The ACIT, 2(1), Bhopal V. M/s Betul Zila Sahkari Krishi Aur Gramin Vikas Bank, Betul

ITA 239/IND/2011

• Counselvise Citation: 23922714 RSA 2011
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: B L SAHU SR BR MANAGER BANK
• Keywords: Initiation of penalty proceedings; Bad and doubtful debts; Revised return
• Section: 143(3); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 239/IND/2011 A.Y. 2007-08 ACIT-2(1), BHOPAL . APPELLANT VS. BETUL ZILA SAHKARI KRISHI AUR GRAMIN VIKAS BANK, BETUL . RESPONDENT DATE OF HEARING : 23.1.2012 DATE OF PRONOUNCEMENT : 23.1.2012 APPELLANT BY SHRI ARUN DEWAN, SR. DR RESPONDENT BY SHRI B.L. SAHU, SR. BR. MANAGER, ASSE SSEE BANK ORDER PER JOGINDER SINGH THE REVENUE IS AGGRIEVED BY THE ORDER DATED 18.7.2 011 OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, BHO PAL, WHEREIN, THE PENALTY OF RS.11 LACS IMPOSED UNDER SECTION 271(1) OF THE ACT WAS DELETED. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD LEA RNED REPRESENTATIVES OF BOTH SIDES. THE CRUX OF ARGUMENT S ON BEHALF OF THE 2 REVENUE IS THAT THE PENALTY WAS WRONGLY DELETED BY THE LD. FIRST APPELLATE AUTHORITY AS THERE IS A CONCEALMENT OF INCOME BY TH E ASSESSEE BY FURNISHING INACCURATE PARTICULARS. ON THE OTHER HAN D, SHRI B.L. SAHU, SENIOR BR. MANAGER OF THE ASSESSEE BANK DEFENDED TH E IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE BANK DECLARED NIL INCO ME IN THE ORIGINAL RETURN FILED ON 28.3.2008. SUBSEQUENTLY, ON 31.12.2 009, THE INCOME WAS ASSESSED AT A TOTAL LOSS OF RS.1,11,78,670/- IN AN ORDER FRAMED U/S 143(3) OF THE ACT, WHEREIN, THE LD. ASSESSING OFFIC ER OBSERVED THAT THE ASSESSEE CLAIMED RS.3,00,67,000/- AS PROVISION FOR BAD AND DOUBTFUL DEBTS. AS PER THE REVENUE AND IN VIEW OF THE PROVIS IONS OF SEC. 36(1)(VIA) OF THE ACT, THE CLAIM IS ALLOWABLE TO TH E EXTENT OF 7.5% OF THE TOTAL INCOME AND NOT EXCEEDING 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES. AS ON 31.3.2007, THE AD VANCES WERE RS.26,40,65,789/-, THEREFORE, THE DEDUCTION @10% WO RKED OUT TO RS.2,64,06,579/- AGAINST WHICH THE ASSESSEE CALIEMD RS. 3,00,67,000/-. AS PER THE LD. ASSESSING OFFICER, THUS, THE ASSESSE E CLAIMED EXCESS BAD AND DOUBTFUL DEBTS TO THE TUNE OF RS. 36,60,421/- W HICH WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. PENALTY PR OCEEDINGS U/S 271(1) OF THE ACT WERE ALSO INITIATED. 3 4. BEFORE THE LD. CIT(A), THE CLAIM OF THE ASSESSEE WAS THAT THE IMPUGNED CLAIM WAS UNDER THE INSTRUCTIONS OF THE M. P. STATE RURAL & DEVELOPMENT BANK LTD. WHICH IS THE APEX BODY OF THE ASSESSEE BANK AND SINCE THERE WAS NO CONCEALMENT OF INCOME OR FIL ING OF INACCURATE PARTICULARS, THEREFORE, NO PENALTY IS LEVIABLE. THE LD. CIT(A) DELETED THE PENALTY WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUN AL. 5. FOR IMPOSING PENALTY U/S 271(1) OF THE ACT, EIT HER THERE SHOULD BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME. THE FACT REMAINS THAT THE ASSESSEE EVEN IF MADE AN EXCESSIVE CLAIM BY FILING THE RETURN, WE ARE OF THE OPINION T HAT NO PENALTY IS LEVIABLE BECAUSE FOR CLAIMING EXCESS CLAIM ITSELF DOES NOT T ANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF CONCEALMENT OF INCOME. OUR VIEW IS FORTIFIED BY THE DECISION FROM THE HONBLE APEX COU RT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (2010) 322 ITR 158, CIT VS. SIDHARTH ENTERPRISES (2010) 322 ITR 80 (P & H) AND CIT VS. S HAHBAD CO- OPERATIVE SUGAR MILLS LTD. (2010) 322 ITR 73 (P & H ). NOW THE QUESTION ARISES WHETHER THE PENALTY CAN BE LEVIED ON THE INC OME DECLARED BY THE ASSESSEE OR EXCESSIVE CLAIM, IF ANY, SO MADE IN THE RETURN? THE OBVIOUS REPLY IS NO BECAUSE THE ASSESSEE IS COVERED BY TH E UMBRELLA OF THE HONBLE JURISDICTIONAL HIGH COURT IN SURESHCHAND MI TTAL; 241 ITR 124 WHEREIN IT WAS HELD AS UNDER :- 4 HEAD NOTES THE ASSESSEES RETURNS WERE FILED ORIGI NALLY SHOWING A MEAGRE INCOME. LATER ON, IN PURSUANCE OF A NOTICE ISSUED U/S 148 OF THE INCOME TAX ACT, 1961, REVISED RETURNS WERE FILED SHOWING HIGHER INCOME TO PURCHAS E PEACE OF MIND AND AVOID VEXATIOUS LITIGATION. THE R EVISED RETURNS WERE ACCEPTED AND REGULARIZED BY THE REVENU E. ON INITIATION OF PENALTY PROCEEDINGS U/S 271(1), THE TRIBUNAL HELD THAT PENALTY COULD NOT BE LEVIED BECAUSE THERE WAS NO CONCEALMENT. ON REFERENCE, HELD THAT THE ASSESSMENT WAS MADE BY THE REVENUE AND ONCE THE ASSESSING OFFICER HAD FAILED TO TAKE A NY OBJECTION IN THE MATTER, THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN HIS REVISED RETURNS AND THE EXPLANA TION THAT HE HAD DONE SO TO BUY PEACE WITH THE DEPARTMEN T AND TO COME OUT OF VEXED LITIGATION COULD BE TREATED AS BONAFIDE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDI NGLY, NO PENALTY COULD BE LEVIED FOR CONCEALMENT. IT IS PERTINENT TO MENTION HERE THAT THE AFORESAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WAS AFFIRMED BY THE HONB LE APEX COURT REPORTED IN 251 ITR 9. THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PRIVATE LIMITED; (2 010) 322 ITR 158 FURTHER SUPPORTS THE CASE OF THE ASSESSEE, WHEREIN, IT WAS CLEARLY HELD THAT MERE MAKING INCORRECT CLAIM IN THE RETURN DOES NOT TANTAMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME. THE HONBLE COURT HELD AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1) OF T HE INCOME TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUS T HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2 71(1) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, 5 THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STR ETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE TH E ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DE TAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOJND TO BE INCOR RECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1). A MERE MAKING OF A CLAIM, WHI CH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANN OT AMOUNT TO FURNISHING INACCURATE PARTICULARS. IN VIEW OF THE ABOVE, IT CAN BE SAID THAT MERE MAKI NG OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSE SSEE. THEREFORE, IT DOES NOT AMOUNT TO FURNISHING ACCURATE PARTICULARS OF INCOME. THE HONBLE APEX COURT IN THE AFORESAID CASE, WHILE COM ING TO A PARTICULAR CONCLUSION, AFFIRMED THE DECISION OF HONBLE GUJARA T HIGH COURT AND FURTHER PLACED RELIANCE ON DILIP N. SHROFF VS. JCIT ; 291 ITR 519 (SC), SHRIKRISHNA ELECTRICALS; 23 VST 249 (SC); ATUL MOH AN BINDAL; 317 ITR 1 (SC) AND ALSO THE DECISION OF DHARMENDRA TEXTILES P ROCESSORS; 306 ITR 277 AND RAJASTHAN SPINNING & WEAVING MILLS (2010) 1 GSTR 66 (SC). THEREFORE, WE ARE OF THE OPINION THAT NO PENALTY IS LEVIABLE. THE STAND OF 6 THE LD. CIT(A) IS AFFIRMED, RESULTING INTO DISMISSA L OF THE APPEAL, FILED BY THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 23.1.2012. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23.1.2012 COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR !VYS!