Prakash G. Kewalramani, Mumbai vs Assessee

आयकर अपील य अ धकरण, ए खंडपीठ मंब ु ई INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH सव ी आई पी बंसल , या यक सद य एवं राजे , लेखा सद य Before S/Sh. I P Bansal,Judicial Member & Rajendra,Accountant Member आयकर अपील सं/.ITA No.6210/Mum/2010, नधारण वष/Assessment Year-2005-06

Prakash G. Kewalramani The ACIT-19(1) 301, Deja Vu Apts. Mumbai.

Vs 77, Hill Road Bandra (W) Mumbai-400 050.

PAN:AAGPK 4702 PAN:AAGPK 4702 K (अपीलाथ /Appellant) ( यथ / Respondent)

नधा रती ओर से/Assessee by :Shri Gopal P. Naik राज व क ओर से/ Revenue by :Shri Premanand J. सुनवाई क तार ख/ Date of Hearing :28- 04 -2015 घोषणा क तार ख / Date of Pronouncement : 28-04-2015 आयकर अ ध नयम,1961 क धारा 254(1)के अ तगत आदे श Order u/s.254(1)of the Inco me-tax Act,1961(Act) लेखा सद य राजे के अनुसार PER RAJENDRA, AM:

Challenging the order dt.18/05/2010 of the CIT(A)-30- Mumbai, the assesseee has raised following Grounds of Appeal:

I) The learned A.O has erred in levying penalty u/s.271 (1 )© and the honorable CIT- A 30 erred in dismissing the appeal on the following grounds.

a) Both of them failed to appreciate the fact that the amount of Rs.18,10,000/ showed less was earned by Impact Management Services owned by the spouse of the appellant b } The sai d am ount wa s deduct ed from gr oss pr ofe ssi onal rec ei pt a nd cr ed ite d t o the sp ouse account in the hooks of appellant

c)The appellant readily agreed to include this amount to his total income a s t h e s p o u s e assessment had been completed without considering this amount as suggested by the A.O during the assessment proceedings.

The appellant reserves its right to add,delete,modify the grounds of the appeal preferred as above.

Assessee,an individual and proprietor of M/s.Impact Management & Personnel Services,is engaged in the business of manpower recruitment and management consultancy.He filed his return of income on 30.10.2005,declaring total income of Rs.19,62,805/- .The Assessing Officer (AO) completed the assessment u/s.143(3) of the Act on 31/12/2007,determining the income of the assessee at Rs.38,73,345/-.

2.Effective ground of appeal is about the imposition of penalty u/s.271 (1)(c) of the Act, amounting to Rs.6,09,250/-.During the assessment proceedings,the AO found that the assessee 2 6210/M/10 Prakash GK

had received service charges of Rs.1,30,54,601/- during the year under appeal, that in the P &L account he had shown receipt at Rs. 1,12,44,601/- only, that service charges, received as per certificate of deduction of tax at source u/s.203 of the Act ,worked out at Rs. 1, 18, 48,280/-.The AO directed the assessee to reconcile the figures of service charges. As per the AO same were not reconciled though sufficient opportunities were given to the assessee In his reply the assessee stated that due to clerical error the receipt of Rs. 18,10,000/- was credited to some other account and total receipt should he Rs.1,30,54,601/-instead of Rs.1,12,44,601/-.He asked the AO to condone the error and offered the amount in question i.e.Rs.18 lakhs(app.)for taxation.The AO held that the assessee kept and maintained the books of accounts duly audited by the Chartered Accountant,that the assessee was unable to produce any evidence as to which account the said receipt had been actually credited in the books of accounts,that the submission of the assessee was an afterthought. He further held that the case was testimony of abuse of summary assessment scheme,that income of Rs.18.10 lakhs would have not seen the light of the day had the matter not been selected for scrutiny. Referring to the case of K P Madhusudan (251ITR99), the AO levied a penalty of Rs.6.09 lakhs for concealing the particulars of income u/s.271(1)(c)of the Act.

3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).Before him it was contented that that some services rendered by M/s. Impact Management Services during the year were wrongly billed in the name of M/s.Impact Management and Personal Services,that mistake was noticed at the end of the year and then the amount was inadvertently transferred to the spouse's account instead of proprietary concern account,that no TDS was made while crediting the amount to her account,that the assessee had not done anything willfully and there was no intention to hide the income. After considering the submissions of the assessee and the assessment order, he held that only after the department asked the assessee to reconcile the difference of Rs. 18,10,000/- the assessee came forward and offered this sum for taxation, that it was not a voluntary disclosure of income, that the AO has held that explanation to section 271(1)(c) was clearly attracted in the case of the assessee,that he had not offered any explanation as to why there was difference between the party wise receipt and the receipt shown by him in the P & L account,that no explanation was offered about as to how his books of accounts had balanced when the receipts were shown less by Rs.18.10 lakhs,that the assessee had committed default u/s.271(1)(c)of the Act.Finally,the FAA confirmed the order of the AO.

4.Before us,Authorised Representative (AR) stated that by mistake the income of the spouse of the assessee was not disclosed properly, that non disclosure of income was an inadvertent mistake, that the assessee had paid due taxes on it, that there was no concealment of income.Departmental Representative(DR)supported the order of the FAA and stated that the assessee had not offered any explanation during the course of assessment proceedings or during the penalty proceedings, that during appellate proceedings with regard to quantum additions the assessee had not explained the understatement of income, that income was offered for taxation only after concealment was detected by the AO .

5.We have heard the rival submissions and perused the material before us.We find that the AO while completing the assessment noticed difference in the receipts as shown by the assessee in his return of income,that he directed the assessee to reconcile the difference in receipts,that the 3 6210/M/10 Prakash GK

assessee admitted the error and offered the income for taxation.Thus,it is clear that it was not a voluntary step taken by the assessee to revise his income rather it was the inquiry made by the AO that resulted in detecting the untaxed amount.The explanation offered by the assessee before the AO,that it was the clerical mistake,in our opinion is not sufficient to rescue him from the penal provisions.He is not a small time assessee of a remote place who is not aware of the provisions of the Act.He is assisted by the professionals and the books of accounts are audited.It is surprising that in spite of such a glaring mistake there is no mention of the disputed amount in the audit report.If the matter had not been selected for scrutiny income amounting to Rs.18.10 lakhs would have remained untaxed.Assessees are supposed to declare their true income and not to conceal the particulars of income while filing the return.Failure to disclose the taxable income should result in levy of concealment penalty.The explanation filed by the assessee is neither based on facts nor is convincing. Therefore,we are of the opinion that the FAA was justified in confirming the penalty order passed by the AO. In the case of Zoom Communication the Hon'ble Delhi High Court has held as under:

So long as the assessee has not concealed any material fact or the factual information given by him has not been found to be incorrect, he will not be liable to imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961, even if the claim made by him is unsustainable in law, provided that he either substantiates the explanation offered by him or the explanation, even if not substantiated, is found to be bona fide. If the explanation is neither substantiated nor shown to be bona fide, Explanation 1 to section 271(1)(c) would come into play and the assessee will be liable for the prescribed penalty".

In our opinion the explanation offered by the assessee in the matter under appeal is neither bonafide nor substantiated and therefore the effective ground of appeal has to be decided against him.

As a result,appeal filed by the assessee stands dismissed.

फलतः नधा रती वारा दा खल क गई अपील मंजूर क जाती है .

Order pronounced in the open court on 28th,April,2015.

आदे श क घोषणा खल ु े यायालय म दनांक 28th अ ैल,2015 को क गई ।

Sd/- Sd/- (आई पी बंसल/I P Bansal) (राजे / RAJENDRA) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मुंबई/Mumbai, दनांक/Date: 28.04.2015 JV. 4 6210/M/10 Prakash GK

आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1.Appellant /अपीलाथ 2. Respondent / यथ

3.The concerned CIT(A)/संब ध अपील य आयकर आयु त, 4.The concerned CIT /संब ध आयकर आयु त

5.DR "A" Bench, ITAT, Mumbai / वभागीय त न ध, ए खंडपीठ,आ.अ. याया.मुंबई

6.Guard File/गाड फाईल स या पत त //True Copy// आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai.