The Cosmos Co-op. Bank Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 1723/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3209 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-08-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 1723 & 1724/PUN/2016 / ASSESSMENT YEARS : 2007-08 & 2008-09 THE COSMOS COOPERATIVE BANK LTD., COSMOS TOWER, PLOT NO.6, ICS COLONY, UNIVERSITY ROAD, GANESHKHIND, SHIVAJINAGAR, PUNE 411007 PAN : AAAAT0742K ....... / APPELLANT / V/S. DCIT, CIRCLE-7, PUNE / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI A.K. MODI / DATE OF HEARING : 08.08.2018 / DATE OF PRONOUNCEMENT : 14.08.2018 / ORDER PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS FILED BY THE ASSESSEE UNDER CONS IDERATION INVOLVING A.YRS. 2007-08 AND 2008-09. THEY ARE FILED AGAINST THE SEPARATE ORDERS OF CIT(A)-5, PUNE, COMMONLY DATED 31-0 5-2016. PENALTIES LEVIED U/S.271(1)(C) OF THE I.T. ACT IS THE ISSUE IN B OTH THESE APPEALS. WE SHALL FIRST TAKE UP THE APPEAL FOR A.Y. 2007-08. 2 ITA NOS.1723 & 1724/PUN/2016 THE COSMOS COOPERATIVE BANK LTD., ITA NO.1723/PUN/2016 A.Y.2007-08 2. ASSESSEE RAISED THE FOLLOWING GROUNDS AND THE SAME ARE EXTRACTED HERE AS UNDER : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN THE ABSENCE OF CONDITIONS PRECEDENT FOR INITIATION AND LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961, THE IMPUGNED P ENALTY IS BAD IN LAW, PATENTLY ILLEGAL, VOID AB INITIO AND HENCE THE SAME MAY PLEASE BE DELETED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED PENALTY OF RS.8,16,41,860.00 AS LEVIED BY THE LEARN ED ASSESSING OFFICER U/S.271(1)(C) OF THE I.T. ACT, 1961 AND CONFIRMED B Y THE LEARNED CIT(A) BEING ARBITRARY, PERVERSE, BAD IN LAW AND DEVOID OF MERITS THE SAME MAY PLEASE BE VACATED. 3. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEN D, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF AP PEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE INCLUDE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND IS ENGAGED IN THE BUSINESS OF BANKING. ASSESSEE FILED THE RETURN OF INCOME ON 29-10-2007 DECLAR ING LOSS OF RS.111.07 CRORES (ROUNDED OFF). IN THE ASSESSMENT, THE AO DENIED VARIOUS CLAIMS BY THE ASSESSEE AND EVENTUALLY ASSESSED THE INCO ME OF THE ASSESSEE AT RS.53,95,04,919/- AND LEVIED PENALTY OF RS.8,16 ,41,860/-. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) CONFIRMED TH E PENALTY LEVIED BY THE AO. AGGRIEVED WITH THE ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE GROUNDS MENTIONED ABOVE. 4. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE GROUNDS SUBMITTED THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD VALID SATISFACTION AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVYING THE PENALTY. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) O F THE ACT AND RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON 3 ITA NOS.1723 & 1724/PUN/2016 THE COSMOS COOPERATIVE BANK LTD., PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 LD. COUNSEL DEMONSTRATED T HAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALT Y ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 5. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDER S OF AO/CIT(A). 6. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS O F THE REVENUE. ON GOING THROUGH THE FACTS OF THE CASE AND THE ARGUMEN TS OF THE LD. COUNSEL ON THE SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SA TISFACTION BY THE AO, WE FIND THAT THE AO INITIATED THE PENALTY PROCEEDIN GS U/S.271(1)(C) OF THE ACT FOR FOR CONCEALING AND/OR. FOR FILING INACCURATE PARTICULARS OF INCOME WHEREAS IN THE PENALTY ORDER IT WAS MENTIONED AS CONCEALED THE PARTICULARS OF ITS INCOME AND HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271 (1)(C) OF IT ACT, 1961. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY IN THE MIND OF THE AO WITH REFERENCE TO THE APPLICABLE LIMB OF CLAUSE (C). THEREFORE, WE ARE OF THE OPINIO N THAT CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS SUCH PE NALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. AO IS UNDER OBLIGATION TO SPECIF Y THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, W E ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT TH E AO TO DELETE THE 4 ITA NOS.1723 & 1724/PUN/2016 THE COSMOS COOPERATIVE BANK LTD., PENALTY. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY TH E ASSESSEE ARE ALLOWED ON TECHNICAL GROUNDS WITHOUT GOING INTO THE MERITS OF THE ISSU E. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.1724/PUN/2016 A.Y.2008-09 8. REGARDING THE APPEAL FOR A.Y. 2008-19 TOO, LD. COUNSEL FOR THE ASSESSEE AS WELL AS LD. DR FOR THE REVENUE SUBMITTED TH AT THE ARGUMENTS MADE IN APPEAL FOR A.Y. 2007-08 WOULD APPLY TO THIS APPEAL SINCE THE GROUNDS, FACTS, ISSUES AND DECISION OF AO/CIT(A) ARE SAME. 9. AFTER HEARING BOTH THE SIDES, WE FIND THE AO IN THE ASSE SSMENT ORDER DATED 29-12-2010 INITIATED PENALTY PROCEEDINGS MEN TIONING PENALTY PROCEEDINGS ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHEREAS IN THE PENALTY ORDER DATED 28-08-2014, THE AO LEVIED PENALTY MENTIONING I AM SATISFIED THAT ASSESSEE, WIT HOUT SUFFICIENT AND REASONABLE CAUSE, UNDER THE DELIBERATE INTENTION CONCEALED ITS INCOME BY FURNISHING INACCURATE PARTICULARS OF INCO ME . THEREFORE, SIMILAR AMBIGUITY EXISTS IN THIS APPEAL TOO WITH REFERENCE TO THE APPLICABLE LIMB OF CLAUSE (C). THE REASONING GIVEN BY US IN PARA NO.7 ABOVE WHILE DEALING WITH APPEAL FOR A.Y. 2007-08 WOULD APPLY TO THIS ASSESSMENT YEAR ALSO. ACCORDINGLY, WE ARE OF THE OPINION THAT THE APPEAL OF THE ASSESSEE SHOULD BE ALLOWED ON TECHNICAL GROUNDS WIT HOUT GOING INTO THE MERITS OF THE ADDITIONS. THUS, THE GROUNDS RAISE D BY THE ASSESSEE ARE ALLOWED. 5 ITA NOS.1723 & 1724/PUN/2016 THE COSMOS COOPERATIVE BANK LTD., 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 14 TH DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 14 TH AUGUST, 2018. SATISH # # # # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-5, PUNE. 4. THE PR. CIT-4, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. ' / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.