The Kolhapur Urban Co.op. Bank Ltd., V. Assistant Commissioner of Income-tax,

ITA 2160/PUN/2013

• Counselvise Citation: 216024514 RSA 2013
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: P S SHINGTE
• Keywords: Wrong claim
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2160/PN/2013 (ASSESSMENT YEAR : 2008-09) THE KOLHAPUR URBAN CO-OP. BANK LTD., 514 D, GANGAWESH, KOLHAPUR. PAN : AAAAT0942R . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 1, KOLHAPUR. . RESPONDENT ASSESSEE BY : MR. P. S. SHINGTE DEPARTMENT BY : MR. P. L. PATHADE DATE OF HEARING : 21-04-2014 DATE OF PRONOUNCEMENT : 25-04-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED A GAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 14.10.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 23.0 6.2011 PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL, THE SOLITARY GRIEVANCE OF THE AS SESSEE IS AGAINST THE ACTION OF THE CIT(A) IN SUSTAINING PENALTY IMPOSED BY THE ASSESSING OFFICER OF RS.10,63,896/- U/S 271(1)(C) OF THE ACT. 3. BRIEFLY PUT THE FACTS RELEVANT TO APPRECIATE THE CONTROVERSY CAN BE SUMMARIZED AS FOLLOWS. THE APPELLANT IS A CO-OPERA TIVE BANK ENGAGED IN THE BUSINESS OF BANKING AND FOR THE ASSESSMENT YEAR UND ER CONSIDERATION IT FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,80, 62,633/-, WHICH INTER-ALIA INCLUDED A CLAIM OF DEDUCTION U/S 36(1)(VIII) OF TH E ACT OF RS.43,03,786/-. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SUBJECT TO SCRUTINY ASSESSMENT U/S ITA NO.2160/PN/2013 A.Y. 2008-09 143(3) OF THE ACT ON 08.12.2010 WHEREIN THE TOTAL I NCOME WAS DETERMINED AT RS.3,07,26,460/-. IN THE ASSESSMENT SO FINALIZED T HE DEDUCTION CLAIMED BY THE ASSESSEE U/S 36(1)(VIII) OF THE ACT AMOUNTING TO RS .43,03,786/- WAS SCALED DOWN TO RS.8,60,757/- AND THE BALANCE OF RS.34,43,0 29/- WAS DISALLOWED. THE SAID DISALLOWANCE HAS SINCE BECOME FINAL. SUBSEQUE NTLY, VIDE ORDER DATED 23.06.2011 THE ASSESSING OFFICER HELD THE ASSESSEE GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT QUA THE CLAIM OF DEDUCTION U/S 36(1)(VIII) OF T HE ACT WHICH WAS DISALLOWED TO THE EXTENT OF RS.34,43,029/-. ACCORDINGLY, A PE NALTY EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED ON THE AFORESAID INCOME I.E. RS.10,63,896/- WAS IMPOSED BY THE ASSESSING OFFICER, WHICH HAS SINCE B EEN AFFIRMED BY THE CIT(A). HENCE THE PRESENT APPEAL OF THE ASSESSEE I S BEFORE US. 4. IN THE COURSE OF HEARING, THE LEARNED COUNSEL FO R THE ASSESSEE SUBMITTED THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE THERE WAS NO DELIBERATE OR MALA-FIDE INTENTION IN CLAIMIN G THE DEDUCTION U/S 36(1)(VIII) OF THE ACT OF RS.43,03,786/- AS AGAINST THE AMOUNT OF RS.8,60,757/- ALLOWED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE LEARNED COUNSEL POINTED OUT THAT THE DEDUCTION PERMISSIBLE IN TERMS OF SECTION 36(1) (VIII) OF THE ACT WAS EXTENDED TO CO-OPERATIVE BANKS BY THE FINANCE ACT, 2007 W.E.F. ASSESSMENT YEAR 2008-09 AND IT WAS CLAIMED BY THE ASSESSEE FOR THE FIRST TIME DURING THE YEAR UNDER CONSIDERATION. THE LEARNED COUNSEL POIN TED OUT THAT THE ONLY DIFFERENCE BETWEEN THE ASSESSEE AND THE REVENUE WAS ON THE CORRECT AMOUNT OF DEDUCTION AVAILABLE AND IN SO FAR AS THE ELIGIBI LITY OF THE ASSESSEE FOR AVAILING OF DEDUCTION U/S 36(1)(VIII) OF THE ACT IS CONCERNED, THERE IS NO DISPUTE. IT WAS THEREFORE POINTED OUT THAT A MERE WRONG COMP UTATION OF DEDUCTION U/S 36(1)(VIII) OF THE ACT WOULD NOT AMOUNT TO CONCEALM ENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND IN SUPPORT A REFERENCE HAS BEEN MADE TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) ITA NO.2160/PN/2013 A.Y. 2008-09 322 ITR 158 (SC). THE LEARNED COUNSEL POINTED OUT THAT IN THE RETURN OF INCOME FILED THERE WAS NO INACCURATE PARTICULARS OF INCOME BUT IT WAS SIMPLY A CASE OF WRONG COMPUTATION OF DEDUCTION, WHICH WAS O THERWISE ALLOWABLE TO THE ASSESSEE. THE LEARNED COUNSEL FURTHER EXPLAINED TH AT IN THE COURSE OF ASSESSMENT PROCEEDINGS WHEN ASSESSEE WAS POINTED OU T THAT THE CLAIM WAS INCORRECTLY COMPUTED, THE ASSESSEE CORRECTED THE CL AIM BY FILING A REVISED COMPUTATION OF INCOME AND ADDITIONAL TAX WAS VOLUNT ARILY PAID BY THE ASSESSEE WHICH WOULD SHOW THAT THERE WAS NO BASIC INTENTION OF CLAIMING DEDUCTION OVER AND ABOVE THE AMOUNT ELIGIBLE IN TERMS OF THE STATU TORY PROVISION. FOR ALL THE ABOVE REASONS, THE CLAIM OF THE ASSESSEE IS THAT PE NALTY U/S 271(1)(C) OF THE ACT IS NOT MERITED. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE CLAIM BY POINTING OUT THAT MERELY BECAUSE COMPUTATION OF INCOME WAS VOLUNTARILY REVISED MADE BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS WOULD NOT JUSTIFY MAKING OF A WRONG CLAIM ORIGINALLY IN THE RETURN OF INCOME FILED. THEREFORE, ONCE ASSESS EE ADMITTED THAT IT IS CASE OF EXCESS DEDUCTION CLAIMED IN THE RETURN OF INCOME, T HE PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN RIGHTLY IMPOSED BY THE ASSESSING O FFICER. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT IS W ITH REGARD TO CLAIM OF DEDUCTION MADE BY THE ASSESSEE IN THE RETURN OF INC OME IN TERMS OF SECTION 36(1)(VIII) OF THE ACT, WHICH WAS FOUND TO BE IN EX CESS OF WHAT WAS CORRECTLY ALLOWABLE AS PER THE SAID SECTION. SECTION 36(1)(V III) OF THE ACT PERMITS DEDUCTION IN RESPECT OF ANY SPECIAL RESERVE CREATED AND MAINTAINED BY THE ENTITIES SPECIFIED THEREIN, WHERE THE AMOUNT DOES N OT EXCEED 20% OF THE PROFITS DERIVED FROM THE ELIGIBLE BUSINESS. THE SA ID PROVISION HAS BEEN MADE APPLICABLE TO THE CLASS OF ASSESSEES BEFORE US, NAM ELY, A CO-OPERATIVE BANK, BY THE FINANCE ACT, 2007 AND ACCORDINGLY, THE CLAIM OF THE ASSESSEE IN THE ITA NO.2160/PN/2013 A.Y. 2008-09 IMPUGNED ASSESSMENT YEAR OF 2008-09. THE ASSESSEE CLAIMED A DEDUCTION U/S 36(1)(VIII) OF THE ACT OF RS.43,03,786/- THOUGH THE SPECIAL RESERVE CREATED AS PER THE REQUIREMENTS OF SECTION 36(1)(VIII) OF T HE ACT WAS ONLY TO THE EXTENT OF RS.9,00,000/-. IN-FACT, THE NET INCOME EARNED B Y THE ASSESSEE FROM THE SPECIFIED BUSINESS I.E. THE ELIGIBLE BUSINESS PRESC RIBED BY SECTION 36(1)(VIII) OF THE ACT, WAS WORKED OUT AT RS.43,03,786/-, AND THE ENTIRE AMOUNT OF SUCH INCOME WAS INCORRECTLY CLAIMED AS A DEDUCTION IN TE RMS OF SECTION 36(1)(VIII) OF THE ACT WHEREAS IN TERMS OF THE REQUIREMENTS OF SEC TION 36(1)(VIII) OF THE ACT, DEDUCTION PERMISSIBLE WAS ONLY IN RESPECT OF THE SP ECIAL RESERVE CREATED AND MAINTAINED OF AN AMOUNT NOT EXCEEDING 20% OF THE PR OFITS DERIVED FROM THE ELIGIBLE BUSINESS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, WHEN ASSESSEE WAS SHOW-CAUSED ON THIS ISSUE, ASSESSEE EX PLAINED THAT SINCE THE AMENDMENT WAS NEWLY INTRODUCED IN THE ACT AND AT TH E TIME OF FILING OF RETURN OF INCOME THERE WERE DIFFERENT INTERPRETATIONS, A W RONG CLAIM WAS MADE AND THE ASSESSEE IMMEDIATELY RECTIFIED THE MISTAKE AND PAID TAXES ACCORDINGLY. AS A RESULT, THE CLAIM OF DEDUCTION U/S 36(1)(VIII) OF THE ACT STOOD REVISED TO RS.8,60,757/- INSTEAD OF ORIGINAL CLAIM MADE IN THE RETURN OF INCOME OF RS.43,03,786/-. IT IS QUA THE SAID DIFFERENTIAL OF RS.34,43,029/- THAT THE ASSESSEE HAS BEEN HELD TO BE GUILTY OF FURNISHING I NACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF T HE ACT. 7. THOUGH, THERE IS NO DISPUTE THAT THE CLAIM OF DE DUCTION MADE IN THE RETURN OF INCOME AT RS.43,03,786/- WAS NOT MAINTAIN ABLE BUT THE MOOT POINT BEFORE US IS AS TO WHETHER THE SAME WOULD AMOUNT TO A DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. IN THIS C ONTEXT, IT MAY BE APPROPRIATE TO REFER TO THE JUDGEMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT MAKING OF AN INCORRECT CLAIM IN THE RETURN OF INCOME WOULD NOT T ANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT UNLESS ANY INFORMATION OR PARTICULARS GIVEN IN THE RETURN ARE FOUND TO BE ITA NO.2160/PN/2013 A.Y. 2008-09 INCORRECT OR FALSE. IN THE PRESENT CASE, THERE IS NO CONCEALMENT OF ANY OF THE PARTICULARS OF INCOME IN QUESTION. THERE IS NO DIS PUTE THAT ASSESSEE FALLS WITHIN THE PURVIEW OF SECTION 36(1)(VIII) OF THE AC T AND ALSO THE FACT THAT IT HAS EARNED INCOME FROM THE ELIGIBLE BUSINESS, WHICH QUA LIFIES FOR THE DEDUCTION U/S 36(1)(VIII) OF THE ACT. THE ONLY ISSUE IS THAT THE QUANTUM OF DEDUCTION U/S 36(1)(VIII) OF THE ACT COMPUTED AND CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME WAS NOT IN ORDER. SO HOWEVER, ON FACTS THER E IS NO CONCEALMENT OF THE PARTICULARS OF INCOME FURNISHED BY THE ASSESSEE QUA THE IMPUGNED DISALLOWANCE MADE BY THE ASSESSING OFFICER. THERE IS NO FINDING THAT ANY OF THE DETAILS OR PARTICULARS OF INCOME FURNISHED BY T HE ASSESSEE IN ITS RETURN OF INCOME WERE FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE SO AS TO ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. A MERE WRONG COM PUTATION OF A CLAIM OF DEDUCTION BY ITSELF DOES NOT AMOUNT TO FURNISHING O F INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE, WITHIN THE ME ANING OF SECTION 271(1)(C) OF THE ACT. THEREFORE, CONSIDERING THE FACTS AND C IRCUMSTANCES OF THE CASE, IN OUR VIEW, THE ASSESSING OFFICER WAS WRONG IN HOLDIN G THE ASSESSEE GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME QUA THE SCALING DOWN OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 36(1)(VIII) OF THE ACT BY A SUM OF RS.34,43,029/-. 8. MOREOVER, IT MAY ALSO BE MENTIONED THAT APART FR OM MAKING A BALD ASSERTION THAT THE WRONG COMPUTATION OF CLAIM U/S 3 6(1)(VIII) OF THE ACT WAS MADE DELIBERATELY, THE ASSESSING OFFICER HAS NOT RE FERRED TO ANY MATERIAL IN SUPPORT OF THE SAME. IN-FACT, ASSESSEE HAD POINTED OUT BEFORE THE ASSESSING OFFICER THAT THE AMENDMENT WAS INTRODUCED IN THE AC T W.E.F. ASSESSMENT YEAR 2008-09 AND AT THE TIME OF COMPUTATION OF DEDUCTION THERE WERE INDEPENDENT INTERPRETATIONS AND OPINIONS AND IT COULD NOT BE SA ID THAT THE CLAIM WAS MADE AT A HIGHER FIGURE DELIBERATELY. IN-FACT, IN THE C OURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FILED A WRITTEN COMMUNICATION DATED 17.05.2011 TO THE ASSESSING OFFICER, WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN PARA 3.1 OF HIS ORDER. IN SUCH WRITTEN SUBMISSIONS , ASSESSEE HAS ASSERTED THAT ITA NO.2160/PN/2013 A.Y. 2008-09 DURING ASSESSMENT PROCEEDINGS THE MATTER WAS DISCUS SED WITH VARIOUS AUTHORITIES OF THE INCOME-TAX DEPARTMENT AND THERE WERE DIFFERENT INTERPRETATIONS EVEN AMONGST THEM. THE AFORESAID A SSERTION OF THE ASSESSEE DOES INDICATE THAT THE INCORRECT CLAIM COMPUTED IN THE RETURN OF INCOME WAS A BONA-FIDE ERROR, AND THE SAME STOOD CORRECTED BY RE VISING THE COMPUTATION OF INCOME AND PAYING TAXES VOLUNTARILY BEFORE COMPLETI ON OF THE ASSESSMENT. IN SUM AND SUBSTANCE, HAVING REGARD TO THE FACTS AND C IRCUMSTANCES OF THE CASE, IT WOULD BE WRONG TO INTERPRET AND SAY THAT THE WRO NG COMPUTATION OF DEDUCTION U/S 36(1)(VIII) OF THE ACT MADE IN THE RETURN OF IN COME WAS A DELIBERATE ACT. 9. IN VIEW OF THE AFORESAID DISCUSSION, WE HOLD THA T THE AUTHORITIES BELOW HAD ERRED IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT IN THE PRESENT CASE QUA THE EXCESS CLAIM OF DEDUCTION MADE BY THE ASSESSEE IN ITS RETURN OF INCOME U/S 36(1)(VIII) OF THE ACT. ACCORDINGLY, WE SET-AS IDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.43,03,786/-. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 25 TH APRIL, 2014. SUJEET 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 A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE