Satinder Pal Singh, New Delhi vs Assessee

Satinder Pal Singh, vs ACIT, S-391, Greater Kailash-II, New Delhi Circle-37(1), PAN-AATPS0167K New Delhi (Appellant) (Respondent)

Appellant by Dr.Rakesh Gupta, Adv. & Sh.Ashwani Taneja, Adv. Respondent by Sh.B.R.R.Kumar, Sr. DR

Date of Hearing 26.03.2015 Date of Pronouncement 16.04.2015 ORDER

PER DIVA SINGH, JUDICIAL MEMBER

This is an appeal filed by the assessee assailing the correctness of the order dated 29.08.2011 of CIT(A)-XXVII, New Delhi pertaining to 2006-07 assessment year wherein the penalty of Rs.1,62,023/- imposed by the AO u/s 271(1)(c) has been upheld by the CIT(A).

2. The relevant facts of the case are that in the course of the assessment proceedings as per the claim put forth by the assessee it was stated that the specific saving bank a/c no.-2777 in Bank of Punjab by oversight was not disclosed. Accordingly the declared income of Rs.10,62,330/- was revised by the amounts found deposited in the said bank account alongwith the interest (Rs.4,79,350/-+Rs.2004/-) resulting in income being rounded off at Rs.15,43,680/- as per the Revised computation. In view of the fact that the amount indicated in the revised computation was not originally returned by the assessee, the AO concluded that it was discovered only as a result of the queries made in the assessment proceedings. As a result of this the assessee was show - caused to show why penalty u/s 271(1)(c) for filing inaccurate particulars thereby concealing his income should not be attracted in the facts of the case. The ITA No. 4759/Del/2011

assessee explained that the specific bank account was not disclosed as a result of the oversight by his Chartered Accountant. On noticing the oversight in the assessment proceedings it was voluntarily accepted as a mistake by the assessee consequently the computation of income was revised by paying due tax and interest thereon. Accordingly it was submitted that this did not amount to concealment. The said explanation was not accepted by the AO. In view thereof penalty of the afore-said amount was imposed on the assessee. The action was challenged in appeal by the assessee. However the CIT(A) also not convinced with the explanation offered confirmed the action of the AO.

3. Aggrieved by this the assessee is in appeal before the Tribunal.

4. The Ld. AR reiterated the submissions advanced before the AO and the CIT(A) in the penalty proceedings. Various case-laws were also relied upon so as to contend that the charge has not been specifically been made out against the assessee to show on what count the penalty being imposed has been considered and levied. It was his submission that law mandates that the specific charge required to be met should be spelt out. The assessee must know is he required to explain filing of inaccurate particulars or is he required to explain concealment of income. Case laws were also relied upon for the proposition that where it is a case of inadvertent mistake penalty was not attracted especially where as per judicial precedent laid down by the Apex Court in Price Waterhouse Coopers where the mistake committed by a Chartered Accountant in putting further a claim penalty was held to be not attracted as the mistake was considered to be a human error. In the facts of the present case where the assessee is not even a tax expert and admittedly is a criminal lawyer mistake committed by his Chartered Accountant it was submitted should not be held against him. The imposition of penalty in the circumstances it was stated is harsh. Attention on facts was also invited to the two Remand Reports of the AO wherein in the first Remand Report dated 05.12.2009 in page No. 5 - 5(A) the AO accepts that the assessee voluntarily made the disclosure on 14.10.2008 on noticing the mistake which the AO had not discovered. However in the Second Remand Report dated 16.03.2010 in page No.-6 - 7(A) the very same AO contradicts himself by stating half truths. Addressing the facts it was submitted that the assessment order is dated 22.12.2008 and the AO thereafter has sent notice u/s 133(6) to various banks except this specific bank account as it admittedly already stood disclosed by the

2 ITA No. 4759/Del/2011

assessee itself and only on 22.10.2008 i.e on the date of passing of the assessment order notice u/s 133(6) for this specific information which already stood disclosed to the AO was sent to the Bank of Punjab. The second Remand Report it was submitted was specifically made out as the First Remand Report did not find favour of the CIT(A). Attention was invited to Paper Book page Nos.- 5, 5A, 7 and 7A wherein the very same AO, Sh. A. K. Dhir has contradicted himself in the Second Remand Report. Accordingly it was his submission that in the face of the contradictions in the departmental stand even if the First Remand Report is not believed then also the penalty deserves to be quashed as the departmental stand is contradictory.

5. The Ld. Sr. DR, Dr. B. R. R. Kumar stated that the disclosure was not suo moto or voluntarily and it was made only when the assessee found that it had no choice but to disclose this bank account. The argument it was submitted is supported by the fact that the return as per record was filed on 31.03.2007 and notice u/s 143(2) was issued on 27.07.2007 fixing the date of hearing on 17.08.2007. Referring to the paper Book page No.-5 relied upon by the assessee which contains First Remand Report of the AO, it was pointed out that it was only on 14.10.2008 that the assessee revised its computation thus irrespective of the fact that there is a contradiction in the two Remand Reports even considering the very same Remand Report relied upon by the assessee in its favour, it was evident that the disclosure was made only in the assessment proceedings and it was not suo moto as it was made only when the AO started looking into the record as such it cannot not be stated to be voluntarily disclosed. Accordingly it was his submission that the case laws on facts which are different have no relevance as penalty u/s 271(1)(c) on facts has correctly been levied and upheld.

6. We have heard the rival submissions and perused the material available on record. A perusal of the record shows that the AO in the assessment proceedings qua the revised computation extracts the following explanation of the assessee. Considering which the returned income was varied as per the disclosure made:-

"Due to oversight one bank account with Bank of Punjab was left to be included. The assessee has voluntarily paid the addition tax alongwith interest and praise that a lenient view be taken and no penalty proceedings be initiated. Tax of Rs.2,20,960/- has been deposited in HDFC Bank Kalkaji and challans will be received after one month."

(emphasis provided)

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6.1. The said explanation it is seen has also been put forth in the penalty proceedings and it has been repeated before the CIT(A) and also before us. Addressing the facts the Ld. AR has canvassed that the assessee is a criminal lawyer and not a tax expert and relied on the judicial precedent laid down by the Apex Court where human error has been considered to be a valid ground for quashing penalty proceedings in the case of a professionally managed accountancy firm of international repute like Price Waterhouse Coopers. The plea that due to inadvertent oversight the Chartered Accountant did not disclose the specific bank account has been submitted. The ld. AR was required to address whether the tax payer has any past history of similar non-disclosure to which on enquiring from the assessee present in the Court the ld. AR stated that on the said issue there is no past history adverse to the assessee. The said position was not disputed by the Ld. Sr. DR. Accordingly considering the entirety of the factual matrix, we find that the consistent explanation of the assessee can be accepted as bona fide. As to our minds on facts it is not beyond the realms of reality to consider that the specific bank account due to inadvertent human error was not originally disclosed. The assessee it is seen is a criminal lawyer who on tax matters has proceeded as per the advice of his Chartered Accountant who by mistake did not include the specific bank account due to oversight. Being satisfied by the explanation offered, we set aside the impugned order and allow the assessee's appeal by quashing the penalty order.

7. In the result the appeal of the assessee is allowed.

The said order was pronounced in the Open Court on 16th April, 2015.

Sd/- Sd/- (T.S.KAPOOR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: the 16th April, 2015 *Amit Kumar* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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