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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SMT.ANNAPURNA GUPTA & SMT.SUCHITRA KAMBLE
आदेश/O R D E R
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER
Present appeal has been filed by the assessee against order passed by the ld.Commissioner of Income-Tax (Appeals), Jamnagar [hereinafter referred to as “ld.CIT(A)”] dated 16.1.2018 under section 271(1)(c) of the Income Tax Act, 1961 ("the Act" for short) pertaining to the Asst.Year 2013-14.
None appeared on behalf of the assessee. We have noted that since the inception of the appeal in February, 2018 the assessee has remained un-represented throughout. Since then more than four years have passed, and it seems that the assessee is no longer
ITA No.73/Rjt/2018 2 interested in pursuing his appeal. It was therefore decided to proceed with the appeal ex parte.
As transpires from the order of the authorities below,the solitary issue in thepresent case relates to levy of penalty under section271(1)(c) of the Act for concealing/furnishing of inaccurate particulars of income relating to the interest earned by the assessee amounting to Rs.5,37,812/-.
We have noted from orders of the authorities below that the assessee had filed return for the impugned year declaring income of Rs.9,97,814/-; that during the assessment proceedings the Assessing Officer (AO), on verification of Individual Transaction Statement (ITS) of the assessee noted that the assesseehad received interest of Rs.5,37,812/-from one Shri Suresh Bindraj but had not disclosed the same in his return of income. He noted that the assesseehad claimed TDS on the same. Accordingly, this interest income was added to his income and penalty proceedings under section 271(1)(c) of the Act initiated thereon. Thereafter, penalty was levied by the AO ,amounting to Rs.1,66,220/-,being 100% of the tax sought to be evaded on account of the same,stating that the assessee hadnot disclosed thisincome either in his original return or by way of filing a revised return, but had surrendered the same only when confronted with during assessment proceedings; that it was a clear case of concealment of particulars of income and the said income would have gone un-detected, if not for assessment proceedings. The ld.CIT(A) in turn upheld order of the AO.
On going through the penalty order, we find that during the penaltyproceedings, the assessee had contended that this was an
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inadvertent mistake on his part and had accordingly accepted the additionof the same to his income during the quantum proceedings, and had not challenged it before the ld.CIT(A). The assessee had contended that mistake was evident from the fact that this interest income was not accounted for even in his books of accounts and TDS element had alsoremained unaccounted. The assesseehad also stated that it was first time that suchmistake had occurred by him,that he had cooperated always with the Revenue Department. The relevant submissions of the assessee during the penalty proceedings are reproduced at para-5 of the orderpassed under section 271(1)(c) as under:
"In this matter I have to submit that due to in advertence income credited by one debtor Shri Suresh Agarwal interest income worth Rs. 5,37,812.00 was not considered in audited accounts. It was also seen that claim of TDS was also not made in audited accounts. However, at the time of hearing on 06.09.2016 this fact was voluntarily presented before your good self and the said income was offered for tax by me. The main reason was due to my partlty shifting from Jamnagar to Ahmedabad and accounts are completed at Ahmedabad.
It is further submitted that this is the firm mistake of my life. Moreover, I have paid necessary tax and have co-operated the department for completing assessment proceedings. Based on this fact your good self will appreciate that neither I have acted deliberately acted in defiance of law not I am guilty of conduct, contumacious or dishoned or acted in conscious disregard of my obligation. From my conduct your good self can see that It was my bonafide mistake and I have neither concealed income nor has furnished inaccurate particulars intentionally:
Based on above fact I request your good self to please drop penalty proceedings and oblige.
At this outset I submit following judicial pronouncements where in honourable courts has allowed such mistakes as bonafide and had cancelled the penalties.
Bonafide surrender cannot attract penalty as decided in the case of CIT VsSankaran (2000) 241 ITR 825 (MAD) -followed in the case of Pushpaben P Sonarupawala V. ACIT61 TTJ (AHD-TRIB) 486.
ITA No.73/Rjt/2018 4 2. Inadvertent omission is not liable for penalty as decided by CIT V/s Pradipkumar 246 ITR 94 (J & K). 3. Mensrea is important before leving penalty Dilip N. Shroff V. Joint CIT (2007) 16(1) ITCL 246 (SC).
Looking to the above situation, the same I submit that I was prevented with a sufficient reasonable cause and I have voluntarily surrender the income hence I have neither concealed income nor have filled inaccurate particulars."
We have noted from orders of the authorities below that even the Revenue authorities have acknowledged the fact that this interest income was not reflected in the audited books of the assessee. The fact that the assessee had not contested this addition in the quantum proceedings is also accepted. Moreover, the Revenue has not controverted the fact that this mistake had occurred on the part of the assessee for the first time. Now, considering all these facts, weare inclined to believe the explanation of the assessee that the interest income was inadvertently not included in his returned income for the purpose of taxation.The assesses explanation that it had completely missed out on this component of his income and was totally unaware of it, is believable and rings true on account of the fact that the same was not included even in his audited books of accounts. This non inclusion of interest income as also its TDS componenet, it appears, was missed even by the auditors, who are required to check books of accounts and report reflection of true and correct state of affairs of the assessee.
In view of the above, the explanation of the assessee that the failure to return to tax interest income of Rs.5,37,821/- was an inadvertent mistake on its part ,appears bonafide and we hold therefore that the assessee in such circumstances cannot be charged with having concealed/furnished inaccurate particulars of income so as to levy penalty u/s 271(1)© of the Act.
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The penalty so levied u/s 271(1)© of the Act of Rs.1,66,200/- is directed to be deleted.
In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 29th July, 2022 at Ahmedabad.
Sd/- Sd/- (SUCHITRAKAMBLE) (ANNAPURNA GUPTA) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad,dated 29/07/2022