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2016 (4) TMI 988 - ITAT MUMBAI

2016 (4) TMI 988 - ITAT MUMBAI - [2016] 48 ITR (Trib) 195 - Penalty u/ s 271(1)(c) - error incurred in the filing of Tax Returns - Held that:- The conduct of the assessee was not mala-fide and contemptuous and the assessee had come forward by offering a bona-fide explanation about the error committed by the online tax return filing portal ‘Taxspanner’ and hence in our considered view, the assessee is not liable for penalty u/s 271(1)(c) of the Act as the case is covered by the exceptions as cont .....

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ssessee from the cost of the flat purchased through broker M/s. Buniyad Retail Pvt. Ltd in "Kensington Park" at Jaypee Greens Sector-133. The view adopted by the assessee is a plausible bona-fide view although the same did not found favour with the Revenue and the assessee chose not to file appeal against the said additions but that does not mean that every claim which is not sustained by the revenue will make the tax-payer liable to penalty u/s. 271(1)(c) of the Act. The claim of the assessee w .....

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nalty u/s 271(1)(c) of the Act on the assessee as the conduct of the assessee if seen in context of preceding and succeeding years as set-out above does not warrant imposition of the penalty u/s 271(1)(c) - Decided in favour of assessee. - I .T.A. No. 4887/Mum/2014 - Dated:- 20-4-2016 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Smt. M.K. Patel and Shri K.S. Chokshi For The Revenue : Shri B.S. Bist (Sr.DR) ORDER PER RAMIT KOCHAR, Accountant Memb .....

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raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal , Mumbai (hereinafter called the Tribunal ) read as under:- 1. (a) The Learned CIT(A) has erred in granting partial relief for levy of Penalty u/ s 271(1)(c) of the Income Tax Act, 1961 without considering the facts and circumstances of the case. The same be deleted. (b) The Learned CIT(A) has erred in confirming that the assessee has concealed /filed inaccurate particulars of Income whereby the assessee is .....

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considering the contention of the assessee which was not to evade tax, the penalty confirmed by the Learned CIT(A) be deleted. 3. The brief facts of the case are that the assessee is an individual and During the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the A.O. observed that the assessee received salary from M/s. AC Nielson Research Services Pvt. Ltd of ₹ 26,376/- and M/s. Hindustan Unilever Limited of ₹ 21,22,182/- totaling ₹ 21,48,558/ .....

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the AO u/s 143(3) of the Act and penalty proceedings u/s.271(l)(c) of the Act was also initiated against the assessee for concealment of income and furnishing of inaccurate particulars of income. During the course of penalty proceedings u/s 271(1)(c) of the Act, it was submitted by the assessee that it is a clear cut case of negligence on the part of professional online tax return filing portal Taxspanner , who were engaged by the assessee for filing her return of income with the Revenue and wh .....

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ing portal Taxspanner on 25/06/2011 stating that return of income is filed with the Revenue and the assessee will get ITR-V (acknowledgement of filing of return of income) copy from them in 24 hours. The assessee received the ITR-V from online tax return filing portal Taxspanner portal and sent it to the Bangalore CPC of Income Tax Department. The assessee submitted that at that time she was having pregnancy of 5 months and due to immense work pressure in the office she could not devote time to .....

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filed by them. The assessee submitted that in the month of July, 2013, when she visited the A.O. s office to submit the details relating to scrutiny assessment proceedings u/s 143(3) read with Section 143(2) of the Act, then only she came to know that online tax return filing portal Taxspanner has committed a mistake in filing the return of income of the assessee with the Revenue for the assessment year 2011-12 and the income filed in the return of income is different from the income reflected i .....

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The said information was received by the AO from AIR information data-base. Since the assessee did not declare the said income of ₹ 85,270/- in the return of income filed with the Revenue, the amount of ₹ 85,270 was added to the total income of the assessee vide assessment order u/s.143(3) dated 30/08/2013. During the course of penalty proceedings u/s 271(1)(c) of the Act, the assessee submitted that the assessee has purchased a flat from broker M/s Buniyad Retail Pvt. Ltd. in Kensin .....

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the assessee to the AO does not tantamount to filing of in-accurate particulars or concealment of income as no material has been brought on record by the AO which confirms that the income has been concealed by the assessee. The A.O. also observed that the assessee has earned interest from savings bank account maintaining with ICICI Bank of ₹ 16,803/- which was not offered for taxation in the return of income filed with the Revenue. The amount of interest income from ICICI Bank of ₹ .....

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come with the Revenue . The assessee submitted that she was under the impression that whatever income received by her has been incorporated in Form 16 and she came to know about the interest income only at the time of scrutiny assessment proceedings u/s 143(3) read with Section 143(2) of the Act. The assessee submitted that she has not done anything willfully or intentionally. The A.O. rejected the contentions of the assessee and held that the return of income has been signed by the assessee her .....

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eld that it is a gross negligence on the part of the assessee. Further, the assessee wrongly claimed that this mistake came notice of her in the month July, 2013 , the intimation dated 24.11.2011 u/s 143(1) of the Act was sent to the assessee and subsequently refund of ₹ 4,56,340/- was sent to the assessee vide rectification order dated 13-06-2012 u/s 154 of the Act and it is clear from the facts that the assessee tried to misguide the Revenue and the assessee had mala-fide intention to ev .....

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did not offer the same for taxation. Such income came to the notice of the A.O. through AIR information data-base only wherein it is shown as commission income. Since Commission income cannot be a capital receipt, the contention of the assessee was rejected by the A.O. Thus , the AO held that the assessee willfully concealed the income from the Revenue. With respect to interest income of ₹ 16,803/- , it was held by the AO that the assessee is a habitual tax evader and even for assessment .....

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tions made to her income and has accepted that she has filed in accurate particulars of income. The AO held that the assessee case of penalty is covered under Explanation 1(B) to Section 271(1)(c) of the Act.The assessee being an educated person drawing salary of more than ₹ 20 lacs was aware of consequences of falsifying the facts. Thus, the A.O. levied maximum penalty u/s 271(1)(c) of the Act @ 300% of the tax so evaded i.e. ₹ 13,04,178/- on the assessee , vide penalty orders dated .....

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d by the assessee for filing her return of income with the Revenue and the assessee has never tried to mislead the Revenue and it is a negligence on the part of the online tax return filing portal Taxspanner for which the assessee should not be penalized. The assessee submitted that she did not filed revised return u/s. 139(5) of the Act as the time for filing revised return has expired but promptly deposited back the refund amount of ₹ 4,56,340/- on 14/08/2013 and the AO was informed of t .....

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oker M/s. Buniyad Retail Pvt. Ltd is capital receipt and the same was reduced by her from the cost of the flat purchased through broker M/s. Buniyad Retail Pvt. Ltd at "Kensington Park" at Jaypee Greens Sector-133. The assessee submitted that the above receipt of ₹ 85,270/- is a discount on its investment in the house property which amounts to recovery of capital cost and the assessee has rightly reduced the same from the cost of acquisition of the property. A mere making of the .....

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willful hence the penalty levied should be deleted. The CIT(A) after considering the submission of the assessee observed that the return filed by the assessee contains number of inaccurate particulars and income has not been offered to tax fully in respect of salary income, interest income and commission income. The CIT(A) observed that the AO has clearly brought out that the explanation offered in respect of these defaults is neither substantiated nor the bona-fides of the assessee have been es .....

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action was taken by the assessee to intimate the AO or the department about this wrong refund, till her case was taken-up for scrutiny proceedings u/s 143(3) read with Section 143(2) of the Act in June- July 2013. This clearly casts a dark shadow on the bona fides of the assessee. The excuse of being too busy in her office work and of not understanding intricacies of Income Tax Law and procedure, is not an excuse. The CIT(A) observed that the assessee cannot shift the blame of inaccurate particu .....

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that the commission earned by the assessee cannot be treated as capital receipt, especially when the payer of the commission had clearly mentioned the same as commission income of the assessee. The CIT(A) accordingly held that the action of the A.O. in holding that the assessee is liable for penalty u/s 271(1)(c) of the Act is correct. However nothing has been brought on record by the AO to justify the levy of penalty at 300% of the tax sought to be evaded. Penalty of 300% of tax sought to be ev .....

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aximum penalty u/s. 271(1)(c) of the Act, while the CIT(A) reduced the afore-stated penalty to 100% of the tax sought to be evaded and allowed part relief to the assessee. The ld. Counsel submitted that the assessee filed return of income through online tax return filing portal Taxspanner . Apparently there was an error committed by the online tax return filing portal Taxspanner . There was calculation error in computing salary income . The assessee s counsel submitted that she is a salaried emp .....

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ect salary of Rs.20,96,914/- and also the said online portal did not take into effect any other income of (-) ₹ 1,51,726/- reported by the assessee and hence the error in filing the return of income with the revenue. The details are placed in paper book filed with the Tribunal. The ld counsel submitted that due taxes has been duly deducted at source by both the employers as applicable as per the Act. There was no mala-fide intention on the part of the assessee to evade taxes. There is negl .....

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It is a mistake committed by the online tax return filing portal Taxspanner and the assessee has never tried to mislead the Revenue and it is a negligence on the part of the online tax return filing portal Taxspanner for which the assessee should not be penalized. The assessee s counsel submitted that the refund order received by the assessee was deposited with the bank and assessee did not pay much attention to check the details as she was busy with new born baby and with her work at the time o .....

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me she realized the mistake , the time for filing revised return u/s. 139(5) of the Act had already expired. The ld. Counsel contended that A.O. is not justified in invoking the Explanation 1(B) to section 271(1)(c) of the Act and levying maximum penalty of 300% for a mistake committed by the professional service provider. Similarly, with respect to the commission income, the assessee counsel submitted that the assessee has purchased a flat from broker M/s Buniyad Retail Pvt. Ltd. and received d .....

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Sector- 133. The assessee submitted that the above receipt of ₹ 85,270/- is a discount on its investment in the house property which amounts to recovery of capital cost and the assessee has rightly reduced the same from the cost of acquisition of the property. A mere making of the claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars of income or concealment of particulars of income. The explanations offered by the assessee is bona-fide and .....

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rt in the case of CIT v. Ms. Sania Mirza, [2013] 40 taxmann.com 17 (AP) and also the decision of Hon ble Supreme Court in the case of Price Water House Coopers P. Ltd. v. CIT (2012) 25 taxmann.com 400 (SC). The assessee in case law paper book filed with the Tribunal has also relied upon decisions of Hon ble Supreme Court in the case of CIT v. Reliance Petroproducts Limited (2010)189 Taxman 322(SC), decision s of Tribunal, Mumbai in Mimosa Investment Co. Private Limited v. ITO (2009) SOT 470(Mum. .....

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to deposit the money refunded to her. If this case would not have come in scrutiny u/s 143(3) read with Section 143(2) of the Act, then the assessee would not have deposited the amount with Government Treasury, which was refunded to her by the Revenue. In support, the ld. D.R. relied upon the decision s of Hon ble Supreme Court in the case of Mak Data Private Limited v. CIT (2013) 38 taxmann.com 448(SC) and UOI v. Dharmendra Textile Processors (2008) 13 SCC 369(SC). 9. We have considered the ri .....

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n Lever Limited as Rs.2,09,614/- by mistake instead of correct salary of Rs.20,96,914/- and also not taking into effect any other income of (-) ₹ 1,51,726/- reported by the assessee and hence the error in filing the return of income with revenue. The details are placed in paper book filed with the Tribunal. The assessee had submitted that she engaged the services of online tax return filing portal Taxspanner whom the assessee gave all the details of her income and the said online tax retur .....

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that the assessee received the ITR-V from the said Taxspanner and sent it to the CPC Bangalore , Income Tax Department. The assessee submitted that at that time she was having pregnancy of 5 months and due to immense work pressure in the office she could not devote time to see the content of ITR filed by the said Taxspanner as she did not understand the form also, hence she just signed the ITR-V and sent it to the Bangalore CPC of Income Tax Department. The assessee submitted that keeping in vie .....

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Date of filing return of income Returned Income Taxes Paid Refund claimed 1. 2009-10 03.08.2009 540634 66117 0 2. 2010-11 26.06.2010 763192 133857 0 3. 2011-12 24.06.2011 134882 424501 424500 4. 2012-13 26.07.2012 2474570 611172 0 5. 2013-14 14.08.2013 2862722 711908 0 6. 2014-15 30.06.2014 2875700 714991 10 7. 2015-16 27.07.2015 4542260 1249840 0 The perusal of the above chart shows that the assessee had claimed refund of taxes only in the assessment year 2011-12 under appeal and in the last se .....

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ee is bona-fide and it is due to the error and mistake in the assessment year 2011- 12 as contended by the assessee , return of income was wrongly filed .As soon as the assessee came to know about the error/mistake , she immediately took steps to deposit back the refund of taxes so received with the Government Treasury on 14-08-2013 and intimated the AO also vide letter dated 19-08- 2013. We find that the conduct of the assessee is bona-fide and there is no mala-fide intention on the part of the .....

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iled as set out above before the issuance of notice u/s 143(2) of the Act by the Revenue for the assessment year 2011-12 on 31.08.2012. Further, the assessee salary income was subjected to deduction of tax at source by her employers and the employer also intimate the Revenue about the gross salary paid and tax so deducted at source on such salary by filing quarterly return of TDS in form 24Q and thus, the revenue is fully aware of the salary income of the tax-payer in its data-base. The employer .....

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at the authorities below have used the strong words like habitual tax evader against the assessee which in our humble and respectful submissions are not correct observations of the authorities below and we direct that all such words used by the authorities below stand expunged from the orders of the authorities below. The citizens and the taxpayers of this country are participant in the nation building and also contributor to the exchequer and to use such harsh words against them are not warrant .....

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to the discount as commission income received by the assessee, the assessee has purchased a flat from broker M/s Buniyad Retail Pvt. Ltd. and received discount as commission income of ₹ 85,270/- from M/s Buniyad Retail Pvt. Ltd. and the assessee submitted that the said discount as commission income received from broker M/s. Buniyad Retail Pvt. Ltd is capital receipt and the same was reduced by the assessee from the cost of the flat purchased through broker M/s. Buniyad Retail Pvt. Ltd in .....

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