The Eluru Co-operative House Mortgage Society Ltd., Eluru V. THE ITO, Eluru

ITA 564/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9631 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SATYANADHAM
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 564 / VIZ /201 4 (ASST. YEAR : 20 08 - 09 ) THE ELURU CO - OP HOUSE MORTGAGE SOCIETY LTD., R.R. PET, ELURU 02 V . ITO, WARD - 2, ELURU. PAN NO. AACAT 0060 G (APPELLANT) (RESPONDENT) ITA NO. 615 / VIZ /201 4 (ASST. YEAR : 20 08 - 09 ) ITO, WARD - 2, ELURU. V. THE ELURU CO - OP HOUSE MORTGAGE SOCIETY LTD., R.R. PET, ELURU 02 PAN NO. AACAT 0060 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV. DEPARTMENT BY : SHRI T. SATYANADHAM - DR DATE OF HEARING : 04 / 1 0 /201 6 . DATE OF PRONOUNCEMENT : 23 / 12 /201 6 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , VISAKHAPATNAM , DATED 17 /0 9 /201 4 FOR THE ASSESSMENT YEAR 2008 - 09 . 2 ITA NO. 564 & 615/VIZ/2014 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY ESTABLISHED IN THE YEAR 1963 UNDER THE NAME AND STYLE THE ELURU CO - OPERATIVE HOUSE MORTGAGE BANK LTD , HOWEVER, NAME WAS CHANGED AS THE ELURU CO - OP HOUSE MORTGAGE SOCIETY LTD . W.E.F. 19/02/2009 . THE ASSESSEE FIELD ITS RETURN OF INCOME , WHEREIN IT CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AND DEC L A RED NIL INCOME. THE ASSESSEE ALSO FILED A NOTE CLAIMING THE STATUS THAT THE SOCIETY IS MUTUALLY BENEFIT SOCIETY RUN ON COOPERATIVE LINES, HOWEVER, THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSESSEE UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE ASSESSEE , IN HIS RETURN OF INCOME ALSO CLAIMED OVERDUE INTEREST . THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSE SSEE ON THE GROUND THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, HENCE, CLAIM OF THE ASSESSEE CANNOT BE ALLOWED. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE LONES , ON WHICH NO PAYMENT IS FORTHCOMING FOR MORE THAN 90 DAYS ARE TREATED AS STICKY LOANS AND THE INTEREST WHICH IS ACCRUED AND ALREADY CREDITED IS REVERSED BY CR E ATING R ESERVE ACCOUNT AND DEBITING THE SAME AS EXPENDITURE . THE ASSESSEE S DEBIT OF OVERDUE INTEREST IS DEFERMENT OF INCOME ALREADY EARED AS PER ACCRUAL METHOD BY TAKING SHELTER UNDER RBI NORMS AND THE SAME CANNOT BE ALLOWED. ACCORDINGLY , UPHELD THE ORDER PASSED BY THE ASSESSING OFFICER. 3 . SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS ON TWO COUNTS; ONE IS THE CLAIM MADE ON ACCOUNT OF DEDUCTION UNDER SECTION 80P(2)(A)(I) AND ANOTHER IS DENIAL OF PROVISION 3 ITA NO. 564 & 615/VIZ/2014 MADE FOR OVERDUE INTEREST . THE ASSESSING OFFICER WAS OF THE OP INION THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME AND A CCORDINGLY LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4 . ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 5. THE ASSESSEE SUBMITTED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THAT ALL THE DETAILS IN RESPECT OF CLAIM MADE UNDER SECTION 80P(2)(A)(I) WERE FILED BEFORE THE ASSESSING OFFICER AND DECLINE MADE BY THE ASSESSEE IS A DEBATABLE QUESTION OF LAW AND, T HEREFORE, NO P ENALTY CAN BE LEVIED . THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE CANCELLED THE PENALTY IMPOSED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 8. I HAVE CONSIDERED THE SUBMISSIONS MADE AND THE DETAILS FILED. IT IS SEEN THAT THE ASSESSEE HAS MADE CLAIM FOR DEDUCTION U/S.80P(2)(A)(II), ON WHICH THE AO TOOK THE VIEW THAT THE ASSESSEE IS A CO - OPERATIVE BANK FALLING WITHIN THE PURVIEW OF SEC.80P(4) OF THE I.T.ACT AND WOULD NOT ENTITLED FOR THE IMPUGNED DEDUC TION. THE VIEW OF THE AO WAS UPHELD BY THE CIT(APPEALS) IN THE ASSESSEE'S APPEAL FOR A.Y.2008 - 09. HOWEVER, IT IS ALSO SEEN THAT THE ASSESSEE'S CLAIM FOR DEDUCTION U/S.80P(2)(A)(II) WAS UPHELD BY THE CIT(A) FOR A.Y.2007 - 08 AND A.Y.2009 - 10 AND NO DISALLOWANC E WAS MADE FOR A.Y.2010 - 11. TAKING THESE FACTS 1FTB CONSIDERATION, I AM OF THE VIEW THAT THE ASSESSEE'S CLAIM FOR DEDUCTION U/S. 80 P(2)(A)(I) CANNOT BE SAID TO BE MADE IN A NON - BONAF I DE MANNER. IT IS ALSO NOTED THAT THE DISALLOWANCE WAS ON ACCOUNT OF A DEBATABLE ISSUE WHETHER THE ASSESSEE COULD BE CONSTRUED AS A CO - OPERATIVE BANK WITHIN THE PURVIEW OF SEC.80P(4) AND WHETHER THE ASSESSEE WOULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION U/S.80P(2)(A)(I). THE DIFFERENT VIEWS TAKEN BY THE CIT(A) ON THE SAME ISSU E THAT THIS IS A DEBATABLE ISSUE. I FIND THAT THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN RELIANCE PETROPRODUCTS PVT. LTD. WOULD BE APPLICABLE AND, THEREFORE, I AM OF THE VIEW THAT PENALTY IS NOT EXIGIBLE U/S.271(1)(C) IN REGARD TO DISALLOWANCE OF THE CLAIM UNDER SECTION 80P(2)(A)(I). 4 ITA NO. 564 & 615/VIZ/2014 ACCORDINGLY, THE GROUNDS RAISED IN THIS REGARD ARE ALLOWED. 6 . ON BEING AGGRIEVED, REVE NUE IS IN APPEAL BEFORE THE TRI BUNAL. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 7 . ON THE OTHER HAND , AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE BY FILING ALL THE DETAILS, MADE A CLAIM BEFORE THE ASSESSING OFFICER AND HE WAS OF THE OPINION THAT THE CLAIM MADE BY THE ASSESSEE IS NOT ALLOWABLE . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT DENIAL OF CLAIM IS NOT AUTOMATICALLY ATTRACTS THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HE ALSO SUBMITTED THAT THE CLAIM MADE BY THE ASSESSEE IS BONAFIDE CLAIM, HENCE, NO PENALTY CAN BE LE VIED UNDER SECTION 271(1)(C) OF THE ACT. HE ALSO RELIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD . REPORTED IN 322 ITR 158 (SC) . 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS MADE A CLAIM UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE IS A BANK AND IN THE LIGHT OF SUB - CL A USE(4) TO SECTION 80P, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I). ACCORDINGLY, HE DENIED THE CLAIM OF THE ASSESSEE. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED TH E SAME . THE ASSESSING OFFICER , BY SIMPLY NOTING ASSESSEE HAS CONCEALED THE PARTICULARS OF THE INCOME, IMPOSED THE PENALTY UNDER SECTION 271(1)(C). THE COMMISSIONER OF INCOME TAX 5 ITA NO. 564 & 615/VIZ/2014 (APPEALS) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, CANCELLED THE P ENALTY IMPOSED BY THE ASSESSING OFFICER. AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) , WE FIND THAT IN THE PRESENT CASE, THE ASSESSEE NEITHER CONCEALED THE INCOME NOR F ILED INACCURATE PARTICULARS. THE ASSESSEE HAS ONLY MADE A CLAIM . A CCORDING TO THE ASSESSEE , IT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AND FILED RETURN OF INCOME BY DISCLOSING ALL THE FACTS. THE ASSESSING OFFICER DENIED THE CLAIM , WHICH WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) . THIS IS NOT AUTOMATICALLY AMOUNTING TO NEITHER CONCEALMENT OF INCOME NOR FILING OF INACCURATE PARTICULA R S. IN THIS CONTEXT, THE HON'BLE SUPREME COURT HAS CONSIDERED THE ISSUE IN SIMILAR CIRCUMSTANCES IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) AND HELD THAT W HERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETU R N ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS QUESTION OF INVI T ING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCUR ATE PARTICULARS 9 . KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO BY FOLLOWING THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) , WE FIND NO INFIRMI TY IN THE 6 ITA NO. 564 & 615/VIZ/2014 ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) . HENCE, APPEAL FILED BY THE REVENUE IS DISMISSED. 10 . INSOFAR AS THE PROVISION OF OVERDUE INTEREST IS CONCERNED, THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE A SSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND T HEREFORE, THE PROVISION MADE BY HIM CANNOT BE ALLOWED. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE ASSESSING OFFICER , BY SIMPLY NOTING ASSESSEE CONCEALED THE INCOME , INVOKED THE PROVISIONS OF SECTION 271(1)(C) AND IMPOSED PENALTY. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE O R DER OF THE ASSESSING OFFICER ON THE GROUND THAT THE METHOD FOLLOWED BY THE AS SESSEE IS INCONSISTENCY WITH THE ESTABLISHED PRINCIPLES OF ACCOUNTING AND JUDICIAL DECISIONS OF THE APEX COURT . IT IS NOT THE CASE OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS. THE CASE OF THE ASSESSEE IS THAT HE MADE A PROVISION ON STICKY LOANS BY FOLLOWING THE RBI GUIDELINES BY FILING ALL THE DETAILS BEFORE THE ASSESSING OFFICER. ONCE, THE ASSESSEE FILED ALL THE DETAILS IN HIS RETURN OF INCOME AND MADE A PROVISION, IF THE AS SESSING OFFICER HAS DENIED THE PROVISION MADE BY THE ASSESSEE, IT CAN N OT BE SAID THAT THE PROVISION MADE BY THE ASSESSEE IS NEITHER CONCEALMENT NOR FILING INACCURATE PARTICULARS OF INCOME . IT IS ONLY A LEGAL CLAIM MADE BY THE ASSESSEE. THIS ASPECT HAS ALREADY BEEN CONSIDERED WHILE DEALING WITH SECTION 80P(2)(A)(I) (SUPRA) AND BY 7 ITA NO. 564 & 615/VIZ/2014 FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT, THE PENALTY LEVIED BY THE ASSESSING OFFICER IS TO BE CANCELLED. IN OUR O PINION, THE DECISION OF THE HON'BLE SUPREME COURT IS SQUARELY APPLIES TO TH IS ISSUE ALSO AND T HEREFORE, KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO FOLLOWING THE JU D GM E NT OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) , IT IS NOT A FIT CASE FOR IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FURTHER, WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE SIMPLY CONFIRMED THE OR DER OF THE ASSESSING OFFICER. THUS, WE REVERSE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 1 1 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 R D DAY OF DECEMBER , 201 6 . S D / - S D / - ( G. MANJUNATHA ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 3 R D DECEMBER , 201 6 . VR/ - 8 ITA NO. 564 & 615/VIZ/2014 COPY TO: 1 . THE ASSESSEE. THE ELURU CO - OP HOUSE MORTGAGE SOCIETY LTD., R.R. PET, ELURU - 02 2 . THE REVENUE ITO, WARD - 2, ELURU. 3 . THE CIT, RAJAHMUNDRY , 4 . THE CIT(A) , VISAKHAPATNAM . 5 . THE D.R . 6 . GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY I.T.A.T., VISAKHAPATNAM