SAS Educational Society, Mohali V. ITO, Mohali

ITA 311/CHANDI/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9013 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-09-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Business income; Principle of natural justice; Bonafide belief; Condonation of delay
• Section: 12A; 12AA; 246; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 311/CHD/2012 ASSESSMENT YEAR: 2004-05 SAS EDUCATIONAL SOCIETY, VS THE ITO, C-124, INDUSTRIAL AREA, WARD 6(4), PHASE-VIII, MOHALI. MOHALI. PAN: AADTS797P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 25.10.2016 DATE OF PRONOUNCEMENT : 04.11.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 20.12.2011 FOR ASSESSMENT YEAR 2004-05, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED MATERIAL AVAILABLE ON RECORD. 2 3. BRIEF FACTS ON THE ISSUE ARE THAT THE ASSESSEE H AD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR IN QUESTION DECLARING NIL INCOME, AFTER CLAIMING EXEMP TION U/S 11 OF THE ACT IN RESPECT OF EXCESS OF INCOME OV ER EXPENDITURE AT RS. 13,96,110/-. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM OF EXEMPTION AND S O EXCESS OF INCOME OVER EXPENDITURE OF RS. 13,96,110/ - WAS TAXED AS INCOME OF THE ASSESSEE AOP BY DENYING THE CLAIM OF EXEMPTION U/S 11. PENALTY PROCEEDINGS U/S 271(L)(C) WERE ALSO INITIATED. THE CIT(A) HAD UPHEL D THE VIEW OF THE ASSESSING OFFICER. THE HON'BLE ITAT, CHANDIGARH HAD SET ASIDE THE MATTER VIDE ORDER DATE D 17.04.2008 IN ITA NO. 57/CHD/2008 TO THE FILE OF TH E ASSESSING OFFICER INITIALLY, BUT SUBSEQUENTLY MODIF IED ITS ORDER PASSED ON 11.08.2008 IN MA NO. 129/CHD/2008. THE DEPARTMENT HAD FILED APPEAL BEFORE HON'BLE HIGH COURT AGAINST THE ORDER OF HON'BLE ITAT, CHANDIGARH AND HON'BLE HIGH COURT HAD RESTORED THE MATTER TO HON'B LE ITAT FOR FRESH ADJUDICATION. IN THE PENALTY PROCEED INGS U/S 271(L)(C) BEFORE THE ASSESSING OFFICER, THE ASS ESSEE HAD FILED A REPLY BUT THE ASSESSING OFFICER WAS NOT SATISFIED AND IMPOSED PENALTY OF RS. 4,20,000/- AGA INST MINIMUM LEVIABLE PENALTY OF RS. 4,18,832/-. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, ASSESSEE FILED WRITTEN SUBMISSION BEFORE LD. 3 CIT(APPEALS), RELEVANT PORTION OF WHICH IS REPRODUC ED AS UNDER : 'AS PER THE PROVISO TO SECTION 275(L)(A) OF THE INC OME TAX ACT, 1961, LIMITATION FOR IMPOSING PENALTY 'WHEN THE ASS ESSMENT ORDER IS THE SUBJECT MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR 246A, AND THE COMMISSIONER (AP PEALS) PASSES THE ORDER ON OR AFTER THE 1 ST DAY OF JUNE, 2003 DISPOSING OF SUCH APPEAL AN ORDER IMPOSING PENALTY SHALL BE PASSES BE FORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDIN GS, IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HA S BEEN INITIATED, ARE COMPLETED, OR WITHIN ONE YEAR FROM THE END OF T HE FINANCIAL YEAR IN WHICH THE ORDER OF THE COMMISSIONER (APPEAL S) IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICH EVER IS LATER.' THEREFORE PENALTY CANNOT BE IMPOSED AFTER 31.3.2009 . THAT THE LD. INCOME TAX OFFICER WAS NOT JUSTIFIED I N IMPOSING PENALTY, THAT BEFORE LEVYING ANY PENALTY UNDER SECTION 271(1 ) (C), IT BECOMES NECESSARY TO EXAMINE AS TO WHETHER THE ASSESSEE HAS CONCEALED ANY PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE P ARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF I NCOME WITH A PURPOSE TO CONCEALING ANY INCOME THE TAXING THE EXCESS OF INCOME RS. 1396110.00 OVER EXPENDITURE OF THE SOCIETY IN THE STATUS OF AOP. THE SOCIETY IS SOLELY ENGAGED IN EDUCATIONAL ACTIVITIES AND HAS BEEN GRANTED REGI STRATION UNDER SECTION 12A OF THE INCOME TAX ACT W.E.F. FROM 01.04.2005. IN THE PREVIOUS YEAR 2002-03, GROSS RECEIPTS WERE L ESS THAN THE ALLOWABLE EXEMPTION LIMITS U/S 10(23C) OF THE INCOM E TAX ACT, 1961.DURING THE PREVIOUS YEAR 2003-04, THE GROSS RE CEIPTS EXCEEDED MORE THAN THE ALLOWABLE EXEMPTION LIMIT AN D THE MANAGEMENT WAS NOT AWARE OF THE FACTS THAT REGISTRA TION WAS- TO BE APPLIED EITHER U/S 12A OR U/S 10(23C) OF THE INCOME TAX ACT, 1961 TO GET THE INCOME TO BE ASSESSED AS OF TH E SOCIETY AS CHARITABLE/EDUCATIONAL SOCIETY. IT IS ONLY BEING PO INTED OUT BY THE NEW AUDITOR ON BEING APPOINTED IN PLACE OF PREVIOUS AUDITOR THAT THE SOCIETY APPLIED FOR REGISTRATION U/S 12A OF THE INCOME TAX 4 ACT, 1961, IN THE OFFICE OF THE COMMISSIONER OF INC OME TAX, CHANDIGARH-II, WITH A REQUEST TO GRANT REGISTRATION WITH RETROSPECTIVE AFFECT FROM THE FINANCIAL YEAR 2003-0 4. THE SOCIETY FILED ITS RETURN OF INCOME WITH ANTICIPATION THAT T HE SOCIETY WILL GET THE EXEMPTION AND DELAY IN FILING APPLICATION U/S 1 2A MAY GET CONDONED. FURTHER SUBMITTED THAT GROSS RECEIPTS FOR THE FINANCIAL 2003-04 INCLUDES RS. 1265000.00 RECEIVED AS DEVELOPMENT FUND AND WHICH WAS UTILIZED FOR THE DEV ELOPMENT OF THE SOCIETY'S INSTITUTE FOR PROVIDING EDUCATION TO THE STUDENTS. VERY RECENT JUDGMENT OF SUPREME CO URT IN CIT VS RELIANCE PETROPRODUCTS PVT LTD DELIVERED ON 17/3/2010 :- THE SUPREME COURT MADE FOLLOWING OBSERVATION WHILE DISMISSING THE PETITION BY INCOME TAX DEPARTMENT. 1. FOR EVERY PENALTY U/S 271(L)(C) , ONE -OF THE TWO C ONDITIONS MUST BE SATISFIED THERE MUST BE CONCEALMENT; OR ASSESSEE MUST HAVE FURNISHED INACCURATE PA RTICULARS OF INCOME. IF NONE OF THESE ARE ALLEGED BY A.O VIDE HIS ORDER OF ASSESSMENT, PENALTY U/S 271(L)(C) CAN NOT BE IMPOSE D. 2. THE DECISION OF SUPREME COURT IN DHARMENDRA TEXTILE PROCESSORS & OTHERS [2008] 306 ITR 277 MERELY OVERRULES THE DE CISION OF DILIP N SHROFF VS JCIT [2007] 291 ITR 519 (SC) R ELATED TO MENSE REA I.E A.O NEED NOT PROVE THAT THE CONCEALME NT OR INACCURATE PARTICULARS OF INCOME WAS DONE BY ASSESS EE WITH AN INTENTION TO EVADE TAX AND IN GUILT MIND. THE DECIS ION IN DHARMENDRA TEXTILE DOES NOT MAKE THE PENALTY PROCEEDING A MERE PROCEDURE, BUT THE TWO CONDITIONS GIVEN IN SECTION 271(L)(C) ARE F UNDAMENTAL FOR IMPOSING PENALTY. 3. THE WORD 'INACCURATE PARTICULARS' MUST MEAN THE DET AILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. 4. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASS ESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORREC T; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED TH AT THE FALSEHOOD IN 5 ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN I TEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITUR E MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEAL MENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PA RTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DE TAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS. RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE C ONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EX PENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER SECTION 271(L)(C). IF WE ACCEPT THE CONTENTION OF THE REVEN UE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSE SSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECT ION 271(L)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS THE PEN ALTY HAS BEEN IMPOSED CONTRARY TO THE FACTS OF THE CASE AND PRINC IPAL OF NATURAL JUSTICE. IN VIEW OF THE EXPLANATIONS AND THE SUBMISSIONS MAD E, IT IS RESPECTFULLY PRAYED THAT THE APPEAL MAY PLEASE BE ACCEPTED AND C ONSEQUENTIAL RELIEF MAY BE ALLOWED.' 5. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 5 TO 7 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 5. I HAVE CONSIDERED THE FACTS OF THE CASE. AS PE R THE PROVISIONS OF SECTION 271(L)(C), PENALTY CAN BE LEV IED, IF THE ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FO R THE SAKE OF READY REFERENCE, EXPLANATION 1 BELOW SECTIO N 271(1) IS REPRODUCED BELOW. 'EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME O F ANY PERSON UNDER THIS ACT,- 6 (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLAN ATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HA VE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHAL L, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, B E DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 5.1 THUS, WHEN THE ASSESSEE HAS CONCEALED PARTICULA RS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS, APPLICABIL ITY OF CONDITIONS LAID DOWN IN EXPLANATION (1), (SUPRA) HAVE T O BE EXAMINED. THE APPELLANT HAD FILED ITS RETURN OF INC OME FOR THE ASSESSMENT YEAR IN QUESTION DECLARING NIL INCOME AFT ER CLAIMING EXEMPTION IN RESPECT OF EXCESS OF INCOME OVER EXPEN DITURE OF RS. 13,96,110/-. IN THE ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER NOTICED THAT THE EXEMPTION HAD BEEN WRONGLY CLAIMED, SINCE THE APPELLANT HAD NOT BEEN GRANTED REGISTRATI ON U/S 12AA OF THE ACT AND DID NOT HAVE EXEMPTION U/S 10(2 3C) OF THE ACT. THE EXCESS OF INCOME OVER EXPENDITURE OF RS. 13,9 6,110/- WAS ACCORDINGLY TAXED AS BUSINESS INCOME. THE EXPLA NATION OF THE APPELLANT IS THAT THE APPLICATION HAD BEEN MADE T O COMMISSIONER OF INCOME TAX-II, CHANDIGARH TO GRANT R EGISTRATION, BUT IT IS SEEN THAT THIS APPLICATION WAS MADE ON 10.05. 2005 I.E. MUCH AFTER THE END OF RELEVANT FINANCIAL YEAR. IN FACT, THE APPLICATION FOR REGISTRATION HAD BEEN MADE ONLY AFTE R RECEIPT OF NOTICE U/S 143(2) OF THE ACT. IN ANY CASE, THE FACTU AL POSITION IS THAT THE APPELLANT HAD WRONGLY CLAIMED IN ITS RETU RN OF INCOME THAT EXEMPTION U/S 12A WERE TO APPLY IN ITS CA SE, KNOWING FULLY WELL THAT IT HAD NOT EVEN APPLIED FOR REGISTRATION BEFORE THE COMMISSIONER OF INCOME TAX. 5.2 THE LD COUNSEL FOR THE APPELLANT HAS RELIED UP ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF M/ S RELIANCE PETROPRODUCTS PVT. LTD. AND SOME OTHER CAS ES, 7 BUT THE FACTS OF THESE CASES ARE DISTINGUISHABLE TO THE INSTANT CASE. IN FACT, THE APPELLANT HAS TRIED TO EVADE TAX ON ITS INCOME AND WHAT BETTER CASE CAN THE DEPARTME NT HAVE TO IMPOSE THE PENALTY U/S 271(L)(C) OF THE ACT. HEN CE, IT IS HELD THAT THE ASSESSING OFFICER HAS RIGHTLY LEVIED THE CONC EALMENT PENALTY U/S 271(L)(C) AND THE SAME IS CONFIRMED. AL L THE GROUNDS OF APPEAL TAKEN BY THE APPELLANT ARE DISMIS SED. 6. THE APPELLANT HAS ALSO MENTIONED IN THE WRITTEN SUBMISSION THAT THE PENALTY COULD NOT BE IMPOSED AFTER 31.03.2009. THE APPELLANT HAS NOT TAKEN THE ISSUE O F LIMITATION IN THE GROUNDS OF APPEAL AND SO THIS ISS UE IS NOT BEING ADJUDICATED. IT MAY BE MENTIONED THAT THE ASS ESSING OFFICER HAS DULY DEALT WITH THE MATTER IN PARA - 6( I) OF THE ASSESSMENT ORDER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE SOCIETY IS RUNNING EDUCATIONAL INSTITUTION . THE ASSESSING OFFICER IN THE ABSENCE OF REGISTRATION UN DER SECTION 12AA OF THE ACT MADE THE ADDITIONS ON THE I SSUE. HE HAS SUBMITTED THAT ASSESSEE WAS GRANTED REGISTRA TION LATER ON UNDER SECTION 12AA OF THE ACT W.E.F. 01.04 .2005 COPY OF WHICH IS FILED AT PAGE 2 OF THE PAPER BOOK. THE ASSESSEE ALSO FILED APPLICATION FOR CONDONATION OF DELAY SEEKING REGISTRATION FROM THE EARLIER DATE, COPY OF WHICH IS FILED AT PAGE 1 OF THE PAPER BOOK BUT IT WAS NOT CONSIDERED FAVOURABLY. IT IS ADMITTED FACT THAT AS SESSEE SOCIETY EXISTS FROM EARLIER YEARS AS REGISTERED IN THE YEAR 2000 WITH REGISTRAR OF SOCIETIES. IN THE ASSESSMENT YEAR 2003-04, ASSESSEE SOCIETY HAD TOTAL RECEIPTS FROM STUDENTS IN A SUM OF RS. 88 LACS (PB- 13) 8 AND SINCE GROSS RECEIPTS WERE LESS THAN RS. 1 CRORE , THEREFORE, IT WAS ALLOWABLE EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE INCOME TAX ACT. DURING THE ASSESSMENT YEAR 2004-05, THE GROSS RECEIPTS OF THE ASSESSEE EXCEEDED MORE THAN THE ALLOWABLE EXEMPTION LIMIT AND MANAGEMENT WAS NOT AWARE OF THE FACT THAT REGISTRATION WAS TO BE APPLIED EITHER UNDER SECTION 12AA OR UNDER SECTION 10(23C) OF THE INCOME TAX ACT TO G ET THE EXEMPTION ON ACCOUNT OF ASSESSEE AS EDUCATIONAL INSTITUTION SOLELY EXIST FOR CHARITABLE ACTIVITIES. PB-19 IS INCOME & EXPENDITURE ACCOUNT FOR ASSESSMENT YEAR 2004-05 IN WHICH TOTAL FEES RECEIVED WAS RS. 1,00,19,687/-. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE WAS UNDER BONAFIDE BELIEF T HAT TOTAL RECEIPTS OF THE ASSESSEE MAY NOT EXCEED RS. 1 CRORE AND ALSO APPLIED FOR CONDONATION OF DELAY IN GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT FROM EARLIER YEARS. THEREFORE, EVEN IF ADDITION ON QUAN TUM HAS BEEN MAINTAINED BUT IT IS NOT A FIT CASE OF LEV Y OF PENALTY. HE HAS, THEREFORE, SUBMITTED THAT PENALTY MAY, ACCORDINGLY BE CANCELLED. 6(I) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS O F AUTHORITIES BELOW AND SUBMITTED THAT ADDITION ON QUANTUM HAS BEEN CONFIRMED BY THE TRIBUNAL. THE PENALTY IS A CIVIL LIABILITY AND RELIED UPON DECISI ONS OF HON'BLE SUPREME COURT IN THE CASES OF DHARMENDRA 9 TEXTILES & PROCESSORS 306 ITR 277 AND ATUL MOHAN BINDAL 317 ITR 1. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS FILED CO PY OF REGISTRATION CERTIFICATE GRANTED BY CIT-II, CHANDIG ARH DATED 28.12.2005 AT PAGE 2 OF THE PAPER BOOK IN WHI CH THE CIT NOTED THAT ASSESSEE SOCIETY HAS BEEN REGIST ERED ON 29.03.2000 WITH REGISTRAR OF SOCIETIES. THE CIT WAS SATISFIED THAT SINCE ASSESSEE SOCIETY IS ENGAGED IN CHARITABLE ACTIVITIES I.E. I.E. EDUCATIONAL ACTIVIT IES, THEREFORE, REGISTRATION UNDER SECTION 12AA OF THE A CT WAS GRANTED W.E.F. 01.04.2005. THE ASSESSEE ALSO MA DE A REQUEST FOR CONDONATION OF DELAY IN FILING APPLICAT ION (PB-1) IN WHICH ASSESSEE SIMILARLY EXPLAINED THAT S OCIETY IS REGISTERED IN THE YEAR 2000 WITH SOLE OBJECT OF IMPARTING EDUCATION AND SINCE INCEPTION OF THE SOCI ETY, IT IS ENGAGED IN EDUCATIONAL ACTIVITIES, THEREFORE, DUE TO LACK OF KNOWLEDGE, THE REGISTRATION APPLICATION COU LD NOT BE FILED EARLIER. IT WAS, THEREFORE, PRAYED THAT D ELAY IN FILING APPLICATION FOR REGISTRATION MAY BE CONDONED AND REGISTRATION MAY BE GRANTED WITH RETROSPECTIVE EFFE CT FROM 01.04.2003. SUCH REQUEST OF THE ASSESSEE WAS NOT CONSIDERED FAVOURABLY. IT IS ALSO ADMITTED FACT T HAT IN PRECEDING ASSESSMENT YEAR 2003-04, THE TOTAL RECEIP TS OF THE ASSESSEE WERE BELOW RS. 1 CRORE THEREFORE, INCO ME OF THE ASSESSEE WAS EXEMPT ON ACCOUNT OF EDUCATIONAL INSTITUTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT . IT IS 10 ADMITTED FACT THAT ASSESSEE SOCIETY EXISTS SOLELY F OR EDUCATIONAL PURPOSES. IN THE ASSESSMENT YEAR UNDER APPEAL I.E. 2004-05, THE EXPLANATION OF THE ASSESSE E WAS THAT IT WAS UNDER BONAFIDE BELIEF THAT TOTAL RECEIP TS OF THE ASSESSEE MAY NOT EXCEED RS. 1 CRORE AND AS SUCH THERE WAS NO REQUIREMENT TO GET REGISTRATION UNDER SECTION 12AA AND 10(23C) OF THE ACT FROM THE COMPET ENT AUTHORITY. THE BELIEF OF THE ASSESSEE IS BASED UPO N THE MATERIAL ON RECORD THAT IN PRECEDING ASSESSMENT YEA R, ITS TOTAL RECEIPTS WERE LESS THAN RS. 1 CRORE, THER EFORE, NO APPROVAL UNDER THE ABOVE PROVISIONS WAS REQUIRED AND THE BELIEF OF THE ASSESSEE IS ALSO STRENGTHENED BY THE FACT THAT IN ASSESSMENT YEAR UNDER APPEAL, GROS S RECEIPTS OF THE ASSESSEE HAS SLIGHTLY EXCEEDED FROM RS. 1 CRORE. THESE FACTS CLEARLY SHOW THAT ASSESSEE UND ER BONAFIDE BELIEF MADE A CLAIM OF EXEMPTION OF INCOME UNDER SECTION 11 OF THE INCOME TAX ACT BEFORE THE ASSESSING OFFICER HOPING THAT ITS INCOME IS EXEMPT ON BEING EDUCATIONAL SOCIETY EXISTS SOLELY FOR THE PUR POSE OF EDUCATION. THE ASSESSEE, THUS, OFFERED EXPLANATION BEFORE THE AUTHORITIES BELOW WHICH IS NOT FOUND TO BE FALSE. THE ABOVE FACTS ALSO PROVE THAT THE EXPLANA TION OF THE ASSESSEE IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOM E HAVE BEEN DISCLOSED TO THE REVENUE DEPARTMENT. 7(I) IT IS WELL SETTLED LAW THAT QUANTUM AND PENAL TY PROCEEDINGS ARE DISTINCT AND INDEPENDENT PROCEEDING S. 11 MERELY BECAUSE QUANTUM ADDITION HAVE BEEN CONFIRMED BY ITSELF IS NO GROUND TO LEVY THE PENALTY AUTOMATI CALLY. THE EXPLANATION-I TO SECTION 271(1)(C) OF THE ACT W OULD NOT BE ATTRACTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS AND CIRCUMSTANCES OF THE CASE AND DISCUSSION ABOVE CLEARLY PROVES THAT ASSESSEE HAS N OT CONCEALED THE PARTICULARS OF INCOME AND HAS ALSO NO T FURNISHED INACCURATE PARTICULARS OF INCOME. WE ARE , THEREFORE, OF THE VIEW THAT PENALTY NEED NOT TO BE LEVIED IN THIS CASE BECAUSE IT IS NOT A FIT CASE OF LEVY O F PENALTY. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 4 TH NOVEMBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD