Youth Development Co.op. Bank Ltd., Kolhapur V. Assistant Commissioner of Income-tax,

ITA 1143/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2459 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: C V DESHPANDE
• Keywords: Depreciation; Wrong claim; Bad and doubtful debts; Revised return; Bonafide mistake; Revenue expenditure
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , !'!! # , $ % BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS. 1143 & 1144/PN/2014 $& ' !(' / ASSESSMENT YEARS : 2007-08 & 2009-10 YOUTH DEVELOPMENT CO-OP. BANK LTD., 1429/G, POORNIMA APARTMENT, LAXMIPURI, KOLHAPUR PAN : AAAAY1180G ....... / APPELLANT )& / V/S. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, KOLHAPUR / RESPONDENT ASSESSEE BY : SHRI C.V. DESHPANDE REVENUE BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 29-03-2016 / DATE OF PRONOUNCEMENT : 31-03-2016 * / ORDER PER VIKAS AWASTHY, JM : THESE TWO APPEALS FOR THE ASSESSMENT YEARS 2007-08 AN D 2009- 10 HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 25-03-2014 COMMON FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL. IN BOTH THE APPE ALS, THE ASSESSEE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPE ALS) IN CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) IN RESPECT OF DISALLOWANCE OF 2 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 DEDUCTION CLAIMED U/S. 36(1)(VIIA) OF THE ACT. SINCE, IDENTICAL GRO UNDS HAVE BEEN RAISED IN BOTH THE APPEALS AND BOTH THE APPE ALS ARE ARISING FROM SAME SET OF FACTS, THE APPEALS ARE TAKEN UP TOGET HER FOR ADJUDICATION. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BANKIN G BUSINESS. IN ASSESSMENT YEAR 2007-08 THE ASSESSMENT WAS RE-OPENE D UNDER THE PROVISIONS OF SECTION 147 R.W.S. 148 OF THE ACT AND CERTAIN ADDITIONS/DISALLOWANCES WERE MADE IN THE INCOME RETURNED B Y THE ASSESSEE. IN ASSESSMENT YEAR 2009-10 ADDITIONS ON SIMILA R GROUNDS WERE MADE IN SCRUTINY ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT. THE ADDITIONS/DISALLOWANCES MADE IN THE IMPUGNED ASSESSME NT YEARS ARE AS UNDER : SL. NO. ADDITIONS/DISALLOWANCES A.Y. 2007 - 08 A.Y. 2009 - 10 1 DISA LLOWANCE OF PROVISION U/S. 36(1)(VIIA) ` 24,21,821 / - ` 1,17,265/ - 2 DISALLOWANCE OF ACCRUED INTEREST ON NON PERFORMING ASSETS (NPAS) ` 1,93,04,446/ - ` 1,62,25,296/ - 3 DISALLOWANCE OF DEDUCTION OF AMORTIZATION OF PREMIUM ON GOVT. SECURITIES ` 5,30,941/ - ` 17,57,700/ - ON ACCOUNT OF ADDITIONS/DISALLOWANCES MADE IN THE INCOME RETURNED BY THE ASSESSEE, THE ASSESSING OFFICER VIDE ORDE R DATED 28-01-2014 LEVIED PENALTY OF ` 68,10,706/- U/S. 271(1)(C) IN THE ASSESSMENT YEAR 2007-08 AND VIDE SEPARATE ORDER OF EV EN DATE LEVIED PENALTY OF ` 55,92,981/- IN ASSESSMENT YEAR 2009-10. AGGRIEVED BY THE ORDER LEVYING PENALTY U/S. 271(1)(C) THE AS SESSEE FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) FOR 3 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 RESPECTIVE ASSESSMENT YEARS. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE COMMON ORDER DELETED THE PENALTY IN RESPECT OF DISALLOWANCES OF ACCRUED INTEREST ON NPAS AND AMORTIZATION OF PREMIU M ON GOVT. SECURITIES. HOWEVER, THE COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE LEVY OF PENALTY IN RESPECT OF DISALLOWA NCE OF DEDUCTION MADE U/S. 36(1)(VIIA) OF THE ACT. AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE IS IN SEC OND APPEAL BEFORE THE TRIBUNAL. 3. SHRI C.V. DESHPANDE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CREATE D PROVISIONS FOR BAD AND DOUBTFUL DEBTS IN THE BOOKS OF ACCOUNT FOR THE A SSESSMENT YEAR 2007-08, ` 2,25,000/- AND ASSESSMENT YEAR 2009-10, ` 3,00,000/-. HOWEVER, AT THE TIME OF FILING OF RETURN OF INCOME THE ASSES SEE HAD CLAIMED DEDUCTION ON ACCOUNT OF BAD AND DOUBTFUL DEBTS ` 26,46,821/- IN ASSESSMENT YEAR 2007-08 AND ` 31,17,265/- IN ASSESSMENT YEAR 2009-10. THE ASSESSING OFFICER DISALLOWED THE EXCESS CLAIM O F DEDUCTION U/S. 36(1)(VIIA) I.E. ` 24,21,821/- IN ASSESSMENT YEAR 2007-08 AND ` 1,17,265/- IN ASSESSMENT YEAR 2009-10. THE ASSESSEE CARRIED THE MATTER IN APPEAL TO COMMISSIONER OF INCOME TAX (APPEA LS), WHERE THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE D ISALLOWANCE. IN SECOND APPEAL BEFORE THE TRIBUNAL, THE ASSESSEE COU LD NOT SUBSTANTIATE ITS CLAIM AND THEREFORE, THE DISALLOWANCE MADE IN BOTH THE IMPUGNED ASSESSMENT YEARS ON ACCOUNT OF EXCESS CLAIM OF DEDUCTION U/S. 36(1)(VIIA) WAS UPHELD. THE ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) ON DISALLOWANCE OF DEDUCTION U/S. 36(1)(VIIA) WHICH WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT THE ASSESSEE HAD INADVERTENTLY CLAIMED EXCESS 4 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 DEDUCTION U/S. 36(1)(VIIA) IN RESPECT OF BAD AND DOUBTFUL DEBTS . THE WRONG CLAIM MADE BY THE ASSESSEE WOULD NOT ATTRACT PEN ALTY AS THERE WAS NO CONCEALMENT OF ANY INCOME OR FURNISHING OF INACCURA TE PARTICULARS OF INCOME AS ENVISAGED UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE ASSESSEE HAD DISCLOSED ALL MATERIA L FACTS IN THE RETURN OF INCOME AND ALL RELEVANT DOCUMENTS WERE FURNISHE D BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THERE WAS NO ATTEMPT BY THE ASSESSEE TO SUPPRESS ANY INFORMATION DURING THE ASS ESSMENT PROCEEDINGS OR THEREAFTER. THE LD. AR SUBMITTED THAT TH E CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HON'BLE SUPREME COURT OF INDIA RENDERED IN THE CASE OF COMMISSIONER OF INCOME T AX VS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED AS 322 ITR 15 8 (SC). FURTHER TO STRENGTHEN HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE O F AGRASEN URBAN CO-OP. BANK LTD. VS. ACIT IN ITA NO. 355/PN/2012 FOR THE ASSESSMENT YEAR 2007-08 DECIDED ON 19-02-2014 AND IN THE CASE OF N.D.I.M.C. BANK LTD. VS. ACIT IN ITA NO. 1458/PN/2014 FOR T HE ASSESSMENT YEAR 2010-11 DECIDED ON 15-05-2015. 4. ON THE OTHER HAND SHRI DHEERAJ KUMAR JAIN REPRESEN TING THE DEPARTMENT STRONGLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE LEVY OF PENALTY. THE LD. DR S UBMITTED THAT IT WAS A DELIBERATE AND CONSCIOUS ACT OF THE ASSESS EE IN CLAIMING EXCESS DEDUCTION. THE ASSESSEE IN ASSESSMENT YEAR 200 7-08 HAD MADE PROVISIONS FOR BAD AND DOUBTFUL DEBTS OF ` 2,25,000/- AGAINST WHICH THE ASSESSEE HAD CLAIMED DEDUCTION OF ` 26,46,821/-. SIMILARLY, IN ASSESSMENT YEAR 2009-10 THE ASSESSEE HAD MADE PROVIS ION FOR BAD AND DOUBTFUL DEBT OF ` 3,00,000/- AND CLAIMED DEDUCTION OF ` 31,17,265/-. THE LD. DR SUBMITTED THAT THE PENALTY HAS BEEN RIGHTLY LE VIED ON THE 5 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 ASSESSEE FOR MAKING WRONG CLAIM. IN SUPPORT OF HIS SUBMISS IONS, THE LD. DR PLACED RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS REPORTED AS 306 ITR 277 (SC). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE RIVAL SIDES HAVE PLACED RELIANCE IN SUPPORT OF THEIR RESPECTIVE CONTENTIONS. THE C OMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER HAS CONFIRMED T HE LEVY OF PENALTY U/S. 271(1)(C) IN RESPECT OF EXCESS DEDUCTION CLAIME D U/S. 36(1)(VIIA) OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE ASS ESSEE HAD MADE PROVISION FOR BAD AND DOUBTFUL DEBTS OF ` 2,25,000/- IN ASSESSMENT YEAR 2007-08 AND ` 3,00,000/- IN ASSESSMENT YEAR 2009-10. AGAINST THE AFORESAID PROVISIONS THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 36(1)(VIIA) OF ` 24,21,821/- IN ASSESSMENT YEAR 2007-08 AND `3 1,17,265/- IN ASSESSMENT YEAR 2009-10. THE ASSESSEE IS A CO- OPERATIVE BANK. THE CONTENTION OF THE ASSESSEE IS THAT THE DEDUCTION U/S. 36(1)(VIIA) WAS INADVERTENTLY CLAIMED IN EXCESS OF THE PR OVISIONS MADE AND IT WAS NOT A DELIBERATE ACT ON THE PART OF THE EMPLOYEES OF THE ASSESSEE TO CLAIM EXCESS DEDUCTION. 6. HERE WE WOULD LIKE TO REFER TO EXPLANATION 1(B) TO SECTIO N 271(1)(C) OF THE ACT. THE EXPLANATION (B) TO SECTION 271(1)(C) OF THE ACT AS UNDER: [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) XXXXXXXXX (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND 6 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN R ESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN THE PRESENT CASE THE ASSESSEE HAS OFFERED EXPLANATIO N WHICH WAS NOT ACCEPTED BY THE REVENUE. WE DO NOT CONCUR WITH THE VIEW OF AUTHORITIES BELOW. THE ASSESSEE IS A CO-OPERATIVE SOCIETY . BY MAKING A WRONG CLAIM IN THE RETURN OF INCOME BY AN EMPLOYEE OF THE SOCIETY, IT WOULD NOT BENEFIT THE EMPLOYEE PERSONALLY. THEREFORE, MAKIN G AN EXCESS CLAIM COULD BE INADVERTENT MISTAKE. THE EXPLANATIO N OFFERED MAY NOT HELP THE ASSESSEE IN PREVENTING DISALLOWANCE IN A SSESSMENT PROCEEDINGS BUT FOR LEVY OF PENALTY THE CRITERIONS ARE DIFFER ENT. THEREFORE, THE EXPLANATIONS FURNISHED BY THE ASSESSEE SHO ULD HAVE BEEN ACCEPTED. 7. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF COM MISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE FINDIN GS OF THE HON'BLE APEX COURT READS AS UNDER: 12. ..IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUS ION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING T HAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF T HE TWO FORMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II ) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AM OUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND , THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE 7 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY TINDER 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 UNDER SECTION 271(1)(C ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. [EMPHASIZED BY US] HERE WE WOULD LIKE TO POINT OUT THAT THE HON'BLE SUPREME COURT OF INDIA WHILE RENDERING THE JUDGMENT IN THE CASE OF COM MISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HA S ALSO CONSIDERED THE DECISION IN THE CASE OF UNION OF INDIA VS. DH ARAMENDRA TEXTILE PROCESSORS (SUPRA). 8. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF A GRASEN URBAN CO-OP. BANK LTD. VS. ACIT (SUPRA) WHILE DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT IN SIMILAR CIRCUMSTANCES HELD : 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSE SSING OFFICER, IN THE INSTANT CASE, LEVIED PENALTY ON THE ADDITION OF RS. 95 LAKHS TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS ON THE GROUND THAT THE ASSESSEE HAD MADE A FALSE CLAIM AND THERE WAS NO BONAFIDE RE ASON FOR CLAIMING SUCH DEDUCTION. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THOUGH THE AMOUNT IS AN INADMISSIBLE DEDUCTION/CLAIM, HOWEVER, THE SAME WAS NOT A FALSE CLAIM BUT WAS AN INADVERTENT MISTAKE. IT IS THE SUBMISSION OF THE LD. COUNSEL FO R THE ASSESSEE THAT THE CLAIM OF PROVISION FOR BAD & DOUBTFUL DEBT WAS VERY MUCH THERE IN THE PROFIT AND LOSS ACCOUNT WHICH WERE AUDITED. NEITHER THE TAX CONSULTANTS NOR THE TAX AUDITORS COULD POINT OUT THE MISTAKE FO R WHICH THE SAME REMAINED TO BE DEDUCTED FROM THE LOSS WHICH WAS ALS O APPEARING IN THE 8 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 SAME PROFIT AND LOSS ACCOUNT. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE CLAIM OF RS.95 LAKHS ALONG WITH LOSS OF RS.2.40 CRORES ARE AVAILABLE IN THE PROFIT AND LOSS ACCOUNT WHICH WERE AUDITED BY THE AUDITORS. EVEN THOUGH THE ASSES SEE IS NOT ENTITLED TO CLAIM THE PROVISION FOR BAD AND DOUBTFUL DEBTS RESE RVE, HOWEVER, NEITHER THE TAX CONSULTANTS NOR THE TAX AUDITORS COULD POIN T OUT THE ABOVE GLARING MISTAKE. UNDER THESE CIRCUMSTANCES THE PLEA OF THE ASSESSEE THAT THE CLAIM FOR DEDUCTION WAS MADE ON ACCOUNT OF BONA FIDE MISTAKE HAS TO BE ACCEPTED. IN OUR OPINION, WHEN ALL FACTS ARE AVA ILABLE ON RECORD, IT CANNOT BE SAID THAT THE ASSESSEE ATTEMPTED TO FURNI SH INACCURATE PARTICULARS OF INCOME. IT IS A CASE OF MAKING AN IN CORRECT CLAIM. FURTHER, IN OUR OPINION NON-FURNISHING OF A REVISED RETURN D OES NOT MEAN THAT THE BONAFIDE MISTAKE IN MAKING A WRONG CLAIM SHOULD BE VISITED WITH LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. THIS VIEW OF OURS FINDS SUPPORT FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF SOMANY EVERGREEN KNITS LTD. (SUPRA). 10.1 WE FIND IN THE CASE OF SOMANY EVERGREEN LTD. ( SUPRA) THE ASSESSING OFFICER MADE ADDITION OF RS.32,51,161/- ON ACCOUNT OF WRONG CLAIM OF DEPRECIATION. AS AGAINST ALLOWABLE DEPRECIATION OF RS.1.38 CRORES THE ASSESSEE CLAIMED DEPRECIATION OF RS.1.71 CRORES. DU RING PENALTY PROCEEDINGS, THE ASSESSEE EXPLAINED THAT IT WAS A B ONAFIDE MISTAKE ON THE PART OF THE ASSESSEES CHARTERED ACCOUNTANT IN MAKING THE AFORESAID CLAIM IN THE RETURN OF INCOME. HOWEVER, THE ASSESSI NG OFFICER, REJECTING THE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE ASSE SSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY U/S.271(1)(C) OF THE I.T. ACT. THE CIT(A) CONFIRMED THE LEVY OF PENALTY. ON FURTHER APPEAL, THE TRIBUNAL RELYING ON VARIOUS DECISIONS DELETED THE P ENALTY. WHEN THE REVENUE FILED AN APPEAL BEFORE THE HIGH COURT, THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS UN DER : 3. REGARDING QUESTION B: (I) THE RESPONDENT-ASSESSEE HAD DURING THE ASSESSME NT YEAR SOLD ITS GARMENT MANUFACTURING MACHINE AND CLAIMED A LOSS OF RS.21.68 LAKHS THEREON AS A REVENUE EXPENDITURE IN ITS RETURN OF I NCOME. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE RESPONDENT -ASSESSE E REALISED ITS MISTAKE AND WITHDREW THE ABOVE LOSS SHOWN AS REVENU E EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT AND IN THE CONSEQUENT R ETURN OF INCOME. THE ASSESSING OFFICER ACCEPTED THE ABOVE WITHDRAWAL AND COMPLETED THE ASSESSMENT. HOWEVER, HE IMPOSED PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT. (II) IN APPEAL, THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER. ON FURTHER APPEAL, THE TRIBUNAL BY THE IMPUGNED ORDER RECORDS A FINDING THAT 9 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 IN THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME, THE RESPONDENT-ASSESSEE HAS CLEARLY DESCRIBED THE LOSS AS THE LOSS ON SALE OF ITS GARMENT UNIT ASSETS. THIS LOSS WAS ADDED TO THE NET LOSS IN THE COMPUTATION OF THE TOTAL INCOME. THUS, THERE WAS CO MPLETE DISCLOSURE. THE TRIBUNAL FURTHER RECORDS THAT THE ABOVE LOSS WA S CLAIMED BY THE RESPONDENT-ASSESSEE AS A REVENUE EXPENDITURE AS THE CHARTERED ACCOUNTANT DID NOT ADVICE THEM CORRECTLY AS TO THE LEGAL POSITION. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE MIS TAKE WAS NOTICED AND CORRECTED BY THE RESPONDENT-ASSESSEE. ON THE AB OVE FACTS, THE TRIBUNAL CONCLUDED THE CLAIM FOR DEDUCTION MADE BY THE RESPONDENTASSESSEE WAS ON ACCOUNT OF A BONAFIDE MIS TAKE AND IN SUCH CIRCUMSTANCES, THE LEVYING OF PENALTY WAS NOT JUSTI FIED. (III) THE GRIEVANCE OF THE REVENUE IS THAT PENALTY IS JUSTIFIED IN VIEW OF THE FACT THAT THE RESPONDENT-ASSESSEE HAD NOT FILED A R EVISED RETURN OF INCOME. HOWEVER, THE TRIBUNAL NOTED THAT THE TIME T O FILE REVISED RETURN HAD EXPIRED. IN ANY EVENT, EVEN THE REVENUE DOES NO T DISPUTE THAT IT WAS A BONAFIDE MISTAKE ON THE PART OF THE RESPONDENT-AS SESSEE. IN THE ABOVE VIEW, IMPOSITION OF PENALTY UPON THE RESPONDENT-ASS ESSEE IS NOT WARRANTED. 10.2 WE FIND THE HONBLE SUPREME COURT IN THE CASE RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAS OBSERVED AS UNDER (S HORT NOTES) : A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINAB LE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANN OT AMOUNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT BY ITSELF WOULD NOT, IN OUR OPINION ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CAS E OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTABLE BY AO FOR AN Y REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 10.3 RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND IN VIEW OF OUR REASONS GIVEN IN THE PRECEDING PARAGRAPHS WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PEN ALTY U/S.271(1)(C) OF THE I.T. ACT. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAKDATA PVT. LTD. (SUPRA) IS UNDER DIFFERENT SET OF FACTS A ND IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATT ER, WE SET-ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE ASSESSING OFF ICER TO CANCEL THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. THE GROUND S RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 10 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 9. THE TRIBUNAL IN THE CASE OF N.D.I.M.C. BANK LTD. VS. ACIT (SUPRA) DELETED THE PENALTY WHEREIN A CO-OPERATIVE BANK CLAIMED W RONG DEDUCTION U/S. 36(1)(VIIA) OF THE ACT. THE FINDINGS OF THE TRIBUNAL ARE AS UNDER : 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRE SENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE HAS SUFFERED HUGE LOSSES IN THE IMPUGNED ASSESSMENT YEAR. THE A SSESSEE HAS CLAIMED DEDUCTION U/S. 36(1)(VIIA) IN RETURN OF INC OME. THE EXPLANATION GIVEN BY THE ASSESSEE FOR MAKING WRONG CLAIM IN RES PECT OF ITS RURAL BRANCHES IS, THAT THE ACCOUNTANT WHO HAD PREPARED T HE ACCOUNTS WAS IGNORANT ABOUT THE FACT THAT THE POPULATION OF RURA L AREAS I.E. NIPHAD AND PIMPALGAON BASWANT IS MORE THAN TEN THOUSAND. THER EFORE, THE BRANCHES LOCATED AT ABOVE TWO PLACES DO NOT FALL WI THIN THE AMBIT OF THE TERM RURAL BRANCHES. WE ARE OF THE VIEW, THAT THE EXPLANATION FURNISHED BY THE ASSESSEE SEEMS TO BE FAIRLY JUSTIFIED. THE ASSESSE E IS A COOPERATIVE BANK AND THE EMPLOYEES/ACCOUNTANT WOULD NOT HAVE GA INED BY GIVING FALSE OR INACCURATE PARTICULARS. THE BONAFIDE MIST AKE COMMITTED BY THE ACCOUNTANT AT INITIAL STAGE REMAINED UN-DETECTED EV EN DURING AUDIT DUE TO OVERSIGHT. 6. BE THAT AS IT MAY, THE ASSESSEE HAD CLAIMED WRONG DEDUCTION U/S. 36(1)(VIIA). IT IS NOT THE CASE OF REVENUE TH AT VITAL INFORMATION WAS CONCEALED OR NOT FURNISHED BY THE ASSESSEE. THE AS SESSEE HAD FURNISHED COMPLETE PARTICULARS WITHOUT CAMOUFLAGING ANY TRANS ACTION. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF RELIANCE PETR OPRODUCTS (P) LTD. (SUPRA) HAS HELD; BY ANY STRETCH OF IMAGINATION, M AKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISH INACCURAT E PARTICULARS. THE HON'BLE APEX COURT FURTHER OBSERVED THAT MERELY BECA USE THE ASSESSEE HAD CLAIMED DEDUCTION WHICH HAS NOT BEEN ACCEPTED B Y THE REVENUE, PENALTY U/S. 271(1)(C) CANNOT BE LEVIED. MERE MAKI NG OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. 7. IN THE PRESENT CASE IT IS EVIDENT THAT THE ASSES SEE HAD MADE WRONG CLAIM U/S. 36(1)(VIIA) WITH RESPECT TO TWO RU RAL BRANCHES I.E. NIPHAD AND PIMPALGAON BASWANT, WITHOUT ASCERTAINING WHETHER THE AFORESAID TWO BRANCHES FALL WITHIN THE DEFINITION O F TERM RURAL BRANCHES OR NOT. IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF 11 ITA NOS. 1143 & 1144/PN/2014, A.YS. 2007-08 & 2009-10 INACCURATE PARTICULARS. AT THE MOST IT CAN BE TERM ED AS RECKLESS CLAIM. FOR INVOKING PENAL PROVISIONS FOR FILING INACCURATE PARTICULARS, DELIBERATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE SHOULD BE MADE OUT. IN VIEW OF THE FACTS OF THE CASE AND THE LAW LAID D OWN BY THE HON'BLE SUPREME COURT OF INDIA, WE ARE OF THE CONSI DERED VIEW THAT IT IS NOT A CASE FOR LEVY OF PENALTY U/S. 271(1)(C). ACC ORDINGLY, WE SET ASIDE THE IMPUGNED ORDER AND ALLOW THE APPEAL OF THE ASSE SSEE. 10. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECISIONS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. ACCORDINGLY, THE ORDER OF COMMISSIONER OF INCO ME TAX (APPEALS) CONFIRMING PENALTY IS SET ASIDE AND THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 31 ST DAY OF MARCH, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 31 ST MARCH, 2016 RK *+,$-.'/'(- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A), KOLHAPUR 4. ' / THE CIT-II, KOLHAPUR 5. !*+ %%,- , ,- , . /01 , / DR, ITAT, A BENCH, PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER, %6 ,1 / PRIVATE SECRETARY, ,- , / ITAT, PUNE