The Dy. Commissioner of Income-tax, Pathankot V. The Gurdaspur Primary, Gurdaspur

ITA 302/ASR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57400 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S.SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.302(ASR)/2011 ASSESSMENT YEAR:2007-08 PAN:AABCG5832E THE DY. C.I.T. VS. THE GURDASPUR PRIMA RY CO-OP. CIRCLE VI, AGRICULTURE DEVELOPMENT BANK LTD., PATHANKOT. GURDASPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL, DR RESPONDENT BY:SH. SANDEEP KUMAR CA DATE OF HEARING :05.03.2012 DATE OF PRONOUNCEMENT: ORDER PER BENCH: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), AMRITSAR, DATED 03.02.2011, RELATING TO ASS ESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE REVENUE HAS RAISED FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) UNDER THE LAW & CIRCUMSTANC ES WAS ERRED IN CANCELING THE PENALTY AMOUNTING TO RS.25 L ACS LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 BY HOLDIN G THAT LOSS DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME WA S MUCH HIGHER THAT THE CLAIM OF DEDUCTION OF PROVISION FOR NPA AND THE ASSESSEE WAS ELIGIBLE TO CLAIM OF DEDUCTION U/S 80P OF THE INCOME-TAX ACT, 1961. ITA NO.302/ASR/2011 2 2. THAT THE LD. CIT(A) WAS ERRED IN LAW AND ON FACT S BY NOT APPRECIATING THAT THE PENALTY HAS BEEN BASED ON ADD ITION OF RS.78,91,174/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF NPA PROVISIONS WHICH IS NOT ALLOWABLE EXPENDITURE. 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE EXPLANATION 4 TO SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 4. APPELLANT CARVES LEAVE TO AMEND OR ADD ANY OR MO RE GROUNDS OF APPEAL. 3. THE FACTS NARRATED BY THE REVENUE ARE NOT DISPU TED BY BOTH THE PARTIES, THEREFORE, THERE IS NO NEED TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 4. AT THE TIME OF HEARING, THE LD. DR, SH. TARSEM L AL, RELIED UPON THE ORDER PASSED BY THE A.O. AND STATED THAT THE LD. FI RST APPELLATE AUTHORITY HAS WRONGLY CANCELLED THE PENALTY ON THE DISPUTE WHICH IS CONTRARY TO THE LAW AND FACTS ON THE FILE. HE FURTHER REQUESTED THAT TH E APPEAL FILED BY THE DEPARTMENT BE ALLOWED BY RESTORING THE ORDER OF THE ASSESSING OFFICER AND CANCEL THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). IN ADDITION TO HIS ORAL ARGUMENTS, HE HAS ALSO FILED WRITTEN SUBMISSIONS DA TED 05.03.2012, THE CONTENTS OF THE SAME ARE REPRODUCED AS UNDER: IN THIS APPEAL, THE DEPARTMENT HAS AGITATED THE CA NCELLATION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAXACT , 1961 AT RS.25 LAC. THE GENESIS OF THE LEVY OF THE PENALTY WAS LIKE THA T THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.78,91,174/- ON ACCOUNT OF P ROVISION OF NPA. WHEN THE ASSESSEE WAS CONFRONTED WITH THE FACT THAT NO DEDUCTION ON ACCOUNT OF ANY PROVISION IS ADMISSIBLE UNDER THE IT ACT, 1961, THE ASSESSEE FILED THE FOLLOWING REPLY ITA NO.302/ASR/2011 3 THE BANK HAS DEBITED RS.78,92,174/- ON ACCOUNT OF PROVISIONS FOR NPA. THE SAID PROVISION IS MADE AS PER THE GUIDELINES OF NABARD/HEAD OFFICE APPLICABLE TO ALL THE PRIMARY AGRICULTURAL CO-OPERA TIVE BANKS OF PUNJAB. THE SAID EXPENSES ARE ALLOWABLE AS PER SECTION 36 O F THE INCOME TAX ACT, 1961. THE AO TRASHED THE ASSESSEES CONTENTION IN AS MUCH AS NEITHER ANY DEDUCTION OF ANY PROVISION WAS ADMISSIBLE UNDER THE INCOME TAX ACT, 1961 NOR WAS THERE ANY PROVISION UNDER ANY OF THE SUB-SE CTIONS OF SECTION 36 OF THE INCOME TAX ACT, 1961 WHEREUNDER THE DEDUCTION O N ACCOUNT OF ANY PROVISION ON ACCOUNT OF NPA COULD BE CLAIMED BY THE ASSESSEE. THE AO FURTHER TRASHED THE ASSESSEES FURTHER CONTE NTION THAT IT HAD NO INTENTION OF FURNISHING INACCURATE PARTICULARS OF I NCOME AS THE ASSESSEE HAD DECLARED LOSS OF RS.1,22,35,957/- AND NO TAX WAS PA YABLE EVEN AFTER DISALLOWANCE OF THE DEDUCTION OF RS.78,91,174/-. T HEAO OBSERVED THAT EXPLANATION 4 OF SECTION 271(1)(C ) CLEARLY ENVISAG ES LEVY OF PENALTY IN SUCH CIRCUMSTANCES AND AS SUCH THERE IS NO VALIDITY IN THE ARGUMENT ADVANCED. ACCORDINGLY, THE AO LEVIED PENALTY AT RS.254,0,000/ - WHICH SLIGHTLY ABOVE 100% OF THE TAX SOUGHT TO BE EVADED AT WHICH THE PE NALTY AT ITS MINIMUM IS LEVIABLE UNDER THE INCOME TAX ACT, 1961. IT IS FURTHER PERTINENT TO MENTION HERE THAT WHEN T HE ASSESSEE HAD FOUND THAT IT HAD BEEN NO GO REASON FOR HAVING CLAIMED TH E PATENTLY INADMISSIBLE DEDUCTION, IT CAME FORWARD WITH THE SUBMISSION THAT THE AMOUNT MAY BE ADDED TO THE INCOME AS NON-ALLOWABLE EXPENDITURE. IT IS SUBMITTED THAT PENALTY UNDER SECTION 271(1)( C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME BECOMES LEVIABLE I F IT IS FOUND AS TO WHETHER THE ASSESSEE HAD MADE A FALSE CLAIM OF DEDUCTION OR NOT. IT MAY BE MENTIONED HERE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ZOOM COMMUNICATION (P)LTD. REPORTED AT 327 ITR 510 HAS U PHELD THE LEVY OF PENALTY ON ALL MOST IDENTICAL FACTS AND CIRCUMSTAN CES. A BRIEF COMPARISON IS SHOWN AS UNDER: ASSESSEES CASE CIT VS ZOOM COMMUNICATIONS (SUPRA) INACCURATE PARTICULARS FURNISHED CLAIMED PROVISION OF NPA UNDER SECTION 36(VIIA) EQUIPMENT WRITTEN OFF CONTENTION BEFORE AO WHEN CONFRONTED. MAY BE ADDED TO THE INCOME. CONTENDED THAT DUE TO OVERSIGHT, THE AMOUNT WAS NOT ADDED BACK AND MAY BE ADDED BACK. WHETHER DEBATABLE ISSUE NOT CLAIMED THAT IT IS A DEBATABLE ISSUE. NOT CLAIMED THAT IT WAS A DEBATABLE ISSUE. WHETHER ANY ADVICE COULD BE GIVEN THAT THE DEDUCTION IS ALLOWABLE. SINCE SECTION 36(VIIA) IS NOT APPLICABLE TO PRIMARY DEVELOPMENT COOPERATIVE AGRICULTURAL BANKS, NO SUCH IN VIEW OF THE SPECIFIC PROVISIONS CONTAINED IN SECTION 40(A)(II), NO SUCH ADVICE COULD BE GIVEN BY AN AUDITOR OR OTHER TAX EXPERT. ITA NO.302/ASR/2011 4 ADVICE COULD BE GIVEN. EVEN CO-OP. BANKS HAVE BEEN TAKEN WITHIN THE PURVIEW OF SECTION 36(VIIA) W.E.F.1.4.2007. IN VIEW OF THE AFOREMENTIONED IN THE CASE OF CIT VS ZOOM COMMUNICATIONS (P)LTD (SUPRA), THE HONBLE HIGH COURT HELD THAT TH E EXPLANATION OF THE BEING INCORRECT IN LAW IS MALAFIDE. THEREFORE, IT LEAVES NO ROOM FOR THE ASSESSEE TO ESCAPE THE DECISION OF THE HONBLE DELH I HIGH COURT. THE JUDGEMENTS RELIED UPON BY THE LEARNED CIT(A) HAVE B EEN WRONGLY RELIED UPON. IN FACT, THE CIT(A) HAS MERELY MENTIONED THE RATIO OF SOME OF THE JUDGEMENTS AS MENTIONED IN HIS ORDER BUT NO WHERE H E HAS STRUCK ANY SIMILARITY BETWEEN THE FACTS OF THE ASSESSEES CASE AND THAT OF THE CASES RELIED UPON BY HIM. THE LD. CIT(A) CONCEDES AT PARA 6.2 THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 36(VIIA) OF THE I NCOME-TAX ACT, 1961 AS, HE MENTIONS, THAT A PRIMARY COOPERATIVE AGRICULTURAL A ND RURAL DEVELOPMENT BANK IS EXPLICITLY EXCLUDED FROM CLAIMING DEDUCTION ON ACCOUNT OF PROVISION OF NPA. THE LD. CIT(A) HAS ALSO UPHELD THE APPLICAB ILITY OF THE EXPLANATION 4 TO SECTION 271(1)(C) OF THE ACT. THE LD. CIT(A) F AILED IN THE VERY CRITICAL AREA I.E. WHAT MADE THE ASSESSEE TO CLAIM A PATENTL Y INADMISSIBLE DEDUCTION. IT COULD NOT BE ADVISED TO MAKE SUCH A C LAIM BY ANY LEGAL EXPERT AND THUS ITS ONLY INTENTION WAS TO FURNISH FALSE AN D INACCURATE PARTICULARS OF INCOME. IT WAS CLEARLY A CASE WHERE THE CLAIM MADE IN THE RETURN HAS BEEN FOUND TO BE INCORRECT AND INACCURATE AND AS SUCH IT DESERVES THE APPLICATION OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. REPORTED AT 322 ITR 158. IT IS NOT A CASE WHERE THE ASSESSEE HAD MADE A CLAIM WHICH WAS NOT A CCEPTED BY THE AO. IT IS A CASE WHERE THE ASSESSEE KNOW THAT ITS CLAIM IS INACCURATE AND PATENTLY INADMISSIBLE AND STILL CLAIMING THE SAME IN ITS RET URN OF INCOME CLEARLY TENTAMOUNTS TO FURNISH INACCURATE OF INCOME AND THU S RICHLY DESERVES THE LEVY OF PENALTY. IN VIEW OF THE ABOVE, THE PENALTY ORDER OF THE AO D ESERVES TO BE UPHELD AND IT IS PRAYED THAT THE HONBLE ITAT MAY KINDLY UPHEL D THE SAME AND ALLOW THE APPEAL OF THE DEPARTMENT. 5. THE LD. COUNSEL FOR THE ASSESSEE, SH. SANDEEP KU MAR, CA, IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, STATED THA T THE ISSUE IN DISPUTE HAS ITA NO.302/ASR/2011 5 ALREADY BEEN ADJUDICATED BY THE ITAT, AMRITSAR BENC H, VIDE ITS ORDER DATED 22 ND JUNE, 2011, PASSED IN ITA NO. 372(ASR)/2010 FOR TH E ASSESSMENT YEAR 2006-07 IN THE CASE OF DY. CIT, CIRCLE, PATHANKOT V S. PATHANKOT PRIMARY CO-OPERATIVE DEVELOPMENT BANK LTD. PATHANKOT, IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HE FURTHER DREW OUR ATTENT ION TO THE DECISION OF ITAT, LUCKNOW BENCH, IN THE CASE OF DCIT SITAPUR VS . HARDOI DISTRICT CO- OPERATIVE BANK CIVIL LINES, HARDOI, PASSED IN ITA N OS. 172 & 173/LKW/2011, FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 WHERE THE APPEALS OF THE REVENUE HAVE BEEN DISMISSED AND DEL ETED THE PENALTIES LEVIED U/S 271(1)(C) OF THE ACT. THE LD. COUNSEL FOR THE A SSESSEE, FURTHER STATED THAT THE AFORESAID ORDER PASSED BY THE ITAT, LUCKNOW BEN CH A, LUCKNOW, HAS ALSO BEEN UPHELD BY THE HONBLE ALLAHABAD HIGH COUR T, IN THE APPEAL FILED BY THE DEPARTMENT, BY DISMISSING THE APPEAL OF THE DEPARTMENT. HE HAS ALSO FILED A COPY OF THE SAID ORDER IN THE SHAPE OF SMAL L PAPER BOOK ALONG WITH WRITTEN SUBMISSIONS, WHICH ARE PLACED IN THE FILE. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, ESPECIALLY THE WRITTEN SUBMISSIONS FILED BY THE LD. DR AS WELL AS THE LD. COUNSEL FOR THE ASSESSEE, THE DECISION OF THIS BENCH AS WELL AS THE DECISION OF THE ITAT, LUCKNOW BENCH A AND THE JU DGMENT OF THE HONBLE ALLAHABAD HIGH COURT, IN WHICH THE HONBLE HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE DEPARTMENT AND UP HELD THE ORDER OF THE ITA NO.302/ASR/2011 6 ITAT, LUCKNOW BENCH A, WE ARE OF THE CONSIDERED O PINION THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN ADJUDICATED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. HOWEVER, FOR THE SAKE OF CONVENIENCE, RELEVANT PORTION OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT, IS REPRO DUCED AS UNDER: THIS APPEAL HAS BEEN PREFERRED ON THE FOLLOWING Q UESTIONS OF LAW: 1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE TRIBUNAL IS JUSTIFIED IN LAW IN SETTING ASIDE THE PENALTY OF RS.73,73,700/- LEVIED U/S 271(1)(C) BY THE AO FOLLO WING THE AMENDED PROVISIONS OF SECTION 271(1)C) OF THE ACT W.E.F. 01 .04.03? 2.WHETHER THE RETURNED INCOME AND ASSESSEE INCOME B OTH ARE LOSS THEN THE ADDITION MADE TO REDUCE THE LOSS WOULD BE THE INCOME IN RESPECT OF WHICH TAX HAS BEEN SOUGHT TO BE EVADED AND THAT WOULD BE THE CONCEALED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED, THE TRIBUNAL IS JU STIFIED IN HOLDING TO THE CONTRARY. ON GOING THROUGH THE ORDER OF THE TRIBUNAL WE FIND THAT WHILE UPHOLDING THE ORDER OF THE CIT(A), IT HAS CONSIDERE D THE CASE ON MERITS. THE TRIBUNAL HAS OBSERVED IN PARA 15 THAT EVEN THOU GH TECHNICALLY THE CASE OF THE ASSESSEE IS COVERED UNDER EXPLANATION 4 TO SECTION 271(1)(C) OF THE ACT, THE EXPLANATION, THEREON THAT ITS ENTIRE INCOME IS EXEMPT U/S 80P AND THEREFORE, IT IS NOT LIABLE TO I NCOME TAX NOW OR SUBSEQUENTLY, WHEN THE PRESENT LOSS CARRIED FORWARD IS ADJUSTED AGAINST INCOME IN LATER ASSESSMENT YEARS IS REASONA BLE AND BONAFIDE, AND THEREFORE, WITHIN THE MEANING OF SECTION 274 NO PENALTY IS LEVIABLE ON THE ASSESSEE. IT IS SUBMITTED BY SHRI A.N. MAHAJAN RELYING UPON CIT VS. GOLD COIN HEALTH FOOD P. LTD., (2008) 304 ITR 308 (SC) THAT EXPLANATION 4(A) TO SECTION 271(1)(C)(III) IS INTENDED TO LEVY PENALTY NOT ONLY IN A CASE WHERE AFTER ADDITION OF CONCEALED INCOME, OR A LOSS RETURNED, AFTER ASSESSMENT BECOME POSITIVE INCOME, BUT ALSO I N A CASE WHERE ITA NO.302/ASR/2011 7 ADDITION OF CONCEALED INCOME REDUCES THE RETURNED L OSS AND FINALLY THE ASSESSED INCOME IS ALSO A LOSS OR A MINUS FIGURE. IN THE PRESENT CASE, THE TRIBUNAL HAS CONSIDERED TH E MATTER ON MERITS AND HAVE ARRIVED AT FINDING IN PARA 15 TO THE EFFEC T THAT ASSESSEE IS NOT LIABLE TO INCOME TAX NOW OR SUBSEQUENTLY WHEN THE P RESENT LOSS CARRIED FORWARD IS ADJUSTED AGAINST INCOME IN LATER ASSESSMENT YEARS. WE DO NOT FIND THAT ON THE FINDINGS, ARRIVED AT ON MERITS BY THE TRIBUNAL, THE QUESTIONS OF LAW THAT IN SUCH CASE TH E ORDERS IMPOSING THE PENALTY COULD BE SET ASIDE, REQUIRE CONSIDERED OF THE HIGH COURT. THE INCOME TAX APPEAL IS DISMISSED. 7. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ALLAHABAD HIGH COURT, IN THE CASE OF CIT AND ANOTHER VS. M/S. HARD OI DISTRICT CO-OP. BANK LTD. (SUPRA), WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE, WE DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH MARCH, 2012. SD/- SD/- (B.P.JAIN) (H.S.SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6TH MARCH, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:THE GURDASPUR PRIMARY CO-OP. AGRICULTU RE DEVELOPMENT BANK LTD. GURDASPUR. 2. THE DCIT, CIRCLE, PATHANKOT. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5.THE SR DR, ITAT, AMRITSAR.