THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY and
THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM
I.T.T.A. No. 92 of 2003
% 03.09.2014
Between:
# M.A.Quddus. Versus $ The Income Tax Officer.
... APPELLANT ...RESPONDENT < Gist:
> Head Note:
! COUNSEL FOR THE APPELLANT :- Sri P.C.Yadav ^COUNSEL FOR RESPONDENT :- Sri S.R.Ashok ? Cases Referred:
HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A No.92 of 2003 JUDGMENT:- (Per Hon’ble Sri Justice L.Narasimha Reddy) This appeal is preferred against the order, dated 24.01.2003 passed by the Hyderabad Bench ‘B’ of Income Tax Appellate Tribunal in I.T.A.No.1863/Hyd/1994 covering the assessment years 1986-87 and 1987-88.
The appellant is an assessee under the Income Tax Act (for short ‘the Act’). He established a small private school and was running it. His income was assessed to tax for the two years referred to above. A search operation under Section 133A of the Act was conducted. It was noticed that sums of Rs.46,530/- and 48,380/- for the two years referred to above were not accounted for. The said amounts were added to his income and separate orders of assessment were passed. Though in the appeal preferred by the appellant before the Commissioner (Appeals) was allowed and relief was granted, the Department carried the matter in further appeal to the Tribunal and the order of assessment was upheld. Accordingly, the appellant paid the tax on the amounts added to his income, as a result of the survey.
The respondent initiated proceedings under Section 271 (1) (c) of the Act against the appellant, proposing to levy penalty. The appellant stated that though he admitted to the figures referred to above, they are only the result of calculations, and at any rate, he has already been subjected to tax on such amount. The respondent passed orders levying penalty of Rs.20,000/- each for the two assessment years. The appellant moved the Commissioner (Appeals). Through order, dated 07.09.1994, the Commissioner allowed the appeals and has set aside the orders levying penalty. The Department filed I.T.A.Nos.1862 and 1863/Hyd/1994. The same was allowed by the Tribunal. However, a direction was issued to the Assessing Officer to levy minimum penalty. Hence, this appeal under Section 260A of the Act.
Heard the learned counsel for the appellant and the learned Senior Standing Counsel for the respondent.
The appellant is not a businessman nor has he been maintaining books of account. A small school was being run by him. The maintenance of accounts was so casual and imperfect, that hardly any details of exact amount received towards fees and amount paid towards salaries were available. The record discloses that the appellant himself was so anxious to pay the tax and that when in a particular year, the income was below the minimum levels, he added some amounts and filed returns.
The survey did not result in recovery of any specific amount as such. The record discloses that the appellant was subjected to such an extensive grilling that as many as 50 questions were put to him and the deposition itself runs to about 10 typed pages. Ultimately, the figures were arrived at, by taking into account, the number of students and the prescribed fee. It was not even noticed that in several cases, there will be default in payment of fee and the managements of the schools have to discharge their social obligation, be it to poor students or to other important persons in the locality.
Whatever may have been the justification in adding the figures so arrived at, to the income of the appellant, we find that there was no justification to initiate the proceedings under Section 271 (1) (c) of the Act. We agree with the reasons furnished by the Commissioner and find that the Tribunal proceeded on hyper- technicalities. Many a time, an assessee would admit or even disclose certain amounts with a view to purchase peace. Such steps may result in bringing the corresponding amount to tax, but cannot be permitted to expose the assessee to penalty. It was not even alleged that the appellant had any intention to evade tax or to defraud the Revenue.
In the facts of the case, we find that there was no basis to levy penalty, and accordingly, allow the appeal. There shall be no order as to costs.
Miscellaneous petitions, if any, filed in this appeal shall also stand disposed of.
L. NARASIMHA REDDY, J CHALLA KODANDA RAM, J Date:03.09.2014 Note: L.R. copy to be marked. kdl