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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: SHRI N.S. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : The Appellant, Sri Namballa Dharma Rao (hereinafter
referred to as ‘the assessee’) by filing the present appeal sought to
set aside the impugned order dated 27.08.2014 passed by the
Commissioner of Income-tax (Appeals)-II, Bhubaneswar qua the
assessment year 2009-10 reducing the penalty levied u/s 271(1)(c)
of the Income-tax Act, 1961 (for short ‘the Act’) on the grounds
inter alia that :-
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“1. The Appellate Order as well as the order U/s.271 (1) (c) is against law, weight of evidences and probabilities of the case.
The learned assessing officer has arbitrarily imposed penalty without considering the appellant's explanation that the appellant did not intend to conceal the income becomes apparent from the fact that, the original return was filed by the assessee by offering total income of Rs.41,01,946/- and the same income was again revised to Rs.42,99,950/-.
The learned assessing officer ignored the appellant's clarification that the additions effected for furnishing inaccurate/incorrect particulars and not offering certain deposit etc. has not been done by him rather has been done by his counsel. Further the appellant accepted the additions made by the learned assessing officer and deposited the demand tax to buy at peace.
The Honourable CIT(Appeal) also confirmed the levy of penalty U/s 271 (1)(c) and reduced the penalty amount to Rs.2,00,000/- as against the earlier value of Rs.3,07,453/-.
For these and other grounds that may emerge at the time of hearing, it is prayed that the said penalty be deleted and the order be quashed to meet the end of justice.”
Briefly stated the facts necessary for adjudication of the
controversy at hand are : on the basis of assessment order dated
30.12.2011 determining the total income at Rs.50,06,490/- as
against disclosed income of Rs.41,01,946/-, the penalty
proceedings were initiated on the grounds inter alia that the
assessee claimed expenditure on HRA of Rs.6,72,000; that the
ITA No.402/CTK./2014 3
assessee has failed to clarify deposit of Rs.30,000/- in the bank;
and that the assessee has failed to explain the interest on the saving
account to the tune of Rs.4,542/-. After issuance of notice u/s
143(2) of the Income-tax Act, 1961 (for short ‘the Act’), the
assessee filed revised return declaring income of Rs.42,99,950/- as
against total income of Rs.41,01,946/- declared in the original
return. Rejecting the claim raised by the assessee that he has
voluntarily disclosed income to the tune of Rs.1,98,000/- on
ground of omission, the AO came to the conclusion that the
assessee was required to pay excess tax to the tune of Rs.62,356/-
on such undisclosed income and the assessee has also failed to
disclose source of cash deposit of Rs.30,000/- in his bank account
and also failed to disclose interest of Rs.4,252/- and attributed this
lapse to his tax consultant. Consequently, AO imposed a penalty
of Rs.3,07,453/- being 100% of the tax sought to be evaded by the
assessee. Assessee has not challenged the quantum proceedings.
Assessee carried the matter by way of filing an appeal before
the ld. CIT (A) who has reduced the penalty to Rs.2,00,000/- as
against earlier penalty of Rs.3,07,453/- imposed by the AO.
Feeling aggrieved, the assessee has come up before the Tribunal by
filing the present appeal.
ITA No.402/CTK./2014 4
We have heard the ld. Authorized Representatives of the
parties to the appeal, gone through the documents relied upon and
orders passed by the revenue authorities below in the light of the
facts and circumstances of the case.
Undisputedly, the assessee being a salaried person filed his
return of income at Rs.41,01,946/- on 28.07.2009 which was
processed u/s 143(1) of the Act and thereafter the case was
subjected to scrutiny and on issuance of notice u/s 143(2) of the
Act, the assessee filed a revised return to the tune of Rs.42,99,950/-
and then assessment u/s 143(3) was completed by determining the
total income at Rs.50,06,490/-.
Assessee after accepting the lapse on his part attributed the
entire omission to Shri G.P. Ratha, his Tax Consultant, which
explanation has not been accepted by the AO on the ground that
disclosing undisclosed salary income of separate employer is not at
all a voluntary action and the assessee cannot absolve himself of
the commission of wrong doing to avoid the payment of tax. It is
also not disputed that assessee has paid due tax and interest thereon
by filing revised return.
Keeping in view the fact that when the assessee being a
Chemical Engineer/salaried person has taken expert advice from
his tax consultant, Shri G.P. Ratha, by filing return of income, his
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explanation cannot be summarily rejected because immediately on
knowing the fact that some portion of his income could not be
brought to tax, he has filed the revised return of income making
payment of tax and interest thereon which has to be treated as a
voluntary act to buy the peace of mind.
Not only this, when we examine the impugned order passed
by ld. CIT (A), the same is otherwise not sustainable in the eyes of
law because the ld. CIT (A) has reduced the penalty from
Rs.3,07,453/- imposed @ 100% to Rs.2,00,000/- which is less than
100% and beyond the purview of ld. CIT (A) u/s 271(1)(c) of the
Act. The penalty can only be imposed within the range of 100% to
300% and not below 100% but this decision has never been
challenged by the Revenue. So, in the totality of the
circumstances, we are of the considered that the impugned order
passed by the ld. CIT (A) is not sustainable in the eyes of law,
hence hereby set aside. Consequently, the appeal filed by the
assessee is allowed. Order pronounced in open court on this 29th day of May, 2017.
Sd/- sd/- (N.S. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 29th day of May, 2017/TS
ITA No.402/CTK./2014 6
Copy of the order forwarded to: 1.Appellant - Sri Namballa Dharma Rao, BRPL, 5th Floor, IPICOL Annex Building, Janpath, Sahid Nagar, Bhubaneswar. 2.Respondent - ITO, Ward 2 (3), Bhubaneswar. 3.CIT 4.CIT (A)-II, Bhubaneswar. 5.DR(ITAT), Cuttack. 6.Guard File //True Copy//
BY ORDER
SR. PRIVATE SECRETARY, ITAT, CUTTACK