ITO, BARNALA vs. M/S THE TRUCK OPERATOR UNION, BARNALA

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ITA 689/CHANDI/2016Status: DisposedITAT Chandigarh28 February 2018AY 2004-054 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the case was not one of furnishing inaccurate particulars or concealment of income. It also noted that the penalty notice did not specify the ground for levy. Therefore, the penalty was deleted entirely.

What were the facts?

The Assessing Officer (AO) made an addition to the assessee's income due to a difference in reported gross receipts and those reflected in TDS certificates. The CIT(A) deleted a significant portion of the penalty levied under Section 271(1)(c), confirming penalty only on a smaller addition sustained in quantum proceedings.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the additions are deleted in quantum proceedings and the penalty notice is vague. Whether a facilitating agency can be held liable for concealment of income belonging to its members.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH

Before: SMT. DIVA SINGH & DR. B.R.R. KUMAR

Hearing: 30/11/2017Pronounced: 28/02/2018

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’B’, CHANDIGARH

BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER

ITA No.689/Chd/2016 Assessment Year: 2004-05

The ITO Vs. M/s The Truck Operator Union Ward-2, Barnala Sehna Bhadaur, Barnala

PAN No. AAAAT9000F

CROSS OBJECTION No. 31/Chd/2016 (In ITA No. 689/CHD/2016)

M/s The Truck Operator Union Vs. The ITO Sehna Bhadaur, Barnala Ward-2, Barnala

(Appellant) (Respondent)

Assessee By : Sh. Sudhir Sehgal Revenue By : Sh. Manjit Singh

Date of hearing : 30/11/2017 Date of Pronouncement : 28/02/2018

ORDER PER DR. B.R.R. KUMAR A.M.

The present appeal has been filed by the Revenue and Cross Objection

filed by the Assessee against the order of the Ld. CIT(A), Patiala dt. 22/03/2016.

2.

The Revenue has raised the following grounds in its appeal:

1.

In the facts and circumstances of the case, Ld. CIT(A) has erred in deleting the penalty to the extent of Rs. 15,11,981/- out of total penalty of Rs. 15,70,123/- levied under section 271(1)(c) of the Income Tax Act, 1961. 2. In the facts and circumstances of the case, Ld. CIT(A) has erred in deleting the penalty in view of the fact that the additions were deleted in quantum proceedings, as the department did not accepts the same and filed further appeal against the deletions. 3. It is prayed that the order of Ld. CIT(A) be set aside and that of the AO restored. 3. The assessee has raised the following ground in its Cross Objection:

1.

That the Worthy Commissioner of Income Tax (Appeals) has erred in confirming the part penalty on account of the part addition as sustained during the course of quantum appeal. 2. That the confirmation of addition as made by the Worthy CIT(A) is against the facts and circumstances of the case.

4.

Brief facts of the case pertaining to the penalty under section 271C are

that the AO had made addition to returned income on the ground that there

was a difference of Rs. 47,40,508/-in the gross receipts of the appellant as the

assessee has failed to show its receipts correctly as reflected in the TDS

certificate.

5.

In the quantum appeal bearing appeal no. 324/IT/CIT(A)/PTA/ll-12

for A.Y. 2004-05 dated 29.02.2016, it was held as under:

"3.4 I have considered the submissions of the appellant and the remand reports of the A.O. u/s 250(4) of IT Act' 1961. As per record and details submitted during appellate proceeding the gross receipts of the appellant as per Bank A/c is Rs.3,94,52,802/- which is inclusive of Rs.35,97,351/- in Sangrur Central Co-op. Bank and Rs.34,79,271/- in SBOP while the appellant has shown gross receipts at Rs.3,92,59,094/-. The gross receipts as per Form-16A stated at Rs.3,66,32,394/-. The difference of Rs.26,26,700/- between gross receipt shown by appellant and gross receipts as per Form-16A said to be due to a payment pertaining to Sh. Mool Raj. The A.O. has, however, added Rs.28,20,508/- on account of difference in the gross receipt shown in Bank A/c and gross receipt as per Form-16A. The A.O. has also contended that the balance in Sangrur Central Co-op. Bank was at Rs.3,36,017/- but the appellant has shown in Balance Sheet only Rs. 15,017/-. The balance Rs.3,21,000/- was said to be a collection of funds by the operator members from among themselves for some Union working which was deposited in the Bank on 29.03.2009, whereas the same was entered in the Books on 01.04.2004. However, the A.O. didn't accept the contention of the appellant and considered Rs. 3,21,000/- as undisclosed income but made no separate addition as the same was included in Rs.28,20,508/-. On perusal of the remand report of the A.O., it is seen that the appellant's submission in respect of the distribution of the amounts to the members is corroborated. It is also observed that such enquiry was undertaken during the original remand proceedings also wherein the members had confirmed receipt of such payments. No discrepancy is noted by the A.O. in the submission made by the appellant. It is also pointed out that the details of truck numbers and names of persons to whom payments were made are placed on record. During the earlier appellate proceedings, the Id. CIT(A) had confirmed the addition due to the fact that the appellant didn't co- operate during the remand processing. Thereafter, Hon'ble ITAT restored the matter back to the CTT(A) with the observation as reproduced in para 2.2 of this order. Now, the A.O. has submitted the remand report as reproduced in para 3.2. However, it is also seen that during the remand proceedings, the truck operators etc. have given the replies and in some cases, the exact amount received could not be confirmed though the same is confirmed by appellant. However, the A.O. in the remand report has submitted that trucks are supplied by the members of the Union and, therefore, payments had to be made to them. Even otherwise, logically speaking the truck operator union which is only a

facilitating agency has rendered its services only for the benefits of its members and the entire gross amount received by it directly or otherwise cannot be its total income because for rendering services logically speaking they have to get the truck from its members to whom the payment has to be made and therefore, the total amount of Rs. 47f40,508 (19,20,000 + 28,20,508) by no stretch of imagination can be its total income. However, the very fact that the appellant has furnished the details of only Rs. 45,46,700/- (19,20,000 + 26,26,700) to the AO. out of the total amount of Rs. 47,40,508/-, the addition to the extent of balance amount ofRs. 1,93,808/- is confirmed."

Thus, based on the quantum addition confirmed which stands at Rs.

1,93,808/- the Ld. CIT(A) directed the AO to levy penalty to that extent.

Hence the appeal of the Revenue taken at Ground No. 1 that Ld. CIT(A)

has erred in deleting the penalty to the extent of Rs. 15,11,981/- out of total

penalty of Rs. 15,70,123/- levied under section 271(1)(c) of the Income Tax Act,

1961, does not stand in the eyes of law as the quantum stands deleted.

6.

The appeal of the Revenue is liable to be dismissed.

7.

In the Cross Objection the assessee has taken the ground that no penalty

can be levied on the amount of 1,93,808/-.

8.

Before us the Ld. AR contended that the assessee is only a Truck Union

facilitating its members the hiring of vehicles and as such the entire income

belongs to the members. The mismatch of Rs. 47,40,508/- has been reconciled to

the tune of Rs. 45,46,700/- which is the difference between the TDS and the

difference of the closing balance in the bank account. The Ld. AR argued that

the confirmation to the small extent of Rs. 1,93,808/- could not be furnished

though the same is confirmed by the assessee and argued that this cannot be a

case of concealment of particulars of income or furnishing of inaccurate

particulars of income and no penalty is leviable on the facilitator to whom the

income doesn’t belong to.

9.

Ld. DR relied on the order of the CIT(A).

10.

We have gone through the facts of the case and find that this is not a

case of furnishing of inaccurate particulars of income or concealment of

income. The penalty initiated has also not specified whether the penalty is

proposed to levied for concealment of income or for furnishing inaccurate

particulars of income which is a sine qua non for initiation of the penalty. Hence

in the peculiar facts of the case and the law enunciated we hereby ordered to

delete the penalty leviable on amount of Rs. 1,93,808/- only.

11.

In the result, appeal of the Revenue is dismissed and Cross Objection of

the Assessee is allowed.

Order pronounced in the open court.

Sd/- Sd/- (DIVA SINGH) (DR. B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 28/02/2018 AG Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR

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