Income Tax Appellate Tribunal - Hyderabad
Srinivasa Rao Vaitla, Hyderabad, ... vs Addl. Cit, Range-13, Hyderabad, ... on 10 November, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No. 1264/Hyd/2014
Assessment Year: 2010-11
Asst. Commissioner of Income- Vs. Sri Srinivas Rao Vaitla,
tax, Circle - 13(1), Hyderabad. Hyderabad.
PAN - ACQPV 4131 R
(Appellant) (Respondent)
ITA No. 89/Hyd/2017
Assessment Year: 2010-11
Sri Srinivas Rao Vaitla, Vs. Asst. Commissioner of
Hyderabad. Income-tax, Circle - 13(1),
Hyderabad.
PAN - ACQPV 4131 R
(Appellant) (Respondent)
Revenue by : Smt. N. Swapna
Assessee by : Shri A. Srinivas
Date of hearing : 11-09-2017
Date of pronouncement : 10-11-2017
O RDE R
PER S. RIFAUR RAHMAN, A.M.:
Both these appeals filed by assessee and revenue are directed against the order of CIT(A)-V, Hyderabad dated 27/01/2014 whereby the CIT(A) deleted the penalty levied by the AO u/s 271(1)(c) of the Act.
ITA NO. 1264/HYD/14 by the revenue
2. Briefly the facts of the case are that the assessee is a film director earning income from film direction. For the AY 2010-11, the 2 ITA No. 1264/H/14 & 89/H/17 Sri Srinivasa Rao Vaitla, Hyd.
assessee did not file his return of income before the due date i.e. 30/09/2010.
2.1 A survey operation u/s 133A of the Income-tax Act, 1961 ( in short 'the Act') was conducted in the business premises of M/s 14 Reels Entertainments Pvt. Ltd. on 21/11/2011. M/s 14 Reels Entertainments Pvt. Ltd. had produced a film "Dookudu" in which the assessee was a director. During the course of survey operation, it was detected that the assessee was paid remuneration for direction of the said film.
2.2 On 23/11/2011 a notice u/s 148 of the Act was served on the assessee calling for return of income. In response, the assessee had filed his return of income electronically on 30/11/2011 admitting the total income of Rs. 1,26,10,809/- and paid Rs. 45,46,802/- as taxes. The assessment u/s 143(3) rws 147 was completed on 30/03/2012, the income was assessed at Rs. 1,29,21,043/- by making disallowance of expenditure claimed to the extent of Rs. 3,10,234/- for want of evidence and which were not verifiable in nature. The AO noted that further taxes of Rs. 1,33,890/- were paid on this account on 13/06/2012.
2.3 Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) of the Act on the ground that the conduct of the assessee clearly showed that but for the survey conducted in the case of M/s 14 Reels Entertainment Pvt Ltd. and subsequent issuance of notice u/s 148 of the Act, the assessee would not have filed the return of income. Further, AO observed that the filing of return by the assessee was not voluntary and was only subsequent to detection of the concealment of income by the department.
2.4 After rejecting the contentions of the assessee, the AO held that since the income concealed in this case was Rs. 1,29,21,043/- as 3 ITA No. 1264/H/14 & 89/H/17 Sri Srinivasa Rao Vaitla, Hyd.
no return was filed, penalty is levied u/s 271(1)(c) on the entire concealed income of Rs. 1,29,21,043/- which includes disallowance of Rs. 3,10,234/- as non verifiable nature of expenses claimed by the assessee, also amounts to inaccurate particulars and concealment of correct income. He accordingly, levied a penalty of Rs. 38,75,113/-.
3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A).
4. After considering the submissions of the assessee, the CIT(A) observed that there is a force in the contention of the assessee that the very fact of filing of the return on 30/11/2011 (paying the tax due u/s 140A of Rs. 25,64,052/-) within 7 days of issue of notice u/s 148 subsequent to survey operation on 23/11/2011 also goes to prove the bonafide intention of the assessee in filing the return of income, which could also be validly furnished u/s 139(4) of the Act by 31/03/2013 and hence, it cannot be held that the assessee had not filed the return of income voluntarily.
4.1 The CIT(A) further observed that the penalty order which imposed penalty has no mention of what kind of income the appellant has concealed, except disallowance of 20% of unverifiable expenses amounting to Rs.3,10,234 in the assessment made u/s 143 (3) rws 147 of the Act. It just states that but for the survey operation, the assessee would not have filed his return of income. Further, the CIT(A) observed that as submitted by the assessee in his submissions, the question of concealing the particulars of income or furnishing of inaccurate particulars of income will arise only with reference to the return of income. In this regard, the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Limited [2010] 322 ITR 158 (SC), held that there could be no dispute that everything would depend upon the return filed because that was the only document where the assessee could furnish the particulars of his 4 ITA No. 1264/H/14 & 89/H/17 Sri Srinivasa Rao Vaitla, Hyd.
income and when such particulars were found to be inaccurate, the liability would arise.
4.3 In view of the above observations ,the CIT(A) held that assessee neither concealed his income nor furnished inaccurate particulars of income and accordingly, deleted the penalty of Rs. 38,75,113/- levied by the AO u/s 271(1)(c) of the Act.
5. Aggrieved by the order of the CIT(A), the revenue is in appeal before us raising the following ground of appeal:
"1. The Ld.CIT(A) erred in allowing the penalty levied U/s.271(1)(c) of the Income-tax Act, of Rs.38,75,113/- placing reliance on Reliance Petroleum is not applicable to the facts of the assessee as the assessee had not filed voluntarily u/s.139(1) of the Act but in response to notice U/s.148 of the Act and after a lapse of 13 months from due date."
6. The ld. DR submitted that the assessee has not filed return of income voluntarily and filed only after survey. The income was disclosed in return of income only on issue of notice u/s 148 and AO has disallowed certain expenditure which are not verifiable. He further submitted that AO has initiated penalty proceedings in both counts i.e. concealed his income and furnished inaccurate particulars of income. He contended that Ld. CIT(A) has not discussed about voluntary disclosure. He relied on the following case law:
1. Bhairav Lal Verma Vs. Union of India, [1998] 230 ITR 855 (All.)
2. P.C. Joseph & Bros. Vs. CIT, 243 ITR 818 (Kerala)
7. Ld. AR submitted that assessee has not filed return of income, which is a fact but the income offered in return of income, which was filed subsequent to receipt of notice u/s 148, has already suffered TDS. He further submitted that due to his professional engagement, he could not file the return of income but as soon as it is brought to the notice of assessee, he has filed the return of income promptly and paid the necessary tax u/s 140A. He further submitted that assessee 5 ITA No. 1264/H/14 & 89/H/17 Sri Srinivasa Rao Vaitla, Hyd.
has time to file return of income u/s 139(4) of the Act. He relied on the following cases:
1. Swati Pearls & Jewellers Vs. DCIT, ITA No. 1401/Hyd/2014, order dated 04/12/2015.
2. Mrs. Archana D. Talati Vs. ITO, ITA No. 2696/Mum/2016, order dated 05/06/2017
8. Considered the rival submissions and perused the material facts on record as well as the decisions cited by both the counsels. The AO levied penalty u/s 271(1)(c) of the Act on the ground that but for the survey conducted in the case of M/s 14 Reels Entertainments (P) Ltd and subsequent issue of notice u/s 148 of the Act the assessee would not have filed the return of income. He further observed that the filing of the return of income by the assessee is not voluntary and was only subsequent to detection of concealment of income by the department and the assessee could not offer any explanation for not filing the return of income in time. Ld. AR brought to our notice that the income received by assessee after suffering TDS. The assessee failed to file return of income due to preoccupation. The income received by assessee after payment of due tax. As soon as it is brought to the notice, assessee promptly filed the return of income and paid the taxes in due course.
8.1 No penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Section 271(1)(c) of the Act has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. In the given case, the assessee filed the return of income after it is brought to his notice. The same return of income was considered by AO and completed the assessment after accepting the same. AO has not found any concealment or inaccurate particulars of income while processing the return of income filed by the assessee, even though, it is pertinent to note that assessee has time to file the return of income 6 ITA No. 1264/H/14 & 89/H/17 Sri Srinivasa Rao Vaitla, Hyd.
u/s 139(4) of the Act. It is irrelevant, how it is brought to his notice. The ground was raised by the department that assessee has filed the return of income only on the basis of survey, otherwise, assessee would not have filed return of income. We cannot presume anything at this stage. It is the conduct of the assessee that matters. In the given case, assessee has time to file return of income u/s 139(4) and also filed the return of income promptly as soon as it is brought to his notice. Further, the income was already suffered tax due to TDS provisions and assessee also paid the relevant tax before filing return of income u/s 140A. Considering the facts of this case, we are in agreement with the findings of ld. CIT(A) and accordingly grounds raised by revenue are dismissed rendering it as not a fit case for levy of penalty.
8.2 The case law relied on by the revenue is distinguishable to the facts of the case under consideration, for instance, the case of Bhairav Lal Verma (supra) P.C. Joseph & Brothers (supra) are relating to search, there is specific explanations specified in section 271(1)(c) i.e. explanation 5 and 5A, as per which, it is deemed to be concealed or furnishing of inaccurate particulars of income. Whereas, in the given case, it is only survey. Since the facts in the said cases are distinguishable, cannot be applied to the given case.
ITA No. 89/Hyd/2017 by the assessee9. The assessee has raised the following ground of appeal:
"The levy of penalty u/s 271(1)(c) is bad in law and liable to the quashed as the AO omitted to explicitly mention whether the penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income."
10. On perusal of record, we find that is a delay of 948 days in filing the appeal by the assessee before us. The assessee filed condonation petition for 946 days, wherein, inter-alia, stated that the 7 ITA No. 1264/H/14 & 89/H/17 Sri Srinivasa Rao Vaitla, Hyd.
delay in filing the appeal was not wilful nor of any malafide, but because of interpretation of subsequent judicial pronouncements of law which goes into the root cause of the very levy of penalty.
11. As we have dismissed the appeal of the revenue upholding the order of the CIT(A) in deleting the levy of penalty, the appeal of the assessee becomes infructuous and therefore, the same is dismissed as infructuous.
12. In the result, both the appeals under consideration are dismissed.
Pronounced in the open court on 10 th November, 2017.
Sd/- Sd/-
(P. MADHAVI DEVI) (S. RIFAUR RAHMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 10 th November, 2017.
Kv
Copy to:-
1) ACIT, Circle - 14(1), 6 th Floor, "C" Block, Room No. 635, IT Towers, AC Guards, Hyderabad.
2) Sri Srinivas Rao Vaitla, 8-3-326, Flat No. 503, Shilpa Manor, Besides Savera Function Palance, Yousufguda, Hyd.
3) CIT(A) - V, Hyderabad 4 CIT - 1, Hyderabad
5) The Departmental Representative, I.T.A.T., Hyderabad.
6) Guard File