ACIT, CIR-1, JALPAIGURI, Jalpaiguri V. The Jalpaiguri Central Co-operative Bank Ltd., Jalpaiguri

ITA 399/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1276 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VARKEY JUDIC IA L M EMBER
• Assessee Lawyers: SAURABH KUMAR RI
• Keywords: Bad and doubtful debts
• Section: 27

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 396 , 399 - 400 / KOL / 2015 ASSESSMENT YEARS :2007-08, 2009-10 & 2010-11 ACIT, CIRCLE-1, GROUND FLOOR, C.R. BUILDING, RACE COURSE PARA, NAYA BUSTI, JALPAIGURI- 735101 V/S . THE JALPAIGURI CENTRAL CO-OPERATIVE BANK LTD., TEMPLE STREET, JALPAIGURI-735101 [ PAN NO.AAABT 2597 B ] /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI SAURABH KUMAR, ADDL. CIT-DR /BY REVENUE RIP DAS, FCA !'# /DATE OF HEARING 05-10-2017 $% # /DATE OF PRONOUNCEMENT 11-10-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE THREE APPEALS BY THE REVENUE ARE ARISING OUT OF COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-JALPAIGURI DATED 27.02.2015. PENALTY LEVIED BY DCIT, CIRCLE-1, JALPAIGURI U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE HIS ORDER DATED 29.05.2014 FOR ASSESSMENT YEARS 2007-08, 2009-10 & 2010-11 RES PECTIVELY. SHRI SAURABH KUMAR, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE AND RIP DAS, LD. AUTHORIZED REPRESENTATI VE APPEARED ON BEHALF OF ASSESSEE. 2. THE ISSUE INVOLVED IN ALL THE APPEALS ARE ARISIN G OUT OF SAME FACTS AND CIRCUMSTANCES, THEREFORE WE DEEM IT APPROPRIATE TO PASS A COMMON ITA NO.396, 399-400/KOL/2015 A.YS. 07-08 , 09-10 &10-11 ACIT, CIR-1 JAL VS. THE JALPAIGURI CENTRAL CO-O P BANK LTD. PAGE 2 CONSOLIDATE ORDER. THE GROUNDS OF APPEALS IN ALL TH E THREE APPEALS ARE COMMON. FOR THE SAKE OF READY REFERENCE, THE GROUND S OF APPEAL TAKEN BY THE REVENUES APPEAL IN A.Y 2007-08 ARE REPRODUCED BEL OW:- 1. THE LD CIT(A) HAS ERRED IN CONSIDERING THE FACT IN DELETING PENALTY IMPOSED BY THE AO U/S 271(1)(C) MERELY RELYING UPON THE CASE LAW OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S R ELIANCE PETROPRODUCTS PVT LTD. 2. THE LD. CIT(A) ERRED IN LAW BY CONSIDERING THE P ROVISIONS FOR NP. STANDARD ASSETS AND OVERDUE INTEREST AS ALLOWABLE D EDUCTIONS WHICH IS NOT PERMITTED UNDER INCOME TAX ACT, 1961. 3. THE LD CIT(A) HAS ERRED IN CONSIDERING THE FACT THAT CLAIMING DEDUCTIONS FOR PROVISION OF NPA AND OVERDUE INTERES T HAS LEAD TO INACCURATE PARTICULARS OF THE TOTAL INCOME WHEREBY THE TOTAL INCOME IS REDUCED. 4. LD CIT(A) ERRED IN RELYING ONLY UPON THE JUDGMEN T OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIAANCE PET ROPRODUCTS PVT. LTD. BUT COULD NOT FOLLOW THE JUDGMENT OF HON'BLE H IGH COURT IN THE FOLLOWING CASES. A) UNION OF INDIA (UOI) V/S DHARMENDRA TEXTILE PROC ESSOR (2008) 13 SC 369. B) CIT V/S ATUL MOHAN BINDAL 317 ITR 1 (SC) C) MAK DATA PVT LTD V/S CIT (2014) 1 SCC 674 SC. 3. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER FOR IMPOSING PENALTY ON THE ASSESSEE U/S 271(1)(C) OF THE INCOME TAX ACT, 1 961 (ACT). 4. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED ON THE ASSESSEE BY THE AO ARE AS FOLLOWS :- THE ASSESSEE IS A CO-OPERATIVE BANK AND IS ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSEE FILED RETURN OF INCOME FOR A .Y. 2007-08 DECLARING TOTAL INCOME () 1,43,53,483/- ONLY. THE ASSESSEE IN ITS RETURN OF I NCOME CLAIMED DEDUCTION FOR PROVISION FOR THE STANDARD ASSETS, BA D & DOUBTFUL DEBTS AND INCOME TAX FOR 68,583.00, 1,15,13,869.00 AND 71,210.00 RESPECTIVELY BUT INADVERTENTLY OMITTED TO ADD THE SAME IN THE COMPUT ATION OF INCOME. THE ASSESSEE WAS UNDER THE IMPRESSION THAT THE DEDUCTIO N FOR THE ABOVE WAS TO BE ALLOWED IN VIEW OF THE BANKING REGULATION ACT. I N THE COURSE OF ITA NO.396, 399-400/KOL/2015 A.YS. 07-08 , 09-10 &10-11 ACIT, CIR-1 JAL VS. THE JALPAIGURI CENTRAL CO-O P BANK LTD. PAGE 3 ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE HAD NOT ADDED THE AFORESAID PROVISIONS AND THEREFORE ADDED THE SAME T O THE INCOME OF THE ASSESSEE. IN RESPECT OF THE AFORESAID ADDITION MADE IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO INITIATED PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE ACT. THE AO IMPOSED PENALTY HOLDING THAT THE AS SESSEE HAS VIOLATED THE PROVISION OF LAW ENUMERATED IN SECTION 271(1)(C) OF THE ACT AND IMPOSED PENALTY U/S 271(1)(C) OF THE ACT. THE CIT(A) REVERS ED THE ORDER OF AO. HENCE THIS APPEAL BY THE REVENUE IS FILED BEFORE THE TRIB UNAL. 5. THE LD. DR FOR THE REVENUE SUBMITTED THAT IT I S NOT NECESSARY TO SPECIFY CHARGE WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. COUNSEL F URTHER RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF CALCUTTA IN THE C ASE OF DR. SYAMAL BARAN MONDAL VS. CIT REPORTED IN 244 CTR 631. THE LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE BEFORE US SUBMITTED THAT THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT DOE S NOT CONTAIN THE SPECIFIC CHARGE AGAINST THE ASSESSEE NAMELY AS TO WHETHER TH E ASSESSEE WAS GUILTY OF HAVING CONCEALED PARTICULARS OF INCOME OR HAVING FURNISHED INACCURATE PARTICULARS OF INCOME. A COPY OF THE SHOW CAUSE NOT ICE U/S 274 OF THE ACT IS PLACED ON RECORD. PERUSAL OF THE SAME REVEALS THAT AO HAS NOT STRUCK OUT THE IRRELEVANT PORTION IN THE SHOW CAUSE NOTICE AND THE REFORE THE SHOW CAUSE NOTICE DOES NOT SPECIFY THE CHARGE AGAINST THE ASSE SSEE AS TO WHETHER THE CHARGE IS OF CONCEALMENT OF PARTICULARS OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS IN ITA NO.380 OF 2015 DATED 23.11.2015 WHEREIN THE HONBLE KARNATAKA HIGH COURT FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS ITA NO.396, 399-400/KOL/2015 A.YS. 07-08 , 09-10 &10-11 ACIT, CIR-1 JAL VS. THE JALPAIGURI CENTRAL CO-O P BANK LTD. PAGE 4 MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 TOOK A VIEW THAT IMPOSING OF PENALTY U/S 271(1)(C) OF THE ACT IS BAD IN LAW AND INVALID FOR THE REASON THAT THE SHOW CAUSE NOTICE U/S 274 OF THE AC T DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTICE THAT AS AGAINST THE D ECISION OF THE HONBLE KARNATAKA HIGH COURT THE REVENUE PREFERRED AN APPEA L IN SLP IN CC NO.11485 OF 2016 AND THE HONBLE SUPREME COURT BY I TS ORDER DATED 05.08.2016 DISMISSED THE SLP PREFERRED BY THE DEPAR TMENT. THE LD. COUNSEL ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SHRI SAMSON PERINCHERY IN ITA NO.1154 OF 2014 DATED 05.01.2017 WHEREIN THE HONBLE BOMBAY HIGH COURT FO LLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) CAME TO THE CONCLUSION THAT IMPOSITION OF PENALTY ON DEFECTIVE SHOW CAUSE NOTICE WITHOUT SPECIFYING T HE CHARGE AGAINST THE ASSESSEE CANNOT BE SUSTAINED. OUR ATTENTION WAS ALS O DRAWN TO THE DECISION OF ITAT IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS ACIT IN ITA NO.1303/KOL/2010 DATED 06.11.2015 WHEREIN IDENTICAL PROPOSITION HAS BEEN FOLLOWED BY THE TRIBUNAL. 6. WE HAVE ALREADY OBSERVED THAT THE SHOW CAUSE NOTICE ISSUED IN THE PRESENT CASE U/S 274 OF THE ACT DOES NOT SPECIFY TH E CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEALING PARTICU LARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SHOW CAUSE NO TICE U/S 274 OF THE ACT DOES NOT STRIKE OUT THE SPECIFIC CHARGE WHETHER IT IS FOR CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME AND IN THE ABSE NCE OF SPECIFIC CHARGE, THE INITIATION PROCEEDING U/S. 271(1)(C) OF THE ACT IS BAD IN LAW. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSITION O F PENALTY CANNOT BE SUSTAINED. THE PLEA OF THE LD. COUNSEL FOR THE ASSE SSEE WHICH IS BASED ON THE DECISIONS REFERRED TO IN THE EARLIER PART OF THIS O RDER HAS TO BE ACCEPTED. THE JUDGMENT RELIED BY THE LD. DR SYAMAL BARAN MONDAL (SUPRA) CANNOT BE ACCEPTED IN VIEW OF THE FACT THAT IT WAS DECIDED ON 18 TH FEBRUARY 2011 WHERE ITA NO.396, 399-400/KOL/2015 A.YS. 07-08 , 09-10 &10-11 ACIT, CIR-1 JAL VS. THE JALPAIGURI CENTRAL CO-O P BANK LTD. PAGE 5 THE HONBLE APEX COURT HAS DECIDED THE IMPUGNED ISS UE SUBSEQUENTLY IN FAVOUR OF ASSESSEE VIDE ORDER DATED 5.8.2016 IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS. THE JUDGMENT OF HONBLE APEX COURT IS BINDING ON US. WE THEREFORE HOLD THAT IMPOSITION OF PENALTY IN THE PR ESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELLED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. COMING TO ITA NO.399-400/KOL/2015 FOR A.Y. 09-10 & 10-11 . 8. IN THE REMAINING APPEALS, SINCE THE FACTS ARE EX ACTLY IDENTICAL, BOTH THE PARTIES ARE AGREED WHATEVER VIEW TAKEN IN THE ABOVE APPEAL IN ITA NO.396/KOL/2015 FOR A.Y. 2007-08 MAY BE TAKEN IN TH ESE APPEALS ALSO, WE HOLD ACCORDINGLY. 9. IN THE RESULT, REVENUES APPEALS ARE DISMISSED. 10. IN COMBINED RESULT, ALL THE THREE APPEALS OF REVENU E STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 11/ 10/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP &!'(- 11 / 10 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-THE JALPAIGURI CENTRAL CO-OPERATIVE BANK LTD., TEMPLE STREET, JALPAIGURI-735101 2. /REVENUE-ACIT, CIRCLE-1, GROUND FLOOR, C.R.BUILDING , RACE COURSE PARA, NAYA BUSTI, JAL PAIGURI-735101 3.'0'1 2 / CONCERNED CIT JALPAIGURI 4. 2- / CIT (A) KOLKATA 5.56788!1 , 1 , / DR, ITAT, KOLKATA 6.7:;<= / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 1 ,