The Nampur Brihat Vividh Karyakari Sahakari Society Ltd., Nashik V. Income-tax Officer,

ITA 1533/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9120 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1533 /P U N/201 5 / ASSESSMENT YEAR : 20 1 0 - 1 1 THE NAMPUR BRIHAT VIVIDH KARYAKARI SAHAKARI SOCIETY LTD., NAMPUR, TAL SATANA, DIST NASHIK 424305 . / APPELLANT PAN: AAAAN1471F VS. THE INCOME TAX OFFICER, WARD 3(4), MALEGAON . / RESPONDENT / APPELLANT BY : S MT. DEEPA KHARE / RESPONDENT BY : SHRI AJAY MODI / DATE OF HEARING : 27 .0 7 . 2017 / DATE OF PRONOUNCEMENT: 31 . 0 7 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 01.09.2015 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (I N SHORT THE ACT) . ITA NO. 1533 /P U N/20 1 5 THE NAMPUR BRIHAT VIVIDH KARYAKARI SAH SOCIETY LTD. 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT OF RS.4,45,863/ - BY DISALLOWING DEDUCTION U/S 80P IN RESPECT OF INCO ME OF RS. 15,32,930/ - ESTIMATED TO BE THE INCOME EARNED FROM NON - MEMBERS. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE CLAIM OF DEDUCTION U/S 80P WAS A LEGAL CLAIM AND ALL THE PRIMARY FACTS WERE DISCLOSED BY THE APPELLANT. THE VIEW OF THE LEARNED AO ABOUT THE NON - ADMISSIBILITY OF THE CLAIM DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME ON THE PART OF THE APPELLANT. 3. THE LEARNED CIT(A)ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE LEARNED AO HAS ADO PTED A DIFFERENT VIEW FOR THE RELEVANT YEAR THAN THE VIEW THAT IS ADOPTED FOR EARLIER YEARS. THE RESULTANT ADDITION TO INCOME ARISES PURELY FROM THE DIFFERENCE OF OPINION AS TO THE COMPUTATION OF INCOME WHICH DOES NOT LEAD TO ANY CONCLUSION AS TO FURNISHI NG OF INACCURATE PARTICULARS OF INCOME OR CONCEALING THE PARTICULARS OF INCOME. 3. THE ONLY ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS AN A OP AND HAD FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,91,820/ - . THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80P OF THE ACT IN RESPECT OF SALE FOR MEMBERS AND NON - MEMBERS. THE ASSESSING OFFICER RE - COMPUTED THE DEDUCTION UNDER SECTION 8 0P(2)(A)(I) OF THE ACT AND THE INCOME OF ASSESSEE WAS COMPUTED AT RS.16,24,744/ - . WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER RECORDED SATISFACTION OF THE ASSESSEE HAVING FURNISHING INACCURATE PARTICULARS AND HENCE, PENALTY PROCEEDINGS UNDER SE CTION 271(1)(C) OF THE ACT WERE INITIATED. WHILE PASSING THE ORDER UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER NOTED THAT THE DEDUCTION UNDER SECTION 80P OF THE ACT WAS AVAILABLE TO CO - OPERATIVE SOCIETIES CARRYING ON THE BUSINESS ACTIVITY FO R ITS MEMBERS ONLY. IT WAS FURTHER NOTED BY THE ASSESSING OFFICER THAT THE INCOME EARNED BY CO - OPERATIVE SOCIETY FROM THE BUSINESS ACTIVITIES WITH NON - MEMBERS WAS NOT EXEMPTED UNDER SECTION 80P OF THE ACT. SUM OF ITA NO. 1533 /P U N/20 1 5 THE NAMPUR BRIHAT VIVIDH KARYAKARI SAH SOCIETY LTD. 3 RS.15,32,930/ - WAS CONSIDERED AS INCOME O F THE ASSESSEE DERIVED FROM THE BUSINESS ACTIVITY WITH NON - MEMBERS. THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CLAIMED WRONG DEDUCTION UNDER SECTION 80P OF THE ACT AND HE FURTHER OBSERVED AS UNDER: - 6.1 IT FURNISHED INACCURATE PARTICULARS OF INC OME BY SHOWING THE INCOME DERIVED FROM THE BUSINESS ACTIVITIES WITH THE NON - MEMBERS OF RS.15,32,930/ - AS EXEMPT INCOME U/S 80P. THUS, THERE IS CONCEALMENT OF TAXABLE INCOME OF RS.15,32,930/ - . 5. WHILE CONCLUDING VIDE PARA 6.3 AT PAGE 5 OF THE PENALTY O RDER, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE DELIBERATELY CONCEALED THE TAXABLE INCOME TO THE TUNE OF RS.15,32,930/ - . HENCE, I AM SATISFIED THAT IT IS A FIT CASE TO LEVY PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR CONCEALING THE INCOME AND FURNISHING THE INACCURATE PARTICULARS. THE ASSESSING OFFICER LEVIED PENALTY OF RS.4,45,863/ - . 6. THE CIT(A) VIDE PARA 5.21 HELD THE ASSESSEE TO HAVE CLAIMED EXCESS DEDUCTION UNDER SECTION 80P OF THE ACT ON ACCOUNT OF INCOME OF NON - MEMBERS AND ALSO HE LD THE ASSESSEE TO HAVE CONCEALED HIS INCOME TO THE TUNE OF RS.15,32,930/ - . THE CIT(A) VIDE PARA 5.25 CONCLUDES THE ASSESSEE TO HAVE CLAIMED EXCESS DEDUCTION WHICH LED TO REDUCTION OF TAXABLE INCOME. HE FURTHER HELD THAT THIS TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS LEADING TO CONCEALMENT OF INCOME. HENCE, THE ACTION OF ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS UPHELD. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS AGAINST THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHERE THE ASSESSING OFFICER HAS HELD THE ASSESSEE TO HAVE CONCEALED ITS INCOME AND ITA NO. 1533 /P U N/20 1 5 THE NAMPUR BRIHAT VIVIDH KARYAKARI SAH SOCIETY LTD. 4 ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEALS NOS.953 OF 2014, 1097 OF 2014 AND 1 226 OF 2014, JUDGMENT DATED 05.01.2017. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A) AND POINTED OUT THAT IN THE FACTS OF THE CASE BEFORE THE HONBLE BOMBAY HIGH COURT, INITIATION WAS ON ONE LIMB WHILE THE IMPOSITION OF PENALTY WAS ON THE OTHER LIMB AND HENCE, THE PENALTY WAS CANCELLED. HOWEVER, IN THE FACTS OF THE PRESENT CASE, INITIATION WAS ON ONE LIMB AND THE PENALTY HAS BEEN LEVIED UNDER SECTION 271(1)(C) OF THE ACT BY THE ASSESS ING OFFICER ON BOTH THE LIMBS. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND HAD CLAIMED DEDUCTION UNDER SECTION 80P OF THE ACT ON ACCOUNT OF ITS INCOME FROM BOTH THE MEMBERS AND NON - MEMBERS. THE ASSESSING OFFICER HELD THE ASSESSEE NOT ELIGIBLE TO CLAIM THE DEDUCTION UNDER SECTION 80P OF THE ACT ON THE PROFITS MADE WITH NON - MEMBERS. IN VIEW THEREOF, THE ASSESSING OFFICER RECORDED SATISFACTION FOR INITIATING THE PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C) OF THE ACT AGAINST THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HOWEVER, WHEN THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS PASSED, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CONCEALED ITS INCOME AND HE NCE, FURNISHED INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, PENALTY HAS BEEN LEVIED UPON THE ASSESSEE ON ACCOUNT OF SATISFACTION ON BOTH THE LIMBS OF ITA NO. 1533 /P U N/20 1 5 THE NAMPUR BRIHAT VIVIDH KARYAKARI SAH SOCIETY LTD. 5 SECTION 271(1)(C) OF THE ACT. THE CIT(A) HAS FURTHER UPHELD THE ORDER OF ASSESSING OFFICER ON BOTH THESE LIMBS. 11. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THERE IS A THIN LINE OF DISTINCTION BETWEEN TWO LIMBS TALKED OF IN SECTION 271(1)(C) OF THE ACT; HOWEVER , DISTINCTION IS THERE. IN OTHER WORDS, WHILE LEVYING PENALTY FOR CONCEALMENT, THE ASSESSING OFFICER HAS TO RECORD SATISFACTION AND THEREAFTER, COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT. IN OTHER WORDS, WHERE ONE AD DITION IS MADE IN THE HANDS OF ASSESSEE, THEN THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT HAS TO RECORD SATISFACTION AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. 12. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT HAD RECORDED SATISFACTION FOR INITIATING PENALTY PROCEEDINGS ON THE GROUND THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVER, WHILE LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CONCEALED ITS INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. THE ORDER PASSED BY THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY SINCE THE ASSESSING OFFICER HAS NOT COME TO A CLEAR FINDING AS TO WHETHER BY CLAIMING EXCESS CLAIM UNDER SECTION 80P OF THE ACT, WHETHER THE ASSESSEE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WHERE THE ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE, THE DUTY IS CAST UPON THE ASSESSING OFFICER TO INITIATE PENALTY PROCEEDINGS EITHER IN RESPECT OF CONCEALMENT OF INCOME OR ITA NO. 1533 /P U N/20 1 5 THE NAMPUR BRIHAT VIVIDH KARYAKARI SAH SOCIETY LTD. 6 FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER IN THE PRESENT SET OF FACTS HAS CORRECTLY RECORDED THE SAME. HOWEVER, WHILE PASSING THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ORDER SUFFERS FROM INFIRMITIES, WHEREIN AGAINST THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECT ION 80P OF THE ACT, THE ASSESSEE HAS BEEN HELD TO HAVE CONCEALED ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. 13. THE PUNE BENCH OF TRIBUNAL IN VARIOUS CASES INCLUDING IN KANHAIYALAL D. JAIN VS. ACIT IN ITA NOS.1201 TO 1205/PN/2014, RELATI NG TO ASSESSMENT YEARS 2003 - 04 TO 2007 - 08, ORDER DATED 30.11.2016 HAS DELETED THE PENALTY ON SIMILAR ISSUE OF NON - RECORDING OF SATISFACTION AND CONSEQUENTLY PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT WAS HELD TO BE NOT VALID. THE TRIBUNAL IN SIMILAR CIRCUMSTANCES, HAS DELETED PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT VIDE PARAS 13 TO 27 OF THE ORDER. FOR THE SAKE OF BREVITY, THE SAME ARE BEING REFERRED TO BUT ARE NOT BEING REPRODUCED. 14. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SH RI SAMSON PERINCHERY (SUPRA) HELD THAT WHERE INITIATION OF PENALTY IS ON ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 1 5 . APPLYING THE SAID RATIO TO THE FACTS OF PRESENT CASE, WE HOLD THAT WHERE THE ASSESSING OFFICER HAS FAILED TO GIVE A FINDING THAT AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND HAD LEVIED PENALTY ON BOTH THE COUNTS, WHICH HAS BEEN CONFIRMED BY THE CIT(A) ON BOTH THE COUNTS . T HE ORDER PASSED BY THE ASSESSING OFFICER SUFFERS FROM INFIRMITIES FOR NOT CONCLUDING AS TO WHICH LIMB OF SECTION 271(1)(C) ITA NO. 1533 /P U N/20 1 5 THE NAMPUR BRIHAT VIVIDH KARYAKARI SAH SOCIETY LTD. 7 OF THE ACT HAS NOT BEEN SATISFIED BY THE ASSESSEE. ACCORDINGLY, WE HOLD SO. IN S UCH CIRCUMSTANCES, WE DIRECT THE ASSESSING OFFICER TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AT RS.4,45,863/ - . THE ISSUE IS DECIDED ON BASIC JURISDICTIONAL ISSUE AND THE ISSUE ON MERITS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BECOMES ACADEMIC IN NATURE. 1 6 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF JU LY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOW LA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST JU LY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELL ANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 , NASHIK ; 4. / THE PR. CIT - 1 , NASHIK ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE