The ACIT, Circle-2, RAJKOT-GUJARAT V. Shree Kamdar Education Trust, RAJKOT-GUJARAT

ITA 254/RJT/2013

• Counselvise Citation: 25424914 RSA 2013
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR J B JHAVERI
• Assessee Lawyers: VIMAL DESAI CA
• Keywords: Business income; Audit objection; Question of law; Difference of opinion; Non compliance; Procedural lapse; Tax effect
• Section: 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN, A M ITA NOS. 254 & 255/RJT/2013 / ASSESSMENT YEAR : 2008-09 & 2009-10 ACIT, CIRCLE-2, RAJKOT ( / APPELLANT) SHREE KAMADAR EDUCATION TRUST, VINOD, KARANPARA-2, RAJKOT PAN : AAATK 4099 H / RESPONDENT ! '# / REVENUE BY DR. J. B. JHAVERI, DR $% ! '# / ASSESSEE BY SHRI VIMAL DESAI, CA ' & ' %( / DATE OF HEARING 06.01.2014 ) %( / DATE OF PRONOUNCEMENT 09.01.2014 / ORDER .. , / T. K. SHARMA, J. M.: THESE TWO APPEALS BY THE REVENUE ARE AGAINST A COMMON ORDER DATED 08.03.2013 OF LD. CIT(A)-III CANCELLING THE PENALTY OF RS.1,00,000/- FOR THE ASSESSMENT YEAR 20 08-09 AND RS. 1,00,000/- FOR THE ASSESSMENT YEAR 2009-10 LEVIED BY THE ASSESSING OFF ICER U/S 271B OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST IS ENGAGED IN THE CHARITABLE ACTIVITY OF IMPARTING EDUCATION. IN THE ASSESSMENT PROCEEDIN GS FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL, THE ASSESSEE DENIED BENEFIT OF EXEMPT ION U/S 11 OF THE INCOME-TAX ACT AND ITS INCOME WAS TREATED AS BUSINESS INCOME. SINC E THE GROSS RECEIPT OF THE ASSESSEE WAS IN EXCESS OF RS.40 LAKHS, THE ASSESSING OFFICER TOOK A VIEW THAT PROVISIONS OF SECTION 44AB OF THE INCOME-TAX ACT APPLIES TO THE A SSESSEE AND HE ACCORDINGLY INITIATED PENALTY PROCEEDINGS U/S 271B OF THE INCOME-TAX ACT, 1961 FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL. SUBSEQUENTLY, VIDE SEPARATE OR DERS, I.E. ORDER DATED 30.05.2011 FOR AY 2008-09 AND DATED 23.03.2012 FOR AY 2009-10, THE ASSESSING OFFICER LEVIED PENALTY U/S 271B OF THE INCOME-TAX ACT FOR RS.1,00, 000/- EACH FOR BOTH THE ASSESSMENT YEARS. ON APPEAL, IN THE IMPUGNED ORDER, LD. CIT(A ) CANCELLED THE PENALTY FOR BOTH THE ASSESSMENT YEARS FOR THE DETAILED REASON GIVEN IN P ARAGRAPH 6, WHICH READS AS UNDER:- 254 & 255-RJT-2013 SHREE KAMADAR EDUCATION TRUST 2 6. THE FACTS AND CIRCUMSTANCES IN THE YEARS UNDER APPEAL ARE SAME AND I AM IN AGREEMENT WITH THE VIEW TAKEN BY MY PREDECESSOR IN A.Y. 2005-06 THAT PENALTY U/S 271B IS NOT ATTRACTED IN APPELLANTS CASE. THE OBLIGATION PRESCRIBED U/S 44AB ARISES AT THE TIME OF RETURN OF INCOME. THE APPELLA NT, IN THE RETURN OF INCOME, OFFERED THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. HENCE, IT DID NOT HAVE ANY OCCASION TO OBTAIN THE AUDIT REPORT IN FOR M 3CD AT THE TIME OF FILING THE RETURN OF INCOME. THE QUESTION OF NON COMPLIANCE WI TH THE PROVISIONS OF SECTION 44AB ARISES AT THE TIME OF FILING OF RETURN OF INCO ME AND THEREFORE THE OBLIGATION SHOULD BE EXISTING ON THAT DATE OF FILING RETURN OF INCOME AND NOT AFTERWARDS. SINCE THE APPELLANT OFFERED THE INCOME UNDER THE HE AD INCOME FROM OTHER SOURCES, THE SAID OBLIGATION DID NOT EXIST ON THE D ATE OF FILING RETURN OF INCOME AND HENCE THE QUESTION OF DEFAULT DOES NOT ARISE. THE Q UESTION WHETHER THE INCOME OF THE APPELLANT FALLS UNDER THE HEAD INCOME FROM OTHE R SOURCES OR ITS IS INCOME FROM BUSINESS IS A SUBSTANTIAL QUESTION OF LAW PEND ING FOR ADJUDICATION BEFORE THE GUJARAT HIGH COURT. UNDER THE CIRCUMSTANCES, THE ST AND OF THE APPELLANT DESERVES TO BE ACCEPTED AS BONAFIDE ONE. THE DEBATA BLE LEGAL ISSUE OF PROPER HEAD OF INCOME WHICH IS CAPABLE OF TWO VIEWS CANNOT BE MADE SUBJECT MATTER OF PENALTY PRESCRIBED FOR PROCEDURAL LAPSE OF AUDIT RE PORT BY SIMPLY TAKING ONE VIEW OUT OF THE TWO POSSIBLE VIEWS. SUCH A MATTER INVOLV ING DIFFERENCE OF OPINION AND INTERPRETATION OF LAW CANNOT BE SUBJECT MATTER OF A NY PENALTY. EVEN OTHERWISE, THE SUBSTANTIVE REQUIREMENT OF AUDIT AND AUDIT REPORT H AVE BEEN COMPLIED WITH AS THE APPELLANT FURNISHED ALONG WITH THE RETURN OF INCOME AUDIT REPORT UNDER BOMBAY PUBLIC TRUST ACT AS WELL AS UNDER INCOME TAX ACT IN FORM NO.10B. THE GRIEVANCE OF THE ASSESSING OFFICER IS CONFINED TO THE FORM TH AT DETAILS IN FORM 3CD WERE NOT FURNISHED. THIS GRIEVANCE DOES NOT APPEAR TO BE REA SONABLE IN ANY MANNER FOR LEVY OF PENALTY. IN VIEW OF THIS REASONING AND FOLL OWING THE DECISION OF MY PREDECESSOR IN APPELLANTS OWN CASE FOR A.Y. 2005-0 6, I CANCEL THE PENALTIES LEVIED BY THE ASSESSING OFFER U/S 271B FOR BOTH THE ASSESSMENT YEARS VIZ. 2008- 09 & 2009-10. THIS GROUND OF APPEAL IS ALLOWED. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE REVENU E IS NOW IN APPEAL BEFORE THIS TRIBUNAL FOR BOTH THE ASSESSMENT YEARS. 3. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE ASSESSEE, SHRI VIMAL DESAI, CA, APPEARED AND CONTENDED THAT THESE TWO APPEALS A RE FILED BY THE DEPARTMENT ON 23.05.2013; THEREFORE, IT GOVERNED BY THE INSTRUCTI ON NO.3/2011 (F.NO.279/MISC.142/2007-ITJ) DATED 09.02.2011 ISSUE D BY C.B.D.T. IN REGARD TO FILING OF APPEALS, INTER ALIA, BEFORE ITAT. THE MONETARY L IMIT IN REGARD TO TAX EFFECT LAID DOWN IN THE SAID INSTRUCTION FOR FILING APPEAL BEFORE THE T RIBUNAL IS RS.3 LAKHS. ADMITTEDLY, TAX EFFECT IN THE PRESENT APPEAL IS LESS THAN RS.3 LAKH S. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT BOTH THE APPEALS DO NOT FALL UNDER ANY OF THE EXCEPTIONS MENTIONED IN INSTRUCTION NO.3/2011 DATED 09.02.2011 . HE FURTHER SUBMITTED THAT PENALTY U/S 271B IS CANCELLED BY ITAT, A BENCH OF KOLKATA IN ITA NO.669/KOL/2011 IN THE CASE OF ITO V. AMITAVA KEJRIWAL FOR THE ASSESSMENT YEAR 2005-06. THE COPY OF THE SAID DECISION IS PLACED ON RECORD. 254 & 255-RJT-2013 SHREE KAMADAR EDUCATION TRUST 3 4. DR. J. B. JHAVERI, DR, APPEARED FOR THE REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD. COUNSEL OF TH E ASSESSEE. 5. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE INSTRUCTION NO.03/2011 DA TED 09.02.2011 ISSUED BY C.B.D.T., WHICH WAS RELIED BY THE LD. COUNSEL OF THE ASSESSEE . IN PARAGRAPH NO.8 OF THE INSTRUCTION NO.3/2011 DATED 09.02.2011 PROVIDED EXC EPTIONS WHERE APPEAL CAN BE PREFERRED BY THE DEPARTMENT EVEN IF TAX EFFECT IS L ESS THAN RS.3 LAKHS. THE SAID PARAGRAPH OF THE INSTRUCTION NO.3/2011 READS AS UND ER:- 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING IS SUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT . (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE P ROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUC TION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. ADMITTEDLY, THE PRESENT APPEALS DO NOT FALL UNDER A NY OF THE ABOVE MENTIONED EXCEPTIONS; THEREFORE, THE APPEALS FILED BY THE REV ENUE ARE HIT BY INSTRUCTION NO.3/2011 DATED 09.02.2011. THE ITAT, A BENCH OF KOLKATA I N ITA NO.669/KOL/2011 IN THE CASE OF ITO V. AMITAVA KEJRIWAL FOR THE ASSESSMENT YEAR 2005-06 ALSO CANCELLED THE PENALTY LEVIED U/S 271B FOLLOWING THE INSTRUCTION NO.3/2011 DATED 09.02.2011 ISSUED BY THE C.B.D.T. IN REGARD TO FILING THE APPEALS, INTER-ALI A, BEFORE THE ITAT. IN VIEW OF INSTRUCTION NO.3/2011 DATED 09.02.2011, WE DISMISS BOTH THE APP EALS OF THE REVENUE. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- (B. R. JAIN) (T. K. SHARMA) #( '* / ACCOUNTANT MEMBER '* /JUDICIAL MEMBER *#+ ,*-/ ORDER DATE 09.01.2014 /RAJKOT *BT 254 & 255-RJT-2013 SHREE KAMADAR EDUCATION TRUST 4 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- ACIT, CIRCLE-2, RAJKOT 2. /RESPONDENT- SHREE KAMADAR EDUCATION TRUST, VINOD , KARANPARA-2, RAJKOT 3. '-2- % & 3% / CIT-II, RAJKOT 4. & 3%- / CIT (A)-III, RAJKOT 5 . 678 % , , / DR, ITAT, RAJKOT 6 . 89 :; / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT. 254 & 255-RJT-2013 SHREE KAMADAR EDUCATION TRUST 5 1.DATE OF DICTATION : 06-01-2014 2.DATE OF PLACING THE DRAFT. : 06-01-2014 3.DATE OF APPROVAL OF DRAFT. : 4.DATE OF RETURN FROM JM : 5.DATE OF PRONOUNCEMENT : 6.DATE OF SENDING TO BENCH CLERK : 7.DATE OF RECEIPT BY BENCH CLERK : 8.DATE OF PLACING IT FOR ENDORSEMENT : 9.DATE OF ENDORSEMENT : 10.DATE OF DISPATCH :