Maharashtra Academy of Engg & Educational Research., Pune V. ACIT, CC-1(1), Pune

ITA 2016/PUN/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7390 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-09-2017
• Assessment Year: 1999-2000
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Assessee Lawyers: SUNIL PATHAK
• Section: 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 2016 /P U N/20 1 2 / ASSESSMENT YEAR : 1999 - 20 0 0 MAHARASHTRA ACADEMY OF ENGG & EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AAA AM1206F VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), PUNE . / RESPONDENT . / ITA NO. 966 /P U N/20 15 / ASSESSMENT YEAR : 1999 - 2000 MAHARASHTRA ACADEMY OF ENGG & EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AAAAM1206F VS. THE INCOME TAX OFFICER, WARD 11(1), PUNE . / RESPONDENT 2 ITA NO. 2016 /PUN/20 12 ITA NO. 966 /PUN/20 15 & ORS. . / ITA NO. 2017 /P U N/20 12 / ASSESSMENT YEAR : 2000 - 2001 MAHARASHTRA ACADEMY OF ENGG & EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AAAAM1206F VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), PUNE . / RESPONDENT . / ITA NO. 967 /P U N/20 15 / ASSESSMENT YEAR : 2000 - 2001 MAHARASHTRA ACADEMY OF ENGG & EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AAAAM1206F VS. THE INCOME TAX OFFICER, WARD 11(1), PUNE . / RESPONDENT . / ITA NO. 20 22 /P U N/20 12 / ASSESSMENT YEAR : 2005 - 06 MAHARASHTRA ACADEMY OF ENGG & EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AAAAM1206F VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), PUNE . / RESPONDENT 3 ITA NO. 2016 /PUN/20 12 ITA NO. 966 /PUN/20 15 & ORS. . / ITA NO. 9 72 /P U N/20 15 / ASSESSMENT YEAR : 2005 - 06 MAHARASHTRA ACADEMY OF ENGG & EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AAAAM1206F VS. THE INCOME TAX OFFICER, WARD 11(1), PUNE . / RESPONDENT ASSESSEE BY : S /S HRI SUNIL PATHAK & MAHAVIR JAIN REVENUE BY : M S . NIRUPAMA KOTRU / DATE OF HEARING : 27 .0 9 .2017 / DATE OF PRONOUNCEMENT: 2 9 .0 9 .2017 / ORDER PER SUSHMA CHOWLA, JM: OUT OF T H IS BUNCH OF SIX APPEALS , APPEALS IN ITA NO.966/PUN/2015, 967/PUN/2015 AND 972/PUN/2015 ARE AGAINST SEPARATE ORDER S OF CIT(A) - III , PUNE, DATED 20.03.2015 RELATING TO ASSESSMENT YEAR S 1999 - 2000, 2000 - 01 AND 2005 - 06 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF INCOME TAX ACT 1961 (IN SHORT THE ACT). THE APPEALS IN ITA NOS.2016/PUN/2012, 2017/PUN/2012 AND 2022/PUN/2012 ARE AGAINST THE ORDER OF CIT(A) - III, PUNE DATED 27.08.2012, RELATING TO ASSESSMENT YEARS 1999 - 2000, 2000 - 01 AND 2005 - 06, WHEREIN PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED BY THE CIT(A) ON ENHANCEMENT MADE BY HIM. 4 ITA NO. 2016 /PUN/20 12 ITA NO. 966 /PUN/20 15 & ORS. 2 . TH IS BUNCH OF APPEALS RELATING TO SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. FIRSTLY, WE TAKE UP THE APPEALS OF ASSESSEE RELATING TO ASSESSMENT YEAR 1999 - 2000 I.E. ITA NOS.2016/PUN/2012 AND 966/PUN/2015. 3. THE ASSESSEE IN ITA NO. 2016 /PUN/201 2 RELATING TO ASSESSMENT YEAR 1999 - 2000 H AS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED (LD) CIT(A) ERRED IN LEVYING PENALTY UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT,1961 ( THE ACT), TO THE EXTENT OF RS.3,33,902/ - . 2. THE LD. CIT(A) GROSSLY ERRED IN LEVYING THE AFORESAID PENALTY AS THE CIT(A) HAS BROUGHT NO MATERIAL ON RECORD IN SUPPORT OF THE FACT THAT THE APPELLANT EDUCATIONAL TRUST HAD CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF SUCH IN COME. 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT NO PENALTY COULD BE LEVIED IN RESPECT OF AN ADDITION OR CLAIM OF DEDUCTION, IN THE ABSENCE OF EVIDENCE REGARDING FURNISHING OF INCORRECT, ERRONEOUS OR FALSE DETAILS OF INCOME, NOTWITHSTANDING THE FACT THA T THE AFORESAID CLAIM OF DEDUCTION IS NOT SUSTAINABLE IN LAW. 4. ALL THE AFORESAID GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO ONE ANOTHER. 4. THE ASSESSEE IN ITA NO.966/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) ERRED I N CONFIRMING THE LEVY OF PENALTY U/S. 271(1) (C) OF RS.1,23,21,080/ - . 2. THE ASSESSEE SUBMITS THAT THE REOPENING U/S. 148 IS BAD IN LAW AND ACCORDINGLY, THE REASST. ORDER AND THE PENALTY ORDER PASSED U/S. 271(1)(C) BE DECLARED NULL AND VOID. 3. THE LEA RNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE TRUST HAD VIOLATED THE PROVISIONS OF SECTION 13(1) (C) RESULTING IN DENIAL OF EXEMPTION U/S.11/10(23C)(VI) AND HENCE, THE LEVY OF PENALTY ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S.11/10(23C)(VI) WAS JUSTIFIE D. 4. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EXPLANATION 1 TO SECTION 271(1) (C) WAS ATTRACTED IN THE CASE OF THE ASSESSEE TRUST AND HENCE, THE LEVY OF PENALTY WAS JUSTIFIED ON THE FACTS OF THE CASE. 5. THE LEARNED CIT(A) ERRED IN HOLDING THAT TH E ASSESSEE TRUST HAD CONCEALED ITS INCOME AS WELL AS FURNISHED INACCURATE PARTICULARS OF INCOME BY PROVIDING UNDUE BENEFITS TO THE TRUSTEES AND RELATED PARTIES AND HENCE, THE LEARNED A.O. WAS JUSTIFIED IN LEVYING THE PENALTY ON ACCOUNT OF DISALLOWANCE OF E XEMPTION U/S. 11. 5 ITA NO. 2016 /PUN/20 12 ITA NO. 966 /PUN/20 15 & ORS. 6. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE TRUST HAD NOT PROVIDED ANY BENEFIT TO THE TRUSTEES AND THEIR RELATIVES AND ACCORDINGLY, THERE WAS NO QUESTION OF VIOLATION OF PROVISIONS OF SECTION 13(1)(C) AND HENCE, THE DENI AL OF EXEMPTION U/S. 11 WAS ALSO NOT JUSTIFIED AND THE PENALTY LEVIED MAY ALSO KINDLY BE DELETED. 7. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ISSUE WHETHER THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 13(1) (C) WAS A DEBATABLE ONE AND TWO OPINIONS WERE CLEARLY POSSIBLE AND HENCE, THE QUESTION OF LEVY OF PENALTY ON SUCH DEBATABLE ISSUE SIMPLY DOES NOT ARISE. 8. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE TRUST HAD SUBMITTED ITS EXPLANATION THAT NO BENEFIT WAS PROV IDED TO THE TRUSTEES AND THE LEVY OF PENALTY BY SIMPLY REJECTING THE EXPLANATION FURNISHED WITHOUT PROVING IT TO BE FALSE IS NOT JUSTIFIED AT ALL. 9. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THERE WAS NO CONCRETE EVIDENCE THAT THE ASSESSEE HAD PROVIDED BENEFIT TO THE TRUSTEES AND THE DENIAL OF EXEMPTION U/S 11 ON THIS GROUND WAS BASED ON PRESUMPTIONS AND SURMISES AND HENCE, THE LEVY OF PENALTY ON SUCH BASIS IS INVALID IN LAW. 10. WITHOUT PREJUDICE, THE ASSESSEE SUBMITS THAT ASSUMING WITHOUT ADMITTING THAT IT HAD PROVIDED ANY BENEFIT TO THE TRUSTEES, THE INCOME ONLY TO THE EXTENT OF THE VIOLATION OF SECTION 13(1)(C) CAN BE TAXED AND HENCE, THE LEVY OF PENALTY SHOULD BE RESTRICTED ONLY ON THE AMOUNT OF VIOLATION OF SECTION 13(1)(C) AND NOT ON THE ENTIRE ASSESSED INCOME. 5 . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS EDUCATIONAL TRUST AND HAD CLAIMED EXEMPTION UNDER SECTION 11/10(23C) OF THE ACT FOR DIFFERENT YEARS. THE SAID EXEMPTION CLAIMED BY THE ASSESSEE WAS DENIED TO THE ASSESSEE TRUST AND THE INCOME OF ASSESSEE WAS ASSESSED AS AN AOP, AGAINST WHICH PENALTY PROCEEDINGS WERE INITIATED. 6 . THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER IN DENYING EXEMPTION UNDER SECTION 11/10(23C) OF THE ACT. HE ALSO ENHANCED THE INCOME ON ACCOUNT OF CERTAIN EXPENSES AND INITIATED PENALTY PROCEEDINGS IN RESPECT OF ENHANCED INCOME IN THE ORDER. THE CIT (A) LEVIED PENALTY FOR THE YEARS UNDER APPEAL UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF ENHANCED INCOME VIDE ORDER DATED 27.08.2012. THE ASSESSING OFFICER ALSO LEVIED PENALTY FOR THE RESPECTIVE YEARS ON ACCOUNT OF VARIOUS DISALLOWANCE AND ALSO DENI AL OF EXEMPTION UNDER SECTION 6 ITA NO. 2016 /PUN/20 12 ITA NO. 966 /PUN/20 15 & ORS. 11 OF THE ACT. AGAINST THE ORDER OF ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE CIT(A) CONFIRMED LEVY OF PENALTY AND THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). THE ASSESSEE HAS ALSO FILED APPEAL AGAINST THE ORDER OF CIT(A) LEVYING PENALTY ON ENHANCED INCOME. THE MATTER TRAVELLED TO THE TRIBUNAL AND THE TRIBUNAL DECIDED THE APPEAL RELATING TO ASSESSMENT YEARS 1999 - 2000 TO 2004 - 05 VIDE ORDER DATED 10.02.2017 IN ITA NOS.915 TO 920/PUN/2 012 . 7. IN RESPECT OF ASSESSMENT YEAR 1999 - 2000, THE TRIBUNAL HELD THAT REOPENING UNDER SECTION 148 OF THE ACT WAS BAD IN LAW AND QUASHED RE - ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 1999 - 2000. THE OPERATIVE PARAS ARE IN PARAS 113 AND 114 AT PAGES 69 AN D 70 OF THE SAID ORDER. 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US POINTED OUT THAT SINCE RE - ASSESSMENT PROCEEDINGS HAVE BEEN QUASHED IN THE HANDS OF ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY BY THE ASSESSING OFFICER OR EVE N ON ENHANCEMENT MADE BY THE CIT(A) AND HENCE, BOTH THE APPEALS FILED BY THE ASSESSEE AGAINST RESPECTIVE ORDERS OF CIT(A) MERITS TO BE QUASHED. 9. WE FIND MERIT IN THE PLEA OF ASSESSEE IN THIS REGARD. THE RE - ASSESSMENT PROCEEDINGS INITIATED FOR ASSESSMEN T YEAR 1999 - 2000 HAVE BEEN QUASHED BY THE TRIBUNAL AND CONSEQUENT THERETO, THERE IS NO MERIT IN PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER, WHICH HAS BEEN UPHELD BY THE CIT(A). THERE IS ALSO NO MERIT IN THE ORDER OF CIT(A) LEVYING PENALTY FOR CONCEALMENT ON ENHANCED DISALLOWANCES MADE BY HIM. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER, WHICH IS UPHELD BY THE CIT(A) AND BY THE CIT(A) ON 7 ITA NO. 2016 /PUN/20 12 ITA NO. 966 /PUN/20 15 & ORS. EN HANCED DISALLOWANCE. THE GROUNDS OF APPEAL RAISED ON MERITS THUS, BECOME INFRUCTUOUS AND HENCE, BOTH THE APPEALS OF ASSESSEE ARE THUS, ALLOWED. 10. NOW, COMING TO ASSESSMENT YEAR 2000 - 2001. BRIEF FACTS RELATING TO THE SAID ASSESSMENT YEAR ARE THAT THE ASSESSMENT WAS COMPLETED IN THE SAID CASE AFTER REFERENCE WAS MADE FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT. HOWEVER, THE TRIBUNAL VIDE ORDER DATED 10.02.2017 (SUPRA) ACCEPTED THE PLEA OF ASSESSEE AND HELD THAT THE ASSESSMENT WAS BA RRED BY LIMITATION ON ACCOUNT OF INVALID REFERENCE FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE IN PARAS 116 TO 120 AT PAGES 70 TO 74 OF THE ORDER. ONCE THE ASSESSMENT HAS BEEN HELD TO BE BARRED BY LIMITAT ION, THEN THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE HOLD SO. WE DIRECT THE ASSESSING OFFICER TO DELETE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT WHICH HAS BEEN CONFIRMED BY T HE CIT(A) AND ALSO DIRECT THE DELETION OF PENALTY LEVIED BY THE CIT(A) ON ENHANCED DISALLOWANCES MADE IN THE HANDS OF ASSESSEE. 11. SIMILARLY, IN ASSESSMENT YEAR 2005 - 06, THE ASSESSMENT WAS HELD TO BE TIME BARRED BY LIMITATION ON ACCOUNT OF INVALID REFERE NCE FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT AND THE ASSESSMENT WAS QUASHED. THE RELEVANT FINDINGS OF TRIBUNAL ARE IN ITA NO.921/PUN/2012 IN APPEAL FILED BY THE REVENUE VIDE ORDER DATED 16.05.2017. THE RELEVANT DISCUSSION IS IN PARAS 4 TO 7 AT PAGES 3 TO 7 OF THE ORDER OF TRIBUNAL. ONCE THE ASSESSMENT ORDER IS HELD TO BE BARRED BY LIMITATION, THEN CONSEQUENT PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT DOES NOT SURVIVE. ACCORDINGLY, WE HOLD SO. THE ASSESSING OFFICER IS THUS, DIRECTED TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER, WHICH HAS BEEN UPHELD BY THE CIT(A) AND ALSO THE ORDER OF 8 ITA NO. 2016 /PUN/20 12 ITA NO. 966 /PUN/20 15 & ORS. PENALTY PASSED BY THE CIT(A) IS DIRECTED TO BE CANCELLED, WHEREIN THE CIT(A) HAD LEVIED PENALTY ON THE ENHANCED DIS ALLOWANCES MADE BY HIM. CONSEQUENTLY, BOTH THE APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06 ARE ALLOWED. 1 2 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 2 9 T H DAY OF SEPTEMBER , 201 7 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 2 9 T H SEPTEMBER , 201 7 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - III , PUNE ; 4. THE CIT (CENTRAL), PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE