Assistant Commissioner of Income-tax, Circle - 2, Aurangabad V. Maharashtra Water Conservation Corporation, Aurangabad

ITA 3048/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6728 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-09-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 21-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIF A KARMAL
• Keywords: Revised return; TDS
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.3048/PUN/2017 / ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE-2, AURANGABAD. .. /APPLICANT / V/S. MAHARASHTRA WATER CONSERVATION CORPORATION, NEW ADMINISTRATIVE BUILDINGS, GROUND FLOOR, COLLECTOR OFFICE, AURANGABAD-431001. PAN: AAMFM1607K .. / RESPONDENT REVENUE BY : SHRI ASIF A. KARMAL ASSESSEE BY : NONE / DATE OF HEARING : 02.09.2020 / DATE OF PRONOUNCEMENT : 04.09.2020 / ORDER PER P.M. JAGTAP, VP: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-2, AURANGABAD DATED 11.10.2017 WHEREBY HE CANCELLED THE PENALTY OF RS.88,14,536/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A STATUTORY CORPORATION OWNED BY THE GOVERNMENT OF MAHARASHTRA AND FORMED VIDE MAHARASHTRA WATER CONSERVATION CORPORATION ACT, 2000 WITH THE PURPOSE OF CONSERVATION OF WATER AND IMPLEMENTATION OF IRRIGATION PROJECT APPROVED BY THE GOVERNMENT OF MAHARASHTRA. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED 2 ITA NO.3048/PUN/2017 BY THE ASSESSEE ON 30.09.2011 DECLARING A LOSS OF RS.7,20,34,168/-. THEREAFTER, THE REVISED RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 29.11.2011 DECLARING REDUCED LOSS OF RS.7,18,42,190/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE INTEREST INCOME OF THE ASSESSEE RECEIVED FROM BANK OF MAHARASHTRA FOR THE YEAR UNDER CONSIDERATION AGGREGATED TO RS.4,70,15,520/- BUT THE INCOME FROM BANK INTEREST AS DECLARED BY THE ASSESSEE WAS ONLY RS.1,84,89,512/-. IN THIS REGARD, IT WAS EXPLAINED ON BEHALF OF THE ASSESSEE THAT THE CONCERNED BANK I.E. BANK OF MAHARASHTRA HAD INADVERTENTLY CREATED TWO CLIENTS ID OUT OF WHICH THE INTEREST INCOME RELATING TO ONLY ONE CLIENT ID AMOUNTING TO RS.1,84,89,512/- WAS COMMUNICATED TO THE ASSESSEE. IT WAS SUBMITTED THAT THE INTEREST INCOME AMOUNTING TO RS.2,85,26,008/- RELATING TO OTHER CLIENT ID WAS ACCUMULATED TO FIXED DEPOSITS AND ONLY WHEN THE SAME WAS RECEIVED BY THE ASSESSEE IN THE IMMEDIATELY SUCCEEDING YEAR RELEVANT TO A.Y. 2012-13, THE ASSESSEE CAME TO KNOW ABOUT THE SAME AND OFFERED IT TO TAX IN THE RETURN OF INCOME FOR THE A.Y. 2012-13 AS PRIOR PERIOD INCOME. THE ASSESSING OFFICER DID NOT FIND THIS EXPLANATION OF THE ASSESSEE TO BE ACCEPTABLE AND PROCEEDED TO MAKE AN ADDITION OF RS.2,85,26,008/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED INTEREST INCOME IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 04.03.2014. HE ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND AFTER CONFIRMATION OF THE ADDITION ON ACCOUNT OF INTEREST BY THE LD. CIT(A), THE ASSESSING OFFICER ISSUED A NOTICE REQUIRING THE ASSESSEE TO SHOW-CAUSE AS TO WHY THE PENALTY U/S 271(1)(C) OF THE ACT SHOULD NOT BE IMPOSED IN RESPECT OF THE SAID ADDITION MADE ON ACCOUNT OF UNDISCLOSED INTEREST INCOME. SINCE THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO THE SAID SHOW-CAUSE NOTICE WAS NOT FOUND BY HIM TO THE SATISFACTORILY, THE ASSESSING OFFICER PROCEEDED TO IMPOSE THE PENALTY OF RS.88,14,536/- U/S 3 ITA NO.3048/PUN/2017 271(1)(C) OF THE ACT BEING 100% OF TAX SOUGHT TO BE EVADED BY THE ASSESSEE ON THE ADDITION MADE ON ACCOUNT OF THE UNDISCLOSED INTEREST INCOME. 3. THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN APPEAL FILED BEFORE THE LD. CIT(A) AND AFTER CONSIDERING THE SUBMISSION MADE ON BEHALF OF THE ASSESSEE AS WELL AS MATERIAL AVAILABLE ON RECORD, LD. CIT(A) CANCELLED THE SAID PENALTY IMPOSED BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARA 6 OF HIS IMPUGNED ORDER :- 6. I HAVE GIVEN DUE CONSIDERATION TO THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE ASSESSEE. SECTION 271(1)(C) IS ATTRACTED WHERE IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, THE ASSESSING OFFICER OR THE FIRST APPELLATE AUTHORITY IS SATISFIED THAT (A) ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME, OR (B) HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE EXPRESSIONS 'HAS CONCEALED' AND 'HAS FURNISHED INACCURATE PARTICULARS' HAVE NOT BEEN DEFINED EITHER IN THE SECTION OR ELSEWHERE IN THE ACT. HOWEVER, NOTWITHSTANDING DIFFERENCES IN THE TWO CIRCUMSTANCES, THEY LEAD TO THE SAME EFFECT, VIZ. KEEPING OFF A CERTAIN PORTION OF INCOME. THE FORMER IS DIRECT WHILE THE LATTER MAY BE INDIRECT IN ITS EXECUTION. THE WORD 'CONCEAL' IS DERIVED FROM LATIN WORD 'CONCELARE' WHICH IMPLIES 'TO HIDE'. IN WEBSTER'S NEW INTERNATIONAL DICTIONARY, THE WORD HAS BEEN EQUATED 'TO HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVENT DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF'. THEREFORE, IT IS IMPERATIVE TO FIND OUT WHETHER THE ASSESSEE HAD CONCEALED ITS INCOME OR HAD FILED INACCURATE PARTICULARS OF INCOME. IN THE INSTANT CASE, THE ASSESSEE HAD DECLARED INTEREST INCOME OF RS.1,84,89,510/- IN THE RETURN OF INCOME AND IN ITS P&L ACCOUNT. THIS WAS DECLARED ON THE BASIS OF FORM 16A ISSUED BY BANK OF MAHARASHTRA. IN THE COMPUTATION OF INCOME, CREDIT FOR PREPAID TAXES OF ONLY RS.36,33,056/- HAD BEEN TAKEN AS AGAINST RS.66,85,682/-DEDUCTED BY THE BANK. THE CREDIT FOR TDS WAS ALSO TAKEN ON THE BASIS OF FORM-16A ISSUED BY THE BANK OF MAHARASHTRA. THE ASSESSEE CAME TO KNOW ABOUT ACCRUAL OF THIS INCOME IN THE IMMEDIATELY SUCCEEDING YEAR I.E. DURING A.Y.2012-13, WHEN THE ASSESSEE WITHDREW THE FD FROM THE BANK AND IT RECOGNISED THE SAME BY INCORPORATING THE SUM IN ITS P & L ACCOUNT AS PRIOR PERIOD INCOME. THE ASSESSEE DID NOT RECEIVE ANY COMMUNICATION FROM BANK OF MAHARASHTRA REGARDING ACCRUAL OF INCOME TO THE TUNE OF RS.2,85,26,008/- OR TDS MADE ON THIS AMOUNT DURING THE RELEVANT PREVIOUS YEAR. UNDER THE CIRCUMSTANCES, IT CAN BE SAFELY INFERRED THAT THE APPELLANT DID NOT HAVE ANY KNOWLEDGE ABOUT THE ACCRUAL OF INCOME TO THE EXTENT OF RS.2,85,26,008/-. THE BONA FIDE OF THE ASSESSEE IS ALSO REINFORCED BY THE FACT THAT IT RELIED ONLY ON THE COMMUNICATION MADE BY THE BANK AND DID NOT CLAIM CREDIT FOR TDS OF THE FULL AMOUNT OF RS.66,85,682/- BUT HAD CLAIMED CREDIT FOR THE AMOUNT WHICH WAS REFLECTED IN FORM 16A ISSUED BY THE DEDUCTING BANK I.E. RS.36,33,076/- ONLY. IN MY OPINION, THIS IS NOT A CASE OF CONCEALMENT OF INCOME BECAUSE CONCEALMENT IMPLIES AN ACTION OF HIDING OR WITHDRAWING FROM OBSERVATION OR TO COVER OR KEEP AWAY FROM SIGHT OR TO PREVENT DISCOVERY OF OR TO WITHHOLD KNOWLEDGE OF AN EVENT. IN THE INSTANT CASE, THE ASSESSEE WAS NOT IN THE KNOWLEDGE OF THE FACT OF THE BANK CREDITING ITS ACCOUNT WITH INTEREST TO THE TUNE OF RS.2,85,26,008/-. A PERSON CANNOT HIDE FROM ANOTHER ANYTHING ABOUT WHICH IT DOES NOT POSSESS THE KNOWLEDGE OF. HENCE, THIS IS ALSO NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. HAD THE ASSESSEE BEEN DILIGENT ENOUGH AND INQUIRED FROM THE BANK ABOUT THE TOTAL INCOME ACCRUING TO IT, AND THEREAFTER UPON HAVING OR POSSESSING THE FULL KNOWLEDGE THAT SOME AMOUNT MORE THAN WHAT WAS REFLECTED IN FORM 16A 4 ITA NO.3048/PUN/2017 HAD ACCRUED TO IT AS INTEREST DID NOT DISCLOSE THE SAME, THEN IT COULD BE STATED THAT THE ASSESSEE HAD CONCEALED ITS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVER, THIS IS NOT THE CASE. THE ASSESSEE WAS IN THE DARK ABOUT ACCRUAL OF INCOME TO THE EXTENT OF RS.2,85,26,008/- DURING THE RELEVANT PREVIOUS YEAR AND HAD IMMEDIATELY, UPON KNOWING THAT INCOME HAD ACCRUED TO IT SHOWN THE SAME IN ITS FINANCIAL RESULTS IN THE ENSUING FINANCIAL YEAR. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT THIS IS NOT A CASE OF CONCEALMENT OF INCOME OR OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, I DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY LEVIED BY HIM. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING FIXED IN THIS CASE BEFORE THE TRIBUNAL, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. THIS APPEAL OF THE ASSESSEE IS, THEREFORE, BEING DISPOSED OF EX-PARTE QUA THE RESPONDENT-ASSESSEE AFTER HEARING THE ARGUMENT OF THE LD. DR WHO HAS MAINLY RELIED ON THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER IN SUPPORT OF THE REVENUES CASE. IT IS OBSERVED THAT A CATEGORICAL EXPLANATION WAS OFFERED BY THE ASSESSEE IN SUPPORT OF THE ALLEGED UNDISCLOSED INCOME FROM BANK INTEREST AT THE STAGE OF THE ASSESSMENT ITSELF THAT THE INTEREST INCOME FROM BANK WAS UNDERSTATED BECAUSE OF THE MISTAKE COMMITTED BY THE CONCERNED BANK I.E. BANK OF MAHARASHTRA. AS EXPLAINED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, THE BANK HAD INADVERTENTLY CREATED TWO CLIENTS ID FOR THE ASSESSEE AND A CERTIFICATE IN FORM NO.16A WAS ISSUED BY THE BANK ONLY IN RESPECT OF ONE CLIENT ID SHOWING THE INTEREST INCOME EARNED BY THE ASSESSEE AT RS.1,84,89,512/-. THE INTEREST INCOME RELATED TO OTHER CLIENT ID OF RS.2,85,26,008/- EARNED DURING THE YEAR UNDER CONSIDERATION WAS NEVER INFORMED BY THE BANK TO THE ASSESSEE AND EVEN FORM NO.16A FOR THE SAME WAS APPARENTLY NOT ISSUED. THE ASSESSEE CAME TO KNOW ABOUT THE EARNING OF THE SAID INTEREST INCOME OF RS.2,85,26,008/- ONLY WHEN THE SAME WAS REALIZED BY IT IN THE IMMEDIATELY SUCCEEDING YEAR WHEN THE CONCERNED FIXED DEPOSITS IN BANK GOT MATURED. ACCORDINGLY, THE SAME WAS DECLARED BY THE ASSESSEE IN THAT YEAR AS ITS INCOME. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE WHICH HAVE REMAINED UNDISPUTED BY THE ASSESSING 5 ITA NO.3048/PUN/2017 OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS AND BY THE LD. DR AT THE TIME OF HEARING BEFORE US, WE ARE OF THE VIEW THAT THE MISTAKE OF THE ASSESSEE IN UNDERSTATING ITS INTEREST INCOME FROM BANK TO THE EXTENT OF RS.2,85,26,008/- WAS BONA-FIDE ONE AND IT GETS FURTHER FORTIFIED BY THE FACT THAT CREDIT FOR THE TAX DEDUCTED AT SOURCE FROM THE SAID INCOME BY THE BANK WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(A) THAT THIS IS NOT A FIT CASE WHERE ASSESSEE CAN BE SAID TO HAVE CONCEALED PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AS CONTEMPLATED U/S 271(1)(C) OF THE ACT AND THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER THE SAID PROVISIONS OF THE ACT, IN OUR OPINION, WAS RIGHTLY CANCELLED BY THE LD. CIT(A). WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) CANCELLING THE PENALTY U/S 271(1)(C) OF THE ACT AND DISMISS THIS APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 04 TH DAY OF SEPTEMBER, 2020. SD/- SD/- ( S. S. VISWANETHRA RAVI ) ( P.M. JAGTAP ) JUDICIAL MEMBER VICE PRESIDENT / PUNE; / DATED : 04 TH SEPTEMBER, 2020 SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-2, AURANGABAD. 4. THE PR. CIT-2, AURANGABAD. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.