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TMI Blog2019 (10) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to hold that the penalty proceedings initiated by the AO is void ab initio and allow the appeal of the assessee - I.T.A. Nos.374 to 380/Coch/2019, I.T.A. Nos.381 to 384/Coch/2019 - - - Dated:- 27-9-2019 - S/Shri Chandra Poojari, AM And George George K., JM For the Assessee : Shri Jacob Babu, CA For the Revenue : Smt. A.S. Bindhu, Sr. DR ORDER PER CHANDRA POOJARI, AM: These appeals of the assessees are directed against the different orders of the CIT(A)-III, Kochi dated 20/02/2019 and pertain to the assessment years 2002-03 to 2008-09. 2. The grounds of appeals in the case of the assessee Smt. Thankamani Varadarajulu which are common in nature except for change in amount read as follows: 1. The learned deputy commissioner of income tax erred in levying a penalty of ₹ 51.151/- u/s 271(1) (C) of the Income Tax Act 1961overlooking the explanations offered by the appellant. 2. The learned deputy commissioner of income tax ought to have appreciated that failure to disclose property income was purely accidental. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come tax matters of other members of the family. The sudden demise of key member, S Varadarajulu, made the other members handicapped to properly explain the transactions in their account. 10. The CIT (A) also should have appreciated the fact that the return of income of the appellant for the Assessment Year 2002 - 2003 was filed on 20/11/2009. The appellant's husband, who was handling the accounts and tax affairs of the appellant, was died on 05/09/2009. Before the death the appellant's husband undergone for continuous treatments in relation to his illness. At that time the appellant had to devote her full attention and care to her husband. Her beloved husband's health condition worried her a lot and she gave more importance for the survival of her husband rather than income tax matters. Soon after her husband passed away and the sudden demise of the leader of the family made them mentally weak. In such a situation the department asked the appellant to file the return and produce the supporting evidence. Hence the appellant filed a return based on her limited knowledge and produced the supporting evidences to the best of his knowledge. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have appreciated the fact that the appellant is a housewife supporting her husband in the business needs without having any knowledge in tax and accounting matters. The sudden demise of her husband made her shaken and at that time filing of return becomes necessary and she had filed the return based on available documents with her. The actual intention was to file the return and not conceal any income. Her inability to explain things in the absence of her husband lead to the situation of differences in income. 14. The CIT (A) also should have appreciated the fact that the appellant lost her husband. Emotions can affect the mind of a person for a long period. It will take a lot of time to recover from the mental illness caused by such emotions. In this case the appellant's husband died in the year 2009. Since the appellant was very much closer to her husband it took a lot of time to the appellant to recover from that Actually the appeal was considered by the CIT(A) in the year 2019. A look back into such a situation after a long period of 10 years made an impression that the appellant got about 3 months to file the return after the death of her husband and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s S.B Account No.7961 with Canara bank, Kottayam. This amount was added as income from other sources, on account of failure on the part of the assessee to explain the sources of the same. According to the Assessing officer, this addition attracted the provisions of section 271(1) (c) of the Income Tax Act 1961. 3.1 It was the case of the assessee that income from house properties was a pure accidental omission and the assessee was not in receipt of any rent for most parts of the year and at the time of filing the return, this fact was completely overlooked. As a new tax consultant was handling the affairs, on account of dispute in the family, failure to return the income was not intentional. Regarding deposit in her S.B Account, the assessee could not explain the same, since it was her late husband Varadarajulu, who was handling her accounts and tax matters and in view of the fact that he had expired before the assessment was completed, the assessee could not properly explain the source for the deposits. The assessee also submitted that the additions were agreed to merely on account of her inability to explain things properly to the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The reason for agreeing for an addition may be on several counts that alone cannot be a ground for concealment of income. 5. The CIT (A) erred in confirming the penalty of ₹ 60,558/- u/s 271(1) (C) of the Income Tax Act 1961 overlooking the explanations offered by the appellant. 6. The CIT (A) also should have appreciated the factual position that the major addition in income was due to the appellant's inability to explain the deposit in bank account in the absence of her late father who was handling her tax matters. 7. Since the business of M/s Parthas Textiles was a joint family business, the key member of the family handled the business and the other members of the family assisted him. The key member was responsible for managing the transactions of the business and the income tax matters of other members of the family. The sudden demise of key member, S Varadarajulu, made the other members handicapped to properly explain the transactions in their account 8. The CIT (A) also should have appreciated the fact that the return of income of the appellant for the Assessment Year 2002-2003 was filed on 20/11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfortunately the tax payer is no more. Therefore the legal representatives of the tax payer were practically handicapped in explaining the real situation which resulted in credit of the amount in the bank account In such a circumstance, we may not be able to blame the legal heirs in not furnishing a satisfactory explanation. By taking into consideration the death of the tax payer and the practical difficulty faced by the legal heirs in furnishing the reasons for not offering the amount found in the bank account, this Tribunal is of the considered opinion that this is not a fit case for levy of penalty. Therefore the Commissioner of Income Tax (A) has rightly deleted the penalty. We do not find any infirmity in the order of the lower authority. Accordingly the same is confirmed . 11. The CIT (A) also should have appreciated the fact that the appellant is a housewife supporting her father in the business needs without having any knowledge in tax and accounting matters. The sudden demise of her father made her shaken and at that time filing of return becomes necessary and she had filed the return based on available documents with her. The actual intention was to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the assessee had not satisfactorily explained the source for these deposits and the further fact that the assessee had agreed for the addition, the Assessing officer came to the conclusion that the assessee had concealed her income. Further, the Assessing officer was of the opinion that the search brought to light incriminating materials that led to the addition, which also amounted to concealment. The Assessing officer rejected the assessee s contention that failure to explain the source with evidence was on account of the fact that the details were known only to the assessee s father, late Varadarajulu, who died during the course of assessment proceedings, Further, she also did not take to notice of fact that these deposits were not cash deposits, but clearing cheques which could have been easily ascertained from the banks. The Assessing officer rejected the explanation offered and went on to levy a penalty of ₹ 60,558/- u/s 271(1)(c) of the Income Tax Act 1961. 4.2 On appeal, the CIT(A) rejected the appeal of the assessee by stating that the assessee s father's presence and ability to explain these items would have resulted in no addition at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2012-13 from the Income Tax Authorities in Kottayam requiring submission of income tax return of that year. In relation to that, I had to collect documents relating to past years (Especially Bank Statements). Obtaining bank statements from bank at a time when they were under statutory audit was very difficult and some of the statements were not yet received. In addition to that I had to follow up with CCIT, Trivandrum regarding the status of Interest waiver petition submitted earlier by me relating to AY 2002 -03 to AY 2008-09. Since the Interest waiver petition was also submitted long years ago I had to take more efforts to identify the current position, which required continuous communications with Income Tax Authorities in Kottayam, Ernakulum and Trivandrum. Moreover there was a lot of pressure on me to remit various tax demands pertaining to the period from AY 2002-03 to AY 2008- 09. All these situations lead to a busy schedule for me in the month of April 2019. In the month of April 2019 I was busy with the aforesaid matters and I was not able to prepare all the appeal documents before the ITAT. Since the case related to earlier years, obtaining the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search u/s 132 of the Income Tax Act 1961 took place on 11.10.2007. 1 lost my father after a prolonged illness. Thereafter an assessment was completed on me and penalty u/s 271(1)(c) of the Income Tax Act 1961 was levied on me. I challenged the levy of penalty before Hon'ble CIT (A) III, Cochin and the Hon'ble CIT (A) III, Cochin confirmed the penalty vide order u/s 250 dated 20.02.2019. The order was communicated to me on 06.03.2019 and the appeal against the order was to be filed within 60 days (i.e, on 05.05.2019). There is a delay of 5 days in filing the appeal. It is submitted that actually the penalty was relating to my assessed income of AY 2002-03, 2003-04, 2004-05 and 2005-06. Since the assessment was done based on a search conducted in the family of us, I was also served with a penalty order. All the documents and communications relating to that search assessment were handled and kept by my mother. On receipt of the order u/s 250 as mentioned above my mother was abroad and she came back to India at the end of March 2019. Since the filing of appeal before ITAT required copy of the assessment orders of earlier years I contacted my mother and she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the assessees and admit the appeals for adjudication. 6. The assessees have also filed petitions for admission of the additional ground of appeals in all cases as follows: When the Appeal came up for hearing,the Hon'ble Bench directed the Appellant to produce a copy of the penalty notice received by the Appellant for the Asst. Years under appeal. 6.1 We find bona fide reasons in the act of the assessee in not raising the additional ground on an earlier occasion by placing reliance on the judgment of the Supreme Court in the case of National Thermal Power Corporation Ltd. vs. CIT (229 ITR 383) wherein it was held that Tribunal has the discretion to allow or not to allow additional ground to be raised for the first time before the Tribunal. Accordingly, we admit the additional ground for adjudication. 6.2 We have heard the rival submissions and perused the record. We find bona fide reasons in the act of the assessee in not raising the additional ground on an earlier occasion by placing reliance on the judgment of the Supreme Court in the case of National Thermal Power Corporation Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the penal action was taken has not been specified in the notice issued. The notice mentioned both the defaults viz. concealment of income and furnishing of inaccurate particulars of income. it was submitted that the Assessing Officer had not struck off the irrelevant portion of the penalty notice which was not applicable to the assessee and does not clearly mention whether he proposed to levy penalty for concealment of income or furnishing of inaccurate particulars of income. 7.2 The Ld. AR relied on the recent judgments of the Karnataka High Court in the case of Muninaga Reddy vs. ACIT reported in 396 ITR 398 and in the case of S. Chandrasekar Vs. ACIT reported in 396 ITR 538 and also that of Telangana Andhra Pradesh High Court in the case of Pr.CIT Vs. Smt. Baisetty Revathi reported in 398 ITR 88. Hence, it was submitted that the penalty levied may be cancelled. 8. The Ld. DR submitted that it was only a technical mistake which was not to be considered and the appeal should be decided on merit. 9. We have heard the rival submissions and perused the record. We have carefully gone through the notice issued u/s. 274 r.w.s. 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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