received interest from Syndicate Bank amounting to Rs.14,24,721/- during financial year 2009-10 relevant to A.Y 2010-11. Accordingly, after serving statutory notices and seeking reply of the assessee, order of assessment was passed thereby making addition, inter alia, on the ground of difference of interest amount received and offered by the assessee amounting to Rs.2,81,769/-. Thereafter, penalty proceedings were initiated u/s 271(1)(c) of the Act and after seeking reply from the assessee, order of penalty u/s 271(1)(c) of the Act levying penalty of Rs.87,066/- was passed against the assessee. Aggrieved by the order imposing penalty, assessee preferred appeal before the CIT(A) and CIT(A) after hearing the case of both the parties had dismissed the appeal and upheld the order of levy of penalty. Aggrieved by the order of CIT(A), assessee has preferred the present appeal before us on the grounds mentioned hereinabove.

3.

Ground nos. 1 to 3 are interconnected and therefore, we decided to dispose of the said grounds by a common order.

3.1 At the very outset, the Ld. AR for the assessee submitted that the assessee is a permanent resident of Canada and she is suffering from multiple Sclerosis and she is unable to write or sign, therefore, the return was filed by her sister on her behalf. The sister before filing the return of income obtained a certificate from Syndicate Bank, Kalbadevi Branch wherein they have mentioned that the interest amounting to Rs.11,42,952/- is being paid to her and a sum of Rs.1,44,946/- is being deducted as TDS from the said interest. After obtaining the said certificate from the bank, sister of the assessee filed the same before the Assessing Officer. It was further submitted by the Ld. AR that while filing the return, sister of the assessee had fully relied on the bank certificate issued by Syndicate Bank wherein the bank has stated that interest of Rs.11,42,952/- was paid after deduction of tax at source. The Ld. AR further submitted that the bank had issued the certificate on 7.2.2011, a day before filing of the return of income by the assessee whereas the bank has filed TDS return in May, 2010 wherein they have declared that they have paid interest of Rs.14,24,721/-. Therefore, relying on the certificate issued by the bank, assessee has not concealed or furnished inaccurate particulars of income.

3.2 On the other hand, the Ld. DR relied on the order passed by the Revenue authorities.

3.3 We have heard the counsel of both sides and we have also considered the documents placed on record as well as the order passed by the lower authorities. After appreciating the facts of the present case, we noted that the assessee is a permanent resident of Canada and is suffering from multiple Sclerosis and is unable to write and sign, therefore, the return was filed by her sister on her behalf. The sister of the assessee has fully believed and relied upon the certificate issued by the bank and the said certificate was submitted before the Assessing Officer. Prima facie taking into consideration the peculiar facts and circumstances of the present case and considering the physical condition of the assessee it appears that the sister of the assessee has bona fide relied upon the certificate of the bank and has not concealed or furnished inaccurate particulars of income intentionally. From the facts and the arguments of the present case, prima facie the explanation put forth before us appears to be bona fide. Relying on the order of coordinate Mumbai Bench of the Tribunal in CIT v. Somany Evergreen Knits Ltd. (ITA No. 1332/Mum/2011), which was also upheld by the Hon'ble High Court vide order dated 21.3.2013 as submitted by the Ld. AR, we hold that the explanation offered by the sister of the assessee is bona fide and considering the peculiar facts and circumstances of the case, we delete the penalty and accept the appeal.

4.

In the result, appeal of the assessee is allowed.

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