Gandhi College of Pharmacy, Karnal V. DCIT, Karnal

ITA 366/DEL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7045 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Charitable institution; Wrong claim
• Section: 12A; 2

Judgement Text

ITA NO.366/DEL/2011 1 IN THE INCOME TAX APPELLAT E TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI C.L. SETHI, JUDICIAL MEMBER ITA NO.366/DEL/2011 ASSTT. YEAR: 2003-04 GANDHI COLLEGE OF PHARMACY, VS DY.COMMISSIONE R OF INCOME TAX, NEAR ITI CHOWK, KARNAL CIRCLE, KARNAL. KARNAL. (APPELLANT) (RESPONDENT) APPELLANT BY: MISS RANO JAIN, SHRI VENKATESH CHO URASIA RESPONDENT BY: SHRI SALIL MISHR A, DR O R D E R PER G.D. AGRAWAL, V.P. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AG AINST THE ORDER OF CIT(A) DATED 25.10.2010. THE ONLY GROUND IN THIS A PPEAL IS AGAINST THE LEVY OF PENALTY OF RS. 9,81,990 U/S 271(1)(C) OF THE INC OME TAX ACT. 2. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSEE IS A CHARITABLE TRUST. FOR THE Y EAR UNDER CONSIDERATION, THE ASSESSEE DISCLOSED INCOME OF RS.30,48,937 WHICH WAS CLAIMED EXEMPT U/S 10(23C) BECAUSE THE ASSESSEE IS RUNNING THE COLLEGE OF PHARMACY. THE AO DENIED THE EXEMPTION CLAIMED U/S 10(23C) WHICH IS U PHELD BY THE CIT(A) AS WELL AS ITAT. THAT THE AO ALSO LEVIED PENALTY U/S 2 71(1)(C) FOR THE ITA NO.366/DEL/2011 2 CONCEALMENT OF PARTICULARS OF INCOME AMOUNTING TO R S.30,48,937 I.E. THE INCOME WHICH WAS CLAIMED AS EXEMPT U/S 10(23C). TH AT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE APEX COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158. IN THIS CASE, THEIR LORDSHIPS HAVE HELD THAT EVEN IF THE AS SESSEES CLAIM IS FOUND TO BE NOT SUSTAINABLE IN LAW, THE ASSESSEE CANNOT BE P ENALIZED U/S 271(1)(C). THAT THE RATIO OF THE ABOVE DECISION OF HONBLE APE X COURT WOULD BE SQUARELY APPLICABLE TO THE ASSESSEES CASE BECAUSE IN THE CASE OF THE ASSESSEE ALSO, ITS CLAIM FOR DEDUCTION U/S 10(23C) WAS FOUND BY THE ITAT TO BE NOT SUSTAINABLE IN LAW. HOWEVER, THAT, BY ITSELF, WOUL D NOT AMOUNT TO CONCEALMENT OF INCOME. THE REVENUE HAS NOT MADE OU T ANY CASE THAT THE ASSESSEE FURNISHED ANY WRONG FACT OR ANY INCORRECT OR FALSE FACT. MOREOVER, NO FACT WAS CONCEALED FROM THE DEPARTMENT. 3. LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW AND HE STATED THAT FROM THE ORDER OF THE ITAT IN THE QUANTUM APPEAL, IT IS EVIDENT THAT THE ASSESSEE DID NOT FULFILL ANY CONDITION FOR ELIGIBILITY OF DEDUCTION U/S 10(23C). THE TRUST WAS NOT REGISTERE D U/S 12A OF THE I.T. ACT. THE ASSESSEE ALSO COULD NOT PROVE THAT THE INSTITUT ION IS EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT WITH THE OBJECTIVE OF M AKING PROFIT. THE COLLEGE, WHICH IS CLAIMED TO HAVE BEEN RUN BY THE A SSESSEE, WAS NOT GRANTED ITA NO.366/DEL/2011 3 RECOGNITION BY THE GOVERNMENT OF HARYANA OR MEDICAL COUNCIL OF INDIA. HE, THEREFORE, SUBMITTED THAT PRIMA FACIE, THE ASSESSEE S CLAIM FOR DEDUCTION U/S 10(23C) WAS A WRONG CLAIM. THEREFORE, PENALTY U/S 271(1)(C) WAS RIGHTLY LEVIED BY THE AO AND SUSTAINED BY THE CIT(A). 4. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THIS I SSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF C IT VS RELIANCE PETROPRODUCTS PVT. LTD. IN THIS CASE, THEIR LORDSH IPS HAVE HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLI ED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE R ETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 4.1 THAT THE RATIO OF THE ABOVE DECISION OF THE HON BLE APEX COURT WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE S CASE. IN THIS CASE ALSO, THERE IS NO FINDING THAT ANY DETAIL SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME WAS INCORRECT OR ERRONEOUS OR FALSE. HOWEVE R, ON THE FACTS OF THE ASSESSEES CASE, ITS CLAIM FOR EXEMPTION U/S 10(23C ) WAS FOUND TO BE NOT SUSTAINABLE IN LAW. BUT MERELY BECAUSE THE CLAIM U /S 10(23C) WAS FOUND TO BE NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOU NT TO FURNISHING OF ITA NO.366/DEL/2011 4 INACCURATE PARTICULARS OR CONCEALMENT OF INCOME BY THE ASSESSEE. WE, THEREFORE, RESPECTFULLY FOLLOW THE ABOVE DECISION O F THE HONBLE APEX COURT AND CANCEL THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH NOVEMB ER, 2011. SD/- SD/- ( C.L. SETHI ) ( G.D. AGRAWAL ) JUDICIAL MEMBER VICE PRESIDENT DT. 25TH NOVEMBER, 2011 GS COPY FORWARDED TO: 1. GANDHI COLLEGE OF PHARMANCY, KARNAL 2. DCIT, KARNAL CIRCLE, KARNAL 3. CIT(A), KARNAL. 4. CIT 4. DR BY ORDER DY. REGISTRAR