BISWA RANJAN PATTNAIL,ANGUL vs. ITO, DHENKANAL

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.193/CTK/2012 Assessment Year : 2006-07

Biswa Ranjan Patnaik, Qr. Vs. ITO, Ward-1, Dhenkanal No.B/571, Nalco Nagar, Angul. PAN/GIR No. ACUPP 0169 M (Appellant) .. ( Respondent)

Assessee by : Shri B.R.Panda, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 17/05/ 2017 Date of Pronouncement : 17 /05/ 2017

O R D E R Per Pavan Kumar Gadale, JM This is an appeal filed by the assessee against the order of CIT(A)-1,

Bhubaneswar, dated 11.1.2012, for the assessment year 2006-07.

that the CIT(A) erred in confirming the action of the Assessing Officer in

levying penalty of Rs.29,280/- u/s. 271(1)(c) of the Income tax Act, 1961.

However, he did not press the additional ground and made an endorsement

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to this effect. Therefore, we dismiss the additional ground of appeal of the

assessee.

and filed his return of income for the assessment year 2006-07 on

30.10.2006 disclosing total income of Rs.2,33,280/-. The return was

processed on 21.11.2006 and refund of Rs.29,320/- was issued. On

perusal of the assessment record, the Assessing Officer found that the

assessee has concealed particulars of income and issued notice u/s.148 of

the Act. In compliance to the said notice, the assessee filed return of

income disclosing the same as filed in the original return of income. At the

request of the assessee, the reasons recorded for reopening the

assessment were furnished and the assessee filed written objection to the

reopening of assessment and the same was rejected by the Assessing

Officer on 8.12.2009. Subsequently, the Assessing Officer issued notice

u/s.142(1) calling for the information. The assessee could not file

information within the time granted. Therefore, the Assessing Officer

rejected the petition and completed the assessment on the basis of

materials available on record as the assessment was getting time barred.

consideration, in the computation of income, the assessee has disclosed

income from house property and also claimed depreciation of building let

out and treated the entire income as business income, whereas the

Assessing Officer on perusal of facts on record, observed that the assessee

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had obtained loan from the employer NALCO for construction of the building

and claimed deduction of interest on the borrowings. The Assessing Officer

observed that the assessee being a salaried employee cannot disclose the

rent from the let out building as business income and rightfully to be taxed

as income from house property and, accordingly, disallowed the claim and

assessed the total income at Rs.3,34,530/- in an assessment under section

143(3)/147 of the Act.

u/s.271(1)(c). The assessee filed explanation mentioning that the assessee

has challenged the reassessment proceedings before the Hon’ble High

Court of Orissa and, therefore, prayed for penalty to be kept in abeyance

whereas the penalty is barred by limitation before 30.6.2010. The

Assessing Officer based on the availability materials found that the

assessee has disclosed income under the head “business income” and

claimed depreciation, which according to the Assessing Officer, is an act of

submission of inaccurate particulars and concealment of income and,

accordingly, levied minimum penalty under section 271(1)(c) of

Rs.29,280/- by an order dated 28.6.2010.

levying penalty. Aggrieved by the order of the CIT(A), the assessee has

filed appeal before the Tribunal.

the penalty irrespective of the fact that the addition of depreciation in the

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assessment proceedings u/s.143(3)/147 is accepted and the assessment

has not been contested by the assessee. Further, the assessee has

challenged the reopening of assessment before the Hon’ble High Court and

also to buy peace with the Income tax department, the assessee has not

taken up the matter in the higher forum and prayed for deletion of penalty.

Ld A.R. also relied on the decision Hon’ble Supreme Court in the case of

CIT vs. Reliance Petroproducts (P) Ltd.,322 ITR 158 (SC).

grounds of appeal of the assessee.

authorities and materials available on record. The sole contention of ld A.R.

of the assessee is that the assessee has not concealed any income or

furnished inaccurate particulars of income whereas the assessee in the

computation of income, claimed depreciation against house property and

rental income and treated the same as business income. In the

reassessment proceedings, the assessee accepted the addition and to buy

peace with the Income tax Department and to avoid litigation, has not filed

any appeal. We also perused the penalty order where the Assessing Officer

has relied on the assessment order on the ground that the assessee has

claimed depreciation. We also found that prima facie, the Assessing Officer

has discretion power and has to consider the reasonable cause before

initiating the penalty proceedings. We are of the opinion that every addition

in the assessment cannot be a gateway for levy of penalty. There are

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various reasons for which the assessee prefer to not to file appeal with the

higher forum and to satisfy the income tax department, the assessee had

paid tax and interest thereon. We are of the opinion that the assessee has

satisfied the Assessing Officer with the explanation of reasonable cause and

also accepted the addition. We also support our decision relying on the

judicial decision of Hon’ble Karnataka High Court in the case of CIT

vs Manjunatha Cotton and Ginning Factory, reported in [2013] 359 ITR

565 (Kar), wherein, Their Lordships have held that penalty cannot be levied

on the addition in a general way and held as under:

“Merely because the assessee agreed for addition and the assessment order was passed on the basis of this addition, when the assessee had paid the tax and the interest thereon in the absence of any material on record to show the concealment of income, it could not be inferred that the addition was on account of concealment. Moreover, the assessee had offered an explanation. The explanation was not found to be false. On the contrary, it was held to be bonafide. The cancellation of penalty by the Tribunal was justified.” 11. Considering the apparent facts and materials on record and judicial

decision, we are inclined to set aside the order of the CIT(A) and direct the

Assessing Officer to delete the penalty of Rs.29,280/- levied under section

271(1)(c) of the Act.

(N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated /05/2017 B.K.Parida, SPS

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Copy of the Order forwarded to : 1. The Appellant : Biswa Ranjan Patnaik, Qr. No.B/571, Nalco Nagar, Angul. 2. The Respondent. ITO, Ward-1, Dhenkanal 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT, Bhubanswar. 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack