ITO (E), New Delhi V. M/s. Mehta Charitable Prajanalaya Trust, New Delhi

ITA 3287/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2966 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Wrong claim; Difference of opinion; Benefit of exemption
• Section: 260A; 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. N.K.SAINI, AM AND SH. K.N.CHARY, JM ITA NO. 328 1-3287/DEL./2016 ASSTT. YEAR : 1992-93,1993-94, 1994-95, 2001-02, 2005-06, 2006-07 AND 2007-08 ITO(E) WARD-1(4), ROOM NO. 2421, PRATYAKSH KAR BHAWAN, 24 TH FLOOR, E-2 BLOCK, DR. S.P.MUKHERJEE CIVIC CENTRE NEW DELHI VS MEHTA CHARITABLE PRAJANALAYA TRUST 104, TILAK BAZAR CHOWK NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAAFM2171L ASSESSEE BY : SH. V. RAJA KUMAR, ADV. REVENUE BY : SH. ARUN KUMAR YADAV, SR.DR DATE OF HEARING : 20.12.2017 DATE OF PRONOUNCEMENT : 26.12.2017 ORDER PER BENCH : THESE APPEALS BY THE DEPARTMENT ARE DIRECTED AGAIN ST THE SEPARATE ORDERS EACH DATED 28.03.2016 OF THE CIT(A)-36, NEW DELHI. 2. SINCE THE ISSUE INVOLVED IS COMMON IN THESE APPE ALS WHICH WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OF BY THIS CON SOLIDATED ORDER FOR THE SAKE ITA NO.3281-3287/DEL/2016 2 OF CONVENIENCE AND BREVITY. THE COMMON GROUND RAISE D IN THESE APPEALS READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY IGNORING THE FACT THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME BY CLAIMING EXEMPTION U/S 11 OF THE ACT IN RESPECT OF BUSINESS WHICH WAS NOT INCIDENTAL TO THE OBJECTS OF THE TRUST. AT THE FIRST INSTANCE, WE WILL DEAL WITH THE APPEAL IN ITA NO. 3281.DEL.2016 FOR THE ASSESSMENT YEAR 1992-93. 3. THE GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL R ELATES TO THE DELETION OF PENALTY LEVIED BY THE AO U/S 271 (1) (C) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 30.10.1992 D ECLARING NIL INCOME. THE ASSESSEE WAS REGISTERED U/S 12A OF THE ACT AND CLAI MING ITS INCOME EXEMPT FROM TAX U/S 11 AND 12 OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD KATHA MANUFACTURING FACTORY IN OEL(HP) WHICH WAS GIVEN ON LEASE TO M/S. SHANKAR TRADING CO. PVT. LTD., A SIST ER CONCERN AND THE TOTAL RECEIPTS INCLUDED THE LEASE RENTAL INCOME FROM M/S. SHANKAR TRADING CO. P. LTD. CLAIMED TO BE EXEMPT U/S. 11 WHEREAS THE BUSI NESS OF MANUFACTURING OF KATHA WAS NOT INCIDENTAL TO THE OBJECTS OF THE TRUS T. HE INVOKED THE PROVISIONS OF SECTION 11(4A) OF THE ACT, DENIED THE BENEFIT O F EXEMPTION U/S 11 OF THE ACT AND ASSESSEE THE INCOME AT RS. 62,86,390/-. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER OF THE LD. CIT(A) WHO VIDE ORDER DATED 06.03.1996 CONFIRMED THE ACTION OF THE AO FOR DENIAL OF EXEMPTION U/S 11 OF THE ACT. ON FURTHER APPEAL, TH E ITAT VIDE ORDER DATED 04.09.2002 ALLOWED THE EXEMPTION U/S 11 OF THE ACT BUT THE DEPARTMENT DID NOT ITA NO.3281-3287/DEL/2016 3 ACCEPT THE SAID ORDER AND FILED AN APPEAL U/S 260A OF THE ACT BEFORE HONBLE JURISDICTIONAL HIGH COURT WHEREIN VIDE ORDER DATED 20.11.2012 THE STAND OF THE AO WAS CONFIRMED. 6. SUBSEQUENTLY THE APPEAL EFFECT WAS GIVEN BY THE A.O. AND INCOME WAS RECOMPUTED AT RS. 62,53,390/- VIDE ORDER DATED 31.0 5.2013. THE AO ALSO INITIATED THE PENALTY PROCEEDINGS AND NOTED THAT TH E ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM AS REGARDS TO THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT AND THAT THERE WAS NO NEXUS BETWEEN THE KATHA BUSIN ESS AND THE OBJECTS OF THE ASSESSEE TRUST WHICH COULD CONSTITUTE THE CARRYING ON OF THE KATHA BUSINESS AN ACTIVITY INCIDENTAL TO THE ATTAINMENT OF THE OBJECT S. THE AO HELD THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING EXEMPTION U/S 11 OF THE ACT IN RESPECT OF THE BUSINESS WHICH WAS NOT INCIDENTAL TO THE OBJECTS OF THE ASSESSEE TRUST AND THE SAID MISTAKE COULD NO T HAVE BEEN SAID TO BE BONA FIDE ONE. ACCORDINGLY PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED FOR RS. 36,14,670/-. 7. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THERE WAS NEITHER ANY CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE AN D THE DIFFERENCE BETWEEN THE RETURNED INCOME AND THE TAXABLE INCOME COMPUTED WAS ON ACCOUNT OF DIFFERENCE OF OPINION IN RESPECT OF LEGAL ISSUES WH ICH WERE ALL DEBATABLE IN WHICH SITUATION THERE WOULD BE NO CHARGE OF ANY CON CEALMENT. IT WAS STATED THAT THE CLAIM OF EXEMPTION U/S 11 OF THE ACT WAS BASED ON BONA FIDE BELIEF AND EXPERTS OPINION WHICH COULD NOT BE TERMED AS MALA FIDE. IT WAS FURTHER STATED THAT THE AO HIMSELF ALLOWED THE EXEMPTION UP TO THE ASSESSMENT YEAR 1988-89 AND THEREAFTER UP TO ASSESSMENT YEAR 2007-08 AND EV EN ITAT HAD ALSO ALLOWED THE EXEMPTION. THEREFORE, THE ASSESSEE HAD A BONA F IDE BELIEF THAT IT WAS ENTITLED TO EXEMPTION U/S 11 OF THE ACT. IT WAS CONTENDED T HAT THE ORDER OF THE HONBLE ITA NO.3281-3287/DEL/2016 4 DELHI HIGH COURT CAME MUCH LATER ON 20.11.2012, THE REFORE, THERE WAS NO MALA FIDE INTENTION ON THE PART OF THE ASSESSED FURTH ERMORE, THE IMPUGNED PENALTY WAS LEVIED ON THE BASIS OF WRONG AND ILLEGAL COMPUT ATION OF TOTAL INCOME BY THE AO TAKING THE GROSS INCOME / GROSS RECEIPTS AS TAXA BLE INCOME WITHOUT DEDUCTING THE LEGITIMATE EXPENSES, DEPRECIATION, ET C. AND THAT THE HONBLE HIGH COURT IN THEIR ORDER FOR THE ASSESSMENT YEAR 2009-1 0 DIRECTED THE AO TO EXAMINE THE ADMISSIBILITY OF THE EXPENDITURE AND D EPRECIATION. THEREFORE, THE DETERMINATION OF TAXABLE INCOME WAS ALSO NOT FINAL. IT WAS SUBMITTED THAT THE ASSESSEE HAD FURNISHED ALL THE MATERIAL FACTS FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME, SO, THERE WAS NEITHER CONCEALMENT N OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON ITS PART AND IT WAS PURELY A CASE OF DIFFERENCE OF OPINION WITH REGARD TO A DEBATABLE MATTER WHICH COU LD NOT BE TREATED AS CONCEALMENT. THE RELIANCE WAS PLACED ON THE JUDGMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT S REPORTED AT 322 ITR 158. 8. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO HAD IMPOSED THE PENALTY MAINLY ON THE POINT OF THE MISTAKE ON THE PART OF THE ASSESSEE WHICH COULD NOT BE SAID TO BE BONA FIDE ONE, THE INACCURATE PARTICULARS HAD BEEN FURNISHED BY CL AIMING EXEMPTION U/S 11 IN RESPECT OF BUSINESS WHICH WAS NOT ACCIDENTAL TO THE OBJECTS OF THE ASSESSEE TRUST AND THAT THE ASSESSEE COULD NOT HAVE BEEN ROUTINELY CARELESS WHILE SUBMITTING THE RETURNS. THE LD. C.I.T.(A) OBSERVED THAT NO E VIDENCE HAD BEEN BROUGHT ON RECORDS TO ADDUCE THAT FURNISHING OF INACCURATE DE TAILS HAD BEEN DONE BY THE ASSESSEE WILLFULLY IN ORDER TO AVOID THE PAYMENTS O F TAX OR TO CONCEAL THE PARTICULARS OF ITS INCOME AND THAT NO AVERMENT OR F ACT EXISTS TO SHOW THAT ANY DETAIL OR PARTICULAR FILED IN SUPPORT OF THE CLAIM, WAS UNTRUE OR FALSE OR TO SHOW THAT ANY MATERIAL FACT HAS BEEN SUPPRESSED BY THE ASSESSEE. HE FURTHER OBSERVED THAT THE PENALTY IN THE PRESENT CASE WAS LEVIED AFT ER THE HONBLE HIGH COURT ITA NO.3281-3287/DEL/2016 5 CONFIRMED THE DISALLOWANCE OF ASSESSES CLAIM OF EX EMPTION U/S 11 OF THE ACT. THIS CLAIM WAS EARLIER ALLOWED BY THE ITAT DELHI BE NCH BESIDES, THIS, THE AO DID NOT FIND ANY ADVERSE MATERIAL AGAINST THE ASSES SEE FOR FURNISHING INACCURATE DETAILS OR CONCEALMENT OF INCOME AND THAT FROM THE PAST HISTORY ALSO IT WAS CLEAR THAT THE CLAIM WAS NOT DELIBERATELY OR WILLFU LLY MADE IN A FALSE MANNER BECAUSE IN THE EARLIER YEARS EVEN THE AO AND THE LD . CIT(A) HAD BEEN ALLOWING THE CLAIM OF DEDUCTION. THEREFORE, THE DEBATABLE IN TERPRETATION CAN NOT HELD TO BE A REASON FOR LEVYING THE PENALTY U/S 271(1)(C) O F THE ACT. ACCORDINGLY THE IMPUGNED PENALTY WAS DELETED. THE RELIANCE WAS PLA CED ON THE FOLLOWING CASE LAWS :- 1. CIT VS. RELIANCE PETRO PRODUCTS P.LTD. (2010) 3 22 ITR 158(SC) 2. CIT VS. LAKHANI INDIA LTD. (2010) 324 ITR 73, (P & H HIGH COURT) 3. IN DEVSONS LOGISTICS PVT. LTD. VS. CIT (2010) 32 9 ITR 483 (DEL.) NOW THE DEPARTMENT IS IN APPEAL. 9. THE LD. DR STRONGLY SUPPORTED THE PENALTY ORDER PASSED BY THE AO AND FURTHER SUBMITTED THAT SINCE THE CLAIM OF THE ASSE SSEE U/S 11 OF THE ACT WAS NOT ALLOWABLE IN VIEW OF THE JUDGMENT OF THE HONBLE JU RISDICTIONAL HIGH COURT. THEREFORE, THE ASSESSEE CONCEALED THE INCOME BY MAK ING A FALSE CLAIM AS SUCH THE AO WAS JUSTIFIED IN LEVYING THE PENALTY U/S 271 (1)(C) OF THE ACT. 10. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR T HE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EPEATED THE OBSERVATIONS MADE BY THE LD. CIT(A) IN THE IMPUGNED ORDER. RELIA NCE WAS PLACED ON THE FOLLOWING CASE LAWS :- 1. CIT VS. RELIANCE PETRO PRODUCTS P.LTD. (2010) 3 22 ITR 158(SC) 2. CIT VS. LAKHANI INDIA LTD. (2010) 324 ITR 73 (P & H) 3. IN DEVSONS LOGISTICS PVT. LTD. VS. CIT (2010) 32 9 ITR 483 (DEL.) 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE, IT IS AN ADMITTED FACT THAT ITA NO.3281-3287/DEL/2016 6 THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 OF T HE ACT WAS EARLIER ALLOWED BY THE AO UP TO THE ASSESSMENT YEAR 1988-89 AND THEREA FTER UPTO ASSESSMENT YEAR 2007-08, FOR THE YEAR UNDER CONSIDERATION ALSO THE CLAIM OF THE ASSESSEE WAS ALLOWED BY THE ITAT. SUBSEQUENTLY THE HONBLE JURIS DICTIONAL HIGH COURT DID NOT ALLOW THE CLAIM OF THE ASSESSEE U/S 11 OF THE A CT. HOWEVER, SLP IS PENDING BEFORE THE HONBLE SUPREME COURT. THEREFORE, IT CAN BE SAID THAT THE ISSUE RELATING TO THE CLAIM OF EXEMPTION U/S 11 OF THE AC T IS HIGHLY A DEBATABLE AND LEGAL ISSUE. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME. 12. ON A SIMILAR ISSUE, THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS 322 ITR 158 (SUPRA) HELD AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(L) (C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECO NDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(L)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTIC- ULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAI M TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARI SE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MER E MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOU NT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. 13. IN THE PRESENT CASE ALSO THE CLAIM OF THE ASSES SEE FOR EXEMPTION U/S 11 HAS NOT BEEN ALLOWED BY THE AO ON THE BASIS OF THE JUDGMENT OF THE HONBLE HIGH COURT. THEREFORE, NOT ALLOWING THE CLAIM OF THE ASSESSEE U/S 11 OF THE ITA NO.3281-3287/DEL/2016 7 ACT ITSELF CANNOT TANTAMOUNT TO FURNISHING OF INAC CURATE PARTICULARS OF INCOME. WE, THEREFORE, IN VIEW OF THE RATIO LAID DOWN BY TH E HONBLE APEX COURT IN THE AFORESAID REFERRED TO CASE ARE OF THE CONFIRMED VIE W THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) DO NOT REQUIRE ANY INTERFE RENCE. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 14. IN ALL OTHER APPEALS I.E. ITA NO. 3282-3287/DEL /2016, THE FACTS ARE IDENTICAL AS WHERE INVOLVED IN ITA NO. 3281.DEL.201 6 FOR THE ASSESSMENT YEAR 1992-93 WHICH HAVE ALREADY ADJUDICATED IN THE FORME R PART OF THIS ORDER, THEREFORE, OUR FINDINGS GIVEN THEREIN SHALL APPLY MUTATIS MUTANDIS. 15. IN THE RESULT APPEALS FILED BY THE DEPARTMENT ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/12/2017). SD/- SD/- (K.N.CHARY) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 / 12/2017 *B.RUKHAIYAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO.3281-3287/DEL/2016 8 DATE INITIAL 1. DRAFT DICTATED ON 20.12.2017 2. DRAFT PLACE D BEFORE AUTHOR 21.12.2017 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 26.12.2017 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.