The Solapur District Central Co-op Bank Ltd, Solapur V. Assistant Commissioner of Income tax, Solapur

CO 15/PUN/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3000 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR NAVALJIT KAPOOR
• Keywords: Wrong claim; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 933 /PUN/201 5 / ASSESSMENT YEAR : 20 0 8 - 09 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2, SOLAPUR ....... / APPELLANT / V S. THE SOLAPUR DISTRICT CENTRAL CO - OP. BANK LTD., 207 - 209, GOLD FINCH PETH, SOLAPUR PAN : AAATT9561B / RESPONDENT . / CO NO. 15 /PUN/201 7 / ASSESSMENT YEAR : 200 8 - 09 THE SOLAPUR DISTRICT CENTRAL CO - OP. BANK LTD., 207 - 209, GOLD FINCH PETH, SOLAPUR PAN : AAATT9561B ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2, SOLAPUR / RESPONDENT ASSESSEE BY : SHRI S.N. PURANIK REVENUE BY : DR. NAVALJIT KAPOOR / DATE OF HEARING : 25 - 04 - 2017 / DATE OF PRONOUNCEMENT : 12 - 0 5 - 2017 2 ITA NO . 933/PUN/2015 & CO NO. 15/PUN/2017, A.Y. 2008 - 09 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 7, PUNE DATED 09 - 02 - 2015 FOR THE ASSESSMENT YEAR 2008 - 09 DELETING PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). THE ASSESSEE HAS FILED CROSS OBJECTIONS IN THE APPE AL BY THE DEPARTMENT SUPPORTING THE FINDINGS OF FIRST APPELLATE AUTHORITY. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN B ANKING BUSINESS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 ON 18 - 09 - 2008 DECLARING LOSS OF ` 1,30,78,739/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE DISALLOWANCES/ADDITIONS INTER ALIA ON ACCOUNT OF : I . OVERDUE INTEREST ON NPA ` 47,01,85,366/ - . II . INTERES T ON AGRICULTURAL STABILIZATION FUND ` 52,24,988/ - . III . INTEREST ON CORPUS FUND ` 13,97,158/ - . IV . PROVISION FOR BONUS ` 60,500/ - . 2.1 THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AGAINST THE ASSESS EE IN RESPECT OF ADDITIONS/DISALLOWANCES MADE DURING ASSESSMENT. PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER, THE ASSESSING OFFICER VIDE ORDER DATED 28 - 03 - 2013 LEVIED PENALTY OF ` 14,73,49,200/ - 3 ITA NO . 933/PUN/2015 & CO NO. 15/PUN/2017, A.Y. 2008 - 09 ON THE AB OVE SAID ADDITIONS FOR FURNISHING INACCURATE PARTICULARS AND CONCEALING THE PARTICULARS OF INCOME. 2.2 AGGRIEVED BY THE ORDER LEVYING PENALTY U/S. 271(1)(C) OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE M EANTIME , THE ASSESSEE HAD ALSO CHALLENGED ADDITIONS MADE DURING THE ASSESSMENT PROCEEDINGS AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) BEFORE THE TRIBUNAL IN ITA NO. 495/PN/2012. THE TRIBUNAL VIDE ORDER DATED 29 - 09 - 2014 DELETED THE ADDITION OF ` 47,01,85,366/ - IN RESPECT OF INTEREST ON NPA. HOWEVER, THE TRIBUNAL CONFIRMED THE ADDITION MADE ON ACCOUNT OF INTEREST ON AGRICULTURAL STABILIZATION FUND ` 52,24,988/ - . SO FAR AS OTHER TWO ADDITIONS I.E. INTEREST DEBITED ON CORPUS FUND AND PROVISION FOR BONUS , THE SAME WERE NOT AGITATED BY THE ASSESSEE BEFORE THE TRIBUNAL. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER DELETED THE ENTIRE PENALTY BY PLACING RELIANCE ON THE DECISION OF TRIBUNAL DELET ING INTEREST ON NPA AND VARIOUS OTHER D ECISIONS . NOW, THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY U/S. 271(1)(C) IN RESPECT OF ADDITIONS CONFIRMED BY THE TRIBUNAL IN ASSESSEES QUANTUM APPEAL, I.E.: I . ADDITI ON MADE WITH RESPECT TO INTEREST ON AGRICULTURAL STABILIZATION FUND ; II . INTEREST DEBITED TO CORPUS FUND ; AND III . EXCESS PROVISION FOR BONUS. 3. DR. NAVALJIT KAPOOR REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORT ED THE ORDER OF ASSESSING OFFICER IN LEVYING PE NALTY U/S. 271(1)(C) OF THE ACT. THE LD. DR SUBMITTED THAT THE TRIBUNAL IN 4 ITA NO . 933/PUN/2015 & CO NO. 15/PUN/2017, A.Y. 2008 - 09 ASSESSEES APPEAL CHALLENGING THE ADDITION MADE IN ASSESSMENT HAS DELETED THE ADDITION MADE ON ACCOUNT OF OVERDUE INTEREST ON NPA. HOWEVER, WITH RESPECT TO OTHER ADDITIONS/DISALLO WANCES THE SAME HAVE BEEN CONFIRMED BY THE TRIBUNAL , THEREFORE, COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE CONFIRMED PENALTY ON SUCH ADDITIONS / DISALLOWANCES. 4. ON THE OTHER HAND SHRI S.N. PURANIK APPEARING ON BEHALF OF THE ASSESSEE STRONGLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ENTIRE PENALTY. THE LD. AR SUBMITTED THAT IN SO FAR AS DISALLOWANCE OF OVERDUE INTEREST ON NPA IS CONCERNED THE ADDITION HAS BEEN DELETED BY THE TRIBUNAL IN ASSESSEES APPEAL IN IT A NO. 495/PN/2012. THEREFORE, THERE IS NO QUESTION OF LEVYING PENALTY ON THE SAID AMOUNT AND THIS FACT HAS BEEN ADMITTED BY THE LD. DR. AS FAR AS THE LEVY OF PENALTY ON OTHER ISSUES IS CONCERNED , THE SAME ARE DEBATABLE. IT IS A WELL SETTLED LAW THAT NO PENALTY IS LEVIABLE WHERE THE ADDITIONS/DISALLOWANCES ARE MADE ON DIFFERENCE OF OPINION. THE LD. AR POINTED THAT WHILE INITIATING PENALTY PROCEEDINGS THE ASSESSING OFFICER HAS RECORDED SATISFACTION FOR INITIATING PENALTY FOR FURNISHING INACCURATE PARTICUL ARS OF INCOME. AT THE TIME OF LEVY OF PENALTY THE PENALTY HAS BEEN LEVIED FOR FURNISHING INACCURATE PARTICULARS AND CONCEALING PARTICULARS OF INCOME. THE ASSESSING OFFICER IS INCONSISTENT IN HIS REASONS WHILE RECORDING REASONS FOR LEVYING PENALTY AND AT THE TIME OF LEVYING PENALTY. THE LD. AR PRAYED FOR REJECTING THE APPEAL OF THE DEPARTMENT AND UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 5 ITA NO . 933/PUN/2015 & CO NO. 15/PUN/2017, A.Y. 2008 - 09 5. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS IN RESPECT OF FOLLOWING ADDITIONS/DISALLOWANCES : I . OVERDUE INTEREST ON NPA ` 47,01,85,366/ - . II . INTEREST ON AGRICULTURAL STABILIZATION FUND ` 52,24,988/ - . III . INTERE ST ON CORPUS FUND ` 13,97,158/ - . IV . PROVISION FOR BONUS ` 60,500/ - . 6. IN SO FAR AS THE MAJOR ADDITION ON ACCOUNT OF OVERDUE INTEREST ON NPA IS CONCERNED , THE SAME HAS BEEN DELETED BY THE TRIBUNAL IN ASSESSEES APPEAL IN ITA NO. 495 /PN/2012 (SUPRA) . THE COMMISSIONER OF INCOME TAX (APPEALS) BY PLACING RELIANCE ON THE AFORESAID ORDER OF TRIBUNAL HAS DELETED THE LEVY OF PENALTY ON THE SAID ADDITION. 7. IN SO FAR AS THE OTHER THREE ADDITIONS/DISALLOWANCES ARE CONCERNED , INTEREST ON A GRICULTURAL STABILIZATION FUND HAS BEEN CONFIRMED BY THE TRIBUNAL AND OTHER TWO ADDITIONS WERE NOT AGITATED BY THE ASSESSEE BEFORE THE TRIBUNAL. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE LEVY OF PENALTY ON THE SAID ADDITIONS BY OBSERVING TH AT THERE WAS HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT ON THESE ISSUES. THIS FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT BEEN REBUTTED BY THE LD. DR. IT IS A WELL SETTLED LAW THAT WHERE THERE IS GENUINE DIFFEREN CE OF OPINION AND THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER, NO PENALTY IS LEVIABLE ON SUCH ADDITION. ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO DISTINCT, SEPARATE AND INDEPENDENT 6 ITA NO . 933/PUN/2015 & CO NO. 15/PUN/2017, A.Y. 2008 - 09 PROCEEDINGS [COMMISSIONER OF INCOME TAX VS. KHODAY ES WARSA AND SONS REPORTED AS 83 ITR 369 (SC)]. THEREFORE, IT IS NOT NECESSARY THAT EVERY ADDITION MADE DURING THE ASSESSMENT SHOULD ULTIMATELY RESULT IN LEVY OF PENALTY. THE ASSESSING OFFICER HAS INITIATED PENALTY U/S. 271(1)(C) OF THE ACT ON THE GROUND TH AT THE ASSESSEE HAS FURNISHING INACCURATE PARTICULARS OF INCOME. A PERUSAL OF THE DOCUMENTS ON RECORD SHOWS THAT THE ASSESSEE HAD MADE A BONAFIDE CLAIM WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. AT THE MOST IT IS A CASE OF MAKING WRONG CLAIM. THE ASSESSEE IS A CO - OPERATIVE BANK AND HAS MADE FULL DISCLOSURE OF PARTICULARS IN ITS BOOKS OF ACCOUNT. 8. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED AS 322 ITR 158 HAS HELD : MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF W OULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UN DER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECISION OF HONBLE APEX COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E PENALTY IN TOTO. WE CONCUR WITH THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY. ACCORDINGLY, THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. 7 ITA NO . 933/PUN/2015 & CO NO. 15/PUN/2017, A.Y. 2008 - 09 9 . THE ASSESSEE HAS FILED CROSS OBJECTIONS SUPPORTING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). SINCE, THE APPEAL OF THE DEPARTMENT HAS BEEN DISMISSED , THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BECOME INFRUCTUOUS AND ARE DISMISSED , AS SUCH. 10. IN THE RESULT, THE APPEAL OF THE DEPA RTMENT AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 12 TH DAY OF MAY, 201 7 . SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 12 TH MAY, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 7, PUNE 4. CHIEF COMMISSIONER OF INCOME TAX - 6, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / ASSISTANT REGISTRAR , , / ITAT, PUNE