DCIT, Mandi V. M/s The Bilaspur Distt. Co op Marketing & Consumer Federation Ltd., Bilaspur

ITA 529/CHANDI/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1571 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Wrong claim; Non compliance; Bonafide mistake
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH DIVISION BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO.529/CHD/2014 ASSESSMENT YEAR:2007-08 DCIT, VS. THE BILASPUR DISTT. COOP MARKETING CIRCLE & CONSUMER FEDERATION LTD. MANDI, MAIN MARKET BILASPUR PAN NO. AAATT4157D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K. MITTAL RESPONDENT BY : SH. RAMAN SETH DATE OF HEARING : 23/07/2015 DATE OF PRONOUNCEMENT : 03/08/2015 ORDER PER BHAVNESH SAINI.J.M THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-SHIMLA, H.P. DT. 25/02/2014, DELETING THE PENALTY AMOUNTING TO RS. 359,324, LEVIED BY A.O. UNDER SECTION 271(1)(C) OF THE ACT. THE GROUND S RAISED BY REVENUE ARE AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRE D IN LAW AND FACTS IN DELETING THE PENALTY IMPOSED U/S 271(1 )(C) IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT OF INDIA IN THE C ASE OF CIT VS. GOLD COIN HEALTH FOOD PVT. LTD. (SC) 304 ITR 308 (2008) WHERE IN IT HAS BEEN HELD BY THE APEX COURT THAT PENALTY U/S 271(1)(C) CAN BE LEVIED EVEN IF AFTER ADDITION OF CONCEALED INCOME, THERE WAS NO POSITIVE INCOME. 2. THE APPELLANT CRAVES TO ADD OR TO AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FEDERATION HAVING CO- OPERATIVE SOCIETIES AS ITS MEMBERS AND IS TRADING I N GENERAL ITEMS AND MEDICINES 2 AND IS ALSO RUNNING A RICE SHELLER. DURING THE ASSE SSMENT PROCEEDINGS U/S 143(3) THE A.O. OBSERVED THAT THE ASSESSEE HAS CLAIMED LOS SES TO BE CARRIED FORWARD AMOUNTING TO RS. 1,05,65,084/- COMPRISING OF THE CU RRENT YEAR LOSS OF RS. 12,96,392/- AND LOSSES BROUGHT FORWARD FROM EARLIER YEARS AMOUNTING TO RS. 92,68,692/-. THE ASSESSEE HAD DONE SO BY ACCUMULATI NG THE LOSSES FROM THE A.Y. 1985-86 ONWARDS. HOWEVER, AS THE ASSESSEE IS ENTITL ED TO CARRY FORWARD THE LOSSES ONLY TO THE EXTENT OF EIGHT YEARS, THE AO COMPUTED THE LOSSES TO BE CARRIED FORWARD AT AN AMOUNT OF RS. 95,47,144/-. ACCORDINGL Y THE EXCESS LOSS OF RS. 10,17,939/- WAS DISALLOWED. THE ASSESSEE DID NOT GO IN APPEAL AGAINST THE SAID ORDER. PENALTY PROCEEDINGS WERE INITIATED BY ISSUE OF NOTICE U/S 271(1)(C) OF THE ACT. IN THE PENALTY PROCEEDINGS THE ASESSEE CONTEND ED THAT AS THE NET RESULT OF THE CASE OF THE ASSESSEE IS A LOSS, NO PENALTY U/S 271(1)(C) IS IMPOSABLE. VIDE HIS LETTER DT. 06.04.2010, THE AO AGAIN GAVE ASSESSEE A N OPPORTUNITY TO REPRESENT ITS CASE. BUT NO COMPLIANCE WAS MADE ON THE SAID NOTICE . CONSEQUENTLY, THE A.O. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. GOLD COIN HEALTH FOOD PVT. LTD. (SUPRA) 304 ITR 308, WHE REBY IT HAS BEEN HELD THAT EVEN IT THE RETURNED INCOME AS WELL AS ASSESSED INC OME ARE LOSS, STILL PENALTY U/S 271(1)(C) IS LEVIABLE, LEVIED THE PENALTY U/S 271(1 )(C) AMOUNTING TO RS. 3,59,324/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. 3. ASSESSEE WENT INTO APPEAL BEFORE THE CIT(A). BEF ORE HIM, IT WAS ARGUED THAT THE ASSESSEE HAD ACCEPTED THE ASSESSMENT FRAME D U/S 143(3) AND NOT PREFERRED ANY APPEAL AGAINST THE SAID ORDER. IT WAS ALSO SUBMITTED THAT THE CLAIM OF THE EXCESS LOSS WAS ON ACCOUNT OF A BENAFI DE MISTAKE COMMITTED AT THE TIME OF PREPARATION OF RETURN AND THE ASSESSEE SHOULD NOT BE PENALIZED FOR THE SAME. TO PROVE THE BONAFIDE, IT WAS ALSO SUBMIT TED THAT THE ASSESSED INCOME AS WELL AS THE RETURNED INCOME, BOTH BEING L OSSES, THE INTENTION OF THE ASSESSEE COULD NOT BE TO DEFRAUD REVENUE. FURTHER I T WAS ALSO SUBMITTED THAT 3 THERE WAS NO FALSE EXPLANATION OR PARTICULARS SUBMI TTED BY THE ASSESSEE. ALL FACTS RELATING TO THE CASE WERE DULY DISCLOSED. IT WAS SU BMITTED THAT THE PENALTY WAS LEVIED SIMPLY BECAUSE THERE WAS DISALLOWANCE IN THE ASSESSMENT ORDER AND AS A MATTER OF ROUTINE ONLY. THE ASSESSEE RELIED ON A NU MBER OF JUDGMENTS ALSO. 4. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE, D ELETING THE PENALTY, VIDE PAGE 5 PARA 4 OF THE CIT(A) ORDER, HOLDING AS FOLLO WS: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E, THE WRITTEN SUBMISSION AND JUDGMENTS CITED BY THE ASSESSEE. ASS ESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE ACT AT A LOSS OF RS . 12,96,392/- AFTER MAKING CERTAIN DISALLOWANCES. IN THE RETURN OF INCO ME CARRY FORWARD LOSS OF RS. 1,05,65,084/-/- WAS CLAIMED BY THE ASSESSEE. TH E SAME WAS RESTRICTED TO RS. 95,47,144/-. THE EXCESS LOSS WAS DISALLOWED AND PENALTY PROCEEDINGS U/S 271 (1)(C) WERE INITIATED. IT SEEMS THAT THE A O HAS LEVIED THE PENALTY FOR NON-COMPLIANCE ON THE GIVEN DATE BUT NOT FOR CO NCEALMENT OR FURNISHING THE INACCURATE PARTICULARS OF INCOME. TH E AO HAS OBSERVED THAT THE ASSESSEE WAS REQUESTED TO REPLY ON OR BEFORE 1 2/04/2010 BUT NO COMPLIANCE WAS MADE ON THE DATE GIVEN. THE ASSESSE E HAS DECLARED BASIC DETAILS OF ITS INCOME IN THE RETURN OF INCOME AND FOR THE CALCULATION LAPSE DISALLOWANCE WAS MADE BY THE AO. EXCESSIVE LO SS CLAIMED BY THE ASSESSEE CANNOT BE TREATED AS FURNISHING OF INACCUR ATE PARTICULARS. THE A.O. HAS NOT HONESTLY MADE A CASE WHERE THE PARTICU LARS OF INCOME WERE CONCEALED. HE HAS SIMPLY MADE THE DISALLOWANCE OF E XCESS CARRIED FORWARD LOSS. EVERY DISALLOWANCE MADE IN THE ASSESS MENT CANNOT BE A VALID GROUND FOR IMPOSITION OF PENALTY U/S 271(1)(C ). IN PENAL PROCEEDINGS, THE A.O. HAS TO ESTABLISH BEYOND DOUBT THAT ASSESSE E HAS CONCEALED THE PARTICULARS OF INCOME AND INACCURATE PARTICULARS OF INCOME WERE FURNISHED DELIBERATELY. THERE IS ONLY DISALLOWANCE OF LOSS INCURRED DURING BUSINESS, WHICH DID NOT AMOUNT TO CONCEALMENT BY TH E ASSESSEE. THE LD. A.O NOWHERE OBSERVED THAT ANY FALSE EXPLANATION OR PARTICULARS WERE SUBMITTED BY ASSESSEE. THE RETURN OF INCOME WAS HAV ING ALL THE MATERIAL FACTS IN THE SHAPE OF COMPUTATION SHEET IN WHICH AL L THE FACTS WERE CORRECTLY MENTIONED. THE EXPLANATION SUBMITTED BY T HE ASSESSEE BEFORE THE A.O. WAS NOT FOUND FALSE. THE EXPLANATION OFFER ED BY ASSESSEE WAS BONAFIDE. ALL MATERIAL TO THE COMPUTATION OF ITS TO TAL INCOME WAS DISCLOSED BY IT. DURING THE ASSESSMENT PROCEEDINGS, NOWHERE IT WAS FOUND THAT THERE WAS ANY CONCEALMENT OF ANY FACTS RELATIN G TO PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. IN VIEW OF FOREGOING DISCUSSIONS AND JUDICIAL PRONOUNCEMENTS (SUPRA) I A M OF THE CONSIDERED OPINION THAT THE A.O. WAS NOT JUSTIFIED IN IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT FOR DISALLOWANCE OF CARRY FORWARD LOSS. THE SAME IS ORDERED TO BE DELETED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HA S CAME IN APPEAL BEFORE US. 6. THE LD. DR ARGUED THAT THE CIT(A) HAS ERRED IN D ELETING THE PENALTY IMPOSED U/S 271(1)(C) IN THE LIGHT OF DECISION OF S UPREME COURT IN THE CASE OF CIT VS. GOLD COIN HEALTH FOOD PVT. LTD. (SC) 304 ITR 30 8 (2008), WHEREIN IT HAS BEEN 4 HELD THAT PENALTY U/S 271(1)(C) CAN BE LEVIED EVEN IF AFTER ADDITION OF CONCEALED INCOME, THERE WAS NO POSITIVE INCOME. 7. LD. COUNSEL FOR THE ASSESSEE PLACED HEAVY RELIAN CE ON THE ORDER OF CIT(A), WHO HAS DELETED THE PENALTY ONLY AFTER DETAILED DIS CUSSION . 8. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL ON RECORD. THIS IS A CASE WHERE EXCESS CLAIM OF CARRY FORWARD LOSSES WAS MADE BY THE ASSESSEE, WHICH WAS DISALLOWED BY THE A.O., SINCE I T WAS NOT AS PER LAW. THE ASSESSEE DID NOT CHALLENGE THE SAID ORDER OF THE A. O. AND ACCEPTED THE SAID ASSESSMENT. 9. IT IS NOT A CASE OF CONCEALMENT OF INCOME AS THE AO HIMSELF HAS PICKED UP ALL FACTS AND FIGURES FROM THE RETURN OF INCOME AND THE DETAILS FILED BY THE ASSESSEE. IT IS NOT ALSO A CASE OF FURNISHING OF IN ACCURATE PARTICULARS, AS THE ASSESSEE HAS DISCLOSED ALL PARTICULARS RIGHTLY BEFO RE THE AO. IT IS A CASE WHERE A EXCESS CLAIM WAS MADE BY THE ASSESSEE IN ITS RETURN . EVERY DISALLOWANCE OR ADDITION MADE BY AO COULD NOT BE THE SOLE BASIS FOR LEVYING PENALTY U/S 271(1)(C). ASSESSEE HAS PLEADED BONAFIDE, WHICH GE TS STRENGTHENED BY THE FACT THAT THE PARTICULARS OF BROUGHT FORWARD LOSS WERE D ECLARED TO REVENUE AND AS PER AO, ASSESSEE COULD CLAIM BUSINESS LOSSES OF ONL Y EIGHT YEARS AND ASSESSEE WAS DEPENDENT ON LEGAL ADVICE ONLY. THE EXPLANATION OFFERED BY THE ASSESSEE WAS THEREFORE BONAFIDE. IT IS A CLEAR CASE OF CLAIM MADE BY COMMITTING A BONAFIDE MISTAKE. 10. ON A SIMILAR ISSUE THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATER HOUSE COOPER PVT. LTD. VS. CIT(2012) 348 ITR 306 (S C) HELD AS UNDER : 19. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT T HERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THE RE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULA RS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT T HROUGH A BONAFIDE AND 5 INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING IT S RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CA N ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CAL IBRE AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE I NADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL CANNOT BE DOUBTED , BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT, DOES NO T MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 20. WE ARE OF THE OPINION, GIVEN THE PECULIAR FACTS OF THIS CASE, THAT THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JU STIFIED. WE ARE SATISFIED THAT THE ASSESSEE HAD COMMITTED AN INADVERTENT AND BONAFIDE ERROR AND HAD NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. IN THE PRESENT CASE ALSO, THE CLAIM OF CARRY FORWAR D LOSSES IS ON ACCOUNT OF AN INADVERTENT & BONAFIDE ERROR AND NOT INTENDING TO C ONCEAL INCOME OR TO FURNISH INACCURATE PARTICULARS OF INCOME. 11. AS THIS IS A CASE OF ADDITION ON ACCOUNT OF EXC ESS CLAIM MADE BY THE ASSESSEE, PENALTY COULD NOT BE LEVIED UNDER SECTION 271 (1)(C). OUR VIEW GETS SUPPORTED BY THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158(SC), WHE REBY IT HAS BEEN HELD AS UNDER: AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CL AIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDE R S. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE O F EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON , THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. AS HELD EARLIER, THIS IS ONLY A CASE OF WRONG CLAIM , THEREFORE PENALTY IS NOT LEVIABLE. 12. FURTHER, THE CIT(A) HAS GIVEN DETAILED FINDINGS WHILE DELETING THE PENALTY. IT IS ALSO A MATTER OF RECORD THAT THE A.O. IN ORDER UNDER SECTION 271(1)(C) HAS NOWHERE GIVEN ANY FINDINGS AS TO THE CONCEALMENT OF INCOME OR FURNISHING OF 6 INACCURATE PARTICULARS. IN FACT HE LEVIED PENALTY J UST ON NON COMPLIANCE BY THE ASSESSEE ON THE GIVEN DATE. 13. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). THE PENALTY U/S 271(1)(C) IMPOSED B Y THE A.O. WAS RIGHTLY DELETED BY LD. CIT(A). 14. THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2015 SD/- SD/- (T.R. SOOD) (BHAVNESH S AINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03/08/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR