M/S. M.P. RAJYA OPEN SCHOOL, Bhopal V. THE ACIT 1(2), Bhopal

ITA 379/IND/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5772 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: S N AGRAWAL; PANKAJ MOGRA CAS
• Keywords: Question of law
• Section: 260A; 148

Judgement Text

M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JM & SHRI O.P. MEENA, AM ITA NOS.376 TO 382/IND/2015 A.YD. 2003-04 TO 2008-09 & 2010-11 M/S. M.P. RAJYA OPEN SCHOOL, BHOPAL PAN - AAAAM 1067 A :: APPELLANT VS ACIT-1(2), BHOPAL :: RESPONDENT ASSESSEE BY SHRI S.N. AGRAWAL & SHRI PANKAJ MOGRA, CAS RESPONDENT BY SHRI LAL CHAND, CIT DATE OF HEARING 01 . 3 .201 7 DATE OF PRONOUNCEMENT 1 4 . 3 .2017 O R D E R PER BENCH THE ABOVE APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE COMMON & CONSOLIDATED ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 30.3.2015 FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09 & 2010-11 C HALLENGING THE IMPOSITION OF PENALTY U/S.271(1)(C) OF THE I.T. ACT . BOTH THE PARTIES SUBMITTED THAT IDENTICAL FACTS ARE INVOLVED IN THES E APPEALS AND THE LEAD CASE IS FOR THE ASSESSMENT YEAR 2003-04. HENCE, IN ORDER TO AVOID REPETITION AND FOR THE SAKE OF BREVITY, WE ARE DECI DING ALL THE APPEALS M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 2 OF 8 THROUGH THIS CONSOLIDATED ORDER BY TAKING THE FACTS FROM THE ASSESSMENT YEAR 2003-04 BUT OUR FINDINGS FOR THE ASSESSMENT YE AR 2003-04 ON SIMILAR ISSUES SHALL PREVAIL IN ALL THE PRESENT ASSESSMENT YEARS. 2. FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A SOC IETY INCORPORATED UNDER M.P. SOCIETIES REGISTRATION ACT ON 11.8.1995 TO PRO VIDE ALTERNATE EDUCATION SYSTEM THROUGH OPEN SCHOOLS FOR PRIMARY, MIDDLE AND HIGH SCHOOL LEVEL. THE STATE GOVERNMENT HAD PROVIDED RS. 10 LACS AS ONE TIME SEED MONEY TO SET UP THE ASSESSEE SOCIETY. THE ASSE SSING OFFICER OBTAINED INFORMATION THAT THE ASSESSEE HAD GENERATE D HUGE INCOME IN THE PRESENT ASSESSMENT YEARS BUT HAD NOT FURNISHED ANY RETURN OF INCOME. THEREFORE, THE ASSESSING OFFICER ISSUED NOT ICES U/S 148 OF THE I.T. ACT. IN RESPONSE TO THE SAME, THE ASSESSEE FURNISHE D RETURNS OF INCOME FOR THE PRESENT ASSESSMENT YEARS DECLARING NIL INCO ME, CLAIMING THAT THE INCOME OF THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U /S 10(23C)(IIIAB) OF THE I.T. ACT. HOWEVER, THE ASSESSING OFFICER WAS O F THE VIEW THAT THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIMING EXEMPTION U/ S 10(23C)(IIIAB) OF THE I.T. ACT. ACCORDINGLY, THE ASSESSING OFFICER COMPLE TED THE ASSESSMENTS FOR THE PRESENT ASSESSMENT YEARS REJECTING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 10(23C)(IIIAB) OF THE I.T. ACT. THE L D. CIT(A) ALSO CONFIRMED M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 3 OF 8 THE ACTION OF THE ASSESSING OFFICER. THE ASSESSEE P REFERRED APPEALS ON THIS ISSUE BEFORE THE ITAT AND ITAT CONFIRMED THE ACTION OF THE REVENUE AUTHORITIES ON THIS ISSUE HOLDING THAT THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAB) OF THE I.T. ACT. THERE AFTER, THE ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C) OF THE I.T. A CT IN ALL THE PRESENT ASSESSMENT YEARS. THE ASSESSEE PREFERRED APPEALS BE FORE LD. CIT(A), WHO CONFIRMED THE IMPOSITION OF PENALTY. AGGRIEVED WITH THE ORDERS OF THE REVENUE AUTHORITIES, THE ASSESSEE IS BEFORE US. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE FILED DETAILED WRITTEN SUBMISSION AND SUBMITTED THAT THE ASSESSEE SOCIETY WAS FORMED WITH THE RESOLUTION AS PASSED BY THE COUNCIL OF MIN ISTERS OF THE STATE GOVT. OF THE MP ON 28.3.1995 AND IN PURSUANCE OF TH E RESOLUTION, THE ASSESSEE SOCIETY WAS FORMED AND DULY REGISTERED VID E CERTIFICATE OF REGISTRATION DATED 11.8.1995. LEARNED COUNSEL FOR T HE ASSESSEE FURTHER SUBMITTED CLAIMED THAT AS PER OBJECTS, THE ASSESSEE IS ENGAGED IN ESTABLISHING OPEN SCHOOL OR IMPARTING EDUCATION TO STUDENTS AND AS PER THE MOU OF THE ASSESSEE, THE IMPARTING OF EDUCATION IS EVIDENCED AND THE FACT THAT THE ASSESSEE IS EXISTING FOR EDUCATIONAL PURPOSES WAS NOT DISPUTED BY THE REVENUE AUTHORITIES. FURTHER, THE L EARNED COUNSEL FOR THE M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 4 OF 8 ASSESSEE PLACED ON RECORD THE ORDER OF HONBLE JURI SDICTIONAL HIGH COURT OF MP IN THE CASE OF PR. COMMISSIONER OF INCOME-TAX -2, BHOPAL VS. M/S. R.K. GUPTA CONTRACTORS & ENGINEERS P. LTD., ITA 89/2 016 DTD. 11.1.2017, WHEREIN IT WAS HELD THAT WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE, UNDER SUCH CIRCUMSTANCES, THE PENALTY CA NNOT BE LEVIED U/S.271(1)(C) OF THE ACT. MANY OTHER DECISIONS OF H ONBLE HIGH COURTS INCLUDING CIT VS. NAYAN BUILDERS AND DEVELOPERS (20 15) 231 TAXMAN 665 (BOM) AND THE DECISIONS OF COORDINATE BENCH IN CASE OF ITO-4(2) VS. SHRI GOPAL BANKE, ITA NO.174/IND/2015 (A.Y. 2005-06) DTD . 09.9.2015 WERE ALSO PLACED ON RECORD, WHEREIN THE PENALTY WAS DELE TED ON THE PLEA THAT SUBSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED BY TH E HON'BLE HIGH COURT. 4. ON THE OTHER HAND, THE LD. DR BANKED UPON THE OR DERS OF THE REVENUE AUTHORITIES. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE TRIBUNAL HAS UPHELD THE QUANTUM ADDITIONS AGAINST WHICH THE ASSESSEE APPROACHED TO THE HIGH C OURT AND THE HONBLE HIGH COURT HAS ADMITTED FOLLOWING SUBSTANTIAL QUEST ION OF LAW VIDE ORDER DATED 14.3.2016: - M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 5 OF 8 ARGUABLE QUESTIONS ARE RAISED. HENCE, THE APPEALS ARE ADMITTED ON THE FOLLOWING TWO SUBSTANTIAL QUESTIONS OF LAW:- A. WHETHER, THE TRIBUNAL IS RIGHT IN LAW IN DENYIN G THE EXEMPTION TO THE ASSESSEE UNDER SECTION 10(23C)(III AB), (IIAC) (VI) OF THE INCOME TAX ACT. B. WHETHER, THE ORDER OF THE TRIBUNAL IS PERVERSE, ARBITRARY AND UNREASONABLE IN DENYING THE EXEMPTION TO THE AS SESSEE AS AN EDUCATIONAL INSTITUTION FOR REGULATING AND DE VELOPMENT OF SCHOOL EDUCATION IN THE STATE. SD/- SD/- (A.M. KHANWILKER) (SANJAY YADAV) CHIEF JUSTICE JUDGE 6. WE FIND THAT RECENTLY, THE HONBLE JURISDICTION AL HIGH COURT OF MP VIDE ORDER DATED 11.1.2017 IN CASE OF PR. CIT VS. R .K. GUPTA CONTRACTORS & ENGINEERS P. LTD IN ITA 9/2016 HAS DISMISSED THE APP EALS OF THE REVENUE AND CONFIRMED THE VIEW OF THE TRIBUNAL THAT WHEN AN APPEAL INVOLVING A SUBSTANTIAL QUESTION OF LAW WAS PENDING CONSIDERATI ON BEFORE THE HIGH COURT, THE ADDITION BECAME A DEBATABLE ONE AND WHEN THE ADDITION WAS DEBATABLE AND SUBJUDICE BEFORE THE APPELLATE AUTHOR ITY, THE PENALTY U/S 271(1)(C) OF THE I.T. ACT COULD NOT BE LEVIED AS TH E ADMISSION OF APPEAL AND THE SUBSTANTIAL QUESTION OF LAW FRAMED CREDENCE TO THE BONA FIDE OF THE ASSESSEE TO SAY THAT THERE WAS NO DELIBERATE CO NCEALMENT. FOR READY M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 6 OF 8 REFERENCE, THE RELEVANT PORTION OF THE ORDER OF THE HONBLE MP HIGH COURT IS REPRODUCED HEREUNDER: 3. THE ORDER PASSED BY THE ASSESSING OFFICER WAS I NTERFERED WITH BY THE COMMISSIONER, APPEALS AND CHALLENGING THE ORDER OF COMMISSIONER, (APPEAL), THE APPEAL WAS FILED BEFORE THE TRIBUNAL BY THE REV ENUE. WITH REFERENCE TO ASSESSMENT YEAR 2005-2006 TO 2008-2009, VARIOUS ASS ESSMENT ORDERS WERE PASSED AND DEDUCTION CLAIMED UNDER SECTION 80(1)(A) (4) OF THE INCOME TAX ACT WAS DISALLOWED BY THE ASSESSING OFFICER, THE AP PELLATE AUTHORITIES AND THE TRIBUNAL. CHALLENGING THE DISALLOWANCE, APPEALS WERE FILED BY RESPONDENT ASSESSEE UNDER SECTION 260-A OF THE INCOME TAX ACT IN THE HIGH COURT. SUBSTANTIAL QUESTIONS OF LAW WERE FRAMED AND THE AP PEALS AFTER ADMISSION WERE PENDING CONSIDERATION BEFORE THE APPELLATE FOR UM. IN THE MEANWHILE, AS PROCEEDINGS FOR IMPOSING PENALTY WERE INITIATED UNDER THE PROVISIONS OF SECTION 271(1)(C) AND ULTIMATELY WHEN PENALTY WERE IMPOSED BY THE ASSESSING OFFICER AT THE INSTANCE OF RESPONDENT -AS SESSEE, MATTER TRAVELED TO THE COMMISSIONER, APPEAL AND THE SAME HAVING BEEN A LLOWED AT THE INSTANCE OF REVENUE, MATTER WAS AGITATED WITH TRIBUNAL AND T HE TRIBUNAL AFTER TAKING NOTE OF VARIOUS ASPECTS OF THE MATTER, CAME TO THE CONCLUSION THAT PENALTY COULD NOT BE IMPOSED WHEN THE APPEAL UNDER SECTION 260A HAS BEEN ADMITTED IN THE MATTER OF ADDITION MADE OR DEDUCTIO N PERMISSIBLE UNDER SECTION 80(1)(A)(4) AND AFTER TAKING NOTE OF CERTAI N JUDGMENTS OF THE TRIBUNAL AND THE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUIL DERS AND DEVELOPERS PVT. LTD. VS. THE TAXING AUTHORITIES, CONCURRENT FINDING S ARE RECORDED BY THE COMMISSIONER (APPEAL) AND THE TRIBUNAL, THEY CAME T O THE CONCLUSION THAT WHEN AN APPEAL INVOLVING A SUBSTANTIAL QUESTION OF LAW WAS PENDING CONSIDERATION BEFORE THE HIGH COURT, THE ADDITION B ECAME A DEBATABLE ONE AND WHEN THE ADDITION WAS DEBATABLE AND SUBJUDICE B EFORE THE APPELLATE AUTHORITY, PENALTY UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT COULD NOT BE LEVIED AS THE ADMISSION OF APPEAL AND THE SUBSTANTI AL QUESTION OF LAW FRAMED CREDENCE TO THE BONAFIDE OF THE ASSESSEE TO SAY THA T THERE WAS NO DELIBERATE M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 7 OF 8 CONCEALMENT. ACCORDINGLY, FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT AND CONSISTENT ORDERS OF THE APPELLATE TRIBUNAL IN THIS REGARD, THE APPEALS FILED BY THE REVENUE WERE DISMISSED AND THE ORDERS PASSED BY THE COMMISSIONER, INCOME TAX APPEAL, BHOPAL, WAS UPHELD . 4. THE FINDINGS RECORDED BY THE COMMISSIONER, INCOM E TAX APPEAL WAS TO THE EXTENT THAT AS THE QUESTION OF DEDUCTION WAS PENDIN G CONSIDERATION IN THE APPELLATE FORUM, THEREFORE, PENALTY IMPOSED SHOULD BE CANCELED. 5. WE FIND THAT THE AFORESAID VIEW TAKEN BY THE TRI BUNAL, TO SAY THAT TILL DECISION ON THE APPEAL BY THE HIGH COURT THE BONOFI DE OF THE ASSESSEE IN CLAIMING THE DEDUCTION CANNOT BE DISPUTED, THE COMM ISSIONER, INCOME TAX APPEALS AND THE TRIBUNAL HAVE NOT COMMITTED ANY ERR OR AND IN DISMISSING THE APPEAL OF REVENUE ON SUCH CONSIDERATION, NO ERROR H AS BEEN COMMITTED NOR ANY SUBSTANTIAL QUESTION OF LAW ARISES WARRANTING C ONSIDERATION. 6. ACCORDINGLY, FINDING NO GROUND TO INTERFERE INTO TH E MATTER, ALL THESE APPEALS STAND DISMISSED. 7. RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LA ID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT (SUPRA), WE HOLD THAT WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDI TION, IT BECOMES APPARENT THAT ADDITION IS DEBATABLE. IN SUCH CIRCUM STANCES PENALTY CANNOT BE LEVIED U/S 271(1)(C). THE RATIO LAID DOWN IN THE FOLLOWING CASE-LAWS FURTHER SUPPORT OUR VIEW: I) BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS & DEVELOPERS, 231 TAXMAN 0665. II) HON'BLE DELHI HIGH COURT IN THE CASE OF LIQUID INVESTMENT AND TRADING CO. LTD. ITA NO.240/2009 DATED 05.10.2010. M.P. RAJYA OPEN SCHOOL, BHOPAL (ITA NOS.376 TO 382/IND/2015) PAGE 8 OF 8 III) ITAT, INDORE IN THE CASE OF GOPAL BANKE (ITA N O.174/IND/2015, ORDER DATED 09.9.2015). 8. IN VIEW OF THE ABOVE, WE REVERSE THE ORDERS OF THE REVENUE AUTHORITIES AND DELETE THE PENALTY IN ALL THE PRESE NT ASSESSMENT YEARS. 9. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE ARE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 14.3.2 017. SD/- SD/- (C.M. GARG) (O.P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14.3.2017 !VYAS! COPY TO : APPELLANT / RESPONDENT / CONCERNED CIT / CONCERNED CIT(A) /DR, INDORE BY ORDER, ASSISTANT REGISTRAR