M/s. Noida Commercial Co-Operative Bank Ltd., New Delhi V. JCIT, Noida

ITA 442/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0948 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 22-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER & SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NO.-442/DEL/2015 ( ASSESSMENT YEAR: 2008-09) NOIDA COMMERCIAL CO- OPERATIVE BANK LTD. C/O. SH. SUDESH GARG, ADV. 295, DDA MIG FLATS, PRASAD NAGAR, PHASE-I NEW DELHI PAN : AAABN0147M VS JCIT RANGE NOIDA, INCOME TAX OFFICE A-2D, SECTOR 24, AAYAKAR BHAWAN NOIDA ASSESSEE BY SH. AKHILESH KUMAR, ADV. REVENUE BY SH. GAURAV SHARMA, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST ORDER DATED 17.11.2014 PASSED BY THE LD. CIT (APPEALS)- N OIDA FOR ASSESSMENT YEAR 2008-09 WHEREIN VIDE THE IMPUGNED O RDER THE LD. CIT (APPEALS) HAS UPHELD THE IMPOSITION OF PENALTY AMOUNTING TO RS. 1,68,400/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). DATE OF HEARING 30.08.2018 DATE OF PRONOUNCEMENT 27.11.2018 2 ITA N O. 442/DEL/2015 2. THE BRIEF FACTS OF THE CASE ARE THE RETURN OF IN COME WAS FILED DECLARING INCOME OF RS. 68,39,060/- AND THE ASSESSM ENT WAS COMPLETED U/S 143(3) OF THE ACT AFTER MAKING AN ADD ITION OF RS. 5,44,744/- BY DISALLOWING EXCESS DEDUCTION CLAIMED BY THE ASSESSEE U/S 36(1)(VIII) OF THE ACT. DURING THE ASS ESSMENT PROCEEDINGS, THE AO HAD NOTICED THAT THE ASSESSEE H AD TRANSFERRED TO STATUTORY RESERVE, AN AMOUNT OF RS. 22,79,684/- BEING 25% OF THE NET PROFIT WHEREAS THE ASSESSEE WAS ALLOWED T O TRANSFER TO RESERVE @ OF ONLY 20%. PENALTY PROCEEDINGS WERE INI TIATED SUBSEQUENTLY AND PENALTY WAS IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. ON APPEAL, THIS PENALTY WAS CONFIRMED BY THE LD. CIT (APPEALS). NOW THE ASSESSEE IS BEFORE T HE ITAT AND HAS CHALLENGED THE UPHOLDING OF PENALTY BY THE LD. CIT (APPEALS). 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS A CO-OPERATIVE BANK REGISTERED UNDER TH E U.P. CO- OPERATIVE SOCIETIES ACT, 1965 AND HAS BEEN CARRYING ON THE BANKING BUSINESS FOR MORE THAN 15 YEARS. IT WAS SUB MITTED THAT AS PER THE U.P. COOPERATIVE SOCIETYS ACT, THE ASSESSE E BANK WAS OBLIGED TO TRANSFER 20% OF THE NET PROFIT TO THE GE NERAL RESERVE ACCOUNT. HOWEVER, DUE TO INADVERTENT ERROR, THE ASS ESSEE TRANSFERRED 25% OF THE NET PROFITS TO THE GENERAL R ESERVE ACCOUNT. IIT WAS SUBMITTED THAT THIS WAS A BONA FIDE MISTAKE ON THE PART OF 3 ITA N O. 442/DEL/2015 THE ASSESSEE AND IT WAS NOT A CASE OF FURNISHING IN ACCURATE PARTICULARS OF INCOME. IT WAS FURTHER SUBMITTED THA T ALL THE FACTS RELEVANT FOR THE COMPUTATION OF INCOME WERE ALREADY BEFORE THE AO AND IT COULD NOT BE SAID THAT THERE WAS ANY FURNISH ING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE WAS NOT AWARE THAT AS P ER THE CO- OPERATIVE SOCIETY ACT ONLY 20% OF THE NET PROFITS H AD TO BE TRANSFERRED TO THE GENERAL RESERVE ACCOUNT AND THIS WAS A BONA FIDE MISTAKE ON THE PART OF THE ASSESSEE. THE LD. AUTHOR ISED REPRESENTATIVE ALSO SUBMITTED THAT DURING THE YEAR UNDER APPEAL THE ASSESSEE HAD PAID TAX TO THE TUNE OF RS. 21,67, 670/- ON THE TAXABLE INCOME AND, THEREFORE, AN ADDITIONAL AMOUNT OF TAX OF RS. 1,68,400/- WAS A MEAGER AMOUNT TO HAVE BEEN SOUGHT TO BE EVADED BY THE ASSESSEE. IT WAS PRAYED THAT THE PENA LTY BE DELETED. 4. IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESENTA TIVE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY ARGUED THAT THE PENALTY HAD BEEN RIGHTLY IMPOSED. I T WAS FURTHER SUBMITTED THAT HAD THE ASSESSEES EXCESS TRANSFER T O THE RESERVE NOT BEEN DETECTED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE INCOME TO THAT EXTENT WOULD HAVE REMAINED UNTAX ED. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND HAVE ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT TH E ASSESSING 4 ITA N O. 442/DEL/2015 OFFICER, IN THE PENALTY ORDER, HAS OBSERVED THAT TH E ASSESSEEE HAS FURNISHED INACCURATE PARTICULARS. THE AO HAS HELD T HAT THE ACT OF TRANSFER OF EXCESS AMOUNT TO THE RESERVE WAS AN ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. CIT (A PPEALS) HAS NOTED THAT THE EXPLANATION OF THE ASSESSEE REGARDIN G INADVERTENT ERROR WAS NOT TENABLE. HOWEVER, WITH REGARD TO THE PROVISIONS OF SECTION 271(1)(C ) OF THE ACT PERTAINING TO PENALTY , THE HONBLE APEX COURT HAS AUTHORITATIVELY LAID DOWN THAT MAKING OF A CLAIM BY THE ASSESSEE WHICH IS NOT SUSTAINABLE WILL NOT TANTAMOU NT TO FURNISHING INACCURATE PARTICULARS. IN CIT VS. RELIA NCE PETROPRODUCTS PVT. LTD. (SUPRA), THE HONBLE APEX C OURT HAS HELD AS FOLLOWS: A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN O RDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE F URNISHED INACCURATE PARTICULARS OF HIS INCOME. THE PRESENT I S NOT A CASE OF CONCEALMENT OF INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. HOWEVER, THE LD. COUNSEL FOR THE REVENUE SUGGESTED THAT BY MAKING INCORRECT CLAIM FOR THE EXPENDITURE ON INTER EST, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' I S A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD 'PARTICULA RS' USED IN THE SECTION 271 (1) (C) WOULD EMBRACE THE MEANING OF TH E DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN THE PRESE NT CASE THAT NO 5 ITA N O. 442/DEL/2015 INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INC ORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR A NY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE , AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE LEARNED COUNSEL ARGUED THAT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEN DITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICUL ARS OF SUCH INCOME.' WE DO NOT THINK THAT SUCH CAN BE THE INTER PRETATION OF THE CONCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICUL ARS. 5.1 ALTHOUGH, BOTH THE LOWER AUTHORITIES HAVE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, ON AN OVERALL CONSIDERATION ON THE FACTS, SUCH A VIEW IS NOT TENA BLE IS THE PRESENT APPEAL THEREFORE, RESPECTFULLY FOLLOWING THE JUDGME NT OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PV T. LTD. (SUPRA) WE SET ASIDE THE IMPUGNED ORDERS AND DIRECT THE AO TO DELETE THE PENALTY. 6. IN THE FINAL RESULT THE APPEAL OF THE ASSESSEE S TANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.11.2018 SD/- SD/- (O.P.KANT) (SUDHA NSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 27.11.2018 6 ITA N O. 442/DEL/2015 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 26.11.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.11.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 26.11.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 27.11.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 27.11.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 30.11.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 30.11.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 7 ITA N O. 442/DEL/2015