VINOD KUMAR VERMA (LEGAL HIER OF LATE SMT. SANGEETA VERMA),GURGAON vs. ITO,WARD-52(1), DELHI

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ITA 1541/DEL/2023Status: DisposedITAT Delhi31 July 2023AY 2012-135 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment was completed ex-parte without sufficient opportunity and that the tax deducted at source exceeded the tax liability. Therefore, the penalty imposed under Section 271(1)(c) was directed to be deleted.

What were the facts?

The assessee did not file its return of income for AY 2012-13, leading to a best judgment assessment under Section 144. The Assessing Officer imposed a penalty of Rs. 1,12,220 under Section 271(1)(c) for unexplained interest income.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when assessment is made ex-parte and tax deducted at source exceeds the tax liability.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “SMC” BENCH: NEW DELHI

Before: SHRI KUL BHARAT

For Appellant: Shri Sandeep Kumar, CA
For Respondent: Shri Om Parkash, Sr.DR
Hearing: 25.07.2023Pronounced: 31.07.2023

ORDER

PER KUL BHARAT, JM :

1.

The present appeal filed by the assessee is directed against the order passed by Ld.CIT(A), National Faceless Appeal Centre (“NFAC”) dated 22.03.2023 for the assessment year 2012-13.

2.

The assessee has raised following grounds of appeal:-

1. “The Lower Authorities have grossly erred in Law and on facts of the case while imposing / confirming penalty of Rs. 112220 u/s 271(1)(c) of Income Tax Act, therefore the Penalty order and also Appellate order are bad in Law, against provisions of Income Tax Act and are against facts and circumstances of the case.

2. The National Faceless Appeal Centre has grossly erred in Law and on Rs. 1,12,220/- facts of the case in confirming the penalty imposed by Assessing Officer of Rs. 112220 u/s 271(1)(c) of Income Tax Act, therefore the Appellate Order is bad in Law, against

provisions of Income Tax Act and is against facts and circumstances of the case. 3. The assessee craves leave to amend, add or modify any grounds of appeal before the disposal of the appeal.”

3. The present appeal has been preferred through Legal Heir of Late Smt. Sangita Verma.

4.

Facts giving rise to the present appeal are that the assessee had not filed its return of income pertaining to AY 2012-13. The case was re-opened u/s 147 of the Income Tax Act, 1961 (“the Act”) and the assessment was framed u/s 144 r.w.s 147 of the Act vide order dated 11.12.2019. Thereby, the Assessing Officer (“AO”) assessed the income of the assessee at INR 6,79,840/- u/s 144 r.w.s. 147 of the Act. The AO also initiated penalty proceedings u/s 271(1)(c) of the Act. Thereafter, he imposed penalty vide order dated 27.01.2022 amounting to INR 1,12,220/-.

5.

Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, also sustained the penalty.

6.

Aggrieved against this, the assessee preferred appeal before this Tribunal.

7.

Apropos to grounds of appeal, Ld. Counsel for the assessee submitted that the imposition of penalty u/s 271(1)(c) is illegal and arbitrary. The assessment was made at the back of the assessee thereby, the assessing authority made addition of INR 6,79,840/- and initiated penalty proceedings u/s 271(1)(c) of the Act. He contended that the assessee was the wife of a Senior Officer in Air Force and the assessment was framed ex-parte to her. It was contended that there is no tax liability as the tax deducted is higher than the tax due. As per the assessee, the total tax was due at INR 60,968/-. On this amount, the deduction of tax was INR 89,660/- thus, excessive of the tax due. Ld. Counsel for the assessee relied on the explanation on the provision of section 271(1)(c) of the Act. To buttress the contention that under these facts, no penalty can be imposed u/s 271(1)(c) of the Act to the assessee. Further, he submitted that the assessee has proved his bonafide in terms of section 271(1)(c) of the Act.

8.

On the other hand, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below.

9.

I have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. Looking to the totality of the facts of the present case, the assessment was made ex-parte/best judgement assessment under the provision of section 144 of the Act as the assessee was not provided sufficient opportunity. For the sake of clarity, the relevant contents of section 144 of the Act are reproduced as under:-

“Best Judgement Assessment: Section 144.[(1)] If any person- (a) ………………………. (b) fails to comply with all the terms of a notice issued under sub- section (1) of section 142 [or fails to comply with a direction issued under sub-section (2A) of that section] Page | 3

(c) ……………………………………. the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered,[shall after giving the assessee an opportunity of being heard, make the assessment] of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment: [provided that such opportunity shall be given by the Assessing officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.] Keeping in view of the facts and circumstances of the case, assessment in this case is completed u/s 144 of the IT Act on the basis of material on record. As per Individual Transaction Statement (ITS), the assessee has earned Interest income of Rs. 13,17,296/- from various Banks during the F.Y. 2011-12 relevant to the A.Y. 2012-13 and that during the assessment proceedings assessee failed to explain the source of interest income of Rs. 13,17,296 /-. Further, on perusal of 26AS for the A.Y. 2012-13, it is noted that interest received by the assessee is Rs. 6,79,840/- and same is reconciled with ITS. In the absence of any detail/explanation, the interest income of Rs. 6,79,840/- is treated as unexplained income and the same is added back to the income of the assessee as income from other source.” 9.1. Moreover, it is the case of the assessee that the default was not deliberate as the tax deducted at source is more than the tax liability. I therefore, considering the totality of facts hereby, direct the AO to delete the impugned penalty. Grounds raised by the assessee are thus, allowed.

10.

In the result, the appeal of the assessee is allowed.

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