DCIT, CHITTORGARH V. M/s. Chittorgarh Urban Cooperative Bank Ltd., CHITTORGARH

ITA 388/JODH/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7972 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBASH CHANDRA
• Keywords: Wrong claim; Revised return; Bonafide mistake
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 388/JU/2011 [ASSESSMENT YEAR 2007-08] DY. CIT, VS M/S. CHITTORGARH URBAN CO-OPERATIVE CIRCLE, BANK LIMITED, NEW CLOTH MARKET CHITTORGARH. CHITTORGARH. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN, SHRI GAUTAM CHAND SHRI RAJENDRAJAIN DEPARTMENT BY : SHRI SUBASH CHANDRA DATE OF HEARING : 22.11.2012 DATE OF PRONOUNCEMENT : 17.12.2012 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007 -08 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), UD AIPUR DATED 09/09/2011. 2 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHE R DELETION OF PENALTY BY THE LD. CIT(A) OF RS. 4,00,0 00/- IMPOSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT', FOR SHORT], IS JUSTIFIED, IN THE GIVEN FACTS AND THE CIRCUMSTANCES OF THE CAS E OR NOT. 3. THE FACTS LEADING TO LEVY OF PENALTY ARE THAT, T HE ASSESSEE IS A CO-OPERATIVE SOCIETY, ENGAGED IN THE BUSINESS OF BANKING AND PROVIDING CREDIT FACILITIES TO ITS MEMB ERS AND PUBLIC IN GENERAL. THE ASSESSEE HAD BEEN CLAIMING DEDUCTION U/S 80P(2) OF THE ACT BEING ELIGIBLE FOR THE SAME H AS ALSO CLAIMED SIMILAR DEDUCTIONS WHICH HAVE NOT BEEN ALLO WED BY THE A.O IN THIS YEAR DUE TO CHANGE IN LAW WHICH HAS RENDERED THE ASSESSEE INELIGIBLE FOR THIS DEDUCTION. THEREFO RE, PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED AND IMPUGN ED PENALTY HAS BEEN LEVIED ON ACCOUNT OF CONCEALMENT O F INCOME. THIS PENALTY HAS BEEN DELETED BY THE LD. C IT(A). 3 4. AFTER HEARING BOTH THE SIDES, IT IS FOUND THAT T HE ASSESSEE HAD BEEN CLAIMING SIMILAR DEDUCTIONS U/S 80P(2)(A)(II) AND U/S 80P(2)(D) IN THE EARLIER A.YS AND THE SAME WERE BEING ALLOWED. THIS FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE. THE ASSESSEE HAS MADE SIMILAR CLAIM FOR DEDUCTIONS IN THIS YEAR ALSO BUT DUE TO T HE AMENDMENT MADE IN SECTION 80P(4) W.E.F 1.4.2007, TH E ASSESSEE HAS BECOME INELIGIBLE FOR THIS DEDUCTION U /S 80P(2)(II) AND U/S 80P(2)(D) OF THE ACT. THE ASSES SEE HAS CLAIMED THAT IT WAS A TECHNICAL MISTAKE SIMPLICITER ON ITS PART AND IN MAKING A CLAIM OF DEDUCTION IN THIS YEA R ALSO IS A BONAFIDE MISTAKE. AS SOON AS THIS WAS HOWEVER BROU GHT TO ITS NOTICE, THE ASSESSEE FILED REVISED RETURN WITHDRAWI NG THE DEDUCTIONS AND ALSO PAID DIFFERENCE OF TAX ALONGWIT H REQUISITE INTEREST PAYABLE THEREON, TO AVOID ANY FU RTHER LITIGATION. THIS PENALTY HAS BEEN DELETED BY THE L D. CIT(A) BY ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE S UDDEN CHANGE IN LAW IS THE REASON FOR THIS WRONG CLAIM AN D NO SOONER DID THE ASSESSEE BECAME AWARE OF THIS FACT, IT 4 CORRECTED ITS MISTAKE BY REVISING THE RETURN WITHDR AWING THIS CLAIM. 5. BEFORE US, SAME STANDS WERE TAKEN BY THE REVENUE AS WELL AS BY THE ASSESSEE. BEFORE WE ANALYZE AND CON SIDER THE FACTUAL MATRIX OF THIS CASE TO ASCERTAIN WHETHER, I N THE EYES OF THE PROVISIONS OF THE ACT, AS EXPLAINED BY CATENA OF JU DICIAL PRONOUNCEMENTS, PENALTY CAN BE LEVIED IN THIS CASE OR NOT, WE WOULD LIKE TO DISCUSS IN NUT-SHELL THE RELEVANT LEGAL POS ITION REGARDING SCHEME OF IMPOSITION OF A PENALTY U/S 271(1)(C) OF THE ACT . WE MAY DISCUSS UNDER WHAT CIRCUMSTANCES AND IN WHAT CONDITIONS PEN ALTY CAN BE LEVIED UNDER THIS SECTION. THERE ARE NO TWO OPINIO NS ABOUT THE SETTLED POSITION OF LAW THAT REGULAR ASSESSMENT PROCEEDING S AND PENALTY PROCEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHI CH OPERATE IN DISTINCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIR ELY DIFFERENT PARAMETERS ARE APPLICABLE FOR MAKING QUANTUM ADDITI ON AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE I S NO DISPUTE REGARDING THE POSITION OF LAW THAT UNDER SECTION 27 1(1)(C) PENALTY CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALMENT O F PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS O F INCOME' IS FOUND TO 5 HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS, ALBEIT, THEY REFER TO A DELI BERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOUL D NOT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGEST IO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT, IPSO FACT O, BECOME LIABLE TO A PENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOM ATIC. MEANING THEREBY, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENA LTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPI NG THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO DECISIONS IN THE CASES OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UNION OF INDIA VS. DH ARMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UNION OF I NDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448, THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD, 322 ITR 158, HAS RECENTLY HELD AS UNDER: 6 A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS . THERE CAN BE NO DISPUTE THAT 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 INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED 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 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 IN ACCURATE 7 PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 6. REVERTING TO THE FACTS OF THE CASE AND AFTER CON SIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THIS IS N OT A FIT CASE FOR LEVYING PENALTY AS IN THIS CASE NEITHER TH E ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME NOR HAS FUR NISHED INACCURATE PARTICULARS OF INCOME. THIS IS SIMPLY A CASE OF BONAFIDE MISTAKE WHICH HAS OCCURRED DUE TO CHANGE O F LAW APPLICABLE IN THIS YEAR. THE ASSESSEE HAD BEEN CLAI MING AND WAS BEING ALLOWED SIMILAR CLAIMS OF DEDUCTIONS IN E ARLIER ASSESSMENT YEARS ALSO. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO THE FACTS OF THIS CASE VIS-A-VIS T HE LEGAL POSITION NARRATED ABOVE, WE ARE OF THE CONSIDERED O PINION 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 MA KING SIMILAR CLAIM AND THE SAME WERE BEING ALLOWED IN EA RLIER ASSESSMENT YEARS. DUE TO SUDDEN CHANGE IN LAW, THI S CLAIM WAS NOT ALLOWED AND THE ASSESSEE ALSO CORRECTED ITS MISTAKE 8 BY FLING A REVISED RETURN, IT IS NOT A CASE OF WILL FUL WRONG CLAIM. THEREFORE, WE DO NOT FIND ANY MISTAKE IN THE ORDER OF THE LD. CIT(A) AND CONFIRM THE DELETION OF IMPUGNED PENALTY. THE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. WE, DISMISS THE SAME. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH D ECEMBER, 2012. SD/- SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17 TH DECEMBER , 2012 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) BY ORDER 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR