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TMI Blog2016 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings u/s 271(1)(c) of the Act for filing inaccurate particulars of income. In our considered opinion, the assessee cannot be made liable for penalty as there is a bona fide mistake of omission in not showing the salary received from the previous employers. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. From the ROI filed by the assessee, it has been demonstrated that the assessee has failed to claim the TDS deducted by the earlier employers. The conduct of the assessee supports the explanation tendered and therefore, a deliberate omission to include the salary received from previous employer cannot be established.Accordingly, we delete the penalty levied by the Assessing Officer in respect of omission to disclose the salary received from the previous employers on which TDS had already been deducted by them. Interest on housing loan - Held that:- From the Paper Book filed before us, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had made expenses of ₹ 3,12,137/- as seen from the AIR information, through credit card. On calling for the details by Ld. A.O., assessee submitted the bank account and was not able to submit the credit card statement for verification of such expenses. Ld. A.O. has verified the expense amounting to ₹ 1,50,843/- which appears in the bank statement. As the remaining expense have been ₹ 1,61,294/- for the expenses made through credit card which was not verifiable, the same was added to the income of the assessee. It has been observed that the addition had been made for want of evidence / explanation. As the assessee has not submitted proper explanation in support of expenses made through credit card. We do not find any infirmity in levying penalty on such amount. In view of above, we confirm the penalty levied by the Assessing Officer for submitting wrong explanation in respect of credit card expenses. Decided partly in favour of assessee. - I.T.A. No.2457/Del/2016 - - - Dated:- 27-7-2016 - SHRI G. D. AGRAWAL, HON BLE VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Appellant : Shri Pradip Dinodia. CA Shri R. K. Kapoor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /CIT(A) erred in law in levying penalty u/s 271(1)(c) on routine additions made in a grossly illegal manner. 10.0 That without prejudice the penalty levied is highly excessive. 2. The facts of the case as recorded by the authorities below are as under: 2.1 The assessee is an individual and had file its return of income on 20.07.2011 disclosing total income of ₹ 7,39,676/- under the head income from salary. The assessee had claimed deduction of housing loan interest amounting to ₹ 1.50 lacs and deduction u/s 80C at ₹ 1,00,000/-, the assessee had claimed TDS at ₹ 84,394/-. The case was selected for scrutiny under CASS to examine the contents and difference as per 26 AS and return of income. 2.2 Ld. A.O. after examination, found that the assessee had not disclosed salary income of ₹ 30,47,245/ received from two other institutions against which TDS amounting to ₹ 7,88,334/-had been deducted. Accordingly, assessee was asked to explain the reasons why the salary of ₹ 30,.47,245/- was not shown in the return of income. The Assessing Officer observed that the assessee had claimed interest on housing loan which was in the joint nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest on saving bank account was missed out as the assessee was not aware that the same being taxable. Ld. CIT(A) did not accept the bona fide mistake on behalf of the assessee as the assessee was not an uneducated person. He confirmed the penalty levied by the Assessing Officer. 4. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us now. 5. Ld. A.R. submitted that the penalty has been levied on the following items: i) non disclosure of salary amounting to ₹ 30,47,245/- omitted to be included by the erstwhile employer; ii) interest on housing loan proportionately disallowed being ₹ 31,756/-; and iii) interest on saving bank account of ₹ 12,863/-/- iv) credit card expenses of ₹ 1,61,294/-. 5.1 Ld. A.R. submitted that the assessee is working in hotel industry. During the financial year, relevant to the Assessment Year under consideration, the assessee had shifted his employment thrice. He submitted that such quick change in the employment by the assessee has happened for the first time. The assessee at the time of filing the return, omitted the salary received from the previous employers due to ignorance and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. 6. On the contrary, Ld. D.R. referred to the written submissions before us in support of his arguments which are reproduced as under: WRITTEN SUBMISSION ON BEHALF OF REVENUE Regarding Penalty u/s 271(1)(c): The case of the assessee is squarely covered under general provisions of the section 271(1)(c) as well as mischief of explanation 1 to the section 271(1). 1.1 The assessee had concealed salary income from two employers, claimed excess deduction on account of housing loan, unexplained credit card expenses and had not declared the interest income. Therefore, the assessee has concealed income and the particulars furnished by assessee are certainly 'inaccurate'. 1.2 The case is squarely covered by the binding ratio of jurisdictional High Court in case of Commissioner of Income-tax VS. NG Technologies Ltd. [2015] 57 taxmann.com 389 (Del) which has been confirmed by the Hon'ble Supreme Court by way of dismissal of SLP in case of N.G. Technologies (In Liquidation) Vs. Commissioner of Income-tax [2016] 70 taxmann.com37 (SC). 1.3 In this particular case, the Hon'ble Delhi High Court has explained the meaning of 'inaccurate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation. Therefore, case of assessee is covered under sub clause (A). 2.3 In fact, during the penalty proceedings also, the assessee stated that it was a human error but has not furnished any valid explanation. 2.4.1 The assessee has not discharged its onus. Jurisdictional High Court in case of Commissioner of Income-tax Vs. HCll Kalindee Arsspl [2013] 37 taxmann.com 347 (Del) has laid down the ratio that initial burden of proof is upon assessee to prove that his explanation was bona-fide. The Hon'ble HC also laid down the ratio that this burden can only be discharged by producing cogent material. Hon'ble HC has stated as under:- 8 The assessee had made a wrong claim for deduction under Section 80lA and, therefore, had furnished inaccurate particulars as the claim was not admissible. Sub-clause (B) of the explanation is, therefore, applicable and we have to examine the two conditions whether: (1) The assessee has been able to show that the explanation was bona fide; and (2) Facts and material relating to computation of his income had been disclosed. 9. Onus of establishing that the assessee satisfied the two conditions is on him i.e. the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenable neither legally nor factually. Courts are of the view that disputable claims and inadmissible claims are to be treated differently. (iii) In para 12, the Hon'ble ITAT has taken a note of the settled law position that Courts have held that the object behind enactment of section 271(1)(c) read with the Explanations indicate that the section has been enacted to provide for a remedy for loss of revenue, that the penalty under that provision is a civil liability, that willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276C of the Act. (iv) The Hon'ble ITAT analysed various judicial pronouncements including the judgment of Hon'ble Madras HC in case of Sharma Alloys (India) ltd.(Mad) (357 ITR 379) = 2013-TIOl- 559-HC-MAD-IT .and judgements of Hon'ble Delhi HC in the cases of ECS Ltd.(Del) (336 ITR 162) = 2010-TIOl-287-HC-DEl-IT, Harparshad and Company ltd.(Del) (328 ITR 53), Escorts Finance Ltd.(Del)(328 ITR 44) = 2009-TIOL- 483-HC-DEL-IT and ClT vs. Zoom Communication Pvt. Ltd.(2010-TIOL-361-HC-DEL-IT). (v) In para 17, the Hon ble ITAT reproduced the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is mentioned in the return of income does not prove that the claim made in it is justified and allowable. Filing of return does not tie down the hands of an AO. A final decision depends upon the truthfulness of the particulars of income filed by the assessee. The Hon'ble ITAT interpreted the phrase 'particulars of income' appearing in section 271(1)(c) and remarked that it has to be interpreted as facts leading to correct computation of income and held that whenever any material fact is not filed for correct computation of income or if filed is inaccurate, then penalty has to be imposed. (viii) Hon'ble ITAT in the para 27 stated that bonafide belief of an assessee in making a claim has limited role for deciding the issue of penalty to be imposed u/s.271(1)(c). Fact of the case decide whether such a belief could be treated as bonafide or not. In other words, it can safely be held that if an assessee, disregarding all the relevant facts and circumstances, interprets a section that suits its interest then such interpretation cannot be held bona fide belief. In the garb of the bonafide claim, an assessee cannot escape the levy of penalty. 5. (i) The case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim, that once the assessee offered an explanation the onus would shift on the Revenue to prove that the explanation offered by the assessee was false, that bonafides of the explanation were clearly proved, that no material or evidence was brought on record or pointed out by the DR proving that the Revenue had discharged its onus for proving the falseness of explanation of the assessee, that the assessee had also duly discharged its onus which was cast on the assessee. When the matter travelled up to the Hon'ble Supreme Court, it was observed by the Apex Court that in that case, there was no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false, that such not being the case there would be no question of inviting the penalty under section 271(l)(c} of the Act. However, in the present case, assessee has not only tried to disregard correct position of law settled by Hon'ble SC but also refrained from mentioning the said judgment of the Hon'ble SC in the note furnished along with computation of Income. 7. We have perused the orders passed by authorities below and the judgments relied upon by the parties. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the salary received from the previous employers on which TDS had already been deducted by them. 8. Regarding interest on housing loan, it is observed that the Assessing Officer has made addition of ₹ 31,756/- in respect of interest on housing loan which has been claimed in excess by the assessee. Ld. Assessing Officer / CIT(A) are of the view that the assessee is eligible for 50% of the interest component of Rs,2,36,488/- u/s 24(b), as the housing loan stands in the joint name of the assessee and his wife. As the assessee had claimed ₹ 1.50 lacs in its return of income, and eligible for claiming interest at ₹ 1,18,244/-. The Assessing Officer disallowed the difference of balance of ₹ 31,756/-. Ld. A.R. also submitted that there is no concealment in respect of interest on housing loan as the employer has also granted the deduction of ₹ 1.50 lacs in the form 16A issued by him. 8.1 On the contrary, Ld. D.R. has referred to the written submissions, reproduced hereinabove. 8.2 We have perused the relevant records placed before us and submissions advanced by both the parties. From the Paper Book filed before us, the assessee has referred page 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had made expenses of ₹ 3,12,137/- as seen from the AIR information, through credit card. On calling for the details by Ld. A.O., assessee submitted the bank account and was not able to submit the credit card statement for verification of such expenses. Ld. A.O. has verified the expense amounting to ₹ 1,50,843/- which appears in the bank statement. As the remaining expense have been ₹ 1,61,294/- for the expenses made through credit card which was not verifiable, the same was added to the income of the assessee. 9.3 It has been observed that the addition had been made for want of evidence / explanation. As the assessee has not submitted proper explanation in support of expenses made through credit card. We do not find any infirmity in levying penalty on such amount. In view of above, we confirm the penalty levied by the Assessing Officer for submitting wrong explanation in respect of credit card expenses. 10. Accordingly, the Grounds of appeal filed by the assessee in respect of salary and interest on housing loan stand partly allowed and we confirm the penalty levied by the Assessing Officer in respect of interest on saving bank account and credit card expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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