Rail Vihar Welfare Association, Gurgaon V. ITO, Gurgaon

ITA 5354/DEL/2013

• Counselvise Citation: 535420114 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 30-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: VED BHANU ARYA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI H.S. SIDHU, JM ITA NO.5354/DEL/2013 ASSESSMENT YEAR : 2004-05 RAIL VIHAR WELFARE ASSOCIATION, SECTOR-15, PART II, GURGAON. PAN : AAAJR0362A VS. ITO, WARD-2, GURGAON. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED BHANU ARYA, ADVOCATE DEPARTMENT BY : SHRI VIKRAM SAHAY, SR. DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A) ON 23.07.2013 CONFIRMING THE PENALTY IMP OSED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAF TER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2004-05. ITA NO.5354/DEL/2013 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, A SOCIETY REGISTERED UNDER SOCIETIES REGISTRATION ACT, RECEIV ED TRANSFER FEES AMOUNTING TO RS.9,05,000/- FROM ITS OUTGOING MEMBER S, WHICH WAS REFLECTED IN THE RECEIPTS AND PAYMENTS ACCOUNT. TH IS AMOUNT WAS NOT OFFERED FOR TAXATION. ON BEING CALLED UPON TO EXPL AIN THE REASONS FOR NOT DISCLOSING THIS AMOUNT IN THE INCOME AND EXPENDITUR E ACCOUNT, THE ASSESSEE STATED THAT A TRANSFER FEE FUND WAS CREATE D BY A RESOLUTION PASSED IN THE GENERAL BODY MEETING OF RAIL VIHAR WE LFARE ASSOCIATION HELD ON 16.9.2002 SO AS TO IMPROVE ITS FINANCIAL PO SITION FOR PROVIDING BETTER SERVICES TO ITS MEMBERS. THIS AMOUNT OF TRA NSFER FEE WAS TAKEN TO CAPITAL FUND FOR UTILIZATION IN EXECUTION OF ALL WORKS OF CAPITAL NATURE. A COPY OF RESOLUTION PASSED BY THE GENERAL BODY MEE TING WAS ALSO PLACED BEFORE THE AO, WHO CAME TO HOLD THAT THIS AM OUNT TO BE IN THE NATURE OF REVENUE RECEIPT CHARGEABLE TO TAX. THIS AMOUNT WAS ADDED TO THE ASSESSEES TOTAL INCOME AND, EVENTUALLY, THE PE NALTY IMPOSED ON ACCOUNT OF THIS ADDITION CAME TO BE UPHELD IN THE F IRST APPEAL. ITA NO.5354/DEL/2013 3 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSE E RECEIVED THE AMOUNT OF TRANSFER FEE FROM ITS OUTGOING MEMBERS TO BE UTI LIZED IN EXECUTION OF WORKS OF CAPITAL NATURE. THIS AMOUNT WAS PROPERLY REFLECTED IN THE RECEIPT AND PAYMENT ACCOUNT ACCOMPANYING THE RETURN OF INCOME FILED BY THE ASSESSEE. HOWEVER, THE SAME WAS TREATED AS NOT CHARGEABLE TO TAX IN THE NATURE OF A RESERVE TO BE UTILIZED FOR PROVI DING BETTER SERVICES TO ITS MEMBERS, PRESUMABLY ON THE PRINCIPLE OF MUTUALITY. THAT IS HOW THE ASSESSEE TREATED THIS AMOUNT AS NOT CHARGEABLE TO T AX BY PROPERLY DISCLOSING ALL THE NECESSARY FACTS ABOUT IT. THE H ONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) , HAS HELD THAT THE MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT ATTRACT PENA LTY. WHEN THE ASSESSEE FURNISHES ALL THE PARTICULARS IN RETURN WHICH ARE N OT FOUND TO BE INACCURATE, IT IS ONLY UP TO THE AUTHORITIES TO ACC EPT THE CLAIM OF THE ASSESSEE IN THE RETURN OR NOT. IN NO SITUATION THI S CAN CALL FOR IMPOSITION OF ANY PENALTY. THE HONBLE SUPREME COURT IN THE C ASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT (2012) 348 ITR 306 (SC) HAS HELD ITA NO.5354/DEL/2013 4 THAT NO PENALTY U/S 271(1)(C) CAN BE IMPOSED FOR A BONA FIDE MISTAKE COMMITTED BY THE ASSESSEE. WHEN WE APPLY THE RATIO OF THE ABOVE TWO JUDGMENTS OF THE HONBLE SUMMIT COURT TO THE FACTUA L POSITION PREVAILING BEFORE US, THE ONLY CONCLUSION WHICH CAN BE DRAWN IS THAT THE PENALTY IS NOT EXIGIBLE, FOR NOT OFFERING THE AMOU NT OF TRANSFER FEE TO TAX, WHICH WAS OTHERWISE PROPERLY REFLECTED IN RECE IPT AND PAYMENT ACCOUNT BY THE ASSESSEE. OVERTURNING THE IMPUGNED ORDER, WE ORDER FOR THE DELETION OF PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04.02.201 5. SD/- SD/- [H.S. SIDHU] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 04 TH FEBRUARY, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.