Bally Cooperative Bank Ltd., Howrah V. ACIT, Circle - 46, Kolkata, Kolkata

ITA 238/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48027 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 25-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2010
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR
• Assessee Lawyers: P J BHIDE

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 238/KOL/2010 %& '(/ ASSESSMENT YEAR : 2006-07 (*+ / APPELLANT ) BALLY CO-OPERATIVE BANK LTD.KOLKATA (PAN: AAAAB 5813 F) - % - - VERSUS - . (-.*+/ RESPONDENT ) THE A.C.I.T., CIRCLE-46, KOLKATA *+ / 0 '/ FOR THE APPELLANT: SHRI P.J.BHIDE -.*+ / 0 '/ FOR THE RESPONDENT: SHRI S.K.MALAKAR '1 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 26.11.2009 OF THE CIT(A)-XXX, KOLKATA PERTAINING TO A.YR. 2006-07. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS I SSUE IS IN RESPECT OF CONFIRMATION OF PENALTY LEVIED U/S 271(1)(C) OF THE IT ACT 3. THE BRIEF FACTS OF THIS CASE ARE THAT THE AO LEV IED PENALTY OF RS.52,74,696/- BY OBSERVING THAT :- THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS CO- OPERATIVE BANK DOING THE BANKING BUSINESS AND DERIVED HEAVY LOSS AS IN THE P AST. THE LOSS OF THE ASSESSEE FOR THE PARTICULAR ASSESSMENT YEAR IS ACCEPTABLE AT PAR IF THE LOSS IS GENUINE, BUT IN NO CASE LOSS OF THE EARLIER YEAR CANNOT BE CLAIM ED AS LOSS OF THE YEAR IN THE PROFIT AND LOSS ACCOUNT AS THERE IS OTHER PROVISION S FOR TREATMENT OF LOSSES. THEREFORE, THE ASSESSEE DEBITING THE LOSSES OF EARL IER YEAR IN THE PROFIT AND LOSS ACCOUNT OF THE YEAR UNDER CONSIDERATION IGNORING TH E SETTLED PRINCIPLE OF 2 ACCOUNTING AND PROVISIONS OF THE LAW SHOWN WITH INA CCURATE RESULT OF THE BUSINESS OF THE YEAR. IT IS NECESSARY TO MENTION HE RE THAT THE ASSESSEE VIDE WRITTEN REPLY DATED 23/12/2008 ACCEPTED THAT THE BA NK ADJUSTED THE DIFFERENCE IN F.Y. 2004-05, DEVIATING FROM THE STANDARD NORM OF A CCOUNTING PRACTICE AND ENTRY WAS REVERSED IN THE F.Y. 2005-06. THE CASE LA W REFERRED BY THE ASSESSEE IS FOUND TO BE NOT RELEVANT WITH THE FACTS OF THE A SSESSEES CASE. THEREFORE, IT IS CLEAR THAT THE ASSESSEE ENHANCED ITS LOSS BY DEBITI NG PROVISIONS OF EARLIER YEARS IN THE P/L ACCOUNT AND CONCEALED HIS PARTICULARS OF INCOME/LOSS AND THEREFORE, LIABLE FOR PENALTY U/S 271(1)(C) OF I.T.ACT. THEREF ORE, I IMPOSE PENALTY OF RS.52,74,696/- (RUPEES FIFTY TWO LAKHS SEVENTY FOUR LAKHS SEVENTY FOUR THOUSAND SIX HUNDRED NINETY SIX ONLY) U/S 271(1)(C) READ WITH SECTION 274 OF I.T.ACT WHICH IS MINIMUM PENALTY ON THE CONCEALED I NCOME. 3.1. ON APPEAL AFTER TAKING INTO CONSIDERATION OF V ARIOUS SUBMISSIONS AND CASE LAWS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE THE LD. CIT(A) AFTER DISCUSSING THE CASE LAWS CONFIRMED THE ACTION OF THE AO BY OBSERVING THAT :- THE APPELLANT DISCLOSED LOSS OF RS.2,39,56,973/-. THE APPELLANT DEBITED THE PROVISION TO THE PROFIT AND LOSS ACCOUNT TOWARDS TH E DIFFERENCE BETWEEN GENERAL LEDGER AND PERSONAL LEDGER. THE APPELLANT CONTENDS THAT AMOUNT IS DEBITED AS PER DIRECTION OF STATUTORY AUDITOR. THOUGH THE APPE LLANT HAS DEBITED PROVISION TO THE PROFIT AND LOSS ACCOUNT, THIS IS NOT ALLOWABLE DEDUCTION WHILE ARRIVING AT THE LOSS OF THIS YEAR. THE APPELLANT OUGHT TO HAVE ADDE D BACK THE PROVISION ARRIVED AT TO THE LOSS TO BE DETERMINE LOSS FOR THIS YEAR. SINCE THE APPELLANT FAILED TO MAKE ADJUSTMENT THE LOSS DISCLOSED BY THE APPELLANT IS INCORRECT. THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITH IN THE MEANING OF SEC. 271(1)(C). THE AO IS CORRECT AS PER LAW IN INITIATI NG THE PENALTY PROCEEDING U/S 271(1)(C). THE APPELLANT HAS NOT GIVEN A BONAFIDE E XPLANATION FOR THE LOSS CLAIMED OF RS.1,75,82,320/-, BEING THE DIFFERENCE B ETWEEN GENERAL LEDGER AND PERSONAL LEDGER. THE DIFFERENCE DOES NOT RELATE TO THIS YEAR AND IS ALSO NOT ALLOWABLE DEDUCTION. THE AO IS CORRECT AS PER LAW I N LEVYING PENALTY U/S 271(1)(C). THE AOS ACTION IS UPHELD. 3.2. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 4. AT THE TIME OF HEARING BEFORE US THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2006-07 EVEN THOUGH APPELLANT WAS NOT GUILTY OF CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE REVENUE AUTHORITIES WER E UNJUSTIFIED IN IMPOSING PENALTY U/S 271(1)(C) EVEN THOUGH THE APPELLANT WAS NOT GUI LTY OF CONCEALING PARTICULARS OF INCOME AND THEREFORE PENALTY LEVIED U/S 271(1)(C) D ESERVES TO BE DELETED. HE FURTHER 3 SUBMITTED THAT THE REVENUE AUTHORITIES WERE UNJUSTI FIED IN LEVYING PENALTY MERELY BECAUSE THE AMOUNT PROVIDED FOR IN THE PROFIT AND L OSS ACCOUNT WAS DISALLOWED IN THE ASSESSMENT WHICH FACT BY ITSELF DID NOT LEAD TO CON CLUSION THAT THE APPELLANT HAD CONCEALED PARTICULARS OF INCOME. THE APPELLANT HAVI NG PROVIDED FOR THE DIFFERENCE BETWEEN THE GENERAL LEDGER AND SUBSIDIARY LEDGER, I N ITS BOOKS OF ACCOUNTS AFTER CARRYING OUT RECONCILIATION EXERCISE IN CONFORMITY WITH RBI DIRECTIONS AND ADVICE OF THE AUDITORS, THE AUTHORITIES BELOW WERE UNJUSTIFIE D IN HOLDING THE ASSESSEE GUILTY OF ALLEGED CONCEALED PARTICULARS OF INCOME IN RESPECT OF AMOUNT PROVIDED FOR. HE FURTHER SUBMITTED THAT THE APPELLANTS INCOME HAVING BEEN E NTIRELY DERIVED FROM BANKING OPERATIONS WHICH WAS OTHERWISE FULLY DEDUCTIBLE U/S 80P OF THE ACT, THE AUTHORITIES BELOW OUGHT TO HAVE APPRECIATED THAT THE DISALLOWAN CE OF THE AMOUNT PROVIDED FOR WOULD NOT HAVE RESULTED IN CHARGEABLE INCOME IN THE HANDS OF THE APPELLANT AND THEREFORE THERE BEING NO TAX PAYABLE BY THE APPELLA NT. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED LOSS RETURN BEYOND THE TIME PRES CRIBED U/S 139(1) OF THE IT ACT AND IT IS NOT ENTITLED TO CARRY FORWARD THE SAID BUSINE SS LOSS TO BE SET OFF IN THE SUBSEQUENT ASSESSMENT YEARS. LEVY OF PENALTY FOR ALLEGED CONCE ALING PARTICULARS OF INCOME WAS UNJUSTIFIED. HE REQUESTED THAT THE PENALTY LEVIED U /S 271(1)(C) OF THE ACT MAY BE DELETED. 5. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIAL AVAILABLE ON RECORD, IT IS OBSERVED THAT THE SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS WRITTEN OFF THE DIFFERENCE BE TWEEN THE GENERAL LEDGER AND SUBSIDIARY LEDGER IN ITS BOOKS OF ACCOUNT TO CARRY OUT THE RECONCILIATION EXERCISE IN CONFORMITY WITH RBI DIRECTIONS AND ADVICE OF THE AU DITORS. HE FURTHER CONTENDED THAT THE ASSESSEES INCOME BEING OTHERWISE EXEMPTED U/S 80P OF THE IT ACT EVEN IF THE ASSESSEE CLAIMED THIS DIFFERENCE IT WILL BE AGAIN E XEMPTED U/S 80P SINCE IT CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME. AGAIN THE ARGU MENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS FILED LOSS RETURN BE YOND THE TIME PRESCRIBED U/S 139(1) 4 OF IT ACT HE IS NOT ENTITLED TO CARRY FORWARD THE B USINESS LOSS TO BE SET OFF IN THE SUBSEQUENT ASSESSMENT YEARS. ON CAREFUL PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE CIT(A) IT IS OBSERVED THAT THE ABOVE CONTENTION OF THE ASSESSEE HAS NOT BEEN CONSIDERED BY THE REVENUE IN OUR CONSIDERED OPINION THE ABOVE THREE POINTS ARE VITAL IN ORDER TO IMPOSE PENALTY U/S 271(1)(C) OF THE IT ACT. THEREFORE WE CONSIDER IT FIT TO SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH CONSIDERATION IN THE LIGHT OF SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSE E AND DISPOSE OF THE SAME AS PER LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 06.04.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 06.04.2011. '1 / -2 3'2'4- COPY OF THE ORDER FORWARDED TO: 1. BALLY CO-OPERATIVE BANK LTD., 396, G.T.ROAD, BALLY, HOWRAH-711201. 2 THE A.C.I.T., CIRCLE-46, KOLKATA. 3. THE CIT, 4. THE CIT(A)-XXX, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA .2 -/ TRUE COPY, '1%9/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.) 5