The ITO, Ward-1, Anand V. The Anand Peoples Co.Op.Bank Ltd., Anand

ITA 2808/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5882 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Assessee Lawyers: PRAMESH DOSHI

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2808/AHD/2014 ( / ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER WARD-1 AMAMD 388 001 / VS. THE ANAND PEOPLES CO.OP.BANK LTD. PEOPLES PALACE, SARDAR GUNJ ROAD AT:ANAND-388 001 $ ./ ./ PAN/GIR NO. : AAAAT 2812 Q ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : MR.ANTONY PARIATH, SR.DR ($'*) / RESPONDENT BY : MR. PRAMESH DOSHI, AR +,*- / DATE OF HEARING 16/05/2017 ./0*- / DATE OF PRONOUNCEMENT 17/ 05/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL HAS BEEN FILED BY THE REVENU E AGAINST THE REVERSAL OF ACTION OF THE ASSESSING OFFICER (AO) TO WARDS IMPOSING PENALTY UNDER S.271(1)(C) OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS 'THE ACT'). ITA NO. 2808/AH D/2014 ITO VS. THE ANAND PEOPLES CO.OP.BANK LTD. ASST.YEAR 2009-10 - 2 - 2. THE ASSESSEE A CO-OPERATIVE BANK UNDER THE LIQ UIDATION FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009- 10 DECLARING A BUSINESS LOSS OF RS.4,13,217/-. THE CASE WAS SUBJE CTED TO SCRUTINY ASSESSMENT. IN THE QUANTUM PROCEEDINGS, THE AO TR EATED THE INTEREST INCOME ON ADVANCES AS WELL AS INTEREST INCOME DEPOS ITED WITH BANKS AS INCOME FROM OTHER SOURCES AND TAXED AS SUCH WITHO UT ALLOWING DEDUCTION OF THE EXPENSES INCURRED. HOWEVER, THE A O ALLOWED DEDUCTION OF ESTIMATED EXPENSES @5% OF THE TOTAL INCOME. CON SEQUENTLY, PENALTY UNDER S.271(1)(C) OF THE ACT OF RS.16,57,780/- (BEI NG 100% OF THE TAX SOUGHT TO BE EVADED) WAS INTER ALIA IMPOSED ON THE ADDITION OF RS.53,74,988/-. 3. THE CIT(A), HOWEVER, DELETED THE PENALTY IMPOSE D BY THE AO IN THE FIRST APPELLATE PROCEEDINGS VIDE ORDER DATED 23 /07/2014. 4. AGAINST THE AFORESAID ORDER OF THE CIT(A), THE R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE PERUSED THE ORDERS OF THE AO AND THE CIT (A) IN QUANTUM AS WELL AS THE PENALTY PROCEEDINGS. WE FIND THAT T HE CONCLUSION OF THE CIT(A) FOR DELETION OF PENALTY PROCEEDINGS UNDER S. 271(1)(C) OF THE ACT IS ON A LEGALLY SOUND BASIS. THE RELEVANT PORTION OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER FOR READY REFERENCE: - ITA NO. 2808/AH D/2014 ITO VS. THE ANAND PEOPLES CO.OP.BANK LTD. ASST.YEAR 2009-10 - 3 - THIS IS CASE WHERE THE RETURN OF INCOME WAS FILED DECLARING LOSS OF RS.4,13,217/-. THE APPELLANT WAS IN RECEIPT OF INTEREST OF FDRS AMOUNTING TO RS.52,96,362/-. HOWEVER, THE3 ASSESSI NG OFFICER CONSIDERED THE SAME IS INCOME FROM OTHER SOURCES AS THE RBI HAD CANCELLED THE BANKING LICENCE OF THE APPELLANT ON 2 5/10/2005. AS THE APPELLANT COULD NOT CONDUCT BUSINESS OF BANKING DURING THE YEAR, THE SAME WAS LIABLE TO BE CONSIDERED AS INCOM E FROM OTHER SOURCES ONLY. HOWEVER, AS THE APPELLANT HAD SHOWN IT AS PROFIT & GAINS OF BUSINESS, THE ASSESSING OFFICER, WHILE PAS SING ORDER U/S.143(3) OF THE ACT HAD CONSIDERED THE SAME TO BE INCOME FROM OTHER SOURCES, THEREFORE PENALTY U/S.271(1)(C) OF T HE ACT WAS INITIATED AND LEVIED AS PER THE IMPUGNED ORDER. TH E ASSESSING OFFICER HAS RELIED UPON A NUMBER OF DECISIONS AS ME NTIONED IN PENALTY ORDER WHICH HAVE BEEN CHALLENGED BY THE APP ELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE UNDE RSIGNED. ON PERUSAL OF THE FACTUAL POSITION AND AS CASE LAWS , IT IS CLEAR THAT THE AMOUNT INVOLVED IN QUESTION WERE ALWAYS REFLECT ED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. FOR WHATEVER REASONS , THE BANKING LICENCE OF THE APPELLANT WAS CANCELLED BY THE RBI, THE FACT IS THAT THE APPELLANT IS GETTING SOME INCOME ON THE FUNDS A VAILABLE WITH IT. THE APPELLANT WAS UNDER GOING LIQUIDATION PROCEEDIN GS AND THEREFORE REQUIRED TO COMPLY TO THE REQUIREMENTS OF THE LAW IN AS MUCH AS IT WAS APPLICABLE TO IT. THE APPELLANT HAS FURNISHED A COPY OF THE ORDER THE ITAT, AHMEDABAD IN THE CASE OF M/S.CROWN TRADE LINK PVT.L TD. IN ITA NO.2768/AHD/2012 DATED 31/01/2013 WHEREIN IT IS HEL D THAT CHANGE OF HEAD OF INCOME DOES NOT AMOUNT TO CONCEAL MENT. THUS, ON PERUSAL OF THE FACTS, IT IS HELD THAT THE BALANC E OF CIRCUMSTANCES ARE IN FAVOUR OF THE APPELLANT. THE PENALTY LEVIED IS THEREFORE TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. ITA NO. 2808/AH D/2014 ITO VS. THE ANAND PEOPLES CO.OP.BANK LTD. ASST.YEAR 2009-10 - 4 - 3.1. WE FIND OURSELVES IN AGREEMENT WITH THE CONCLU SION ARRIVED AT BY THE CIT(A). WE ALSO NOTICE THAT IT IS NOT A CASE O F CLAIMING FALSE EXPENDITURE WHERE THE EXPENDITURE CLAIMED HAS NOT B EEN INCURRED AT ALL. IT IS A CASE WHERE THE EXPENDITURE HAS BEEN ADMITTE DLY INCURRED BUT WERE DENIED OWING TO THE REASONING THAT THE EXPENSES INC URRED ARE NOT ATTRIBUTABLE TO THE CORRESPONDING INCOME AND THUS N OT PERMISSIBLE FOR DEDUCTION UNDER THE HEAD INCOME FROM OTHER SOURCES . WE ARE OF THE VIEW THAT SUCH DISALLOWANCE OF EXPENDITURE GIVING R ISE TO THE HIGHER ASSESSED INCOME BY ITSELF DOES NOT MAKE THE ASSESSE E GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, THE I MPOSITION OF PENALTY FOR SUCH DISALLOWANCE IS UNWARRANTED. HENCE, WE DECLIN E TO INTERFERE WITH THE ORDER OF THE CIT(A). 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 17 / 05/2017 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 17/ 05 /2017 4..+,.+../ T.C. NAIR, SR. PS ITA NO. 2808/AH D/2014 ITO VS. THE ANAND PEOPLES CO.OP.BANK LTD. ASST.YEAR 2009-10 - 5 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-IV, BARODA 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 16.5.117 (DICTATION-PAD 5- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17.5.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.17.5.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.5.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER