Yashwant Sahakari Bank Ltd., Miraj V. Assistant Commissioner Income-tax,

ITA 2132/PUN/2013

• Counselvise Citation: 213224514 RSA 2013
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAZHAR AKRAM
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.2132/PN/2013 (ASSESSMENT YEAR: 2010-11) YASHWANT SAHAKARI BANK LTD., 7258, LAXMI MARKET, M.A. NARWADE CHOWK, LAXMI CHOWK, MIRAJ 416410. PAN: AAAAY0244P . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, SANGLI . RESPONDENT ITA NO.2077/PN/2013 (ASSESSMENT YEAR: 2010-11) THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, SANGLI . APPELLANT VS. YASHWANT SAHAKARI BANK LTD., 7258, LAXMI MARKET, M.A. NARWADE CHOWK, LAXMI CHOWK, MIRAJ 416410. PAN: AAAAY0244P . RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY : SHRI MAZHAR AKRAM DATE OF HEARING : 20-10-2014 DATE OF PRONOUNCEMENT : 30-10-2014 ORDER PER SUSHMA CHOWLA, JM: OUT OF THESE TWO APPEALS, ONE FILED BY THE ASSESSEE I.E. AGA INST THE ORDER OF CIT(A) DATED 23.09.2013 RELATING TO ASSESSME NT YEAR 2010-11 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ITA NOS.2132 & 2077/PN/2013 YASHWANT SAH. BANK LTD. 2 ACT. THE APPEAL FILED BY REVENUE IS AGAINST SEPARATE ORDE R OF CIT(A) DATED 23.09.2013 AGAINST PENALTY LEVIED UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT. 2. THE APPEAL FILED BY THE ASSESSEE AGAINST THE QUANTUM ADDITION AND THE APPEAL FILED BY THE REVENUE AGAINST THE DELETION O F PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT RELATING TO ASSESSMENT YEAR 2010-11 WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO.2132/PN/2013 HAS RAISED THE FO LLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF TH E APPELLANT CO.OP. BANK (UNDER LIQUIDATION) OF UNPAID DUES OF ERST WHILE EMPLOYEES OF THE BANK. THE CLAIM BE ALLOWED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE CLAIM WAS SANCTIONED BY THE CO. OP. DEPTT. AND WAS THEREFORE AUTHE NTIC AND GENUINE. THE SAME BE ALLOWED TO THE ASSESSEE. 3. THE APPELLANT CRAVES/LEAVE TO ADDITION, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 4. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE WA S A CO- OPERATIVE BANK REGISTERED UNDER THE MAHARASHTRA CO-OP ERATIVE SOCIETY ACT, 1949. DURING THE YEAR UNDER CONSIDERATION, THE TOTA L RECEIPTS DECLARED BY THE ASSESSEE WERE RS.75,48,531/- AND AFTER D EDUCTING THE EXPENDITURE, ASSESSEE BANK HAD DECLARED A LOSS OF RS.1,51 ,79,593/-. THE PLEA OF THE ASSESSEE BEFORE ASSESSING OFFICER WAS THAT DUE TO LOSSES AND FINANCIAL MIS-MANAGEMENT, THE BANK HAD NOT CA RRIED OUT SIGNIFICANT COMMERCIAL ACTIVITIES AND WAS UNDER LIQUIDATION. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DEBITED A SUM OF ITA NOS.2132 & 2077/PN/2013 YASHWANT SAH. BANK LTD. 3 RS.68,12,100/- AS PROVISION RELATING TO EMPLOYEES DUES. T HE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROVISION BEING U N-PAID, EXPENSES WERE TO BE ADDED TO THE NET RESULTS AS PER THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE, BEING UN-PAID LIABILITY. THE LEARNE D AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DURING THE C OURSE OF HEARING WAS ASKED TO EXPLAIN AS TO WHY SUCH INCOME SHOU LD NOT BE ADDED BACK TO THE INCOME OF THE ASSESSEE. THE FINDING O F THE ASSESSING OFFICER WAS THAT THE LEARNED AUTHORIZED REPRESENTATIVE BEING CONVINCED ABOUT THE ISSUE AS POINTED OUT TO HIM, DID NOT RAISE ANY OBJECTION TO THE SAID ADDITION AND ACCORDINGLY, THE AMOUN T OF RS.68,12,100/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BANK. 5. BEFORE THE CIT(A), THE CLAIM OF THE ASSESSEE WAS THAT TH E SAID PROVISION FOR PAYMENT OF THE AMOUNTS DUE TO THE ERSTWHILE EMPLOYEES, ON ACCOUNT OF TERMINATION OF THEIR SERVICES, WAS MADE AND THE AMOUNT HAD BEEN SANCTIONED BY THE CONCERNED AUTHORITIES. THE CIT(A) NOTED THAT THE ASSESSEE HAD NOT DENIED THE FACT THAT THE LIA BILITY HAD NOT BEEN PAID AND JUST BECAUSE THE AMOUNT HAD BEEN SANCT IONED BY THE AUTHORITIES, AS PER THE CIT(A), THE SAME DOES NOT BECOME ALLOWABLE UNDER THE INCOME TAX ACT. 6. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. THE LEARNE D AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE BANK WAS UNDER LIQUIDATION AND THE PROVISION MAD E FOR THE EMPLOYEES DUES WAS PAID IN THE SUCCEEDING YEAR. IN CON FIRMATION OF THE SAID PAYMENT, THE ASSESSEE FILED A CERTIFICATE FROM THE GENERAL MANAGER OF THE ASSESSEE BANK CERTIFYING THE DATE OF PA YMENT OF RS.68,12,100/- ON 24.07.2010. ITA NOS.2132 & 2077/PN/2013 YASHWANT SAH. BANK LTD. 4 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVEN UE POINTED OUT THAT THE SAID LIABILITY WAS CONTINGENT LIABILITY AND THE SAME WAS NOT ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS A CO-OPERATIVE BANK REGISTERED UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETY ACT, 1949. THE ASSESS EE WAS RUNNING INTO LOSSES AND DURING THE YEAR UNDER CONSIDERAT ION, HAD NOT CARRIED OUT MAJOR COMMERCIAL ACTIVITIES AND WAS ALSO UNDE R LIQUIDATION. IN THE PROFIT & LOSS ACCOUNT FOR THE FINANCIAL Y EAR 2009- 10, THE ASSESSEE HAD DEBITED A SUM OF RS.68,12,100/- ON ACCOUNT OF PROVISION RELATING TO THE EMPLOYEES DUES. THE PLEA OF THE ASSESSEE WAS THAT THE SAID AMOUNT WAS TO BE PAID TO THE ERSTWH ILE EMPLOYEES ON ACCOUNT OF TERMINATION OF THEIR SERVICES. THE TOTAL NUMBER OF EMPLOYEES WITH THE ASSESSEE WERE 45 AND A SUM OF RS.68 ,12,100/- RELATED TO THE SALARIES / COMPENSATION DUE TO THE SAID E MPLOYEES. THE ASSESSEE HAD FILED ON RECORD A CERTIFICATE TO THAT EFFECT C ERTIFYING THAT THE SAID AMOUNT OF RS.68,12,100/- WAS PAID ON 24.07.2010. IN THE TOTALITY OF THE ABOVE FACTS AND CIRCUMSTANCES, THE PROVISIO N MADE AGAINST THE DUES OF THE EMPLOYEES AS ON THE CLOSE OF THE YEAR IS AN ALLOWABLE BUSINESS EXPENDITURE IN THE HANDS OF THE ASSESSE E, WHERE ADMITTEDLY, THE ASSESSEE HAD RECOGNIZED THE SAID LIABILITY A ND MADE A PROVISION AND THE SAID AMOUNT HAS BEEN DISBURSED TO THE EMPLOYEES ON 24.07.2010. WE DIRECT THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE OF RS.68,12,100/- IN THE HANDS OF THE ASSESSEE RELATING TO THE YEAR UNDER AN APPEAL. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. ITA NOS.2132 & 2077/PN/2013 YASHWANT SAH. BANK LTD. 5 9. THE REVENUE IN ITA NO.2077/PN/2013 HAS RAISED THE FOLLO WING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT[A] ERRED IN CANCELLING THE PENALTY O RDER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT[A] ERRED IN PASSING A NON-SPEAKING ORDE R DISREGARDING THE FACTS OF THE CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT[A] ERRED NOT APPRECIATING THE CORRECT POSITION OF LAW ON THIS ISSUE. 4. THE APPELLANT CRAVES TO ADD, ALTER, AMEND OR MODIFY AN Y OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 10. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 11. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSING OFFIC ER IN VIEW OF DISALLOWING THE SUM OF RS.68,12,100/- BEING THE PROVISION R ELATING TO THE EMPLOYEES DUES, HAD HELD THE ASSESSEE TO HAVE FURNISHED IN- ACCURATE PARTICULARS OF INCOME AND HAD LEVIED PENALTY UNDE R SECTION 271(1)(C) OF THE ACT AT RS.20,40,630/- FOR CONCEALMENT. 12. THE CIT(A) DELETED THE SAID PENALTY OBSERVING THAT TH E ASSESSEE HAD NOT FURNISHED IN-ACCURATE PARTICULARS OF INCOME. ALTHOU GH THE ADDITION HAD BEEN CONFIRMED IN THE HANDS OF THE ASSESSEE, BUT MERE ADDITION WAS NOT SUFFICIENT TO LEVY THE PENALTY. 13. THE REVENUE IS IN APPEAL AGAINST THE SAID DELETION OF PE NALTY UNDER SECTION 271(1)(C) OF THE ACT. ITA NOS.2132 & 2077/PN/2013 YASHWANT SAH. BANK LTD. 6 14. WE HAVE ADJUDICATED IN PARAS HEREIN ABOVE, THE DELETIO N OF ADDITION OF RS.68,12,100/- MADE ON ACCOUNT OF PROVISION FOR EMPLOYEES DUES. IN VIEW OF OUR HOLDING THAT THE SAID EX PENDITURE IS ALLOWABLE IN THE HANDS OF THE ASSESSEE, THERE IS NO BASIS LE FT FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN ANY CASE, ME RE DISALLOWANCE OF AN EXPENDITURE DOES NOT WARRANT LEVY OF PE NALTY UNDER SECTION 271(1)(C) OF THE ACT. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND A PPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2014. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH OCTOBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE