Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: ACCOUNTING STANDARD :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: VAT RATES :: VAT Audit :: due date for vat payment :: form 3cd :: empanelment :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: ACCOUNTING STANDARDS
From the Courts »
 Shri Rakesh Kumar Gupta Vs. The Commissioner Of Income Tax-Xiii & Anr.
 Central Board Of Direct Taxes Vs. Satya Narain Shukla
 Meena Rastogi Vs. Central Board Of Direct Taxes, & Anr.
 Siddharth Rastogi Vs. Central Board Of Direct Taxes, Union Of India, Ministry Of Finance, Department Of Revenue & Anr.
 ITO vs. NVS Builders Pvt. Ltd (ITAT Delhi)
 Approva Systems Pvt. Ltd vs. DCIT (ITAT Pune)
 Procter & Gamble Home Products Pvt. Ltd vs. ITAT (Bombay High Court)
 Virag Tiwari Vs. Principal Commissioner Of Income Tax-21 & Others
  Anand Agarwal vs. Vilas Chandrakant Gaokar (Bombay High Court)
 Maxopp Investment Ltd vs. CIT (Supreme Court)
 Order of a Four-Member Appellate Authority constituted under Chartered Accountants Act is Valid: Delhi HC

Devina Mehra, Crescent Chambers, 4th Floor, Tamarind Lane, Fort, Mumbai-400001 Vs. Income Tax Officer Ward 4(1)(1), Room No.636, 6th Floor, Aayaker Bhavan, M K Road, Mumbai-400020
August, 04th 2014
                    ,                  ""          

       .. ,                                        ,      

                     ./I.T.A. No.2590/Mum/2013
                   (   / Assessment Year : 2008-09)

 Devina Mehra,                       /        Income Tax Officer
 #2, Crescent Chambers, 4th Floor,   Vs.      Ward 4(1)(1), Room No.636,
 Tamarind Lane,                                6th Floor, Aayaker Bhavan,
 Fort,                                         M K Road,
 Mumbai-400001                                Mumbai-400020
        ( /Appellant)                ..       (    / Respondent)

          . /   . /PAN/GIR No. :AAHPM4465E

            / Appellant by                :   Shri Satish Mody
              /Respondent by :                Shri Durga Dutta

              / Date of Hearing
                                                  : 10.7.2014
             /Date of Pronouncement : 31.7.2014

                                   / O R D E R

Per B.R.BASKARAN, Accountant Member:

      The appeal filed by the assessee is directed against the order dated

15.02.2013 passed by Ld CIT(A)-8, Mumbai and it relates to the assessment year

2008-09. The assessee is aggrieved by the decision of Ld CIT(A) in confirming

the penalty of Rs.28,32,635/- levied by the AO u/s 271(1)(c) of the Income Tax

Act, 1961 (the Act).

2.    The facts relating to the issue under consideration are stated in brief. The

assessee filed the return of income for the year under consideration declaring a
                                                             I.T.A. No.2590/Mum/2013

total income of Rs.9.00 lakhs. During the course of scrutiny proceedings, the AO

noticed that the assessee has received interest of Rs.47,21,056/- from the

income tax department on the refund received by the assessee and the same

was not included in the return of income. When questioned about the same, the

assessee admitted that it was an inadvertent error and accordingly agreed for its

addition. Accordingly, the AO added the amount of Rs.47,21,056/- to the total

income of the assessee. The AO initiated penalty proceedings by holding that

the assessee has concealed the particulars of income and also furnished

inaccurate particulars of income. After hearing the assessee, the AO imposed a

penalty of Rs.28,32,365/-, being the amount calculated at 200% of the tax

sought to be evaded. The assessee could not succeed in the appeal filed before

the Ld CIT(A). Hence, the assessee has filed this appeal before us.

3.    The Ld A.R submitted that the assessee has omitted to include the

interest income in its return of income by inadvertence. He submitted that the

assessee has duly narrated the break-up details of the refund amount of Rs.2.14

crores received from the Income tax department in the bank account ledger

maintained in the books of account.        He submitted that it is stated in the

narration that the income tax refund was Rs.1.67 crores and interest on IT

refund was Rs.0.47 crore. Accordingly, the Ld A.R submitted that there was no

intention to conceal the above said interest income in the return of income. He

further submitted that the assessee himself has given the details of bank account

to the AO during the course of assessment proceeding and when the mistake

was pointed out by the assessing officer, he immediately admitted the same and

agreed for the assessment of the interest income. By placing reliance on the
                                                              I.T.A. No.2590/Mum/2013

decision dated 25-09-2012 rendered by the Hon'ble Supreme Court in the case of

Price Waterhouse Coopers Pvt Ltd Vs. CIT (Appeal No.6924 -2012), the Ld A.R

submitted that the inadvertent mistakes shall not give rise to penalty. He further

submitted that the assessing officer has levied penalty @ 200% of the tax sought

to be evaded, which in any case, is on the higher side.

4.    The Ld D.R, on the contrary, submitted that the claim of inadvertent

mistake is not a proper explanation contemplated in sec. 271(1)(c) of the Act.

The assessee, having properly accounted the break up details of the income tax

refund, should not have omitted the same to include it in the total income.

Accordingly he submitted that the assessee has concealed the particulars of

income and also furnished inaccurate particulars of income and hence the Ld

CIT(A) was justified in confirming the penalty levied by the AO.

5.    We have heard the rival contentions and carefully perused the record.

There is no dispute with regard to the fact that the assessee has received refund

from income tax department and the said refund included interest amount of

Rs.47,21,056/- granted by the department. There is also no dispute that the

said interest is liable to be included in the total income of the assessee.     It is

also a fact that the assessee has given the break-up details of the income tax

refund in the narration shown for accounting the receipt. Hence, normally it

would not escape the attention of the person scrutinizing the books of account

for the purpose of computing the total income. Before us, the Ld A.R furnished a

copy of bank account as available in the ledger of the assessee to show that the

assessee has given the break-up details.      On verification of the same, it is

noticed that the assessee has given the break-up details in the narration portion.
                                                                I.T.A. No.2590/Mum/2013

According to the assessee, the details of bank account was furnished to the AO

and from that details only, the AO has found out that the assessee has received


6.     Under double entry system, if the cheque received from the department is

debited to the Bank account, then a corresponding credit should be given to

some other account.     In that system, normally the interest receipt is directly

credited to the "Interest receipt" account. Hence, a specific query was put to the

Ld A.R to find out as to how the Credit entry was accounted.            The Ld A.R

submitted that the corresponding credit entry was made in the Capital account of

the assessee. Then the ld A.R was asked to furnish copy of Capital account.

Though the Ld A.R agreed to furnish the same, but till date we have not received

it.   We notice that the assessee has maintained the books of account in a

Computer system.      Hence, normally the same narration given in the bank

account (containing break-up details) shall find place in the Capital account also.

It is also in the common knowledge of every body that the total income of any

person is computed for filing return of income only after analysing the Capital

account.    Hence, it is hard to accept that the assessee has committed

inadvertent mistake by not including the interest income in the computation of

the total income.

7.     The Ld A.R placed reliance on the decision rendered by the Hon'ble

Supreme Court in the case of Price Waterhouse Coopers Pvt Ltd (supra). The

following observations show that it was an exceptional case:-

       "20. We are of the opinion, given the peculiar facts of this case, that the
       imposition of penalty on the assessee is not justified. We are satisfied
       that the assessee had committed an inadvertent and bona fide error and
                                                             I.T.A. No.2590/Mum/2013

      had not intended to or attempted to either conceal its income or furnish
      inaccurate particulars."

In the above said case, other evidences showed that assessee had committed

inadvertent mistake and it did not intend to conceal the income.         Following

observations made by Hon'ble Apex Court bring out this point:-

      "18. The fact that the Tax Audit Report was filed along with the return
      and that it unequivocally stated that the provision for payment was not
      allowable under section 40A(7) of the Act indicates that the assessee
      made a computation error in its return of income. Apart from the fact
      that the assessee did not notice the error, it was not even noticed even by
      the Assessing officer who framed the assessment order. In that sense,
      even the Assessing Officer seems to have made a mistake in overlooking
      the contents of the Tax Audit Report.

      19.     The contents of the Tax audit report suggest that there is no
      question of the assessee concealing its income. There is also no question
      of the assessee furnishing any inaccurate particulars. It appears to us
      that all that has happened in the present case is that through a bona fide
      and inadvertent error, the assessee while submitting its return, failed to
      add the provision for gratuity to its total income. This can only be
      described as a human error which we are all prone to make."

 The fact that the assessee had shown in the Tax audit report that the provision

for payment of gratuity is not allowable u/s 40A(7) of the Act and the fact that

even the AO did not notice the said omission heavily supported the case of the

assessee therein that it was an inadvertent human error.

8.    However, in the instant case, the assessee, besides claiming that it was an

inadvertent error, could not bring any other material to show that the said claim

was bona fide one. On the contrary, the break up details given by the assessee,

in our view, militates against his claim for the reason that the interest element

could not have escaped the attention of the person preparing the return of

income on a scrutiny of the Capital Account of the assessee. Hence, in our view,
                                                               I.T.A. No.2590/Mum/2013

the assessee could not take support of the decision of Hon'ble Apex Court

referred supra.

9.    It is also pertinent to refer to the decision rendered by Hon'ble Supreme

Court in the case of Mak Data Ltd (358 ITR 598), wherein the Hon'ble Apex

Court has held that the Explanation offered by the assessee during the course of

penalty proceeding determines the scope of penalty. In the instant case, apart

from stating that it was inadvertent mistake, the assessee could not furnish any

other explanation or material. Further the assessee has also failed to prove that

the explanation offered by him is bona fide one.

10.   In view of the foregoing discussions, we are of the view that the Ld

CIT(A) was justified in confirming the penalty levied by the AO. However, we

notice that the penalty has been levied @ 200% of the tax sought to be evaded.

We consider it to be on the higher side. Accordingly we modify the order of Ld

CIT(A) and direct the AO to levy the penalty @ 100% of the tax sought to be

evaded. We order accordingly.

11.   In the result, the appeal filed by the assessee is partly allowed.

      The above order was pronounced in the open court on 31st July, 2014.

             31st July, 2014    

         Sd                                                       sd

(   / VIVEK VARMA)                            (..  / B.R. BASKARAN)
     / JUDICIAL MEMBER                          / ACCOUNTANT MEMBER

  Mumbai: 31 July,2014.

. ../ SRL , Sr. PS
                                             I.T.A. No.2590/Mum/2013

        /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent.
3.     () / The CIT(A)- concerned
4.      / CIT concerned
5.      ,     ,                   /
     DR, ITAT, Mumbai concerned
6.     / Guard file.
                                              / BY ORDER,
          True copy
                                        (Asstt. Registrar)
                              ,   /ITAT, Mumbai
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions