SRI NAMBALLA DHARMA RAO,BHUBANESWAR vs. ITO, WARD-2(3), BHUBANESWAR, BHUBANESWAR

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.

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

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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.

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.

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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.

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/-.

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.

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.

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

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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