In a recent judgment, ITAT Amritsar has quashed penalty imposed u/s 271(1)(c) for non declaration of bank fixed deposit interest when the assessee due to her old age, forgot to obtain the information and certificates from the bank on account of accrual of interest
ITA No.170(Asr)/2014 Assessment year:2008-09
Smt. Rajeshwar Kaur vs. Income Tax Officer
Date of Judgment/Order: 31/03/2016
Brief Facts of the Case:
The assessee was an old lady who filed her return of income for the assessment year 2008-09, declaring an income of Rs.3,77,620/-. The Assessing Officer (AO) however assessed her income at Rs.6,83,610/- by making the addition for bank FDR interest not declared in the return of income, amounting to Rs.2,93,187/- and an addition of the difference in rate of interest, amounting to Rs.17,800/-, was also made. Penalty proceedings u/s 271(1)(c) were also initiated.
During the penalty proceedings, the the assessee stated that she was an old houselady and her source of income was only from rent and bank deposit interest. For the last 30 years, she had been filing her return of income and had been paying taxes. In past she used to file her return with the help of her husband. However, due to old age, she was losing physical capacity and memory. Also that her various savings accounts are used for redemption of insurance policies, mutual funds and for receiving rent payments. In March 2007 she was advised by the Bank Manager to transfer funds from savings account to fixed deposits account to get more interest.
She further contended that at the time of filing the return for the year ended 31.03.2009, she forgot to get a certificate from the bank on account of accrual of interest and neither the bank supply her any document/certificate for interest income . Therefore, the omission of non declaration of FDR interest was inadvertent on the part of the assessee and she had also not taken credit for the tax deducted at source in her return of income and that in the assessment proceedings, she immediately and voluntarily accepted the facts and deposited the balance tax.
The AO, however, did not accept the assessee’s arguments and levied the penalty of Rs.90,600/- which was confirmed by CIT(A).
Excerpts from ITAT Judgment:
The facts are not disputed. The ld. CIT(A) has erred in holding the factum of the assessee to have engaged a qualified counsel for filing the return of income as going against the assessee. It goes without gainsaying that the mistake committed by the assessee came about before filing of the return. The factum of the assessee having admitted the facts and having agreed to pay the tax immediately has also erroneously been taken by the ld. CIT(A) to be against the assessee. Rather, this situation goes to show that the assessee, immediately upon realizing her mistake, was willing to pay due tax. Reliance has wrongly been placed on ‘CIT vs. Zoom Communication (P) Ltd.’, 327 ITR 510 (Delhi) by the ld. CIT(A) is also inappropriate. This decision is not applicable to an inadvertent mistake, like the one committed by the assessee.
It is not disputed that the mistake committed by the assessee was the first and last mistake on her part. It has also not been shown that it was a deliberate action on the part of the assessee not to furnish bank certificate for interest income.
Moreover, it has also not been disputed that the income accrued in the shape of interest on a bank FDR cannot be concealed, since the information about the interest accrued and TDS made thereon is reported by the payer to the Income Tax Department and it is reflected in the Form 26AS available under the name of the payee on the website of the Department.
Then, as maintained, if the assessee’s intention was to deliberately avoid any tax, it was income on interest amounting to Rs.2,42,316/- accrued in her savings accounts, which would have been concealed, since thereon, there is no TDS and no reporting by the payer to the Income Tax Department.