Case Law Details

Case Name : M/s Subhash Chander Sewa Vs Income Tax Officer (ITAT Amritsar)
Appeal Number : I.T.A. No. 519 (Asr)/2016
Date of Judgement/Order : 07/06/2017
Related Assessment Year : 2012-13
Courts : All ITAT (4278) ITAT Amritsar (43)

Admittedly there is a mistake committed by the assessee in not adding interest on the refund to his sources of income. There is no disputing the fact that the tax payer duly and diligently must necessarily in its return of income disclose all avenues of his income. The assessee in its defence has consistently maintained that the mistake has occurred as the information in regard to the said interest was not available in the public domain namely 26AS form of the assessee firm downloaded from the system and lack of any other intimation also available to the assessee from the Income Tax Department. These facts are not rebutted by the Revenue as CIT(A) has confirmed the penalty holding that it was the duty of the assessee to check and recheck the avenues of his income. The fact that it was the duty of the tax payer to follow due diligence cannot be over emphasized. However, considering the fact that the assessee is not a habitual defaulter and as per the assessment order, is shown to be “trading in wood”. There is nothing on record to show that it was an act of concealment nor is there any fact on record that there was a deliberate filing of inaccurate particulars of income. No doubt the assessee is expected to show due diligence and is mandatorily required to disclose all avenues of income before filing of his return. The mistake in the peculiar facts as considered in the decision of Apex Court in the case of Price Waterhouse Coopers (P.) Ltd. (2012) 25 Taxmann.Com 400 (S.C) being a bonafide or inadvertent mistake cannot be the basis for levying or upholding the penalty of Rs. 43,021/-. Accepting the consistent explanation of the assessee as a bonafide inadvertent mistake, the impugned order is set aside and the penalty order is directed to be quashed and the appeal of the assessee is allowed.

ORDER

PER DIVA SINGH,JM:

The present appeal has been filed by the assessee assailing the correctness of the order dated 12.07.2016 of CIT(A)-I Amritsar, pertaining to 2012-13 assessment year on the following grounds :

“1. That the Id. CIT (A) is not justified in upholding the assessment order having failed in discharging the onerous duty as an appellate authority for passing a order which is bad in law and as per facts of the case going to prejudice the. appellant..

2.. That the Id. CIT (A) is not justified in upholding the imposition of penalty u/s 271(l)(c) on account of short disclosure of interest on Income tax refund of Rs 139234/- in its income tax return as the assessee was ignorant about the amount of interest and no intimation of interest on refund was available with the assessee.

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3. That no intimation u/s 143(1) was received by the assessee firm to know the amount of interest on refund. The only source available with the assessee firm to know the amount of interest on income tax refund was the amount of refund and interest appearing in form 26AS. But unfortunately the Form 26AS shows Nil interest on refund.

4. That assessee firm could not assess the exact amount of interest on refunds because due to mismatch, the assesssee received short refunds from the actual refunds due. The assessee firm received refunds of Rs 19.95 Lac against the refund dues for the A.Y. 2008-09, 2009-10 and 2010-11. The detail of refund dues and refunds received by assessee firm are detailed as under:

Asstt. Year Refund Reed. Refund Due
2010-11 901180.00 1013790
2009-10 953290.00 814770
2008-09 140580.00 576630
Total 1995050.00 2405210

5. That worthy CIT(A) has passed the order without undergoing the facts of case and submissions made by assessee firm.”

2. The ld. AR at the time of hearing invited attention to the list of dates and sequence of events addressed in the written submissions placed on record and submitted that the calculations leading to the addition which is a subject matter of the penalty order dated 21.09.2015 has not been assailed by the assessee. The only submission of the assessee before the AO and the CIT(A) in the penalty proceedings has been that there was no concealment or filing of inaccurate particulars of his income. In the facts of the preset case, it was submitted that the assessee was ignorant about the interest received on the income tax refund as no intimation was available with the assessee. This submission, it was submitted, is a matter of fact and has not been rebutted by the AO or the CIT(A). Even as per the 26AS form of the assessee firm as downloaded from the system, at the relevant point of time, it was submitted there was no reference to any interest on income tax refund. This fact was made known to assessee only at the time of the assessment proceedings, as the AO then came to know about the refund and interest thereon and he informed the assessee about the difference of Rs. 1,39,234/-. The assessee promptly agreed and did not object to paying due tax thereon because tax on interest was admittedly payable, the only distinction being that it was not in the notice of the assessee. The tax demand, it was submitted of Rs. 58,690/- was accordingly immediately paid. The following details of Refund and Interest credited available with the assessee which had been relied upon before the CIT(A) extracted at page 4 of the impugned order was referred to. Same is reproduced hereunder:

Asstt Year Refund Recd. Interest                 as per FT System Interest shown in P&l Difference
2010-11 901180.00 89309.00   89309.00
2009-10 953290.00 138516.00 106219.00 32297.00
2008-09 140580.00 26289.00 8661.00 17628.00
Total 1995050.00 254114.00 114880.00 139234.00

2.1 The fact that the assessee has accepted the mistake which has occurred inadvertently, it was submitted, does not amount to concealment. In support of the said submission, various decisions were relied upon before the CIT(A). In the circumstances, it was his submission that the penalty has wrongly been levied and confirmed and a prayer was made that it may be quashed.

3. The ld. Sr.DR, inviting attention to the impugned order submitted that the CIT(A) has dismissed the assessee’s claim holding that it was the statutory duty/responsibility on the part of the assessee before filing the return of income to check the incomes accrued and received by him during the previous year which were to be shown in the return of income. In the year under consideration, it was submitted the assessee has admittedly received refund to the tune of Rs. 2,54,114 /- and has only showed Rs. 1,14,880/-. Since he has not shown the interest income on refund to the tune of Rs.1,39,234/-, which was also his taxable income, the addition was justifiably made. Inviting attention to page 6 of the impugned order, it was his submission that the CIT(A) has also considered the argument of the assessee wherein it has been claimed that the assessee was ignorant about the interest received on income tax refund as in regard to this respect, no intimation was available to the assessee and also as per 26AS form of the assessee downloaded from the system, no reference about interest on income tax refund was available thereon. The said submissions have been rejected by the CIT(A) on the ground that it is the duty on the part of the assessee to check and recalculate his avenues of income and the assessee should have checked and calculated that the refund so claimed is more than 10% of the tax determined. Onus was upon the assessee and thus, it was submitted that the penalty has correctly been upheld.

4. The ld. AR submitted on query that this is the first time such a mistake has occurred and the assessee is not a habitual defaulter.

5. I have heard the submissions and perused the material available on record. Admittedly there is a mistake committed by the assessee in not adding interest on the refund to his sources of income. There is no disputing the fact that the tax payer duly and diligently must necessarily in its return of income disclose all avenues of his income. The assessee in its defence has consistently maintained that the mistake has occurred as the information in regard to the said interest was not available in the public domain namely 26AS form of the assessee firm downloaded from the system and lack of any other intimation also available to the assessee from the Income Tax Department. These facts are not rebutted by the Revenue as CIT(A) has confirmed the penalty holding that it was the duty of the assessee to check and recheck the avenues of his income. The fact that it was the duty of the tax payer to follow due diligence cannot be over emphasized. However, considering the fact that the assessee is not a habitual defaulter and as per the assessment order, is shown to be “trading in wood”. There is nothing on record to show that it was an act of concealment nor is there any fact on record that there was a deliberate filing of inaccurate particulars of income. No doubt the assessee is expected to show due diligence and is mandatorily required to disclose all avenues of income before filing of his return. The mistake in the peculiar facts as considered in the decision of Apex Court in the case of Price Waterhouse Coopers (P.) Ltd. (2012) 25 Taxmann.Com 400 (S.C) being a bonafide or inadvertent mistake cannot be the basis for levying or upholding the penalty of Rs. 43,021/-. Accepting the consistent explanation of the assessee as a bonafide inadvertent mistake, the impugned order is set aside and the penalty order is directed to be quashed and the appeal of the assessee is allowed. Said order was pronounced in the Open Court at the time of hearing itself.

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

Order pronounced in the open court on 07th June,2017.

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