The DCIT, Circle-10, Ahmedabad V. Gujarat State Co.Op.Hsg.Finance Corporation Ltd., Ahmedabad

ITA 1571/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9752 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-08-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 07-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRITESH L SHAH
• Keywords: Wrong claim
• Section: 271(1)(c); 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1571/AHD/2008 ASSESSMENT YEAR:2004-05 DATE OF HEARING:18.8.10 DRAFTED:19.8.10 DY. COMMISSIONER OF INCOME-TAX, CIRCLE-10, AHMEDABAD V/S . GUJARAT STATE CO- OPERATIVE HOUSING FINANCE CORPORATION LTD., GRUH NIRMAN, ASHRAM ROAD, AHMEDABAD, PAN NO.AAAAT3851F (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI ANIL KUMAR, DR RESPONDENT BY:- SHRI PRITESH L SHAH, AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY REVENUE IS ARISING OUT THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS)-XVI, AHMEDABAD IN APPEAL NO. CIT(A)-X VI /AC .CIR.10/ 023/07-08 DATED 14-03-2008. THE ASSESSMENT WAS FRAMED BY DCIT , CIRCLE-10, AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30-10-2006 FOR ASSESSMENT YEAR 2004-05. THE PENALTY UNDER DISPUTE WAS LEVIED BY ACIT, CIRCLE-10, AHMEDABAD U/S. 271(1 )(C) OF THE ACT VIDE HIS ORDER DATED 30-04-2007. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE PENALTY LEVIED BY ASSESSING OFFICER U/ S 271(1)(C) OF THE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND NO.1 :- (1) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE PENALTY LEVIED DU/S.271(1)(C) OF THE ACT AMOUNTING TO RS.9, 87,92,977/-. ITA NO.1571/AHD/2008 A.Y. 2004-05 DCIT, CIR-10, ABD V. GUJARAT STATE CO.OP HSG.FINA NCE CORPN. LTD. PAGE 2 3. THE BRIEF FACTS ARE THAT THE ASSESSEE IS A STATE LEVEL CO-OPERATIVE HOUSING FINANCE CORPORATION AND CARRYING ON THE BUSINESS OF HOUSING FINANCE TO MEMBERS OF THE SOCIETY OUT OF LOAN RECEIVED FROM LIC/HUDCO ETC . THE MAIN OBJECT OF THE CORPORATION IS TO HELP THE NEEDY AND LOW INCOME TO BUILD THEIR HOUSES AND SET UP THIS ORGANIZATION FOR UPLIFTMENT OF LOW INCOME GROU P PEOPLE ON NO PROFIT NO LOSS BASIS. THE RETURN OF INCOME DECLARING LOSS AT RS.4 ,33,94,650/- WAS FILED BY THE ASSESSEE-CORPORATION ON 21-10-2004. ASSESSING OFFIC ER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT INTEREST PAYABL E HAS INCREASED FROM RS.2,43,99,88,694/- TO RS.2,83,43,83,440/-. THE AO FURTHER NOTED THAT THE ASSESSEE BORROWED FUND FROM LIC/HUDCO ETC. AND ACCORDINGLY T HE INTEREST PAYMENT IS TO BE DEALT WITH IN ACCORDANCE WITH THE PROVISION U/S.43B ON ACCOUNT OF INTEREST PAYMENT AND THE WORKING WAS PROVIDED AS UNDER:- ON LIC 353511068 ON HUDCO LOANS 39686529 ON FIXED DEPOSITS 155819 393353416 SUBSEQUENTLY, THE ASSESSING OFFICER ALLOWED DEDUCTI ON U/S.80P OF THE ACT, AS THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER THIS PROVIS ION OF ITS INCOME FROM FINANCING OTHER SOCIETIES AND ACCORDINGLY THE AO COMPUTED THE INCOME AS UNDER:- LOSS FROM BANKING ACTIVITY AS PER RETURN (-) RS . 4,33,94,647/- ADD: DISALLOWANCE U/S.43B AS DISCUSSED ABOVE RS.27 ,53,92,760/- GROS S TOTAL INCOME RS.3,19,98,110/- LESS: DEDUCTION U/S.80P(A)(I) RS.23,19, 98,110/- TOTAL NIL THIS DISALLOWANCE U/S.43B OF INTEREST PAYMENTS AMOU NTING TO RS.27,53,92,760/- WAS ACCEPTED BY THE ASSESSEE. NO FURTHER APPEAL WAS FIL ED ON QUANTUM AND ASSESSING OFFICER STARTED THE PENALTY PROCEEDINGS AND ISSUED NOTICE TO THE ASSESSEE. AFTER DISCUSSING THE FACTS, THE AO LEVIED THE PENALTY BY STATING THAT SUCH MISTAKE CANNOT BE IGNORED AND THE RELEVANT FINDINGS OF THE AO FOR LEVYING THE PENALTY, READS AS UNDER:- WHEN THE ASSESSEE HAS BEEN AVAILING FACILITIES OF SKILLED PERSONS, THEN SUCH MISTAKES CANNOT BE IGNORED. EVEN ON MERIT ALSO, WHE N THE ASSESSEE HAD PAID RS.5,06,83,907 ONLY DURING THE YEAR UNDER CONSIDERA TION, THEN HOW THE ASSESSEE COULD DEBIT RS.39,33,53,416 AS INTEREST PA ID & PAYABLE. IT IS SIMPLY A CASE OF FURNISHING INACCURATE PARTICULARS OF INCO ME. THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN THE R ETURN OF INCOME. EVEN IT HAS ITA NO.1571/AHD/2008 A.Y. 2004-05 DCIT, CIR-10, ABD V. GUJARAT STATE CO.OP HSG.FINA NCE CORPN. LTD. PAGE 3 FAILED TO EXPLAIN SATISFACTORILY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS TO WHY INACCURATE PARTICULARS HAD BEEN FURNISHED. T HE ASSESSEE HAS BEEN GIVEN THREE OPPORTUNITIES OF BEING HEARD BUT IT HAS NOT TURNED UP. NOW ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, I HAVE NO ALTERNATIVE OTHER THAN TO IMPOSE A PENALTY U/S.271(1) OF THE I.T. ACT. IN VI EW OF ABOVE FACTS AND IN THE CIRCUMSTANCES, I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.27,53,92, 760. THEREFORE, I LEVY A PENALTY OF RS.9,87,92,877/- BEING 100% OF TAX SOUGH TO BE EVADED. 4. AGGRIEVED, AGAINST THE LEVY OF PENALTY BY THE AS SESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) DELETED THE PENALTY ON THE BASIS THAT EVEN IN EARLIER YEARS, THE ASSESSEE HAS FILED RETUR NS CLAIMING THE SAME INTEREST AND THE SAME WAS ALLOWED BY THE AO. HE ALSO NOTED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80P OF THE ACT AND ACCORDING WAS UNDE R BONA FIDE BELIEF THAT EVEN IF THE GROSS INCOME IS DETERMINED, THE SAME IS DEDUCTI BLE U/S.80P OF THE ACT AND ACCORDINGLY NO TAX LIABILITY WILL ARISE. HE ALSO NO TED THAT ASSESSEE GOT HIS ACCOUNT AUDITED AND ALL THE AUDITED ACCOUNTS INCLUDING THE NECESSARY DETAILS REGARDING THE SAID LOANS AS PER SCHEDULE-15 AND SCHEDULE-5 OF SCH EDULE-2 OF THE ACCOUNTS WERE FILED BUT THE AO HAS NOT FOUND THE SAME TO BE INACC URATE. ACCORDING TO CIT(A), THE MERE DISALLOWANCE U/S.43B WILL NOT ATTRACT PENALTY. ACCORDINGLY, HE DELETED THE PENALTY. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE U S. 5. BEFORE US LD.CIT-DR, SHRI ANIL KUMAR ARGUED THAT THE ASSESSEE HAS MADE A WRONG CLAIM WHICH IS PRIMA FACIE DISALLOWABLE U/S.4 3B OF THE ACT. HE FURTHER STATED THAT THE INTEREST PAID AND PAYABLE IS ON THE FOLLOW ING:- WORKING U/S.43B OF THE ACT PARTICULARS AMOUNT (RS) AS PER REPORT 393353416 LESS: PAID DURING THE YEAR 50683907 NET INCOME 342669509 LESS: DISALLOWABLE AS PER RETURN 67276749 NET DISALLOWABLE U/S.43B 275392760 ACCORDING TO HIM, OUT OF THIS, A SUM OF RS.5,06,83, 907/- WAS ACTUALLY PAID AND THE ASSESSING OFFICER AFTER ALLOWING FURTHER CLAIM OF R S.6,72,76,749/- DISALLOWED THE SUM OF RS.27,53,92,760/-. HE STATED THAT THE ASSESSEE W AS HAVING THE FACILITIES OF HIGHLY ITA NO.1571/AHD/2008 A.Y. 2004-05 DCIT, CIR-10, ABD V. GUJARAT STATE CO.OP HSG.FINA NCE CORPN. LTD. PAGE 4 QUALIFIED CHARTERED ACCOUNTANT AND THIS IS WITHIN T HE KNOWLEDGE OF THE ASSESSEE THAT THIS INTEREST PAYMENT IS TO BE DISALLOWED. HE STATE D THAT AO HAS RIGHTLY RELIED ON HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. VIDYAGAURI NATVERLAL & ORS. (1999) 238 ITR 91 (GUJ) AND HE JUST MADE MENTIONED OF THE CASE LAWS RELATED BY THE AO IN THE PENALTY ORDER:- 1. KANTILAL MANILAL V. CIT (1981) 130 ITR 41212 (GUJ) 2. CIT V. SULEMAN ABDUL (1983) 139 ITR 8 (GUJ) 3. CIT V. NAMLABHAI BHANABAHAI (1987) 1\63 ITR 189 (GUJ) 4. CIT V. SMT. VILASBEN HASMUKHLAL SHAH (1991) 192 ITR 214 (GUJ) 5. CIT V. ABDULGAFUR AHMED WAGMAR (1993) 199 ITR 82 7(GUJ) 6. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE S TATED THAT ASSESSEE IS A SOCIETY IS A PUBLIC INSTITUTION OF GOVERNMENT OF GU JARAT AND UNDER THE ACT OF CENTRAL GOVERNMENT. HE STATED THAT THE CLAIM OF INTEREST PA ID AND PAYABLE IS DISALLOWED BY ASSESSING OFFICER AMOUNTING TO RS.27,53,92,760/-, W HICH IS MERELY ON DISALLOWANCE AND THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF INCOME. HE STATED THAT, FURTHERMORE, IT CAN BE EASILY INFERRED FROM THE COM PUTATION OF INCOME THAT AO HIMSELF HAS ALLOWED THE DEDUCTION U/S.80P AND THE TOTAL INC OME AFTER DEDUCTION REMAINS NIL. IN VIEW OF THESE ARGUMENTS HE STATED THAT THERE IS NO CONCEALMENT OF INCOME AND PENALTY LEVIED BY AO HAS RIGHTLY BEEN DELETED BY CI T(A). HE FURTHER MADE ARGUMENT THAT IN EARLIER YEARS, THE SIMILAR DEDUCTION HAS BE EN ALLOWED BY AO AND NOW DEPARTMENT IS TAKING U TURN. IN VIEW OF THESE ARG UMENTS, HE URGED THE BENCH TO CONFIRM THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE RECORDS THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF LOAN TAKEN FROM LIC, HUDCO ETC. TO WHOM INTEREST WAS PAID OR PAYABLE AND THE TOTAL INTEREST LIABILITY WAS ACCOUN TED ON ACCRUAL/MERCANTILE NOT ON CASH BASIS. THE ASSESSEE HAS FILED COMPLETE DETAILS WITH THE RETURN OF INCOME ALONG WITH AUDITED ACCOUNTS OF THE ASSESSEE. THE ASSESSEE -CORPORATION IS A GOVERNMENT BODY REGISTERED UNDER STATE CO-OPERATIVE FINANCE SO CIETY AND THE MEMBERS OF THE CORPORATION ARE OTHER CO-OPERATIVE SOCIETIES AND TH E INCOME OF THE ASSESSEE- CORPORATION IS EXEMPT U/S.80P(2)(A)(I) OF THE ACT. EVEN OTHERWISE, THE INTEREST DISALLOWANCE MADE BY ASSESSING OFFICER DURING THE C OURSE OF ASSESSMENT PROCEEDINGS U/S.43B IS MERELY A DISALLOWANCE AND IS NEITHER FURNISHING OF INACCURATE ITA NO.1571/AHD/2008 A.Y. 2004-05 DCIT, CIR-10, ABD V. GUJARAT STATE CO.OP HSG.FINA NCE CORPN. LTD. PAGE 5 PARTICULARS OF INCOME OR THE CASE OF CONCEALMENT OF INCOME. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE ASSESSEE RELIED ON THE CASE LAW OF HONBLE APEX COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 174 (SC), WHEREIN THE HONBLE APEX COURT HAS HELD :- WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A M ATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTERS DICTIONARY, THE WORD INACCURATE HAS BEEN DEFINED AS: NOT ACCURATE, NOT EXACT OR CORRECT ; NOT ACCORDING TO TRUTH ERRONEOUS AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTI CULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCUR ATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH N OT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABL E IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. AS THE POSITION HAS CLEARLY BEEN EXPLAINED BY HONB LE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), MERE DISALLOWANCE OF EXPENSES WILL NOT CONSTITUTE FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHICH INVITES PENALTY U/S.271(1) OF THE ACT. AS THE ASSESSEE HAS FILED C OMPLETE DETAILS ALONG WITH THE RETURN REGARDING THE CLAIM OF INTEREST EXPENSES AND ON MERE DISALLOWANCE OF EXPENSES, THE ISSUE IS SQUARELY COVERED BY THE DECI SION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA). ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) DELETING PENALTY. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17/09/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 17/09/2010 *DKP ITA NO.1571/AHD/2008 A.Y. 2004-05 DCIT, CIR-10, ABD V. GUJARAT STATE CO.OP HSG.FINA NCE CORPN. LTD. PAGE 6 COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XVI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD