Income-tax Officer, V. A P M C., (Krushi Utpanna Bazar Samittee), Jalgaon

ITA 2158/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1667 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU SHEKHAR
• Assessee Lawyers: VINAY V K AWADIA
• Keywords: Bonafide belief; Wrong claim; Difference of opinion; Benefit of exemption

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.2158/PN/2014 '% % / ASSESSMENT YEAR : 2003-04 ITO, WARD - 2(3), JALGAON . / APPELLANT V/S A.P.M.C. (KRUSHI UTPANNA BAZAR SAMITEE), JALGAON ROAD, JAMNER, TAL : JAMNER, DIST. JALGAON 424 206 PAN NO. AAALA0828L . / RESPONDENT / APPELLANT BY : SHRI SUDHANSHU SHEKHAR / RESPONDENT BY : SHRI VINAY V. KAWADIA / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK DATED 26-09-2014 DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE IN COME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE REC ORDS ARE : THE ASSESSEE IS AN AGRICULTURAL PRODUCE MARKET COMMITTEE (APMC). THE INCOME OF THE ASSESSEE WAS EXEMPT FROM TAX U/S.10(2 0) OF THE ACT UPTO A.Y. 2002-03, THEREFORE, THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME. THE PROVISIONS OF SECTION 10(20) WERE AMENDED BY THE FINANCE / DATE OF HEARING :16.06.2016 / DATE OF PRONOUNCEMENT:29.06.2016 2 ITA NO.2158/PN/2014 ACT, 2002 W.E.F. 01-04-2003. AS PER THE EXPLANATION INSERT ED BY FINANCE ACT, 2002 THE ASSESSEE WAS TAKEN OUT OF THE AM BIT OF EXPRESSION LOCAL AUTHORITY. RESULTANTLY, THE ASSESSEE C EASED TO ENJOY THE BENEFIT OF EXEMPTION U/S.10(20) OF THE ACT. THE ASSESS EE WAS REQUIRED TO FILE RETURN OF INCOME IN ACCORDANCE WITH THE PR OVISIONS OF SECTION 139(1) OR 139(4) OF THE ACT. THE ASSESSEE DID NOT COMPLY WITH THE AMENDED PROVISIONS. A NOTICE U/S.148 WAS ISSUED TO THE ASSESSEE ON 22-01-2008. IN RESPONSE TO THE NOTICE THE ASSESS EE FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 13-10-2008 DECLARING ITS TOTAL INCOME AS NIL AFTER CLAIMING EXEMPTION OF RS.47,46,126/- U/S.10(20) OF THE ACT. THE CLAIM OF THE ASSESSEE WAS REJEC TED BY THE AO VIDE ORDER DATED 27-11-2008 PASSED U/S.143(3) R.W.S. 147 OF THE ACT. THE AO MADE ADDITION OF RS.49,55,860/-. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE ORDER DATED 17- 09-2009 GRANTED MINOR RELIEF TO THE ASSESSEE ON ACCOUNT OF CERTA IN EXPENSES AND CONFIRMED THE ADDITION OF RS.47,46,126/-. AGAINST THE FINDING S OF THE CIT(A) THE ASSESSEE CARRIED THE MATTER IN APPEAL TO THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 31-05-2011 REMITTED THE MATTE R BACK TO THE AO WITH A DIRECTION TO VERIFY AS THE WHETHER THE ASSESS EE WAS GRANTED REGISTRATION U/S.12A OF THE ACT AND TO FRAME THE ASSESSM ENT IN THE LIGHT OF THE SAID FACTS. THE AO VIDE ORDER DATED 15-03-2013 P ASSED U/S.143(3) R.W.S.254 OF THE ACT DENIED THE BENEFIT OF EXEMPT ION U/S.11 AS THE ASSESSEE WAS NOT REGISTERED U/S.12A. THE AO AS SESSED THE INCOME OF ASSESSEE AT RS.47,46,126/-. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) FOR CONCEALMENT OF INCOME TO THE TU NE OF RS.47,46,126/-. THE AO VIDE ORDER DATED 19-09-2013 LEVIED THE PENALTY OF RS.14,67,722/- U/S.271(1)(C) OF THE ACT. 3 ITA NO.2158/PN/2014 4. AGAINST THE LEVY OF PENALTY, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE IMPUGNED ORDER DELETED T HE PENALTY BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REP ORTED AS 322 ITR 158 (SC) AND THE DECISION OF CHANDIGARH BENCH OF THE TR IBUNAL IN THE CASE OF M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE, SO LAN VS. DCIT IN ITA NOS. 1228 AND 1229/CHD./2010 DECIDED ON 01- 12-2010. AGAINST THE FINDINGS OF THE CIT(A) DELETING THE PENALTY U/S.27 1(1)(C) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. SHRI VINAY KAWADIA REPRESENTING THE DEPARTMENT SUBMIT TED THAT THE ASSESSEE WAS EXEMPT FROM TAX UPTO A.Y. 2002-03. TH E AMENDED PROVISIONS OF SECTION 10(20) WERE EFFECTIVE FROM 01-04-2003. ACCORDINGLY, THE INCOME OF THE ASSESSEE WAS NO MORE EXE MPT FROM TAX AND THE ASSESSEE WAS REQUIRED TO FILE THE RETURN OF INCOM E VOLUNTARILY WITHIN THE TIME LIMIT PRESCRIBED UNDER THE PROVISIONS OF SEC TION 139(1) OR 139(4) OF THE ACT. HOWEVER, THE ASSESSEE FAILED TO COMP LY WITH THE AMENDED PROVISIONS OF THE ACT. THE HONBLE SUPREME COUR T OF INDIA IN THE CASE OF AGRICULTURAL MARKET PRODUCE COMMITTEES, NARELLA VS. CIT REPORTED AS 305 ITR 1 (SC) VIDE JUDGEMENT DATED 21-08- 2008 DECIDED THE ISSUE AGAINST THE AGRICULTURAL MARKET PRODUCE COMMITT EES. THE ASSESSEE FILED RETURN OF INCOME AFTER PRONOUNCEMENT OF THE ORDER BY THE HONBLE APEX COURT CLAIMING EXEMPTION U/S.10(20) OF THE ACT. THIS CLEARLY INDICATES THAT THE ASSESSEE HAD DELIBERATELY CLAIM ED EXEMPTION U/S.10(20), IN CONTRAVENTION OF PROVISIONS OF THE ACT AND THE LAW LAID DOWN BY THE HONBLE APEX COURT. THE LD. DEPARTMENTAL R EPRESENTATIVE CONTENDED THAT THE CLAIM OF THE ASSESSEE IS WHOLLY UNTEN ABLE AND UNSUSTAINABLE WITHOUT THERE BEING ANY BASIS FOR MAKING THE SAME. IF THE PENALTY IS NOT LEVIED, IT WILL GIVE BOOST TO SUCH UNSCRUP ULOUS 4 ITA NO.2158/PN/2014 ELEMENTS FOR MAKING WRONG/FALSE CLAIMS AND THEN GOING SCOT- FREE TAKING ADVANTAGE OF THE LOOPHOLES IN THE SYSTEM. THE LD. DEPART MENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE CIT(A) HAS ERR ED IN PLACING RELIANCE ON THE JUDGMENT IN THE CASE OF CIT VS. RELIANCE P ETRO PRODUCTS PVT. LTD. (SUPRA). IN THE CASE OF RELIANCE PETRO PRODUCTS LTD., THE ISSUE INVOLVED WAS OF INCORRECT CLAIM OF EXPENDITURE, WHEREAS, IN T HE PRESENT CASE THE ISSUE IS INCORRECT CLAIM OF EXEMPTION. THUS, THE FA CTS IN THE CASE OF THE ASSESSEE ARE AT VARIANCE. THE LD. DEPARTME NTAL REPRESENTATIVE, TO SUPPORT HIS CONTENTIONS DRAW STRENGT H FROM THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATIONS PVT. LTD. REPORTED AS 327 ITR 510 (DELHI). 6. SHRI SUDHANSHU SHEKHAR APPEARING ON BEHALF OF THE ASS ESSEE VEHEMENTLY SUPPORTED THE FINDINGS OF THE CIT(A) IN DELETING THE PENALTY LEVIED U/S.271(1)(C). THE LD. AUTHORISED REPRESENTATIVE CONTE NDED THAT THE INCOME OF THE ASSESSEE WAS EXEMPT UNDER THE PROVIS IONS OF SECTION 10(20) OF THE ACT. SINCE THE INCOME OF THE ASSESSEE WAS EXEMPT THE ASSESSEE NEVER FILED RETURN OF INCOME. EVEN AFTER AMENDME NT W.E.F. 01-04-2003 THE EFFECT OF AMENDMENT WAS NOT CLEAR AS THE INTERPRETATION OF THE EXPLANATION INSERTED BY FINANCE ACT 2002 WAS CHA LLENGED BEFORE THE HONBLE HIGH COURT BY VARIOUS AGRICULTURAL PRODUCE MA RKET COMMITTEES AND IT TRAVELLED UPTO THE HONBLE SUPREME COU RT OF INDIA. IT WAS ONLY ON 21-08-2008 THAT THE HONBLE SUPREME C OURT OF INDIA DECIDED THE ISSUE AGAINST THE AGRICULTURAL PRODUCE MARKET COMMITTEES. THE ASSESSEE IS OPERATING IN A RURAL AREA AND WAS NOT A WARE OF THE JUDGMENT RENDERED BY THE HONBLE APEX COURT. THE ASS ESSEE FILED ITS RETURN OF INCOME IN THE MONTH OF OCTOBER 2008, I.E. SHORTLY AFTER THE DECISION OF HONBLE APEX COURT. UNAWARE OF SUCH DECISION, T HE ASSESSEE CLAIMED EXEMPT U/S.10(2). THE ASSESSE HAD DECLAR ED CORRECT 5 ITA NO.2158/PN/2014 INCOME IN THE RETURN, BUT CLAIMED EXEMPTION WRONGLY UNDE R THE BONAFIDE BELIEF. THE LD. AUTHORISED REPRESENTATIVE CONTENDE D THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION BY FOLLOWING THE DECIS ION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF RELIANCE PET RO PRODUCTS PVT. LTD., (SUPRA) AND THE DECISION OF CHANDIGARH BENCH OF TH E TRIBUNAL IN THE CASE OF M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE, SOLAN VS. DCIT (SUPRA). THE LD. AUTHORISED REPRESENTATIVE FURTHER PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH OF THE T RIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 2019 AND 2025/PN/2013 FOR A.YRS. 2007-08 AND 2008-09 WHEREIN THE TRIBUNAL DELETED THE PE NALTY UNDER SIMILAR CIRCUMSTANCES VIDE ORDER DATED 21-10-2014. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE REPR ESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHOR ITIES BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE REPRESEN TATIVES OF BOTH SIDES HAVE PLACED RELIANCE. IT IS AN UNDISPUTED FACT THAT PRIOR TO THE ASSESSMENT YEAR UNDER APPEAL, THE INCOME OF THE ASSESS EE WAS EXEMPT UNDER THE PROVISIONS OF SECTION 10(20) OF THE ACT. IT WA S AFTER THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2002 W.E.F. 01-0 4-2003 THAT THE ASSESSEE CEASED TO ENJOY THE BENEFIT OF EXEMP TION U/S.10(20) OF THE ACT.. IT IS ALSO AN ADMITTED FACT THAT THE AMENDMEN T BROUGHT IN BY THE FINANCE ACT, 2002 WAS UNDER LIS. THE ISSUE TRAVELLED UPTO THE HONBLE SUPREME COURT OF INDIA. THE HONBLE APEX COURT FINALLY DECIDED THE ISSUE AGAINST THE AGRICULTURAL PRODUCE MARKET COMMITTEES VIDE ORDER DATED 21-08-2008. THE ASSESSEE IN RESPONSE TO NOTICE U/S.148 FILED ITS RETURN OF INCOME ON 13-10-2008 CLAIMING EXE MPTION U/S10(20) OF THE ACT. THE CONTENTION OF THE ASSESSEE IS THAT THE CLAIM MADE BY THE ASSESSEE U/S.10(20) WAS UNDER BONAFIDE BELIEF A ND IT WAS MERELY A CLAIM OF WRONG EXEMPTION. 6 ITA NO.2158/PN/2014 THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRO DUCTS PVT. LTD. (SUPRA) HAS HELD THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INA CCURATE PARTICULARS REGARDING THE INCOME OF ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 8. THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF M /S. AGRICULTURE PRODUCE MARKET COMMITTEE, SOLAN VS. DCIT (SUPRA) DELET ED THE LEVY OF PENALTY U/S.271(1)(C) UNDER IDENTICAL CIRCUMSTANCE S. THE TRIBUNAL HELD: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS AGAIN ST THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE HAD FILE D THE RETURN OF INCOME UNDER THE STATUS OF LOCAL AUTHORITY AND CLAIME D THE INCOME BEING EXEMPT. HOWEVER, THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED IN THE STATUS OF THE AOP AND THE SURPLUS OF T HE ASSESSEE SOCIETY WAS BROUGHT TO TAX. THE AUTHORITIES BELOW LEVIED THE PENALTY U/ 271(1)(C) OF THE ACT UPON THE ASSESSEE FOR FURNISHING INACCURATE P ARTICULARS OF INCOME. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT IT HAD FURNISHED COMPLETE PARTICULARS OF ITS INCOME AND HAD MADE A BON AFIDE CLAIM MERELY BECAUSE THE SAID CLAIM WAS REJECTED DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME, JUSTIFYING THE LEV Y OF PENALTY U/S 271(1)(C) OF THE ACT. WE FIND MERIT IN THE CLAIM OF THE ASSESSEE. IN SUCH CASES WHERE THE ASSESSEE HAD MADE A BONAFIDE CLAIM AND FU RNISHED COMPLETE PARTICULARS WITH REGARD TO ITS CLAIM, THE DI SALLOWANCE OF SUCH A CLAIM ON ACCOUNT OF DIFFERENCE OF OPINION AND INTER PRETATION OF LAW DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. MERE NON- ACCEPTABILITY OF A CLAM IN LAW DOES NOT JUSTIFY INVOK ING EXPLANATION TO SECTION 271(1)(C) OF THE ACT AND, THEREFORE, THE ASSESSI NG OFFICER / CIT(A) ERRED IN LEVYING THE PENALTY BASED ON THE SAID EXPLAN ATION. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COU RT IN CIT VS. RELIANCE PETRO PRODUCTS PVT LTD [322 ITR 158 (SC)] AND HON'BL E PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MILL S LTD [322 ITR 73 (P&H)]. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS NOT LI ABLE TO THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. WE SET ASIDE THE ORD ER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVI ED U/S 271(1)(C) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED . 9. THE LD. AUTHORISED REPRESENTATIVE HAS ALSO PLACED ON RECORD A COPY OF ORDER OF THE COORDINATE BENCH IN ASSESSEES OW N CASE FOR A.YRS. 2007-08 AND 2008-09 IN ITA NOS. 2019 AND 2025/PN/2013 DECIDED ON 21-10-2014, WHEREIN THE PENALTY U/S.271(1)(C) WAS DELETED. A PERUSAL OF THE SAID ORDER SHOWS THAT THE TRIBUNAL DELETED THE P ENALTY 7 ITA NO.2158/PN/2014 U/S.271(1)(C) IN THE AFORESAID ASSESSMENT YEAR ON DIFFERENT GR OUND. THUS, PARITY CANNOT BE DRAWN IN THE FACTS & CIRCUMSTANCE S BETWEEN THE ASSESSMENT YEAR UNDER PRESENT APPEAL AND THE EARLIER O RDER OF TRIBUNAL. 10. THE ASSESSMENT YEAR 2003-04 UNDER APPEAL WAS THE FIRST YEAR AFTER INSERTION OF EXPLANATION TO SECTION 10(20) BY THE FINAN CE ACT, 2002, THE EXPLANATION FURNISHED BY THE ASSESSEE IN CLAIMING WRONG EXEMPTION APPEARS TO BE BONAFIDE. THUS IN VIEW OF THE FA CTS OF THE CASE AND THE DECISIONS DISCUSSED ABOVE, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE CIT(A) IN DELETING THE PENALTY. THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF THE DEPARTMENT IS DISMISSED BEING DEVOID OF ANY MERIT. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 29 TH DAY OF JUNE, 2016. SD/- SD/- ( R.K.PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER IQ.KS PUNE ; DATED : 29 TH JUNE, 2016. LRH'K ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(A)-2, NASHIK CIT-2, NASHIK # &&', ', IQ.KS / DR, ITAT, B PUNE; , / GUARD FILE. / BY ORDER , # & //TRUE COPY// ./ & ' / SR. PRIVATE SECRETARY ', IQ.KS / ITAT, PUNE