Krishan Kumar Dhull, Panchkula vs Assessee

Krishan Kumar Dhull, Vs. The Income Tax Officer, SCO 42, Basement Swastik Vihar Ward 4(1), Sector 5, Panchkula. Chandigarh. PAN: AILPD0282A (Appellant) (Respondent)

Appellant by : Shri Ajay Jain Respondent by : Shri S.K.Mittal, DR

Date of hearing : 30.03.2015 Date of Pronouncement : 31.03.2015

PER BHAVNESH SAINI, J.M. :

This appeal filed by the assessee is directed

against the order of learned Commissioner of Income

Tax(Appeals), Chandigarh dated 3.11.2014 for assessment

year 2009-10, challenging the levy of penalty under

section 271(1)(c) of the Act.

2. Briefly, the facts of the case are that the assessee

filed return declaring income at Rs.8,79,190/- on 30.9.2009

and claimed refund of Rs.3,36,360/-. The case was selected

for scrutiny. Statutory notices were issued on 14.9.2010 and 2

30.5.2011 before completion of assessment proceedings. The

proceedings were attended by the assessee's representatives

and books of account and vouchers were produced.

3. It was noticed by the Assessing Officer from Form

No.26AS details downloaded and printout taken that the

assessee has interest income of Rs.1,58,924/- from deposits

with the Union Bank of India and Bank of Maharashtra, on

which the TDS of Rs.16,242/- has been deducted. However,

the credit of TDS of Rs.775/- on account of TDS made by the

Bank of Maharashtra only has been claimed in the return of

income but neither the interest income from Bank of

Maharashtra, nor from Union Bank of India has been declared

while filing the return of income and also credit of TDS by

Union Bank of India has not been claimed. The learned

counsel for assessee was confronted with the earning of

interest and the learned counsel for assessee has no

alternative but to offer interest income for taxation vide reply

dated 9.12.2011. Accordingly, addition of Rs.1,58,924/- was

made and credit of TDS was allowed. The Assessing Officer

initiated penalty proceedings under section 271(1)(c) of the

Act for not disclosing the interest income from the banks and

the assessee has concealed particulars of income. Vide

separate order penalty was imposed by the Assessing Officer

on undisclosed interest income of Rs.1,58,924/-. 3

4. The assessee challenged the penalty order before the

learned CIT (Appeals) and it was submitted that the banks

had not intimated the assessee regarding the interest which

led to non-disclosure of impugned interest. It was submitted

that the interest was loaded in Form No.26AS on 21.10.2009

whereas the return was filed on 30.9.2009 and that is why

the interest was not declared in the return of income. The

learned CIT (Appeals), h o w e v e r , n o t e d t h a t t h e a s s e s s e e w a s

in possession of the fixed deposits of substantial amount of

more than Rs.15 lacs, on which he has earned interest of

more than Rs.1.5 lacs. Therefore, the amounts of interest

should have been declared in the return of income. The

action of the assessee is not bonafide. Therefore, the levy of

penalty was confirmed and the appeal of the assessee was

dismissed.

5. We have heard the learned representatives of both

the parties and perused the material available on record.

The learned counsel for assessee reiterated the submissions

made before the authorities below and filed details of interest

shown by the banks.

6. On the other hand, the learned D.R for the Revenue

relied upon the orders of the authorities below.

7. After considering the rival submissions, we do not

find any merit in the appeal of the assessee. It is admitted

fact that the assessee had fixed deposits in both the banks of 4

substantial amount. The assessee is following mercantile

system of accounting and is maintaining books of account

also. The assessee was, therefore, aware of the fact that on

fixed deposits with two banks, the assessee has earned

interest but the same was not disclosed in the return of

income so filed. Even if the interest was loaded in Form

No.26AS on 21.10.2009, it was the duty of the assessee to

obtain TDS certificate from the banks with regard to the

details of interest credited to his account maintained with

respect to the fixed deposits. Form No.26AS is always loaded

later on after deducting TDS and crediting the interest income

in the fixed deposits account of the assessee. The assessee

has claimed credit of TDS in respect of the interest earned

from the Bank of Maharashtra in the return of income would

clearly reveal that the assessee was aware of the fact that the

interest is earned and credited to the assessee on the end of

the financial year. Therefore, there is no question of non

intimation of interest to the assessee by the bankers. At the

assessment stage, the assessee was given statutory notices to

explain the return of income and income earned but the

assessee never disclosed any earning of the interest on the

fixed deposits. The earning of interest was also not disclosed

in the return of income and it is only when the assessee's

counsel was confronted to the fact of the earning of interest

on fixed deposits, the assessee offered the interest income for

taxation.

5

8. The Hon'ble Allahabad High Court in the case of

CIT Vs. Rakesh Suri, 331 ITR 458 held as under :

"Held, a l l o wi n g the appeal, that the assessee had concealed the material f acts and given incorrect statement of f acts in the application and also not provided inf ormation required by the Assessing Off icer, af t e r receipt of notice. Accordingly, the action of the assessee w a s n e i t h e r b o n a f i d e n o r v o l u n t a r y . T h e m a n n e r i n wh i c h the assessee had tried to prolong the case bef ore the Assessing Off icer by not providing inf ormation immediately and by narrating incorrect f acts in the letter d a t e d D e c e mb e r 6 , , 2 0 0 6 s h o we d t h a t t h e a s s e s s e e h a d c o n c e a l e d t h e i n c o me a n d d i s c l o s u r e wa s n o t v o l u n t a r y but under comp ulsion being cornered by the Assessing Off icer. Penal ty had to be imposed."

9. Considering the above facts, it is clear that the

assessee has offered the interest income for taxation only

when the assessee was cornered and confronted by the

Assessing Officer at the assessment stage on earning of

interest on fixed deposits. There is no bonafide action of the

assessee for not disclosing the interest income on fixed

deposits. The assessee has deliberately concealed the

particulars of interest income in the return of income as well

as at the assessment stage. Had the return of income of the

assessee would not have taken up for scrutiny assessment,

the assessee would never disclose the interest income for the

purpose of taxation in the year under consideration. We, 6

therefore, do not find any merit in the appeal of the assessee.

The same is accordingly dismissed.

10. In the result, the appeal of the assessee is

dismissed.

Order pronounced in the open court on this 31st day of

March, 2015.

Sd/- Sd/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 31 s t March, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh