District Co- Operative Bank Ltd., Dehradun V. DCIT, Dehradun

ITA 3533/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97580 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Question of law; Wrong claim; Revised return; Bonafide mistake
• Section: 143(3)

Judgement Text

PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. A.T.VARKEY, JM AND SH. PRASHAN T MAHARISHI, AM ITA NO. 3533/DEL/2012 : ASSTT. YEAR : 2007-08 DISTRICT CO-OPERATIVE BANK LTD. VS. DCIT COURT COMPOUND CIRC LE-2 DEHRADUN SUBHASH ROAD PAN : AAAAD0247R DEHRADUN APPELLANT RESPONDENT APPELLANT BY : DR. RAKESH GUPTA, ADV. RESPONDENT BY : HEMAND GUPTA, SR. DR. DATE OF HEARING : 10.10.2015 DATE OF PRONOUCEMENT : 21.10.2015 PER PRASHANT MAHARISHI, AM: 01. THIS APPEAL IS PREFERRED BY ASSESSEE AGAINST THE OR DER OF CIT (A) DATED 19.03.2012 CONFIRMING THE PENALTY U/S 271(1) (C) O F THE ACT OF RS 1,54,49,290/-. 02. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COOP ERATIVE BANK ENGAGED IN THE BUSINESS OF BANKING. FOR IMPUGNED ASSESSMENT YEAR IT FURNISHED ITS RETURN OF INCOME SHOWING NIL INCOME. IN THE RET URN OF INCOME IT CLAIMED DEDUCTION U/S 80 P OF THE INCOME TAX ACT OF RS 3,36,68,582/-. THE ASSESSEE COMPANY WAS ELIGIBLE FOR DEDUCTION U/S 80 P UP TO AY 2006-07 BUT DUE TO AMENDMENT WEF 1-4-2007 SUBSECTIO N 4 WAS INTRODUCED U/S 80 P OF THE ACT WHICH RESTRICTED THE DEDUCTION ONLY TO PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY COO PERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THEREFORE APPARENTLY ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80 P OF THE ACT FOR IMPUGNED ASSESSMENT YEAR. HENCE, AO ISSUED SHOW CAU SE NOTICE ON PAGE 2 OF 8 3.11.2009 TO THE ASSESSEE FOR DISALLOWANCE OF DEDUC TION U/S 80 P AND IN TURN ASSESSEE WITHDREW THE CLAIM OF THE DEDUCTIO N U/S 80 P AND FURNISHED REVISED STATEMENT OF INCOME. THEREAFTER A O PASSED ASSESSMENT ORDER U/S 143(3) OF THE ACT AT INCOME OF RS 3,36,68,580/- ON 24.11.2009. 03. WHILE PASSING ASSESSMENT ORDER AO INITIATED PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT. IN RESPONSE TO THE PENALTY N OTICE ASSESSEE SUBMITTED BEFORE AO THAT :- A. THE DEDUCTION WAS AVAILABLE TO THE ASSESSEE UP TO A Y 2006-07 AND THEREFORE THIS YEAR ASSESSEE WAS UNDER IMPRESSION A BOUT THE AVAILABILITY OF THIS DEDUCTION BUT ON COMING TO KNO W ABOUT THE CORRECT POSITION OF LAW IT WITHDREW THE DEDUCTION CLAIMED. THEREFORE THERE WAS A BONA FIDE ERROR ON PART O THE ASSESSEE FOR WH ICH PENALTY MAY NOT BE LEVIED. B. PENALTY PROCEEDINGS HAVE BEEN INITIATED VALIDLY AS THERE IS NO FINDING OR SATISFACTION HAS BEEN RECORDED IN ORDER OF SECT ION 143(3) THAT WHETHER ASSESSEE FURNISHED INACCURATE PARTICULAR S OF INCOME OR CONCEALED THE INCOME. C. SUBMITTED THE NUMEROUS CASE LAWS RELATING TO THE IS SUE OF PENALTY. 04. HOWEVER AO REJECTING THE EXPLANATION OF THE ASSESS EE LEVIED PENALTY U/S 271(1) (C) OF RS. 15449290/- . AGAINST THIS ORDER ASSESSEE PREFERRED APPEAL BEFORE CIT (A) WHO IN TURN CONFIRMED THE PENALTY HOLDING THAT:- A) THE CLAIM OF THE ASSESSEE IS ERRONEOUS AND NOT IN A CCORDANCE WITH LAW. B) THERE IS NO BONA FIDE OF THE ASSESSEE IN MAKING WRO NG CLAIM AND WHEN CONFRONTED TO WITHDRAW THE SAME. 05. BEFORE US THE LD AR HAS SUBMITTED THAT :- PAGE 3 OF 8 A. DUE TO AMENDMENT IN THE LAW ASSESSEE MISTAKENLY FOR GOT TO APPLY THAT LAW WHERE THE DEDUCTION U/S 80 P W.E.F. AY 2007-0 8 WAS NOT AVAILABLE TO THE ASSESSEE. THEREFORE THERE WAS A BO NAFIDE ERROR ON PART OF THE ASSESSEE. HE SUBMITTED THAT LETTER DATED 2 0/11/2009 AND 15.12.2009 EXPLAINS THE POSITION ABOUT THE BONA FI DE OF THE ASSESSEE. B. ASSESSEE CLAIMED DEDUCTION U/S 80 P (2) OF THE ACT FOR AY 2007-08 AND 2008-09. ON COMING TO KNOW THE ERROR THAT THIS DEDUCTION IS NOT AVAILABLE TO THE ASSESSEE, ASSESSEE WITHDREW THE DE DUCTIONS FOR BOTH THE YEAR. PENALTY PROCEEDINGS WERE INITIATED IN BOT H THE YEARS. IN THIS ASSESSMENT YEAR PENALTY U/S 271 (1) ( C) WAS LEVIE D WHERE IN FOR AY 2008-09, AO HIMSELF HAS DROPPED THE PENALTY PROCEED INGS HOLDING THAT EXPLANATION OF THE ASSESSEE IS FOUND TO BE BON AFIDE APPLYING THE RATIO OF DECISION OF HONORABLE SUPREME COURT IN CA SE OF CIT V RELIANCE PETRO PRODUCTS LIMITED. HOWEVER FOR AY 200 7-08 ON IDENTICAL FACTS AO HAS LEVIED PENALTY. C. HE FURTHER REFERRED TO THE DECISION OF HONOURABLE R AJASTHAN HIGH COURT IN CASE OF CIT UDAIPUR V CHIITORGARH KENDR IYA SAHKARI BANK LIMITED ITA NO 77/2013 DATED 17/10/2013 WHERE IN FOR AY 2007- 08 ON IDENTICAL FACTS HONORABLE HIGH COURT HAS CO NFIRMED THE DELETION OF PENALTY ON CLAIM WITHDRAWN U/S 80 P OF THE ACT. 06. LD DR VEHEMENTLY CONTESTED THAT THE PENALTY IS RI GHTLY LEVIED BY AO AND CONFIRMED BY CIT (A). HE SUBMITTED THAT BECAUSE TH E CASE OF THE ASSESSEE WAS SELECTED IN SCRUTINY THE INCORRECT CLAIM OF THE ASSESSEE WAS DETECTED AND THEN ASSESSEE WITHDREW IT. HE FURTHER SUBMITTED TH AT FROM AY 2007-08, ASSESSEE WAS AWARE ABOUT THE NON AVAILABILITY OF CL AIM AND THEREFORE CLAIM PAGE 4 OF 8 OF THE ASSESSEE WAS FALSE WHICH WAS WITHDRAWN AS S OON AS CAUGHT BY AO. THEREFORE THIS CLAIM WAS NOT BONA FIDE AND PENALTY DESERVES TO BE UPHELD. 07. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO THE RELEVANT ORDERS OF LOWER AUTHORITIES. WE HAVE FOUND THAT THI S IS NOT A FIT CASE FOR LEVYING PENALTY AS IN THIS CASE NEITHER THE ASSESSE E HAS CONCEALED THE PARTICULARS OF INCOME NOR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THIS IS SIMPLY A CASE OF BONAFIDE MISTAKE WHICH HAS OCCURRED DUE TO CHANGE OF LAW APPLICABLE IN THIS YEAR. AFTER GIVING OUR TH OUGHTFUL CONSIDERATION TO THE FACTS OF THIS CASE VIS-A-VIS THE LEGAL POSITION NARRATED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT WHEN A WRONG CLAIM IS MADE UNDER SOME BONAFIDE MISTAKE, THAT CANNOT BE A GROUND FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE HAS BEEN MAKING SIMILAR CLAIM AND THE SAME WERE BEING ALLOWED IN EARLIER ASSESSMENT YEARS. DUE TO CHANGE IN LAW, THIS CLAIM WAS NOT ALLOWED AND THE ASSESSEE ALSO CORRECTED ITS MISTAKE BY WITHDRAWING THE CLAIM, THEREFORE IT IS NOT A CASE OF WILLFUL W RONG CLAIM. MORE IMPORTANTLY WE WERE INVITED TO THE ASSESSMENT ORD ER DATED 30.8.2010 FOR AY 2008-09 IN WHICH ON IDENTICAL FACTS ASSESSEE CL AIMED THE DEDUCTION AND LATER ON POINTING OUT THE ERROR OF UNAVAILABLE CLA IM OF DEDUCTION U/S 80 P WITHDREW SAME BY FILING REVISED RETURN OF INCOME. I N THAT CASE AFTER ISSUE OF SHOW CAUSE NOTICE AND PURSUING THE REPLY OF THE ASS ESSEE, AO HIMSELF DROPPED THE PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT VIDE HIS ORDER DATED 29.03.2011. IN THE OFFICE NOTE IN THAT ORDER SUBMITTED BEFORE US IT WAS CATEGORICALLY MENTIONED BY THE AO AT SERIAL NO 3 THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND T O BE BONAFIDE AND IN VIEW OF THE DECISION OF HONORABLE SUPREME COURT IN CIVIL APPEAL NO 2463 OF 2010 ARISING OUT OF SLP NO 27161 OF 2008 IN TH E CASE OF CIT, PAGE 5 OF 8 AHMEDABAD V RELIANCE PETROPRODCUTS PVT LIMITED PE NALTY PROCEEDINGS ARE HEREBY DROPPED. THE ONLY DIFFERENCE WE COULD VISUALIZE BETWEEN THE FACTS OF AY 2008-09 AND 2007-08 IS THAT IN AY 2007-08, ASSESSEE WITHDREW IT S CLAIM BY FILING A LETTER AND IN AY 2008-09 IT WITHDREW BY FILING A REVISED R ETURN. WE ARE OF THE VIEW THAT THIS DIFFERENCE CANNOT MAKE THE ASSESSEE LIABLE FOR PAYMENT OF PENALTY. IT IS HIGHLY UNUSUAL THAT IN ONE YEAR EXPL ANATION OF ASSESSEE IS FOUND BY AO BONAFIDE AND ANOTHER YEAR IT IS NOT. WE ALSO DO NOT AGREE WITH CONTENTION OF REVENUE THAT HAD THIS CASE NOT BEEN S ELECTED FOR SCRUTINY, THE WRONG CLAIM WOULD NOT HAVE BEEN DETECTED. WE ARE AW ARE THAT IT IS PREROGATIVE OF REVENUE ABOUT WHICH CASE TO BE SCRUT INIZED AND ASSESSEE DOES NOT HAVE ANY SAY IN THAT. THEREFORE, THIS OFT REPEA TED ARGUMENT OF REVENUE DESERVES TO BE REJECTED. FURTHER HONORABLE RAJASTHA N HIGH COURT JODHPUR BENCH IN CIT UDAIPUR V M/S CHITTORGARH KENDRIYA S AHAKARI BANK LIMITED IN D.B. INCOME TAX APPEAL NO NO.77/2013 WHERE IN HO NORABLE HIGH COURT HAS DISMISSED THE APPEAL OF THE REVENUE AGAINST T HE ORDER OF ITAT DELETING PENALTY WHERE THE ASSESSEE CLAIMED DEDUCTION U/S 80P OF THE ACT FOR AY 2007-08 AND WITHDREW THE SAME ON POINTED OUT BY AO BY FILING REVISED RETURN OF INCOME. HONORABLE HIGH COURT HELD THAT IN OUR VIEW, THE SUBMISSIONS OF THE REVENUE FALL SH ORT OF MAKING OUT A SUBSTANTIAL QUESTION OF LAW WORTH CONSIDERATION. THE ASSESSEE IS A CO-OPERATIVE BANK AND HAD BEEN EN TITLED TO THE DEDUCTION UNDER SECTION 80P(2)OF THE ACT BEFORE THE YEAR IN Q UESTION AND HAD BEEN ALLOWED SUCH DEDUCTION. IT IS NO DOUBT TRUE THAT IN THE ORIGINAL RETURN FOR THE YEAR IN QUESTION, THE ASSESSEE CLAIMED DEDUCTION OF RS.50,000/- UNDERSECT ION 80P(2)(C)(II)OF THE ACT AND IN THE REVISED RETURN DATED 13.12.2007, BESIDES THE AB OVE, THE ASSESSEE ALSO CLAIMED DEDUCTION OF RS.3,07,37,988/- UNDER SECTION 80P(2)( D) OF THE ACT. HOWEVER, WITH THE PAGE 6 OF 8 AMENDMENT IN SECTION 80P AND INSERTION OF SUB-SECTI ON (4) FROM 01.04.2007, ASSESSEE WAS, ADMITTEDLY, NOT ENTITLED TO SUCH DEDUCTIONS. THE ASSESSEE, A BANKING INSTITUTION AND A REGISTERE D CO- OPERATIVE SOCIETY, OF COURSE, OUGHT TO HAVE BEEN REMAINED VIGILANT WHILE FILING ITS RETURN OR REVISED RETURN BUT, IT REMAINS A FACT THAT EARLIER, THE DEDUCTION IN QUESTION UNDER SECTION 80P (2) WAS BEING ALLOWED TO THE ASSESSEE, FOR BEING A CO- OPER ATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING AND PROVIDING CREDIT FACILITIES. IT WAS BY VIRTUE OF INSERTION OF SUB- SECTION (4) BY FINANCE ACT, 2006 WITH EFFECT FROM 01.04.200 7 THAT THE PROVISIONS OF SECTION 80P WERE MADE INAPPLICABLE IN RELATION TO ANY CO-OP ERATIVE BANK OTHER THAN THE PRIMARY AGRICULTURE CREDIT SOCIETY OR PRIMARY CO-OP ERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK. APPARENTLY, THE CLAIM FOR THIS DE DUCTION IN THE ASSESSMENT YEAR 2007-08 HAD BEEN A MATTER ITA NO.77/2013 OF BONA FI DE MISTAKE AND COULD NOT HAVE BEEN TAKEN TO BE A CASE OF CONCEALMENT OF PARTICULA RS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN FACT, WHEN CON FRONTED WITH THE LEGAL POSITION, THE ASSESSEE FILED RE-REVISED RETURN, ALBEIT BELATEDLY, WITHDRAWING SUCH CLAIM OF DEDUCTION. THE APPELLATE AUTHORITIES I.E., CIT(A) AND ITAT HAV E, IN OUR VIEW, RIGHTLY EXAMINED THE MATTER WITH REFERENCE TO THE DECISION IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD.: (2010) 322 ITR 158 WHEREIN, THE HON'BLE SUPREME COURT HAS, INTER ALIA, HELD AS UNDER:- '......A MERE MAKING OF THE CLAIM, WHICH IS NOT SUS TAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PART ICULARS .' THE APPELLATE AUTHORITIES HAVE ALSO RIGHTLY TAKEN I NTO CONSIDERATION THAT ON BEING CONFRONTED WITH THE LEGAL POSITION, THE ASSESSEE AT TEMPTED TO CORRECT THE MISTAKE BY FILING RE- REVISED RETURN. IN THE TOTALITY OF CIRCU MSTANCES OF THIS CASE, THE APPELLATE AUTHORITIES CANNOT BE FAULTED IN NOT FINDING IT TO BE A CASE OF MAKING A WILLFULLY WRONG CLAIM BY FURNISHING INACCURATE PARTICULARS. WE FIND NOTHING OF ERROR OR INFIRMITY IN THE APPROACH ON THE PART OF THE APPELLATE AUTHORITIES L EADING TO ANY SUBSTANTIAL QUESTION OF LAW. PAGE 7 OF 8 8. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION O F HONOURABLE RAJASTHAN HIGH COURT AND ALSO THE FACT THAT AO HIMSELF HAS AC CEPTED THE EXPLANATION OFFERED BY ASSESSEE AS BONAFIDE FOR SUBSEQUENT YEA R ON IDENTICAL FACTS, WE DELETE THE IMPUGNED PENALTY OF RS 1,54,49,290/- U/S 271(1) (C) AND REVERSE THE ORDER OF CIT (A). 9.IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 21/10/2 015) SD/- SD/- (A.T.VARKEY) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 /10/2015 *B. RUKHAIYAR* COPY FORWARDED TO: 1. APPELLANT A 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR PAGE 8 OF 8 DATE INITIAL 1. DRAFT DICTATED ON 1 9 / 10 /2015 2. DRAFT PLACED BEFORE AUTHOR 1 9 / 10 /2015 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 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.