TMI Blog2007 (2) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,50,000. For the rest of Rs. 1,12,000, no evidence had been filed with the return. In this view of the matter, a notice under section 154 of the Income-tax Act, 1961 had been issued, in which it was pointed out that the interest claimed by the assessee was far in excess of what was shown in the Form No. 16, and as such it was proposed that the claim of Rs. 2,62,000 was a mistake and why the same should not be rectified, by disallowing the same. Though there was no compliance from the assessee, the proceedings under section 154 were dropped and proceedings under section 147 had been initiated. But since that notice had been issued even when there was still time to issue notice under section 143(2), those proceedings were also dropped. Subsequently, enquiries were made under section 133(6) of the Income-tax Act, relating to the assessee's claim of housing loan interest. The assessee stated that he had not taken any loan from Smt. Brij Rani Gupta or Shri M.C. Gupta Sons, or from anybody else; and that the wrong claims were filed by his counsel, Shri Pankaj Garg; He assured that he would return the refunded amount soon. As the assessee had himself admitted that the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars furnished in the return of income were inaccurate; and that the assessee had surrendered the amount only when he had no way out. 4. By virtue of the impugned order, the ld. CIT(A) cancelled the levy of the penalty in question. Aggrieved thereby, the Department has filed this appeal. 5. The ld. DR, challenging the order of the ld. CIT(A) has submitted that the claim of the assessee regarding refund of Rs. 90,915 was not correct, as available from the Form No. 16A issued by the assessee's employer to him. The ld. DR contended that no explanation or written reply was furnished by the assessee before the Assessing Officer in this regard; it was, therefore, clear that the income of the assessee to the extent of the bogus claim of deduction of interest had escaped assessment. The ld. DR states that it was due to this that the proceedings under section 154 were dropped and a notice under section 148 was issued to the assessee. The assessee not having filed any revised return, time being available, notice under sections 142(1) and 143(2) was issued. The assessee had filed a return of income in response to these notices but simultaneously challenged the validity of the notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lodge an FIR against Shri Pankaj Garg, Advocate for cheating the assessee, but the police informed the assessee that an FIR against some advocates stood already lodged; that the ld. CIT (A) also referred the matter to the CBI, which is making enquiry; that this matter was also published in various newspapers; that in these facts, the imposition of penalty in question was wrong and it was rightly cancelled by the ld. CIT(A). The ld. Counsel for the assessee has placed reliance on certain case laws also. 7. The whole case of the assessee revolves around a single fact and that is, that it was the assessee's counsel Shri Pankaj Garg, Advocate, who made the false claim and thus, according to the assessee, no penalty under section 271(1)(c) was leviable on the assessee and that it has been rightly cancelled by the ld. CIT(A). In this regard, the ld. CIT(A) has made the following observations while cancelling the penalty: "The facts of the case and the submissions of the ld. A.R. have been considered. The undisputed facts are that the assessee had made a claim of Rs. 2,62,000 towards housing loan interest. It is also a fact that this claim could have been made before the DDO also, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order: "(a) The assessee did not surrender when the notice under section 154 was issued. (b) The assessee did not surrender when the first notice under section 148 was issued and rather the assessee challenged the validity of the notice. (c) The assessee vide letter dated 21-10-2003 of the CIT, Meerut under section 133(6) was specifically asked to prove the claim under section 24(2)(b). The ld. CIT, Meerut under section 133(6) made enquiry from the employer OBC, Modinagar, Distt. Ghaziabad. (d) No compliance was made to the notice under section 133(6) by the date and therefore, ld. CIT, Meerut issued summons under section 131 dated 13-2-2003 for 20-2-2003 asking to produce the documents and details called for vide Notice under section 133(6) dated 21-1-2003." 9. Further, the ld. CIT(A) has gone by general observations like "... gullible assessees generally having faith in their counsels put signatures on the forms and believe that the counsel would not do anything, which would harm their interest, and in such matters, the benefit of doubt should go to the assessee." In this regard, the ld. CIT(A) has failed to take into account the fact that the assessee had retired from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d return was filed in response to the notice issued under section 148. No explanation was given when notices under sections 142(1)(a) and 143(2) were issued. In response to the subsequent notices under sections 142(1) 143(2), the validity of the notice under section 148 was challenged. No explanation was filed even in response to notice under section 133(6). It was only before the ld. CIT that the assessee relented. From these facts, the mala fide intention of the assessee is amply clear. The factum of the assessee having taken voluntary retirement and of deductions being available to him under section 89(1)(i) of the Act, do not set off the above facts and they do not absolve the assessee of the liability to penalty. 14. Otherwise too, even if the stand taken by the assessee is accepted, his best case is that he was cheated by his advocate. Now, this, as discussed hereinabove, does not give a licence to the assessee to go scot-free. Even if it is taken that the assessee signed the blank return form in good faith, the responsibility of an ordinary prudent man cannot be shirked. 15. However, the assessee's worst case, on the other hand, is that of complicity or connivance with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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