Income Tax Appellate Tribunal - Bangalore
Smt B C Prathima , Mysore vs Income Tax Officer Ward-1(2), Mysore on 14 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH : BANGALORE
BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER
AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER
ITA No.1543/Bang/2014 & 1373/Bang/2018
Assessment year : 2008-09
Smt. B.C. Pratima, Vs. The Income Tax Officer,
# 2708, Near CITB Choultry, Ward 1(3),
Hebbal 2nd Stage, Mysore.
Mysore - 570 016.
PAN: AQGPP 4368L
APPELLANT RESPONDENT
Appellant by : Shri B.S.N. Prasad, Advocate
Respondent by : Shri Siddappaji, Jt.CIT(DR)(ITAT), Bengaluru.
Date of hearing : 28.08.2018
Date of Pronouncement : 14.09.2018
ORDER
Per N.V. Vasudevan, Judicial Member
Both the aforesaid appeals are by the Assessee against the order dated 06.06.2014 and dated 05.05.2016 of CIT(A), Mysore, relating to assessment year 2008-09. ITA No.1543/B/17 is an appeal against the addition of Rs.2,50,000/- made to the total income of the Assessee u/s.68 of the Income Tax Act, 1961 (the Act). ITA No.1373/B/18 is an appeal against the order imposing penalty u/s.271(1)(c) of the Act on the Assessee in respect of the addition of Rs.2,50,000/-.
ITA Nos. 1543/Bang/2014 & 1373/Bang/2018 Page 2 of 62. The Assessee is an individual. She is engaged in the business of carrying out job work of coil winding for transformers. AY 2008-09 was the first year in which she filed her return of income. In the course of assessment proceedings, the Assessee filed Balance Sheet as on 31.3.2008 in which she declared capital of the business at Rs.5,67,720/-. The AO accepted the explanation of the Assessee with regard to source of capital introduced in the business, except to the extent of Rs.2,50,000/- which was explained by the Assessee as a loan received from her mother- in-law. It was claimed that the Assessee's father-in-law retired from Government service and his retirement benefits were given to the mother- in-law, who in turn gave a sum of Rs.2.5 lacs to the Assessee. The amount was claimed to have been received by the Assessee by way of a cheque maintained by the mother-in-law with Vijaya Bank. The AO on enquiry found that on 5.7.2007, a cheque for Rs.2.5 lacs was returned without clearance. The AO therefore held that the Assessee has failed to satisfactorily explain credit to the extent of Rs.2.5 lacs and added the said sum to the total income of the Assessee u/s.68 of the Act.
3. Before CIT(A), it was submitted that she did not maintain any books of accounts and was declaring income on presumptive basis u/s.44AD of the Act. Therefore, there was no question of examining any credit in the books of accounts of the Assessee for applying the provisions of Sec.68 of the Act. The Assessee submitted that her husband was drawing salary for the past 15 years and she had sufficient funds. The CIT(A) however did not agree with the claim of the Assessee as sufficient evidence was not let in to show existence of own funds.
4. Aggrieved by the order of the CIT(A) the assessee is in appeal before the Tribunal.
ITA Nos. 1543/Bang/2014 & 1373/Bang/2018 Page 3 of 65. Before us the learned counsel for the Assessee pointed out that the Assessee was not guided by any professional in the proceedings before the AO and that the capital shown of Rs.5,67,720 was wrongly shown as pertaining to AY 2007-08 whereas the actual capital contribution of Rs.2,60,000 was in AY 2008-09. The Assessee pointed out this fact in reply to the penalty proceedings u/s.271(1)(c) of the Act that her source of capital of Rs.2,60,000/- as follows:-
S. Name of the person PAN no. of the Date on Amount Total No. from whom the person from which of money amount money had been whom the money borrowed of borrowed money had been borrowed money borrowed borrowed 1 MADHU H R AHRPM 78041 05-04-2008 18000 17-06-2008 15000 19-07-2008 18000 69,000 04-10-2008 18000 H RAMACHANDRA 2 BZQPR3049Q 20-05-2008 18000 54000 BHAT 13-10-2008 18000 05-12-2008 18000 3 GOPIKUMAR AJRPK931OR 15-06-2008 17000 25-08-2008 18000 35000 4 RAHUL CHDPK6812J 17-04-2008 15000 14-07-2008 18000 33000 5 RAVI PRAKASH AFKPR9858.1 09-05-2008 15000 , 07-07-2008 18000 33000 6 R VENKATESH AEJPV95210 12-09-2008 18000 22-11-2008 18000 36000 TOTAL 260000
6. The Assessee in the proceedings before the CIT(A) against the levy of penalty u/s.271(1)(c) of the Act pointed out the above aspect. The above aspect was confronted by the CIT(A) to the AO.
The AO in his response pointed out that this was a new plea never put forth in the quantum proceedings. It was submitted by the learned counsel for ITA Nos. 1543/Bang/2014 & 1373/Bang/2018 Page 4 of 6 the Assessee that the issue requires examination especially in the light of the fact that the Assessee was not required to maintain books of accounts and was entitled to and had in fact declared presumptive income u/s.44AD of the Act. The learned DR relied on the order of the CIT(A).
7. We have considered the rival submissions and are of the view that the issue requires fresh look by the CIT(A). Admittedly, the Assessee had declared income as per provisions of Sec.44AD of the Act and in such a scenario there was no occasion to maintain any books of accounts. The Assessee was not represented by any professional and this fact is evident from the Assessment order which says that the Assessee herself appeared in the proceedings before the AO. In such a scenario there is force in the contention of the Assessee that the issue requires to be looked afresh by the CIT(A) in the light of the contention of the Assessee that there was no credit entry in the books of accounts for AY 2008-09 and therefore no addition can be made u/s.68 of the Act for AY 2008-09. The CIT(A) will decide the issue afresh in the light of the contention put forth by the Assessee above after affording Assessee opportunity of being heard and after confronting the AO with the contention of the Assessee.
8. For statistical purpose the appeal of the Assessee ITA No.1543/Bang/14 is allowed.
ITA 1373/Bang/2018
9. This appeal is by the Assessee against the order of CIT(A) confirming the order of the AO imposing penalty on the Assessee.
10. The ld. Counsel for the assessee submitted before us that the show cause notice issued u/s 274 of the Act before imposing penalty does not contain the specific charge against the assessee namely as to whether the ITA Nos. 1543/Bang/2014 & 1373/Bang/2018 Page 5 of 6 assessee was guilty of having concealed particulars of income or having furnished inaccurate particulars of income. A copy of the show cause notice u/s 274 of the Act was filed before us and perusal of the same reveals that the AO has not struck out the irrelevant portion in the show cause notice and therefore the show cause notice does not specify the charge against the assessee as to whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars of income.
11. The ld. Counsel for the assessee drew our attention to the decision of the Hon'ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 wherein the Hon'ble Karnataka High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory (2013) 359 ITR 565 took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The ld. Counsel further brought to our notice that as against the decision of the Hon'ble Karnataka High Court the revenue preferred an appeal in SLP in CC No.11485 of 2016 and the Hon'ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department.
12. We have heard the submissions of the learned counsel for the Assessee and are of the view that the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee that in such ITA Nos. 1543/Bang/2014 & 1373/Bang/2018 Page 6 of 6 circumstances penalty u/s.271(1)(c) of the Act cannot be imposed has to be accepted as such a plea is based on the decisions referred to by the learned counsel for the Assessee. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. The appeal being ITA No.1373/Bang/2018 is allowed.
13. In the result, ITA No.1543/Bang/2014 is allowed for statistical purpose while ITA No.1373/Bang/2018 is allowed.
Pronounced in the open court on this 14th day of September, 2018.
Sd/- Sd/-
( A.K. GARODIA) ( N.V. VASUDEVAN)
Accountant Member Judicial Member
Bangalore,
Dated, the 14th September, 2018.
/ Desai Smurthy /
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR, ITAT, Bangalore.
6. Guard file
By order
Senior Private Secretary
ITAT, Bangalore.