Kedar Nath Chitlangia (Huf), Malda vs Assessee

Kedar Nath Ch itlan gia बनाम I.T.O Ward-(2)/Malda Marwar i Patty Lane, / Office of the Incom e Tax So uth Baluchar, Malda V/s . Officer Ward-2 , Netaji - 732101 Market Malda - 732 101

Kedar Nath Ch itlan gia बनाम I.T.O Ward-(2)/Malda (HUF), Marwari Patty / Office of the Incom e Tax Lane, South Baluchar, V/s . Officer Ward-2 , Netaji Malda - 732101 Market Malda - 732 101

अपीलाथ /App ellant .. यथ /Respondent

आवेदक क ओर से/By Assessee None यथ क ओर से/By Revenue Shri Dipankar Mukhopadhyay, JCIT, SR-DR सुनवाई क तार ख/Date of Hearing 07-01-2015 घोषणा क तार ख/Date of Pronouncement 07-01-2015

आदेश /O R D E R

PER Shamim Yahya, Accountant Member:-

These appeals by the assessee, Kedar Nath Chitlangia and Kedar Nath Chitlangia-HUF are directed against the respective orders of Ld. Commissioner of Income-Tax (Appeals), Jalpaiguri dated 05-01-2012 and pertains to assessment year 2006-07.

ITA No.694-695/Kol/2012 A.Y 2006-07 Kedar Nath Chitlangia & (HUF) v. ITO Wd-2 Malda Page 2

2. The issue raised is that Ld. CIT(A) erred in sustaining penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') amounting to ₹14,570/- in the case of Kedar Nath Chitlangia and ₹6,120/- in the case of Kedar Nath Chitlangia (HUF).

3. Since the facts are similar and the appeals are heard together and these appeals are disposed by this common order.

4. We have heard Ld. DR. None appeared on behalf of assessee, however, in our considered opinion, the matter can be disposed of by hearing the Ld. DR after perusing the records.

5. Brief facts of the case are that assessee had shown agricultural income of ₹80,000/- in the individual account and ₹ 55,000/- in the HUF account. The assessee could not produce any evidence regarding the agricultural income except purchase deed of land. In these circumstances, assessee's claim of agricultural income was denied and addition was made. Thereupon penalty u/s. 271(1)© of the Act was levied and Ld. CIT(A) also confirmed the levy of penalty.

6. Upon careful consideration, we find that assessee's claim for agricultural income has not been accepted by the Assessing Officer on the ground that assessee could not furnish cogent evidences pertaining to the agricultural income. We find that assessee's claim is of sale mangoes as of agricultural product. In this regard, assessee has also produced deed of land purchased by him. Now, assessee's claim for agricultural income has been denied on the basis of lack of evidence for the cultivation and sale done. We further find that ITA No.694-695/Kol/2012 A.Y 2006-07 Kedar Nath Chitlangia & (HUF) v. ITO Wd-2 Malda Page 3

penalty and quantum proceedings are separate. It is settled law that penalty is not automatic on addition of quantum. We find that u/s 271(1)© of the Act postulates levy of penalty for concealment and furnishing of inaccurate particulars. In this case, we find that assessee has claimed agricultural income. In support of it, assessee has also furnished purchase deed of land. Hence, it cannot be said that assessee's claim was bogus or contumacious. In this view of the matter, in our considered opinion, penalty u/s 271(1)© of the Act was not leviable.

7. In this regard, we place the reliance on the decision of Hon'ble Apex Court in the case of Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC) for the following proposition. An Order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.

8. We further place upon the decision of Hon'ble Apex Court in the case of Commissioner of Income-Tax v. Reliance Petroproducts Pvt. Ltd.(2010) 322 ITR 158 (SC) for the following proposition that it is not the intendment of Act that assessee will invite penalty u/s. 271(1)© of the Act in case of every return ITA No.694-695/Kol/2012 A.Y 2006-07 Kedar Nath Chitlangia & (HUF) v. ITO Wd-2 Malda Page 4

when the claim made is not accepted by the Assessing Officer for any reason. In the background of aforesaid discussion and precedent we set aside the order of Authorities below and delete the penalty.

9. In the result, assessees appeals are allowed.

Order pronounced in open court on 07/01/2015

Sd/- Sd/- (Mahavir Singh) (Shamim Yahya) Judicial Member Accountant Member Kolkata,

*Dkp दनांकः- 07/01/2015 कोलकाता

आदेश क त ल प अ े षत / Copy of Order Forwarded to:-

1. अपीलाथ / Appellant - Kedar Nath Chitlangia (HUF) Marwari Patty Lane South Baluchar, Malda-732101

2. यथ / Respondent- ITO Ward-(2) Office of the Income Tax Officer , Ward-2, Netaji market Malda - 732 101

3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त- अपील / CIT (A)

5. वभागीय त न ध, आयकर अपील य अ धकरण कोलकाता / DR, ITAT, Kolkata

6. गाड फाइल / Guard file.

By order/आदेश से, /True Copy/ उप/सहायक पंजीकार आयकर अपील य अ धकरण, कोलकाता