The Mantola Co-operative Thrift and Credit Society Ltd., New Delhi V. ITO, New Delhi

ITA 204/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7110 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESD KUMAR
• Keywords: Question of law; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI L.P.SAHU, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 204/DEL/2014 THE MANTOLA COOPERATIVE VS. ITO, WARD 38(4), THRIFT & CREDIT SOCIETY LTD., NEW DELHI 541, MANTOLA PAHAE GANJ, NEW DELHI GIR / PAN :AAAJT1976A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAURAV JAIN, ADV. SHRI BHAVITA KUMAR, ADV. RESPONDENT BY : SHRI RAJESD KUMAR, SR. DR DATE OF HEARING: 29.11.2016 DATE OF PRONOUNCEMENT: 03.01.2017 ORDER PER BEENA A. PILLAI, JM: THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED U NDER THE DELHI CO- OPERATIVE SOCIETIES ACT, ENGAGED IN THE BUSINESS OF DEALING WITH ITS MEMBERS WHEREBY IT MOBILISES THRIFT MONEY FROM ITS MEMBERS AND PROVIDE CREDIT FACILITY TO THEM. FOR ASSESSMENT YEA R 2008-09, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING GROSS TOTAL INCOME UNDER THE HEADING BUSINESS AND PROFESSION AT RS.1, 44,04060/-, AND CLAIMED DEDUCTION UNDER SECTION 80P (2)(A) (I) OF THE INCOME TAX ACT 1961, ON THE ENTIRE INCOME, THEREBY DECLARING T OTAL INCOME AT NIL. ASSESSMENT WAS COMPLETED BY THE LD. AO UNDER S ECTION 143 (3) WHEREBY HE TREATED THE INTEREST ON FDR WITH BANKS A S INCOME FROM OTHER SOURCES, NOT ELIGIBLE FOR DEDUCTION UNDER SEC TION 80P(2) (A)(I). ON AN APPEAL BEFORE LD.CIT(A), THE DEDUCTION UNDER SECTION 80P (2) (A)(I) WAS ALLOWED, WHICH WAS REVERSED BY THIS TRIB UNAL SUBSEQUENTLY. AGGRIEVED BY THE ORDER OF THIS TRIBUNAL ASSESSEE FI LED APPEAL BEFORE HONBLE JURISDICTIONAL HIGH COURT. HONBLE DELHI HI GH COURT VIDE ORDER DATED 27/08/2014 IN ITA NO. 569/2013 HELD AS UNDER:- 11.AT THIS STAGE, LD. COUNSEL FOR THE APPELLANT-SE C HAS POINTED OUT THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD D ECIDED THE ISSUE IN THEIR SECTION 57 (3) THAT IS AVAILABILITY OF EXP ENDITURE HAVING EXES WITH EARNING OF THE SAID INCOME WAS NOT EXAMINED. T HIS GROUND/ARGUMENT WAS AN ALTERNATIVE. LD. COUNSEL FOR THE REVENUE SUBMITS THAT THIS QUESTION MAY BE REMITTED TO THE L D. COMMISSIONER OF INCOME TAX (APPEAL) AS HE HAD NOT DECIDED THE SA ID QUESTION HAVING ALLOWED THE APPEAL IN ENTIRETY HOLDING THAT THE ENTIRE INTEREST WAS EXEMPT UNDER THIS SECTION 80P. WE APPRECIATE TH E STAND TAKEN BY THE LD. COUNSEL FOR THE REVENUE AND ACCORDINGLY THE MATTER IS REMITTED ON THE SAID ASPECT TO THE COMMISSIONER OF INCOME TAX (APPEALS) FOR DECISION. 12.SIMILARLY, WITH REGARD TO THE CLAIM OF DEDUCTION UNDER SECTION 80 P (2) (I), WE FIND THAT THERE WAS NO DISCUSSION ON FI NDING BY THE COMMISSIONER OF INCOME TAX (APPEALS), THOUGH THIS G ROUND/ISSUE WAS RAISED. THIS HAS HAPPENED BECAUSE THE COMMISSIONER OF INCOME TAX (APPEALS), AS NOTED ABOVE, HAD GRANTED EXEMPTION TO THE ENTIRE INCOME EARNED BY THE APPELLANT-SOC UNDER SECTION 80 P(2)(I)(A). LEARNING COUNSEL FOR THE RESPONDENT-REVENUE SUBMITS THAT THIS ISSUE WOULD BE EXAMINED BY THE COMMISSIONER OF INCOME TAX (APPEAL) ON MERITS. WE TAKE THIS SAME STATEMENT ON RECORD. ACCORDINGLY AS PER THE DIRECTIONS OF THE HONBLE DE LHI HIGH COURT, ISSUES WHICH WERE NOT ADJUDICATED UPON BY LD. CIT ( A) WERE SENT BACK FOR RE-ADJUDICATION, AS UNDER: A. WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U NDER SECTION 80 P (2) (D) RELATING TO INCOME DERIVED FROM INVESTMENT IN OTHER CO- OPERATIVE SOCIETIES. B. THE AVAILABILITY OF DEDUCTION OF EXPENSES UNDER SECTION 57 REGARDING INCOME FROM OTHER SOURCES. THE LD. CIT(A) DISALLOWED THE ENTIRE CLAIM OF THE A SSESSEE AGAINST WHICH ASSESSEE PREFERRED APPEAL BEFORE THIS TRIBUNA L. BEFORE THE TRIBUNAL, ASSESSEE CAME INTO APPEAL FOR ASSESSMENT YEARS 2004-05 TO 2007-08, 2009-10, 2010-11 AS WELL. THIS TRIBUNAL AFTER CONSIDERING THE VARIOUS SUBMISSIONS ON LAW AS WELL AS ON MERITS AND HELD AS UNDER: IT IS PERTINENT TO NOTE THAT DURING THE CONCERNED Y EARS UNDER CONSIDERATION THE ASSESSEE HAD DEPOSITS WITH CO-OPE RATIVE BANKS AND COMMERCIAL BANKS, AS PROVIDED IN THE CHART SUBMITTE D BEFORE US. IT IS OBSERVED THAT THE GROSS INCOME EARNED BY THE ASSESS EE COMPRISES OF 3 COMPONENTS WHICH ARE AS UNDER: I) INTEREST INCOME EARNED FROM INVESTMENT WITH CO-OPER ATIVE BANKS II) INTEREST INCOME EARNED FROM INVESTMENT WITH COMMERC IAL BANKS AND, III) INTEREST PAID ON DEPOSITS TO MEMBERS. AND AS THERE IS SUBSTANTIAL AMOUNT OF INTEREST EARN ED FROM DEPOSITS WITH CO-OPERATIVE BANKS, THE ASSESSEE WOULD BE ELIG IBLE FOR DEDUCTION UNDER SECTION 80P(2)(D). WE ARE THEREFORE INCLINED TO ALLOW THE INTEREST EAR NED BY THE ASSESSEE FROM THE DEPOSITS MADE WITH CO-OPERATIVE SOCIETY TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT. ACCORDINGLY GROUND NO. 3 FOR ASSESSMENT YEAR 2004-05 TO 2007-08, 2009-10, 2010-1 1 AND GROUND NO. 1 FOR ASSESSMENT YEAR 2008-09 STANDS ALLOWED. IN THE MEAN TIME LD.AO INITIATED PENALTY PROCEEDING S FOR CONCEALMENT AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME. THE ASSESSEE WAS ASKED TO SHOW CAUSE WIDE NOTICE DA TED 21/01/2013 AS TO WHY PENALTY UNDER SECTION 271 (1) (C ) MAY NOT BE IMPOSED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE PARTICULARS OF INCOME HAS BEEN DULY DISCLOSED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS AND THE ADDITION IS MADE MAINLY ON ACCOUNT OF INTO PETI TION OF LAW ON THE BASIS OF THE FACTS AVAILABLE ON RECORD. IT WAS SUBMITTED THAT THE DISALLOWANCE MADE IS A DEBATABLE ISSUE AND THEREFOR E THERE IS NO FAILURE TO OFFER AN EXPLANATION BY THE ASSESSEE. TH E LD. AO REJECTED THE CONTENTIONS AND SUBMISSIONS RAISED BY THE ASSES SEE AND LEVIED A PENALTY OF RS. 44,22,240/-UNDER SECTION 271 (1) ( C ) OF THE ACT. AGGRIEVED BY THE ORDER OF LD.AO ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSE SSING OFFICER UNDER SECTION 271 (1) (C) OF THE ACT. AGGRIEVED BY THE ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. IT HAS BEEN SUBMITTED BY LD.AR THAT ASSESSEE HAS NO T FURNISHED INACCURATE PARTICULARS AND THE CLAIM OF THE ASSESSE E HAS BEEN PARTLY ALLOWED BY THIS TRIBUNAL IN THE QUANTUM APPEAL. HE FURTHER SUBMITTED THAT THE ALLOWABILITY OF THE CLAIM UNDER SECTION 80 P OF THE ACT WAS DEBATABLE IN NATURE AND THE DISALLOWANC E WAS MADE ON BONA FIDES AND IS OF OPINION BETWEEN THE ASSESSEE A ND THE LD. AO. HE SUBMITTED THAT THE CLAIM OF DEDUCTION UNDER SECT ION 80 P WAS BONA FIDES SUPPORTED BY PROPER DISCLOSURES MADE IN THE RETURN OF INCOME ACCOMPANYING BY DOCUMENTS AND THEREFORE NO P ENALTY UNDER SECTION 271 (1) (C) COULD BE LEVIED HERE IS S UBMITTED THAT ASSESSEE HAD FULLY DISCLOSED ALL THE MATERIAL FACTS FOR THE PURPOSES OF CONSIDERATION OF THE CLAIM AND THEREFORE THE PEN ALTY COULD NOT BE IMPOSED FOR ALLEGED FURNISHING OF INACCURATE PARTIC ULARS OF INCOME. HE SUBMITTED THAT THE CLAIM UNDER SECTION 80 P MADE BY THE ASSESSEE WAS UNDER A PRESUMPTION THAT BENEFIT UNDER SECTION 80 P (1) HAS BEEN TAKEN AWAY FROM 01/04/2007 FROM CO-OPE RATIVE BANKS, WHEREAS THE ASSESSEE WAS A CO-OPERATIVE SOCIETY AND THEREFORE WAS UNDER BONA FIDES BELIEF THAT ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER THIS SECTION. HE ALSO SUBMITTED THAT THE CLAI M MADE BY THE ASSESSEE UNDER SECTION 80 P WAS BASED ON VARIOUS DE CISIONS OF HONBLE KARNATAKA HIGH COURT. HE THUS SUBMITTED THA T PENALTY COULD NOT BE LEVIED ON BONA FIDES WRONG CLAY MADE B Y THE ASSESSEE. LD.AR FURTHER PLACED RELIANCE ON VARIOUS JUDGMENTS OF HONBLE SUPREME COURT AS WELL AS JURISDICTIONAL HIGH COURT WHERE IT HAS BEEN HELD THAT PENALTY COULD NOT BE LEVIED ON BONA FIDES WRONG CLAIMS. SOME OF THE JUDGMENTS PLAYS IN THE PAPER BO OK BY THE LD. AI ARE AS UNDER: A) CEMENT MARKETING COMPANY OF INDIA LTD VS. ACIT REPO RTED IN 124 ITR 15 (SC); B) CIT VS. AT & T COMMUNICATION SERVICE INDIA PVT. LTD ., REPORTED IN 342 ITR 257 (DEL); C) CIT VS. SOCIETEX REPORTED IN 259 CTR 325 (DEL); D) CIT VS. TUDOR KNITTING WORKS PVT. LTD., REPORTED IN 366 ITR 236 (P&H); ON THE CONTRARY THE LD. DR RELIED UPON THE ORDERS P ASSED BY THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE HAD W RONGLY CLAIMED DEDUCTION UNDER SECTION 80 P OF THE ACT AND THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING PENA LTY UNDER SECTION 271 (1) (C ) OF THE ACT. WE HAVE PERUSED THE FACTS OF THE CASE IN THE LIGHT OF THE RELEVANT RECORDS PLACED BEFORE US AND THE SUBMISSIONS ADVANC ED BY BOTH THE PARTIES. IT IS A CASE WHERE PENALTY HAS BEEN LEVIED BY THE A SSESSING OFFICER ON A ISSUE IN RESPECT OF WHICH HONBLE DELHI HIGH C OURT IN ASSESSEES OWN CASE FOR THE RELEVANT ASSESSMENT YEA R UNDER CONSIDERATION HAD SENT BACK THE ISSUE FOR RE-ADJUDI CATION BEFORE LD. CIT (A), BY FRAMING SPECIFIC QUESTION OF LAW IN RESPECT OF THE DEDUCTION CLAIMED BY THE ASSESSEE. WHEN THE HONBLE HIGH COURT HAS FRAMED SUBSTANTIAL QUESTION OF LAW, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE. THE FRAMING OF A SUBSTANTIAL QUESTION OF LAW BY HONBLE HIGH COURT LENDS CREDENC E TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. ONCE I T TURNS OUT THAT THE CLAIM OF ASSESSEE COULD HAVE BEEN CONSIDER ED FOR DEDUCTION AS PER INSTRUCTIONS, WHICH IS NOT COMPLET ELY DEBARRED AT ALL, THE MERE FACT OF CONFIRMATION OF THE DISALL OWANCE OF DEDUCTION WOULD NOT PER SE LEAD TO IMPOSITION OF PENALTY. SINCE THE ADDITION IN RESPECT OF WHICH PENALTY HAS BEEN L EVIED BY THE AUTHORITIES BELOW HAS BEEN HELD BY THE HONBLE HIGH COURT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CON SIDERED OPINION, PENALTY IS NOT EXIGIBLE UNDER THIS SECTION . WE THEREFORE ARE INCLINED TO DELETE THE PENALTY. IN THE RESULT APPEAL FILED BY THE ASSESSEE STANDS A LLOWED ORDER PRONOUNCED IN OPEN COURT ON 03 RD JANUARY, 2017. SD/- SD/- (L.P.SAHU) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 03.01.2017 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI)