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Shripad Mahesh Adwalpalkar v/s Income Tax Officer, Ward - 1(1)

    ITA No. 387/Pan of 2018

    Decided On, 03 January 2019

    At, Income Tax Appellate Tribunal Panaji

    By, THE HONOURABLE MR. SHAMIM YAHYA
    By, ACCOUNTANT MEMBER & THE HONOURABLE MR. RAM LAL NEGI
    By, JUDICIAL MEMBER

    For the Appellant: Pramod Vaidya, Advocate. For the Respondent: Y.V. Raviraj, Advocate.



Judgment Text

Shamim Yahya, A. M.:

1. This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-2, Panjai pertaining to assessment year 2013-14, wherein penalty levied u/s. 271(1)(c) of the Income Tax Act, 1961 (the Act for short) amounting to Rs.7,38,068/- has been confirmed.

2. The grounds of appeal read as under

1. On the facts & circumstances of the case and in law the learned C1T(A) erred in confirming the penalty u/s 271(l)(c ) levied by the A.O without specifying the specific charge in the Notice u/s 274 r.w.s 271(l)(c ) of the Act regarding concealment of income or of furnishing inaccurate particulars of income.

2. The CIT (A) failed to appreciate that the Assessment order also failed to specify specific charge for levy of penalty.

3. The learned CIT (A) also failed to appreciate that the disclosure was made in respect of items which were subject to disallowance and there was a bonafide claim made.

4. Penalty is also levied and confirmed on deposit of Rs.l, 00,000

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/- which was not subject to disallowance during the assessment showing clear non application of mind.

3. Brief facts of the case are as under:

During the assessment proceedings, the Assessing Officer (AO) found that the assessee had short offered income from house property and had claimed transport allowance from salary which was not allowable. The AO also found that the assessee had introduced capital and made cash deposits which were not shown in the return of income.

When the assessee was confronted with the said disallowances and incomes not offered to tax and details were called for, the AO was of the opinion that the income under various heads was not offered to tax by the assessee. The AO added the said income and disallowed the expenditure and added to the returned income of the assessee. The AO had initiated the penalty proceedings u/s 271(1)(c) during assessment proceedings and levied the penalty vide order dated 21.04.2016. In the said order AO treated the concealed income as Rs.23,88,568/- and levied 100% penalty on tax sought to be evaded amounting to Rs.7,38,068/-.

4. Upon the assessee's appeal, the learned CIT-A confirmed the assessing officer's action. He distinguished the reliance placed by the assessee on Hon'ble Apex Court decision in the case of Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC).

5. Against the above order, the assessee is in appeal before us.

6. We have heard both the counsel and perused the records. As regards the merits of the levy of penalty, we find that assessee has made the following explanation before the learned CIT-A in connection with the additions made contending that there was no case of concealment of income or furnishing of inaccurate particulars of income:

The appellant tor justice prays for a reddresal to delete the entire penalty of Rs.738068 made on account of the additions of Rs.72000, Rs.10118, Rs.700000 Rs.100000, Rs.200000, Rs.1264000 and Rs.42450 total of Rs.2388568.

1 The first addition is on count of the travel allowance reimbursement which is not a income for the assessee but only a re-imbursement For not protracting the same the same was accepted in assessment proceedings but this gives no cause of action for the Ld AO to again invoke penalty on the same nor does it come within an ambit of the inaccurate filing of details on this item.

2. In regards to the second item of addition is on count of income from house property the difference between 26AS and as per Profit and Loss on Rent is arrived by the ld. AO account is Rs.10118. We have income shown in computation 1232437. The difference was explained as a service tax component in 26AS by the deductor reported in 26AS whereas in books the service tax component is reflected in current liabilities However the amount of 10118 being meager amount it was offered as a voluntary addition without accepting that there was no concealment or so For not protracting the same The same was accepted in assessment proceedings but this gives no cause of action for the Ld AO to again invoke penalty on the same nor does it come within an ambit of the inaccurate tiling of details or concealment of the same as the same is already disclosed in his Return of income and there is neither concealment or inaccurate filing of the details on this item The copy of 26AS AND THE COMPUTATION OF INCOME IS ALSO ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. THE COPY OF 26AS SHOWS INCOME FROM HOUSE PROPERTY AT RS 12,22,730.00 AND THE COMPUTATION OF INCOME SHOWS THE SAME AT 12,32,43700 3 In regards to the third point of addition to management fees we debited an amount of Rs 1033333towards the management fees to Profit & loss account In that Rs.Vvi333paymem made after deducting ids of Rs33333to Think Tank The balance amount of Rs700000 tds has not deducted and it is just an provision of expenses The same is already accepted as addition in assessment proceedings The same entry was also reversed in fy2013-14.

4. There is no such addition of Rs 100000 in the assessment order on which a penalty-can be justified and survive The Ld AO has grossly erred in the same to hold penalty on this amount and the same be deleted.

5. In regards to the fourth point of Rs200000 the same is a cash deposit in bank The entire deposits investments and the cash deposits in the bank were already submitted and reconciled There has been no difference in the same and the Ld AO holds the same as part of our submissions in his records The same amount of Rs200000 was only accepted :is addition in course of assessment proceedings The same cash balance was running in books on the same day and it was cash deposit in bank For not protracting the same the same was accepted in assessment proceedings but this gives no cause of action for the Ld AO to again invoke penalty on the same nor does it come within an ambit of the inaccurate filing of details or concealment of the same as the same is already disclosed in his Return of income and there is neither concealment or inaccurate filing of the details on this item.

The extract of cash book is also enclosed herewith the submissions which show a proper cash balance running.

6. In regards to the fifth point is capital introduction of Rsl264000 The capital introduction taken for paid rent to Adwalpalkar Construction and resorts Pvt ltd of R&l263600 The rent paid to Adwalpalkar Construction and resorts Pvt ltd is disallowed in our Computation of income The same rent has already been booked in the Company and returned as the business income in ITR copy of the company The rent paid to the company was introduced by the proprietor in cash and is reflected in the capital account of the proprietor the same rent paid and debited to books of account was also disallowed in the Return of Income in the computation during the assessment proceedings The Ld AO has not only taxed the same item twice and further gone ahead in invoking the penalty proceedings on the same item which is not only bad in law and facts of the case but untenable as per the provisions of the Income Tax Act, The extract of the cash ledger showing these entries alongwith the computation of income is also enclosed herewith.

In regards to the sixth point is disallowance us 43B of Rs.42450. The entire tax payables challan copies were already submitted in course of assessment proceedings The ESI payable of Rs34220 was already paid before filing the return of income and the Rs8230 is not on account of service tax but on account of the TDS which was also paid and the same does not get covered under the ambit of sec 43B disallowance The same was only accepted as a addition being a meager amount For not protracting the same the same was accepted in assessment proceedings bur this gives no cause of action for the Ld. AO to again invoke penalty on the same nor does it come within an ambit of the inaccurate filing of details or concealment of the same as the same is already disclosed in his Return of Income and there is neither concealment or inaccurate filing of the details on this item Service tax as on 31M March 2013 was Rs 92 as an excess paid

7. In light of the aforesaid explanation by the assessee, we find that the additions have been made by not accepting the claim of the assessee. There is no case of I TA No . 3 8 7 /Pa n . /2 0 1 8 concealment of income or furnishing of inaccurate particulars of income. The mere fact that assessee has not filed appeal against the additions, cannot be taken for adverse inference that the levy of penalty is automatic. This view is duly supported by the decision of Hon'ble Apex Court in the case of Reliance Petroproducts (P.) Ltd. (supra).

8. Furthermore, we find that assessee has filed the ground that in the notice levying the penalty u/s. 271(1)(c), the specification of charge for levy of penalty has not been identified. In this regard, it has also been submitted that in the assessment order, the A.O.

has stated that penalty is to be levied for furnishing of inaccurate particulars of income and concealment of income. However, in the penalty order, the A.O. has not at all specified any charge. He has merely stated that addition has been made in the assessment order and hence, penalty has been levied u/s. 271(1) without specifying in any manner as to on what charge the penalty has been levied. The ld. CIT(A) has confirmed the penalty for concealment.

9. In these circumstances, the learned counsel of the assessee has pleaded that in absence of proper specification of charge, the penalty levied is not sustainable. In this regard, the learned counsel of the assessee has placed reliance upon several case laws as under:

1) CIT vs. Manjunatha Cotton & Ginning Factor [2013] 359 ITR 565 (Karn);

2) CIT vs. Shri Samson Perinchery (in ITA No. 1154, 953, 1097 & 1226 of 2014);

3) CIT vs. SSA's Emerald Meadows [2016] 242 Taxman 180 (SC);

10. Upon careful consideration, we note that we have already held that penalty is not leviable on the merits of the case, wherein we have placed reliance upon the decision of honourable apex court in the case of Reliance Petroproducts (P.) Ltd. (supra). In this view of the matter, the adjudication of issue with regard to the non-specification of charge in the notice u/s.271(1)(c) is only of academic interest. Moreover, we note that this ground was not raised before the ld. CIT(A). Hence we are not engaging into the same.

11. In the result, this appeal filed by the assessee stands allowed Order pronounced by listing the result on the Notice Board of the Bench under Rule 34(4) of the Appellate Tribunal Rules, 1963.

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