The Bureaus Unique Co-op Group Housing Society Ltd., Panchkula V. ITO, W-5, Panchkula

ITA 176/CHANDI/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4911 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 15-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH CIT DR
• Keywords: Depreciation; Bonafide belief; Bonafide mistake; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 176/CHD/2019 / ASSESSMENT YEAR : 2011-12 THE BUREAUS UNIQUE CO-OP GROUP HOUSING SOCIETY LTD., GH 80, SECTOR 20, PANCHKULA VS . THE ITO, WARD-5, PANCHKULA ./PAN NO: AAATT9638B / APPELLANT /RESPONDENT ! ' /ASSESSEE BY : SHRI JASPAL SHARMA, ADVOCATE # ! ' / REVENUE BY : SHRI MANJIT SINGH, CIT DR $ % ! & /DATE OF HEARING : 30.10.2019 '()* ! & / DATE OF PRONOUNCEMENT : 30.10.2019 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE, WHICH IS A COOPERATIVE GROUP HOUSING SOCIETY, AGAINST THE ORD ER DATED 22.12.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, LUD HIANA [HEREINAFTER REFERRED TO AS CIT(A)] AGITATING CONFIRMATION OF LEVY OF PENALTY BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE ACT. 2. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE SOCIETY IS REGISTERED WITH THE REGISTRAR OF CO-OPERATIVE SO CIETIES. THE ITA NO. 176/CHD/2019- THE BUREAUS UNIQUE CO-OP GROUP HOUSING SOCIETY LTD, PANCHKULA 2 ASSESSEE WAS ALLOTTED 8500 SQ. METERS OF LAND BY TH E HUDA. THE COST OF THE LAND WAS CONTRIBUTED BY THE 95 MEMBERS OF TH E ASSESSEE SOCIETY. THEREAFTER FIVE STOREY BUILDING WAS CONSTR UCTED AND FLATS WERE ACCORDINGLY ALLOTTED TO THE MEMBERS OF THE SOC IETY. IN THE RETURN OF INCOME FOR ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE SOCIETY CLAIMED DEPRECIATION ON THE BUILDING CONSID ERING ITSELF AS THE OWNER OF THE BUILDING. THE ASSESSING OFFICER, HOWEV ER, REJECTED THE CLAIM OF THE ASSESSEE SOCIETY OBSERVING THAT NEITHE R THE ASSESSEE OWNED THE FLATS NOR IT WAS DOING ANY BUSINESS OR PR OFESSION AND EVEN IT HAD NOT INCURRED ANY CAPITAL EXPENDITURE ON THE SAME. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASSESSE E WAS NOT ENTITLED TO ANY DEPRECIATION ON THE BUILDING AND ACCORDINGLY DISALLOWED THE SAME. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT AND IMPOSED THE IMPUGNED PENA LTY WHICH HAS BEEN DULY CONFIRMED BY THE CIT(A). THE ASSESSEE, TH US, HAS COME IN APPEAL AGITATING THE AFORESAID LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. 3. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE GONE T HROUGH THE RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE SOCIETY UNDER THE BONAFIDE BELIEF AND AS ADVISED BY ITS ACCOUNTANT, CLAIMED DEPRECIATION ON BUILDING. THERE WAS NO INTE NTION ON THE PART ITA NO. 176/CHD/2019- THE BUREAUS UNIQUE CO-OP GROUP HOUSING SOCIETY LTD, PANCHKULA 3 OF THE ASSESSEE SOCIETY TO FURNISH INACCURATE PARTI CULARS OF INCOME OR TO CONCEAL ITS INCOME. EVEN THERE WAS NO ATTEMPT ON THE PART OF THE ASSESSEE TO EVADE TAX. THAT THE ASSESSEE SOCIETY WA S DULY AUDITED BY THE SUB INSPECTOR AUDIT, COOPERATIVE SOCIETIES. THE DEPRECIATION CLAIMED ON THE BUILDING WAS UNDER BONAFIDE BELIEF A ND ON THE ADVISE OF CONSULTANT ACCOUNTANT OF THE ASSESSEE SOCIETY. THAT THE ASSESSEE SOCIETY IS NOT DOING ANY BUSINESS AND THERE IS NO O THER SOURCE OF INCOME EXCEPT THE CONTRIBUTION RECEIVED FROM THE ME MBERS OF THE SOCIETY. THOUGH THE CLAIM OF DEPRECIATION HAS RESUL TED INTO THE CLAIM OF LOSSES BUT THERE ARE WAS NO INTENTION ON THE PAR T OF THE ASSESSEE SOCIETY TO SET OFF THESE LOSSES AGAINST ANY OTHER I NCOME AS THE ASSESSEE SOCIETY IS NOT IN ANY ACTIVITY OF GENERATI ON OF INCOME. THAT SUBSEQUENT TO THE DENIAL OF DEPRECIATION TO THE ASS ESSEE SOCIETY, THE ASSESSEE SOCIETY IN THE SUBSEQUENT YEARS HAS REVISE D ENTRIES RELATING TO THE CLAIM OF DEPRECIATION. EVEN AFTER REVERSING THE ENTRIES IN THE SUBSEQUENT YEARS, THERE IS NO TAXABLE INCOME OF THE ASSESSEE SOCIETY. THAT THE ASSESSEE SOCIETY SHOULD NOT BE PENALIZED F OR ITS BONAFIDE MISTAKE. 4. ON THE OTHER HAND, LD. DR HAS RELIED ON THE FIN DINGS OF THE LOWER AUTHORITIES. 5. AFTER CONSIDERING THE OVERALL FACTS AND CIRCUMS TANCES OF THE CASE AND AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE COUNSEL FOR ITA NO. 176/CHD/2019- THE BUREAUS UNIQUE CO-OP GROUP HOUSING SOCIETY LTD, PANCHKULA 4 ASSESSEE, WE ARE OF THE VIEW, THAT IN THIS CASE THO UGH THE ASSESSEE SOCIETY MISTAKENLY AND, AS SUGGESTED BY ITS CONSULT ANT ACCOUNTANT, MADE A CLAIM OF DEPRECIATION ON BUILDING WHICH, IN OUR VIEW, WAS A BOANFIDE CLAIM. THERE SEEMS NO ATTEMPT ON THE PART OF THE ASSESSEE TO FURNISH INACCURATE PARTICULARS OF INCOME OR TO CONC EAL ITS INCOME OR EVADE PAYMENT OF INCOME TAX. IN VIEW OF THIS, WE DO NOT FIND IT A FIT CASE FOR LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. THE PENALTY LEVIED BY THE LOWER AUTHORITIES IS AC CORDINGLY ORDERED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMM EDIATELY ON COMPLETION OF HEARING. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 30.10.2019 .. (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ( )/ THE CIT(A) 5. -01 2 , & 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7% / GUARD FILE ITA NO. 176/CHD/2019- THE BUREAUS UNIQUE CO-OP GROUP HOUSING SOCIETY LTD, PANCHKULA 5 (+ $ / BY ORDER, 8 # / ASSISTANT REGISTRAR