TMI Blog2002 (2) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted under section 133A in the case of the employer Dental College it was found that apart from the salary income the assessee was in receipt of additional sums. As per the Revenue the same was in the nature of salary whereas the assessee contended that the same is in the form of reimbursement of travelling and conveyance expenses and food expenses, incurred at the remote place. On the basis of the advice of the survey tem the employer of the assessee conceded that the additional sum paid is salary and accordingly paid the difference in tax required to be deducted at source under section 201 of the Act and also paid the interest thereon. The employer K.V.G. Dental College also issued a revised Form No. 16 (salary certificate) to that effect. After the survey the Assessing Officer issued a notice under section 148 for these three years wherein the assessee included the salary income as per the revised salary certificate issued by the employer to him in Form No. 16. The income disclosed in the returns filed in response to notice under section 148 was accepted and the penalty proceedings were also initiated in the course of reassessment proceedings. 3. During the course of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... km. away from his normal place of residence. The authorised representative further argued that for the employer it is very difficult to avail the services of qualified persons to head such an important post of Principal of a Dental College for which a person has to be exceptionally qualified and experineced too. To appoint such a person it is incumbent on the part of the employer not only to pay salaries but also to pay substantial sum to meet the travelling expenses and incidental expenses like food, local conveyance. But for payment of such sum no reasonable man with the desired qualification and experience will come forward to serve the institution. It was demonstrated that there are no two appointment orders, but the second one is only an office order whereby the payment of Rs. 20,000 p.m. is granted specifically towards reimbursement of travelling, conveyance and food expenses. After the survey was conducted, the employer agreed to deduct the tax on this additional sum of reimbursement also. However, this fact alone does not necessarily mean that the additional sum is taxable and not exempt under section 10(14). The assessee agreed to pay the additional tax as advised by his e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no part thereof is shown to be exempt under section 10 either in the original salary certificate or in the revised salary certificate. In the last it was argued that but for the survey under section 133A the employer would not have deducted the correct tax and the employee would not have paid the legitimate tax due from him. She further relied upon the decision in CIT v. Lalchand Tirath Ram [1997] 225 ITR 675 (Punj. Har.) and CIT v. A. Sreenivasa Pai [2000] 242 ITR 29 (Ker.). Our attention was also drawn to the fact that an SLP by the assessee (A. Sreenivasa Pai) has been dismissed by the Hon'ble Supreme Court. In reply, the ld. authorised representative argued that the decisions relied upon by the ld. Departmental Representative can be differentiated on the facts of the case. He further relied upon the decision of the Supreme Court in CIT v. Suresh Chandra Mittal [2001] 251 ITR 9. 7. We have carefully considered the rival submissions, facts and circumstances of the case, material on record as well as the case law cited. The only point we are required to decide is whether the assessee has concealed his income as held by the Assessing Officer and as confirmed by the CIT(A). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 20,000 p.m. towards reimbursement of travelling, conveyance and food expenses. It was also made clear in the office order dated 5-10-1995 that income-tax will be deducted on salary amount only. This was because the employer was under the bona fide belief that the reimbursement of travelling, conveyance and food expenses are exempt under section 10(14) of the Act. The employer, therefore, never included such portion in the gross income of the employee-assessee. The appointment order and the office order are both addressed to the assessee at Trivandrum only. It is therefore, clear that to attend the duties the assessee has to come all the way from Trivandrum to a small village called Sullia where the employer-institution is located. It is also an accepted fact that the employer-institution is at such a remote place which is somewhat 700 km. from the residence of the employee and is not directly connected by train services. When the employer considered about the liability to deduct tax at source, he issued a revised salary certificate in Form No. 16. The employee also similarly concurred with the employer's decision and offered the additional sum for taxation. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter and has levied the penalty only because it was added in the assessment proceedings. It is true that the employer and employee-assessee considered the fact after the survey was conducted under section 133A. However, this action is limited for the purpose of assessment proceedings only. The assessee is still free to demonstrate in penalty proceedings that the amount received is not truly his income or it is exempt from tax. In the case before us the assessee has amply demonstrated that he had incurred the expenses wholly and exclusively in performance of his duties. We, therefore, find that there is no concealment on the part of the assessee. 9. When the employer failed to deduct tax at source, the Revenue levied penalty under section 271C of the Act. However, the Tribunal, C-Bench, Bangalore in ITA Nos. 154 to 158/Bang./2001 has deleted the penalty on the ground that the employer was under bonafide belief that the income is exempt under section 10(14) and he is not required to deduct tax thereon. Similarly the assessee before us is also under bona fide belief based on the employer's certificate that income was exempt under section 10(14). We, therefore, see no collusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted in response to notice under section 148 the assessee had offered additional income to buy peace of mind and avoid litigation, so long as the burden of proving concealment had not been discharged by the Revenue the penalty cannot be levied. The Supreme Court in the said decision has upheld the order of the Hon'ble Madhya Pradesh High Court and declined to interfere in the matter. We, therefore, revert to the decision of the Hon'ble Madhya Pradesh High Court, wherein it was held as under: "241 ITR 124: Held, that the assessment was made by the Revenue and once the Assessing Officer had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and the explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Accordingly, no penalty could be levied for concealment." We find that this decision is squarely applicable to the facts of the present assessee's case. The assessee has not only filed returns in response to notice under section 148 but also offered an explanation which has neither been found to be fal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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