Agricultural Produce Market Committee, Jalgaon V. Income-tax Officer,

ITA 2019/PUN/2013

• Counselvise Citation: 201924514 RSA 2013
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: N O N E
• Keywords: Charitable institution; Reasonable cause; Difference of opinion; Benefit of exemption
• Section: 143(3); 12AA; 148; 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 2019 & 2025/PN/2013 ASSESSMENT YEAR S : 200 7 - 08 & 2008 - 09 AGRICULTURAL PRODUCE MARKET COMMITTEE, JALGAON ROAD, JAMNER, DISTT.-JALGAON VS. INCOME TAX OFFICER, WARD 2(3), JALGAON (APPELLANT) (RESPONDENT) PAN NO. AAALA0828L APPELLANT BY: N O N E RESPONDENT BY: SHRI B.C. MALAKAR DATE OF HEARING : 14-10-2014 DA TE OF PRONOUNCEMENT : 21-10-2014 ORDER PER R.S. PADVEKAR, JM:- THESE TWO APPEALS ARE FILED BY THE ASSESSEE WHICH IS AGRIC ULTURAL PRODUCE MARKET COMMITTEE (APMC), CHALLENGING THE IMPUGNED ORDERS OF THE LD. CIT(A)-II, NASHIK DATED 24-09-2013 AND 11-10-20 13 FOR THE A.YS. 2007-08 AND 2008-09 RESPECTIVELY. THE ASSESSEE HAS T AKEN THE FOLLOWING GROUNDS OF APPEAL WHICH ARE COMMON IN BOTH THE APPEALS : 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LEARNE D CIT(A) ERRED IN SUSTAINING THE PENALTY LEVIED BY THE AO [ITO WARD 2(3), JALGAON] U/S. 271(1)(C) FOR CONCEALMENT OF INCOME WITHOUT APPREC IATING THE EXPLANATIONS AND SUBMISSIONS OF THE ASSESSEE. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LEARNE D CIT(A) ERRED IN SUSTAINING THE PENALTY LEVIED BY THE AO U/S. 271(1 )(C) WITHOUT APPRECIATING THE REASONABLE CAUSES FOR LATE FILING OF RETURN OF INCOME AS EXPLAINED & SUBSTANTIATED BY THE ASSESSEE. 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDE R. THE ASSESSEE IS AGRICULTURAL PRODUCE MARKET COMMITTEE CONSTIT UTED UNDER THE AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1963. IN BOTH THESE ASSESSMENT YEARS, THE ASSESSEE DID NOT FILE THE R ETURNS OF INCOME AS PER THE PROVISIONS OF SEC. 139 AND THE ASSESSEE WAS ISSUED THE NOTICES 2 ITA NOS. 2019 & 2025/PN/2013, AGRICULTURAL PRODUCE MARKET COMMITTEE, JALGAON U/S. 148 OF THE ACT DATED 22-03-2011 AND ASSESSMENTS OF THE ASSESSEE WERE COMPLETED DETERMINING TOTAL INCOME OF RS.69,54,440/- AN D RS.17,12,370/- FOR THE A.YS. 2007-08 AND 2008-09 RESPECTIV ELY. AS PER THE FACTS ON RECORD, DURING THE A.Y. 2002-03 THE ASSESSE ES INCOME WAS EXEMPTED U/S. 10(20) OF THE ACT BUT THERE WAS AN AMENDM ENT BY THE FINANCE ACT, 2003 AND AS PER THE AMENDED PROVISIONS THE DEFINITION OF THE LOCAL AUTHORITY WAS CHANGED. THE ASSESSING OFFICER INIT IATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT ON THE CHARGE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. THE AS SESSING OFFICER WAS OF THE OPINION THAT THE TAXABILITY OF THE APMC HAS BE EN SETTLED BY THE HON'BLE SUPREME COURT IN THE CASE OF APMC, NARELA VS . CIT 305 ITR 1 AND HENCE, THE ASSESSEE WAS DUTY BOUND TO FILE THE RE TURNS OF INCOME U/S. 139 OF THE ACT AND THE ASSESSEE WAS NOT ENTITLED FO R CLAIMING THE BENEFIT OF EXEMPTION U/S. 10(20) OF THE ACT. BEFORE THE ASSE SSING OFFICER THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS: 4. IN THE FIRST TWO PAGES, THE ASSESSEE HAS SUBMITTE D THE MAIN OBJECTS OF A MARKET COMMITTEE, CONSTITUTION, OBJECTIVES . AFTER CONSIDERING THIS BACKGROUND, THE ASSESSEE HAS SUBMITTED AS UNDER:- THAT THE CONCERNED SECTION WAS AMENDED BY F.A. 2002. E VEN AFTER THE SAID AMENDMENT THERE WAS DIFFERENCE OF OP INION. THE INTERPRETATION OF SEC. 10(20) WAS ULTIMATELY DECIDED B Y SUPREME COURT IN AUG. 2008 AGAINST THE APMC. IT WAS BELIEVED THAT PROVISIONS OF TAX AUDIT ARE NOT APPLICABLE TO THE A SSESSEE. FURTHER GOVT. AUDIT FOR PERIOD ENDING 30.9.07 AND 31.3.08 WAS COMPLET ED ON 14.7.09. MEANWHILE SEVERAL REPRESENTATIONS WERE MADE TO THE GOVT. TO INCLUDE THE NAME OF MARKETING BOARD U/S 10(20). THE APPLICATION FOR REGISTRATION U/S 12AA WAS REJECTED BY CIT ON TH E BASIS OF AMENDED DEFINITION OF CHARITABLE PURPOSE. THE ASSESSMEN T FOR A.Y. 2008-09 WAS COMPLETED U/S 143(3) R.W.S. 148 THE TAXES DUE WITH IN WERE PAID OFF UNDER PROTEST IMMEDIATELY ON RECEIPT OF DEMAND NOTICE. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE A SSESSEE WERE STATED TO BE PREVENTED BY REASONABLE CAUSE TO FILE THE RETURN OF INCOME WITHIN STATUTORY LIMITS. TO SUMMARIZE, TIMELY COMP LIANCE OF SUBMISSION OF RETURNS OF INCOME, PAYMENT OF TAX WAS LACKING FROM OUR END IN VIEW OF THE FOLLOWING CIRCUMSTANCES. A. UPTO A.Y 2002-03 ALL APMCS WERE ENJOYING EXEMPTION FROM TAX U/S 10(20). CONSEQUENTLY WE NEITHER UNDERGONE TAX AUDIT NOR FILED ANY RETURN OF INCOME UPTO A.Y. 2002-03. 3 ITA NOS. 2019 & 2025/PN/2013, AGRICULTURAL PRODUCE MARKET COMMITTEE, JALGAON B. WE WERE GOVERNED GUIDED AND CONTROLLED BY STATE AG RI. MARKETING BOARD, PUNE WHICH NEVER GUIDED US ON THE P ROPER LINES IN TAXATION MATTERS AND KEPT US UNDER IMPRESSION THAT W E ARE TAX EXEMPT ENTITY. C. ACCORDINGLY WE HAD NOT APPOINTED ANY TAXATION EX PERT RESULTING INTO THE NON-COMPLIANCES AS TO THE DELAY IN FILING OF RETURN AND PAYMENT OF TAXES FROM TIME TO TIME. D. SINCE OUR APEX BODY WAS PURSING THE ISSUE BEFORE GOVT. THERE WAS NO CERTAINTY 'ABOUT THE TAXABILITY OF APMCS ULTIMA TELY, AS A RESULT OF THE COLLECTIVE EFFORTS BY THE STATE AGRI. MA RKETING BOARDS AND COMMITTEE ALL OVER INDIA FINANCE ACT, 2008 CAME UP WITH NEW SECTION 10(26AAB) WHICH AGAIN EXEMPTED AGRI. BOARDS/ MARKET COMMITTEES FROM PAYMENT OF INCOME TAX ON THE TOTAL IN COME W.E.F. A.Y. 2009-70. THIS PROVES THE INTENTION OF THE LEGISLATU RE NOT TO TAX SUCH ENTITIES WHICH ARE WORKING FOR THE POOR FARMERS AND DON'T HAVE ANY PROFIT MOTIVE. E. FURTHER, UPTO 30.09.2007 OUR FINANCIAL YEAR WAS FROM OCT TO SEPT AS PER RULES OF OUR APEX BODY. IT TOOK TIME TO CAR EFULLY CONVERT THE CONSOLIDATED FINANCIAL STATEMENTS OF OUR INSTITUTI ON WITH ITS BRANCHES (AUDITED BY GOVT.) IN FORMAT REQUIRED BY I. T. ACT (I.E. APRIL TO MARCH), COMPLETE AND CORRECT IN ALL RESPECTS. F. MOREOVER, GOVT. AUDIT FOR PERIOD ENDING ON 30.9.2007 AND 31.3.2008 WAS COMPLETED ON 14.7.2009 NATURALLY RESULTING IN TO DELAY IN FINALIZING TAX AUDIT AFTER DUE DATES, WHICH WAS BEYOND OUR CONTROL. YOUR HONOUR WILL CERTAINLY APPRECIATE THAT THE ISSUE O F ALLOWABILITY OF DEDUCTION U/S 10(20) OR OTHERWISE TO THE APMCS WA S A NATIONWIDE ISSUE AND HUNDREDS OF APMCS WERE UNDER L ITIGATION ON THE ISSUE. THIS SHOWS THAT THE ISSUE WAS CERTAINLY D EBATABLE ONE AND ACCORDINGLY, MERE DELAY IN FILING ROI WITH AUDIT R EPORT DUE TO VARIOUS REASONS AS DISCUSSED ABOVE, CANNOT BE TREATE D AT PAR WITH INTENTION TO EVADE THE TAXES AND CONCEALMENT OF INCOME. WE THEREFORE, IN THE LIGHT OF THE ABOVE MENTIONED FA CTS HUMBLY SUBMIT THAT THE DELAY IN FILING RETURNS OF INCOME AN D PAYMENT OF TAXES WAS DUE TO THE UNAVOIDABLE CIRCUMSTANCES. WE U RGE THAT THE DELAY WAS NOT OCCASIONED DELIBERATELY OR ON ACCOUNT OF CULPABLE NEGLIGENCE OR ON ACCOUNT OF MALAFIDES AND ACCORDING LY REQUEST YOUR HONOUR TO DROP THE PROPOSED PENALTY PROCEEDINGS U/S . 271(1)(C) AND OBLIGE. 3. THE ASSESSING OFFICER WAS NOT IMPRESSED WITH THE SUBMIS SIONS OF THE ASSESSEE AND HE LEVIED THE PENALTY U/S. 271(1)(C) OF THE ACT OF RS.23,40,865/- AND RS.5,82,034/- FOR THE A.YS. 2007-08 AND 2 008-09 RESPECTIVELY. THE ASSESSEE CHALLENGED THE PENALTY ORDER S BEFORE THE CIT(A) BUT WITHOUT SUCCESS. THE MAIN CONTENTIONS OF THE A SSESSEE BEFORE THE CIT(A) FOR NOT FILING THE RETURNS OF INCOME FOR THE A.YS. 2007-08 AND 2008-09 ARE AS UNDER: 4 ITA NOS. 2019 & 2025/PN/2013, AGRICULTURAL PRODUCE MARKET COMMITTEE, JALGAON 1A. UP TO A.Y. 2002-03 ALL APMCS' WERE ENJOYING EXEMPTI ON FROM TAX U/S 10(20) OF THE I.T. ACT, 1961. CONSEQUENTLY , WE NEITHER UNDERGONE TAX AUDIT NOR FILED ANY RETURN OF INCOME UP WA.Y. 2002-03. B. WE WERE GOVERNED, GUIDED & CONTROLLED BY STATE AGRL. MARKETING BOARD, PUNE WHICH NEVER GUIDED US ON THE PROPER LINES IN TAXATION MATTERS & KEPT US UNDER IMPRESSION THAT WE ARE TAX EXEMPT ENTITY. C. ACCORDINGLY WE HAD NOT APPOINTED ANY TAXATION EX PERT RESULTING IN TO THE NON-COMPLIANCES AS TO DELAY IN FI LING OF RETURN & PAYMENT OF TAXES FROM TIME TO TIME. D. SINCE OUR APEX BODY WAS PURSUING THE ISSUE BEFOR E GOVT., THERE WAS NO CERTAINTY ABOUT THE TAXABILITY OF APMCS'. ULTIMATELY, AS A RESULT OF THE COLLECTIVE EFFOR TS BY THE STATE AGRI. MARKETING BOARDS & COMMITTEES ALL OVER INDIA, FINANCE ACT, 2008 CAME UP WITH NEW SECTION 10(26AAB) WHICH AGAIN EXEMPTED AGRI. BOARDS/ MARKET COMMITTEES FROM PAYMENT OF INCOME TAX ON ITS TOTAL INCOME W.E.F. A.Y. 2009-10. THIS PROVES THE INTENTION OF THE LEGISLATURE NOT TO TAX SUCH ENTITIES WHICH ARE WORKING FOR THE POOR FARMERS & DON'T HAVE ANY PROFI T MOTIVE. E. FURTHER, UP TO 30.09.2007 OUR FINANCIAL YEAR WAS FROM OCTOBER TO SEPTEMBER AS PER RULES OF OUR APEX BODY. I T TOOK TIME TO CAREFULLY CONVERT THE CONSOLIDATED FINANC IAL STATEMENTS OF OUR INSTITUTION WITH ITS BRANCHES (AUDITE D BY GOVT.) IN FORMAT REQUIRED BY LT. ACT (LE. APRIL TO MARCH), COMPLETE & CORRECT IN ALL RESPECTS. F. MOREOVER, GOVT. AUDIT FOR PERIOD ENDING ON 30/09/20 07 & 31/03/2008 WAS COMPLETED ON 14/07/2009, NATURALLY RESULTING IN TO DELAY IN FINALIZING TAX AUDI T AFTER DUE DATES, WHICH WAS BEYOND OUR CONTROL. 2. YOUR HONOUR WILL CERTAINLY APPRECIATE THAT THE ISSU E OF ALLOWABILITY OF DEDUCTION U/S 10(20) OR OTHERWISE TO TH E APMCS' WAS A NATIONWIDE ISSUE AND HUNDREDS OF APMCS' WERE UNDER LITIGATION ON THE ISSUE. THIS SHOWS THAT T HE ISSUE WAS CERTAINTY DEBATABLE ONE AND ACCORDINGLY, MERE DEL AY IN FILING ROI WITH AUDIT REPORT DUE TO VARIOUS REASONS A S DISCUSSED ABOVE, CANNOT BE TREATED AT PAR WITH INTENT ION TO EVADE THE TAXES AND CONCEALMENT OF INCOME. OUR VIEW STANDS FORTIFIED BY THE DECISION OF ITAT C HANDIGARH BENCH IN CASE OF AGRICULTURE PRODUCE MARKET COMMITTE E VS. DCIT [ITA NO. 1228-1229/CHD/2010]: HELD: 'WHERE THE ASSESSEE HAD MADE A BONAFLDE CLAIM AND FURNISHED COMPLETE PARTICULARS WITH REGARD TO ITS CLAIM , THE DISALLOWANCE OF SUCH A CLAIM ON ACCOUNT OF DIFFERENCE OF OPINION AND INTERPRETATION OF LAW DOES NOT TANTAMOU NT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. MER E NON- ACCEPTABILITY OF A CLAM IN LAW DOES NOT JUSTIFY INVO KING EXPLANATION TO SECTION 271(L)(C) OF THE ACT' [RATIO L AID DOWN BY THE HON'BLE SUPREME COURT IN CJT VS. RELIANCE PETRO P RODUCTS 5 ITA NOS. 2019 & 2025/PN/2013, AGRICULTURAL PRODUCE MARKET COMMITTEE, JALGAON PVT. LTD [322 ITR 158 (SC)] AND HON'BLE PUNJAB & HARY ANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MILLS LTD [322 ITR 73 (P&H) FOLLOWED.] WE, THEREFORE, IN THE LIGHT OF THE ABOVE MENTIONED FA CTS HUMBLY SUBMIT THAT THE DELAY IN FILING RETURNS OF IN COME & PAYMENT OF TAXES WAS DUE TO THE UNAVOIDABLE CIRCUMS TANCES. WE URGE THAT THE DELAY WAS NOT OCCASIONED DELIBERAT ELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES AND ACCORDINGLY REQUEST YOUR HONOUR TO DELETE THE PE NALTY U/S 271(L)(C) & OBLIGE. 4. BEFORE THE CIT(A) THE ASSESSEE ALSO RELIED ON THE DEC ISION OF THE ITAT, CHANDIGARH BENCH IN THE CASE OF AGRICULTURE PRODUCE MARKET COMMITTEE VS. DCIT, ITA NOS. 1228 & 1229/CHD/2010. THE CIT(A) WAS NOT IMPRESSED WITH THE PLEA OF THE ASSESSEE AND HE CONFIR MED THE PENALTY. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. WE HAV E HEARD THE LD. DR. NONE WAS PRESENT FOR THE ASSESSEE. 5. IN THIS CASE IT IS NOT IN DISPUTE THAT THE ASSESSEE W AS TREATED AS A LOCAL AUTHORITY U/S. 10(20) OF THE INCOME-TAX ACT UP TO TH E A.Y. 2002-03. SUBSEQUENTLY, THERE WAS AN AMENDMENT TO SECTION 10(2) O F THE INCOME- TAX ACT AND THE APMC WAS REMOVED FROM THE DEFINITION OF T HE LOCAL AUTHORITY. IT IS PERTINENT TO NOTE THAT THE FINANCE ACT , 2008 HAS INTRODUCED SUB-SEC. (26AAB) TO SEC. 10 AND AGAIN THE INCOM E OF THE APMC HAS BEEN EXEMPTED FROM TAX. THERE IS NO DISPUTE A BOUT THE FACT THAT APMC IS CONSTITUTED FOR MARKETING OF THE AGRICULTURA L PRODUCE HELPING THE AGRICULTURISTS TO GET THE BETTER PRICE IN THE OPEN MARKET AND TO AVOID THE BROKERS AND AGENTS. IT APPEARS THAT THE COLLECTIVE EFFORTS WERE MADE BY THE DIFFERENT APMCS IN INDIA AFTER THE AMEN DMENT TO SEC. 10(20) FOR GETTING EXEMPTION. MOREOVER, AS PER THE FACTS ON RECORD THE GOVT. AUDIT OF THE ASSESSEE FOR PERIOD ENDING ON 30-09-20 07 AND 31-03- 2008 WAS COMPLETED ON 14-07-2009 AND HENCE, THERE WAS A DELAY IN FINALIZING TAX AUDIT REPORT. IT IS ALSO SEEN THAT IN BOTH TH E ASSESSMENT YEARS THE RETURNS FILED BY THE ASSESSEE WERE ACCEPTED WITHOUT MAKING ANY ADDITION. 6 ITA NOS. 2019 & 2025/PN/2013, AGRICULTURAL PRODUCE MARKET COMMITTEE, JALGAON 6. WE FIND THAT THE EXPLANATION 3 BELOW SEC. 271(1)(C) WHICH IS DEEMING PROVISION, IS APPLICABLE TO THE ASSESSEE AS PERIOD MENTIONED U/S. 153(1) HAS EXPIRED AND THEN ONLY THE ASSESSEE FILED T HE RETURNS OF INCOME BUT AT THE SAME TIME THE ASSESSEE CAN STILL AVAIL THE EXPLANATION 1 TO ESTABLISH THE BONAFIDE FOR NOT FILING THE RETURNS OF INCO ME WITHIN THE TIME ALLOWED U/S. 139 OF THE ACT. IN THE PRESENT CASE, WE ARE OF THE OPINION THAT THE EXPLANATION OF THE ASSESSEE IS BONAFIDE FOR NOT FILING THE RETURNS OF INCOME FOR BOTH THESE ASSESSMENT YEARS WITHIN THE MEANING OF EXPLANATION 1 BELOW SEC. 271(1)(C) OF THE ACT AND IN OUR OPINIO N NO PENALTY CAN BE LEVIED ON THE ASSESSEE ON THE CHARGE OF CONCEALING THE PARTICULARS OF INCOME FOR BOTH THE ASSESSMENT YEARS. WE, ACCORDINGLY, DELETE PENALTY LEVIED BY THE ASSESSING OFFICER IN BOTH THESE ASSESSMENT YEARS AND GROUNDS TAKEN BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 21-10-2014 SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS/SATISH PUNE, DATED: 21 ST OCTOBER, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 4 THE CIT(A) - II , NASHIK THE CIT-II, NASHIK 5 THE DR, ITAT, A BENCH, PUNE. 6 GUARD FILE. BY ORDER // TRUE COPY // ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE