The ACIT, Circle-2, RAJKOT-GUJARAT V. Rajkot Lodhika Sahakari Kharid Vechan Sangh Ltd., RAJKOT-GUJARAT

ITA 374/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0201 (ITAT-RAJKOT)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: D R ADHIA ATP
• Keywords: Revised return; Bonafide mistake

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . .. . , , , , . .. . . .. . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVASTAV A, AM ITA NO.374/RJT/2012. / ASSESSMENT YEAR 2007-08 ASSTT.COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, 3 RD FLOOR, RACE COURSE, RING ROAD, RAJKOT-360001 ( * / APPELLANT) VS. RAJKOT LODHIKA SAHKARI KHARID VECHAN SANGH LTD., SAHKARI TRIVENI 29/38, KARANPARA, RAJKOT. PAN: AAAAR0531J +,* / RESPONDENT - / REVENUE BY SHRI. M.K.SINGH /- / ASSESSEE BY SHRI D.R.ADHIA, ATP - / DATE OF HEARING 11.9.2012 - / DATE OF PRONOUNCEMENT 5.10.2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 29.3.2012 OF CI T(A), CANCELLING THE PENALTY OF RS.7,90,811/- LEVIED BY THE AO U/S 271(1) (C ) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED FACTS RELATING TO THE CONTROVERSY IN VOLVED IN THIS APPEAL ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY, ENGAGED IN SUPPLY OF FERTILIZERS, SEEDS, GROUND NUT OIL, TEA, ETC TO ITS MEMBERS. IN THE IMPUGNED ORDER, THE AO IN THE ASSESSMENT ORDER HAS OB SERVED THAT THE ASSESSEE-CO-OPERATIVE SOCIETY CLAIMED DEDUCTION U/S 80P ON G ROSS AMOUNT WITHOUT DEDUCTING THE EXPENSES OF HEAD OFF ICE LIKE SALARY, PF ITA NO.374/RJT/2012. 2 AND OTHER ADMINISTRATIVE EXPENSES AMOUNTING TO RS.30,6 4,215/-. WHEN ASSESSEE WAS CONFRONTED WITH THIS, THE ASSESSEE-CO-OPERATIVE SO CIETY FILED REVISED COMPUTATION SHOWING TAXABLE INCOME AT RS.25,8 4,350/-. THE AO COMPLETED THE ASSESSMENT OBSERVING THAT THERE WAS A CON CEALMENT OF INCOME IN ORDER TO EVADE TAX ON THE THAT PART OF T HE INCOME OF THE SOCIETY AND HENCE THE ASSESSEE-CO-OPERATIVE SOCIETY HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN THE ORIGINAL RETURN OF INCOME . SUBSEQUENTLY, THE AO LEVIED PENALTY OF RS.7,90,811/-. 3. ON APPEAL, BEFORE THE LD.CIT(A), THE ASSESSEE CONT ENDED THAT THROUGH OVERSIGHT , THE EXPENSES OF HEAD OFFICE LIKE SAL ARY, PF AND OTHER ADMINISTRATIVE EXPENSES AMOUNTING TO RS.30,64215/- WE RE REMAINED TO BE DEDUCTED FROM THE GROSS INCOME U/S 80P. IT WAS SUBMIT TED THAT THIS WAS DUE TO BONAFIDE MISTAKE AND AS SOON AS ASSESSEE CAME TO KNOW, COMPUTATION OF INCOME IS REVISED. IN SUPPORT OF THIS, THE RELIANCE WAS PLACED ON THE DECISIONS IN THE CASES OF (1) RAJKOT BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04, DATED 17.10.2008, (2) DAHOD SAHKAR KHARID VECHAN SANGH, 282 ITR 321 (GUJ), (3) ITAT-RAJKOT IN CASE OF SHAILESHBHAI C KADECHA VS ITO (ITA NO. 1332/RJT/2010, (4) HINDUSTAN STEEL LTD. VIS. STATE OF ORISSA [1972] 83 ITR 26 (SC), (5), T.ASHOK PAI V/S CIT 292 ITR 11 (SC), (6 ) DILIP N SHROFF V/S JCIT 291 ITR 519 (SC), (7) CIT V/S SUBHASH TRADING C O (1996) 221 ITR 110(GUJ),(8) NAVJIVAN OIL MILLS VS. CIT (2001) 252 I TR 417 (GUJ), (9) CIT VS. SANGRUR VANASPATI .MILLS LTD. (SLP ITR 303 ITR ST. P(SC), (10) KANBAY SOFTWARE VS. DC IT, ITAT PUNE BENCH IN ITA NO. 300/PN/07, (11) SMT. BHANUBEN CHIMANLAL MALAVIA VS. ITO (2006) 100 T TJ(RJT) 337 AND ITA NO.374/RJT/2012. 3 (12) CIT V/S RELIANCE PETRO. PRODUCTS. (P) LTD. (2010 ) 189 TAXMAN 322(SC). 4. AFTER CONSIDERING THE VARIOUS SUBMISSIONS, IN THE IM PUGNED ORDER, THE LD. CIT(A) CANCELLED THE PENALTY FOR THE DETAILS REASONS GIVEN IN PARAGRAPH 4 WHICH IS REPRODUCED HEREUNDER : 4. I HAVE GONE THROUGH THE PENALTY ORDER, ASSESSMENT ORDER AND SUBMISSIONS OF APPELLANT. I FIND THAT APPELLANT IS ENGA GED IN ACTIVITIES, WHICH ARE PARTIALLY TAXABLE AND PARTIALLY NON TAXABLE U/S 80P. THE INCOME OF MARKET YARD SHOP, OIL MILL DEPARTME NT, SOLVENT REFINERY DEPARTMENT IS MOSTLY TAXABLE. THE INCOME OF F ERTILIZER SALE DEPARTMENT IS MOSTLY EXEMPT U/S 80P. THE INCOME FROM LETTING OUT OF STORAGE TANK BY APPELLANT SOCIETY IS EXEMPT U/S 80P (2)(E). THE INCOME RECEIVED AS DIVIDEND AND INTEREST FROM OTHER COOPERATIVE BANKS IS EXEMPT U/S 80P. WHILE CALCULATING THE INCOME OF HEAD OFFICE, APPELLANT CONSIDERED THE GROSS DIVIDEND AND I NTEREST RECEIVED FOR DEDUCTION U/S 80P(20)(A)(I) AND 80P(2 )(D). THE HEAD OFFICE EXPENDITURES WERE EFFECTIVELY CLAIMED FOR DEDUCT ION AGAINST OTHER INCOMES OF OTHER DEPARTMENTS. ASSESSING OFFICER A SKED THE APPELLANT TO SUBMIT THE WORKING OF DEDUCTION CLAIMED U/S 80P AFTER TAKING INTO CONSIDERATION THE HEAD OFFICE EXPENSES AND O THER TAXABLE AND NON TAXABLE INCOMES. IT APPEARS THAT DURI NG THE ASSESSMENT PROCEEDINGS THE APPELLANT DECIDED TO ALLOCATED H EAD OFFICE EXPENDITURE SUBSTANTIALLY TOWARDS DIVIDEND AND INTEREST INCOME AND ASSESSING OFFICER AGREED TO SUCH ALLOCATION AP PELLANT SUBMITTED THE WORKING OF NET INCOME OF RS.6,78,34,830/- FROM DIVIDEND AND INTEREST FROM OTHER SOCIETIES TO THE ASSESSING OFFICER AFTER ADJUSTING THE HEAD OFFICE EXPENSES WHEREAS THE EAR LIER CLAIM OF DEDUCTION U/S 80P WAS WITH REFERENCE TO GROSS DIVIDEN D AND INTEREST INCOME OF RS 7,07,39,382/- RECEIVED WITHOUT ANY DEDUCTION OF HEAD OFFICE EXPENDITURE. THIS RESULTED IN REDUCED CL AIM OF DEDUCTION U/S 80P. THE ALLOCATION OF HEAD OFFICE EXPEN DITURE AMONGST DIFFERENT INCOME EARNING DEPARTMENTS MAY BE AS PER THE PERCEPTION OF THE APPELLANT, WHICH MAY OR MAY NOT BE ACCEPTABLE TO THE ASSESSING OFFICER. HOWEVER, IT CANNOT BE DENIED THAT THIS IS A DEBATABLE ISSUE AND EVERYONE CAN HAVE HIS OWN JUSTIFICATI ON FOR HIS METHOD OF ALLOCATION OF HEAD OFFICE EXPENSES AMONGST VA RIOUS DEPARTMENTS. I FIND THAT APPELLANT HAD CHOSEN ONE WAY OF ALLOCATION OF HEAD OFFICE EXPENSES AMONGST VARIOUS DEPARTMENTS WHIL E FILING THE RETURN OF INCOME. IF DURING THE ASSESSMENT PROCEEDIN G APPELLANT REVISED THE METHOD OF ALLOCATION, WHICH WAS MORE ACCEPTABLE TO THE DEPARTMENT, IT WOULD NOT MEAN THAT APPELLANT HAS CONCEALED ANY INCOME OR FURNISHED ACCURATE PARTICULARS. A REWORKING SUBMITTED BY APPELLANT IN RESPECT OF CLAIM OF DEDUCTION U/S 8OP WHEN THERE COULD BE MANY TO ALLOCATED HEAD OFFICE EXPENSES, IS DEFINITELY IN THE DOMAIN OF DEBATABLE ISSUE. IT IS A SETTLED POSITION OF ITA NO.374/RJT/2012. 4 LAW THAT PENALTY U/S 271 (1)(C) CANNOT BE LEVIED ON A DEBATABLE ISSUE. IN THE JUDGMENT OF THE HONBLE SUPREME COURT IN CIT V/S RELIANCE PETROPRODUCTS P. LTD. (2010) 322 TIR 158 (SC ) THE LEGAL POSITION TO THIS EFFECT HAS BEEN REITERATED. IF THE ASSESS EE HAS MADE FULL DISCLOSURE IN THE RETURN, THE CLAIM FOR DEDUCTION CA NNOT BE HELD TO BE GIVING OF INACCURATE PARTICULARS. I THEREFORE DIR ECT THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS. 7,90,811/ - LEVIED BY HIM U/S 271 (1)(C) OF THE .ACT. 5. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US SHRI M.K.SINGH , THE LD. DR APPEARED AND POINTED OUT THAT THE ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271( 1)( C) OF THE ACT. WHEN CONCEALMENT WAS DETECTED BY THE AO THE ASSESSEE FIL ED THE REVISED RETURN ACCEPTING THE INCOME, THEREFORE, THE PEN ALTY U/S 271(1)( C) HAS RIGHTLY BEEN LEVIED BY THE AO. IN THESE CIRCUMSTANCE S, THE LD. CIT(A) IS NOT JUSTIFIED IN CANCELLING THE SAME. IN THESE C 7. ON THE OTHER HAND, SHRI D.R.ADHIA, THE LD. AR OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). 8. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GO NE THROUGH THE ORDERS OF AUTHORITIES BELOW. WHILE CALCULATING THE I NCOME OF HEAD OFFICE, THE ASSESSEE CONSIDERED THE GROSS DIVIDEND AND INTEREST RE CEIVED FOR DEDUCTION U/S 80P(2)(A)(I) AND 80P(2)(D). THE HEAD OFFICE EXPENDITURE FACTUALLY CLAIMED FOR DEDUCTION AGAINST OTHER INCOMES OF OTHER DEPARTMENTS. THE AO ASKED THE ASSESSEE TO RE-WORK OUT T HE DEDUCTION U/S 80P AFTER MAKING ALLOCATION OF EXPENSES AS ASKED FOR. THE AO ACCORDINGLY RE-ALLOCATED THE EXPENSES BY ADMITTING IT A S BONAFIDE MISTAKE. WE ARE, THEREFORE, OF THE VIEW THAT DURING THE ASSESSM ENT PROCEEDINGS, ITA NO.374/RJT/2012. 5 THE ASSESSEE REVISED THE METHOD OF ALLOCATION OF EXPENS ES WHICH WAS MORE ACCEPTABLE TO THE DEPARTMENT. IT WOULD NOT ME AN THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INA CCURATE PARTICULARS OF INCOME. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD. CIT(A) IS LEGALLY AND FACTUALLY CORRECT IN CANCELLING THE PENALTY LEVIED BY THE AO U/S 271(1)( C ) OF THE ACT. WE THEREFORE, DE CLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). THE APPEAL OF THE REVENUE IS, THEREFORE, DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD SD ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 3/ ORDER DATE 5.10.2012. /RAJKOT SRL - -- - +4 +4 +4 [phone] / COPY OF ORDER FORWARDED TO:- 1. * / APPELLANT-, 2. +,* / RESPONDENT- 3. : / CONCERNED CIT. 4. :- / CIT (A). 5. 4 +, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.