Case Law Details
Dineshchandra Dudhwala Vs ITO (ITAT Surat)
ITAT Surat held that each and every addition cannot be a basis for levying a penalty under section 271(1)(c) of the Income Tax Act. There has to be deliberate furnishing of inaccurate particulars or concealed income for levy of penalty. Accordingly, appeal allowed and penalty set aside.
Facts- The case of assessee was reopened u/s. 147 and notice u/s. 148 dated 27.03.2018 was served upon the assessee. In response to notice u/s. 148, the assessee filed return of income declaring income of Rs.12,31,590/- and assessment was completed by making a small addition on account cash deposit in City Bank of Rs. 60,800/- only. No further appeal was filed by assessee due to smallness of addition. The assessee has not filed any appeal to buy peace.
AO initiated penalty only on the addition of cash deposited of Rs. 60,800/-. However, while levying penalty, AO levied penalty on additional income offered by assessee in revised return of income filed in response to notice u/s. 148 of the Act. Being aggrieved, the present appeal is filed.
Conclusion- Held that So far as addition under section 69 of Rs. 60,800/- is concerned, in our view, no penalty is leviable as mere cash deposit cannot be considered income of the assessee. It is also matter of record that no further appeal is filed by the assessee. The assessee has not filed further appeal due to smallness of the addition. Mere no further appeal is filed; it cannot be taken as admission on the part of the assessee. Each and every addition cannot be a basis for levying a penalty under section 271(1), unless there is a finding of AO that the assessee has deliberately furnished inaccurate particulars or concealed the income. The ld AR of the assessee is her submissions categorically submitted that the bank account on the credit of which, the penalty is levied, was shown in his cash book and such deposit was not unexplained. Thus, we considering the aforesaid facts we do not find any justification for levying penalty even on the addition of Rs. 60,800/-. In the result, the grounds of appeal raised by the assessee are allowed.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi/Commissioner of Income tax (Appeals) [for short to as “NFAC/Ld.CIT(A)] dated 21.03.2022 for assessment year (AY) 2011-12, which in turn arises out of penalty levied by Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) 27.06.2019. The assessee has raised the following grounds of appeal:-
“1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of the Assessing Officer in levying the penalty of Rs.2,17,272/- u/s 271(1)(c) of the I.T. Act, 1961.
2. It is therefore prayed that the above penalty levied by the Assessing Officer and confirmed by the CIT(A) may please be deleted.
3. Appellant craves leave to add, alter or delete any ground(s) either before or in course of hearing of the appeal.”
2. Rival submission of both the parties have been heard and record perused. The Ld. Authorized Representative (Ld.AR) for the assessee submits that there is delay of 532 days in filing appeal before Tribunal. The assessee has filed application for condonation of delay supported with affidavit. The Ld.AR for the assessee submits that impugned order was passed by Ld.CIT(A) on 21.03.2022 and that assessee was required to file appeal on or before 20.05.2022, however, appeal was filed only on 03.11.2023 resultantly by delay of 532 days. The Ld. AR of the assessee submits that delay in filing appeal is neither intentional nor deliberate but due to miscommunication and inadvertent assumption of fact by instructing Chartered Accountant, Kansariwala & Chevli & Associates by staff of Rasesh Shah & Co (AR). The instructing Chartered Accountant sent e-mail to present Ld.AR of his office on 17.04.2021 for filing appeal before Tribunal for assessment year 2012-13, which was filed on 24.05.2021, which was filed in time. For filing appeal for assessment year 2011-12 against the order dated 21.03.2022, instructing Chartered Accountant sent e-mail, however, that e-mail was inadvertently assumed by staff of present Ld.AR in relation to assessment year 20 12-13 and resultantly no further action was initiated. Thus, appeal for impugned year could not be filed. This fact for non-filing appeal was realized only after 3rd week of October, 2023 when the assessee enquired from his instructing Chartered Accountant to know the status of appeal, when recovery notice was served for assessment year 20 11-12. On verification of record, it was realized that due to inadvertent, the appeal for assessment year 2011-12 could not be filed before Tribunal. The Ld.AR of the assessee submits that there is no fault on the part of assessee rather he was relying upon the CA/Consultant who is well known professional in the matters of appeal before Tribunal. The Ld. AR of the assessee submits that there is absolutely no mala fide intention on the part of assessee rather the assessee was under bona fide belief that this appeal has already been filed. The Ld. AR of the assessee submits that assesse has a good case on merit and is likely succeeds if the case of assessee is heard and decided on merit. The Ld. AR of the assessee submits that when technical consideration and cause of substantial justice are kept against each other, cause of substantial justice may be preferred.
On merit, Ld. AR of the assessee submits that case of assessee was reopened under section 147 and notice under section 148 dated 27.03.2018 was served upon the assessee. In response to notice under section 148, the assessee filed return of income declaring income of Rs.12,31,590/- and assessment was completed by making a small addition on account cash deposit in City Bank of Rs. 60,800/- only. No further appeal was filed by assessee due to smallness of addition. The assessee has not filed any appeal to buy peace. The Assessing Officer initiated penalty only on the addition of cash deposited of Rs. 60,800/-. However, while levying penalty, the Assessing Officer levied penalty on additional income offered by assessee in revised return of income filed in response to notice under section 148 of the Act. The Ld. AR of the assessee reiterated that revised return in response to notice under section 148 was filed by assessee and there is no question in concealment or furnishing inaccurate particulars of income. So far as, addition of Rs. 60,800/-is concerned, the cash deposited was out of cash withdrawal from other bank account and which was substantiated by filing cash flow statement. The Ld. AR of the assessee submits that it is settled law that when assessee has filed return of income in response to notice under section 148, such return of income is to be considered as “return of income filed under section 139” for the purpose of penalty under section 271(1)(c) and no penalty is to be levied. Only income assessed over and above the return of income, if there is no income assessed over and above return of income, no penalty is liable to be levied under section 271(1)(c) of the Act. The Ld. AR of the assessee reiterated that so far as levy of penalty on addition of Rs. 60,800/- on account of cash deposit in bank account is concerned, the cash deposit in bank account was reflected in cash book and such deposit was not unexplained. Merely, Assessing Officer treated the cash deposit as undisclosed income but cash deposit is not with concealed income for the purpose of penalty proceedings. To support her submission, Ld.AR of the assessee relied on following case law:
> CIT vs. Suresh Chandra Mitttal (2001) 170 CTR 0182
> CIT vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC)
> Kirit Dahyabhai Patel vs. ACIT [2017] 80 com 162 (Guj)
> CIT vs. Whiteford India Ltd. [2013] 38 com 15(Guj)
> CIT vs. Shankerlal Nebhumal Uttamchandani [2009] 311ITR 327 (Guj)
> Ravi Sud vs. ACIT [2015] 60 com 241 (Mumbai –Trib.)
> Ashvin Narayan Bajoria (HUF) vs. ITO ITA No.369/Srt/2022 dated 07.03.2023
3. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. The Ld. Sr-DR for the Revenue submits that assessee offered additional income only on service of notice issued under section 148. The Assessing Officer while assessing income of assessee made addition of Rs.60,800/- under section 69 of the Act. The Assessing Officer while passing the assessment order, at the bottom of assessment order, has clearly recorded about issuance of notice for concealment of income and penalty was levied for concealment of income.
4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We have also deliberated on various case law relied upon Ld. AR of the assessee. first, we are considering the plea of condonation in filing the present appeal. Before us, the ld AR of the assessee vehemently urged that due to miscommunication and inadvertent assumption of fact by instructions of instructing Chartered Accountant, Kansariwala & Chevli & Associates by staff of Rasesh Shah & Co (AR) for filing appeal before Tribunal for assessment year 2012-13, which was filed on 24.05.2021, which was filed in time. For filing appeal for assessment year 20 11-12 against the order dated 21.03.2022, instructing Chartered Accountant sent separate e-mail, however, that e-mail was inadvertently assumed by staff of present Ld.AR in relation to assessment year 2012-13 and resultantly no further action was initiated. On the basis of aforesaid facts, the ld AR of the assessee explained that appeal for impugned year could not be filed and fact for non-filing appeal was realized only after 3rd week of October, 2023 when the assessee enquired from his instructing Chartered Accountant to know the status of appeal, when recovery notice was served for assessment year 20 11- 12. We find that the assessee has engaged well known consultant and due to inadvertent assumptions of facts, the appeal for impugned year was not filed. Considering the facts that the assessee has taken the step and engaged counsels firm, which due to miscommunication and wrong assumption of facts for different years of appeal, could not file appeal in time. It is also matter of facts that appeal for AY 2012-13 was filed on 24.05.2021 that is in time. Thus, accepting the reasonable and plausible explanation in not filing the appeal in time. Further considering the principal of law that when technical consideration and cause of substantial justice are kept against each other, cause of substantial justice may be preferred. Hence, delay in filing appeal is condoned. Now adverting the merits of the case.
5. The Assessing Officer levied penalty on the additional income offered by assessee in the return filed in response notice issued under section 148 as well as addition made under section 69 of the Act on account of deposit in City Bank of Rs.60,800/-.So far as additional income offered by assessee in response to notice under section 148 is concerned, we find that such income is accepted by Assessing Officer and by accepting such additional income no penalty is leviable as has been held by Hon’ble jurisdictional High Court in the case of Kirit Dahyabhai Patel vs. ACIT [2017] 80 taxmann.com 162 (Gun). Similar view was taken by Division Benches of Mumbai Tribunal in the case of Ravi Sud vs. ACIT [2015] 60 taxmann.com 241 (Mumbai-Trib.). So far as addition under section 69 of Rs. 60,800/- is concerned, in our view, no penalty is leviable as mere cash deposit cannot be considered income of the assessee. It is also matter of record that no further appeal is filed by the assessee. The assessee has not filed further appeal due to smallness of the addition. Mere no further appeal is filed; it cannot be taken as admission on the part of the assessee. Each and every addition cannot be a basis for levying a penalty under section 271(1), unless there is a finding of AO that the assessee has deliberately furnished inaccurate particulars or concealed the income. The ld AR of the assessee is her submissions categorically submitted that the bank account on the credit of which, the penalty is levied, was shown in his cash book and such deposit was not unexplained. Thus, we considering the aforesaid facts we do not find any justification for levying penalty even on the addition of Rs. 60,800/-. In the result, the grounds of appeal raised by the assessee are allowed.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 27/11/2024.
Author Bio
