Surya Merchants Ltd., New Delhi V. DCIT, Ghaziabad

ITA 4367/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6402 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 27-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 17-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANOMA BARNWAL
• Assessee Lawyers: VK SABHARWAL; SUDHIR MATHUR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI O .P. K A NT ITA NO. 4367 /DEL/201 3 ASSESSMENT YEAR: 200 8 - 09 SARVA JANTA CO - OPERATIVE THRIFT & VS. ITO, CREDIT SOCIETY LTD., 486 1 - LADDU GHATI, WARD - 38(4), PAHAR GANJ, NEW DELHI. NEW DELHI. (PAN: AA D A S3051P ) (APPELLANT) (RESPONDENT) ASSESSEE BY: S /S HRI VK SABHARWAL & SUDHIR MATHUR, ADV. DEPAR TM ENT BY: SHRI ANOMA BARNWAL, SR. DR DATE OF HEARING : 16 . 0 3 .201 6 DATE OF PRONOUNCEMENT: 16 : 0 3 .201 6 ORDER PER I.C. SUDHIR : JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON SEVERAL GROUNDS INVOLVING THE ISSUE REGARDING VALIDITY OF PENALTY LEVIED UNDER SEC. 271(1)(C) OF THE INCOME - TAX ACT, 1961 ON THE DISALLOWANCE OF THE CLAIM MADE UNDER SEC. 80P(2) OF THE ACT. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIE ARE THAT THE ASSESSING OFFICER LEVIED PENALTY UNDER SEC. 271(1)(C) OF THE INCOME - TAX ACT, 1961 AT RS.1,50,800 ON THE 2 DISALLOWANCE OF THE CLAIMED DEDUCTION UNDER SEC. 80P(2) OF THE ACT ON THE INTEREST RECEIVED BY THE ASSESSEE FROM ITS INVESTMENT OF SURPLUS FUNDS IN BANKS AMOUNTING TO RS.4,98,122.06. THE LEARNED CIT(APPEALS) HAS UPHELD THIS PENALTY. THE ASSESSING OFFICER HAD MADE THE ABOVE SAID DISALLOWANCE DENYING THE CLAIM OF THE ASSESSEE THAT THE INTEREST INCOME WAS BUSINESS RECEIPTS. 4. IN SUPPORT OF THE GROUNDS, THE LEARNED AR SUBMITTED THAT ALL THE NECESSARY INFORMATION RELATING TO THE CLAIMED DEDUCTION ON THE INTEREST RECEIVE D BY THE ASSESSEE FROM ITS INVESTMENT OF SURPLUS FUNDS IN BANKS WERE MADE AVAILABLE TO THE ASSESSING OFFICER ON THE BASIS OF WHICH THE ASSESSING OFFICER MADE DISALLOWANCE . THE ASSESSEE DID NOT QUESTION THE DISALLOWANCE TO AVOID LITIGATION. THE AUTHORITIES BELOW HAVE, HOWEVER, LEVIED AND UPHELD THE PENALTY IN QUESTION ON THE BASIS THAT THERE WAS DELIBERATE ACTION OF THE ASSESSEE IN CLAIMING DEDUCTION UNDER SEC. 80P ON SUCH INCOME WHICH WAS NOT ITS BUSINESS INCOME AND THUS THE ASSESSEE HAS FURNISHED INACCURAT E PARTICULARS OF SUCH INCOME. THE LEARNED AR SUBMITTED THAT EVEN ON MERITS OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER THE ASSESSEE HAS GOT GOOD CASE AS THE ISSUE IS FULLY COVERED BY THE DECISION OF DELHI BENCH OF ITAT IN THE CASE OF ACIT VS. JAWALA CO - OPERATING URBAN THRIFT & CREDIT SOCIETY LTD. ITA NO. 2607/DEL/2012 (A.Y. 2008 - 09) ORDER DATED 19.12.2014 3 HOLDING THAT THE FUNDS PLACED BY THE ASSESSEE IN THE FORM OF FIXED DEPOSITS CAN BE SAID TO BE KEPT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE A ND THUS WAS ELIGIBLE FOR THE DEDUCTION UNDER SEC. 80P(2) OF THE ACT. 5. THE LEARNED SENIOR DR OPPOSED THE SUBMISSION OF THE ASSESSEE WITH THIS CONTENTION THAT THE ASSESSEE BY NOT PREFERRING APPEAL AGAINST THE DISALLOWANCE MADE BY THE ASSESSING OFFICER HA D ACCEPTED THE DISALLOWANCE IN QUESTION AND THERE WAS DELIBERATE ACTION ON THE PART OF THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SEC. 80P ON SUCH INCOME ABOUT WHICH THE ASSESSEE WAS AWARE THAT IT WAS NOT BUSINESS INCOME AND HENCE NOT ELIGIBLE FOR THE CLAIM ED DEDUCTION. THUS, THERE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE TO ATTRACT PENAL PROVISIONS UNDER SEC. 271(1)(C) OF THE ACT. 6 . CONSIDERING THE ABOVE SUBMISSIONS AND UNDISPUTED FACT THAT THE ASSESSING OFFICER HAD M ADE DISALLOWANCE OF THE CLAIMED DEDUCTION UNDER SEC. 80P(2) OF THE ACT ONLY ON THE BASIS OF INFORMATION FURNISHED BY THE ASSESSEE ON RECORD, IT CAN BE ARRIVED AT A CONCLUSION THAT THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE P ARTICULARS THEREOF ON THE PART OF THE ASSESSEE TOWARDS MAKING THE CLAIMED DEDUCTION. BEING PENAL IN NATURE THE PROVISIONS LAID DOWN UNDER SEC. 271(1)(C) OF THE ACT CAN BE INVOKED ONLY IN THOSE CASES WHERE THE ASSESSING OFFICER IS IN A 4 POSITION TO ESTABLISH BEYOND DOUBT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TOWARDS THE DISALLOWANCE/ADDITION MADE BY HIM. IN ABSENCE OF SUCH CLEAR FINDING IN THE PRESENT CASE, WE DO NOT AGREE WITH THE AUTHORITIES BELOW THAT THERE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE WHILE CLAIMING DEDUCTION UNDER SECTION 80P(2) OF THE ACT ON THE INTEREST INCOME RECEIVED ON SURPLUS FUNDS DEPOSITED IN BANKS. IT IS AN ESTA BLISHED PROPOSITION OF LAW THAT ASSESSMENT PROCEEDINGS AND PENAL PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT ARE INDEPENDENT PROCEEDINGS AND UNLESS THE REQUIREMENT OF LEVY OF PENALTY IS FULFILLED, IT CANNOT BE INVOKED AUTOMATICALLY WHERE DISALLOWANCE/ADDIT ION IS MADE AND SUSTAINED. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SEC. 271(1)(C) OF THE ACT AT RS.1,50,800. THE GROUNDS INVOLVING THE ISSUE ARE THUS ALLOWED IN FAVOUR OF T HE ASSESSEE. 7 . IN RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 . 0 3 . 201 6 S D/ - SD/ - ( O .P. K A NT ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 / 0 3 / 201 6 MOHAN LAL 5 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED DIRECTLY ON COMPUTER 1 6 . 0 3 .201 6 DRAFT PLACED BEFORE AUTHOR 1 6 . 0 3 .2016 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 16. 0 3 .2016 APPROVED DRAFT COMES TO THE SR.PS/PS 16. 03 .2016 KEPT FOR PRONOUNCEMENT ON 16. 03 .2016 FILE SENT TO THE BENCH CLERK 16.0 3 .2 016 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.