M/s. Sheoganj Cooperative Marketing, SHEOGANJ V. ACIT, JODHPUR

ITA 587/JODH/2009

• Counselvise Citation: 58723314 RSA 2009
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 24-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N MOURYA
• Assessee Lawyers: ARUN CHOURADIA
• Keywords: Bonafide belief; Wrong claim; Bad and doubtful debts; Revised return; Provision of bad debts; Ignorance of law
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ JODHPUR BENCH, JODHPUR ] BEFORE SHRI RAJPAL YADAV, JM AND SHRI K. D. RAN JAN, AM I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. ASSESSMENT YEARS : 200304 & 2004-05. M/S. SHEOGANJ CO-OPERATIVE MARKETING ASSTT. COMM ISSIONER OF INCOME-TAX, SOCIETY LIMITED, VS. C I R C L E : 2, S H E O G A N J. J O D H P U R. P A N / G I R NO. AAA LS 0490 A. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ARUN CHOURADIA, A. R.; DEPARTMENT BY : SHRI M. N. MOURYA, SR. D. R. ; O R D E R. PER K. D. RANJAN, AM : THESE APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2003-04 AND 2004-05 ARISE OUT OF COMMON ORDER OF THE LD. CIT (APPEALS), JODHPUR. EXCEPT THE DIFFERENCE IN FIGURES, THE ISSUES ARE IDENTICAL IN BOTH THE APPEALS. SINCE IDENTICAL ISSUE IS INVOLVED IN BOTH THESE APPEALS, THE APPEALS ARE DECIDED BY COMMON ORDER. 2. THE GROUNDS OF APPEAL RAISED IN ASSESSMENT YEARS 2003-04 AND 2004-05 ARE REPRODUCED AS UNDER :- I. T. APPEAL NO. 587 (JODH.) OF 2009 : 1. THAT THE APPELLANT HAS NEITHER CONCEALED INCOM E, NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME AND AS SUCH PENALT Y OF RS.2,41,118/- UNDER 2 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. SECTION 271(1)(C) OF INCOME TAX ACT SUSTAINED BY TH E LD. CIT (APPEALS) IS BAD IN LAW; 2. THAT THE APPELLANT HAD FILED RETURN OF INCOM E CLAIMING DEDUCTION UNDER SECTION 80-P OF INCOME TAX ACT RELYING ON TAX AUDIT ORS REPORT; 3. THAT THE APPELLANT PRAYS THAT ILLEGAL AND AR BITRARY PENALTY OF RS.2,41,118/- SUSTAINED MAY KINDLY BE QUASHED. I. T. APPEAL NO. 588 (JODH.) OF 2009 : 1. THAT THE APPELLANT HAS NEITHER CONCEALED INCOM E, NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME AND AS SUCH PENALT Y OF RS.3,44,964/- UNDER SECTION 271(1)(C) OF INCOME TAX ACT SUSTAINED BY TH E LD. CIT (APPEALS) IS BAD IN LAW; 2. THAT THE APPELLANT HAD FILED RETURN OF INCOM E CLAIMING DEDUCTION UNDER SECTION 80-P OF INCOME TAX ACT RELYING ON TAX AUDIT ORS REPORT; 3. THAT THE APPELLANT PRAYS THAT ILLEGAL AND AR BITRARY PENALTY OF RS.3,44,964/- SUSTAINED MAY KINDLY BE QUASHED. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO CONF IRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT] OF RS.2,41,118/- IN ASSESSMENT YEAR 2003-04 AND RS.3,44,964/- IN ASSESSMENT YEAR 2 004-05. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY REG ISTERED UNDER RAJASTHAN CO-OPERATIVE ACT, 2001 AND IS BEING CONTROLLED, MANAGED AND RUN BY RAJASTH AN STATE GOVT. THE SOCIETY CARRIES ON BUSINESS OF PUBLIC DISTRIBUTION, SUPPLY OF WHEAT, S UGAR, FERTILIZERS, SEEDS, MEDICINES ETC. AS PER INSTRUCTIONS AND VARIOUS SCHEMES ANNOUNCED BY THE S TATE GOVT. FOR ASSESSMENT YEAR 2003-04 THE ASSESSEE FILED RETURN OF INCOME ON 31 ST OCTOBER, 2003 WHEREIN THE ASSESSEE MADE PROVISIONS IN RESPECT OF PROVISION OF GRATUITY FUND AT RS.4,00,00 0/-; PROVISION FOR SALARY ENCASHMENT AT RS.1,25,000/-; PROVISION OF BAD DEBTS AT RS.52,000/ -; PROVISION FOR DISCOUNT AT RS.30,000/-; AND PROVISION OF BUILDING AT RS.2,00,000/- TOTALING TO RS.8,07,000/-. FOR ASSESSMENT YEAR 2004-05 THE 3 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. ASSESSEE MADE PROVISION ON ACCOUNT OF GRATUITY FUND , SALARY ENCASHMENT, PROVISION FOR BAD DEBTS, EXPENSES WELFARE FUND, PROVISION FOR BUILDING TOTAL ING TO RS.13,70,000/-. THE ASSESSEE CLAIMED DEDUCTIONS UNDER SECTIONS 80-P(2)(C)(I) AT RS.1,00, 000/-; 80-P(2)(D) AT RS.1,42,282/- AND 80-P(2)(IV) AT RS.3,68,185/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS WHICH WERE EXAMINED BY THE AO ON TEST-CHECK BASIS. THE ASSESSEE FILED REVISED RETURN AND OFFERED THE ENTIRE PROVISIONS MADE FOR TAXATION AND DEDUCTION UNDER SECTION 80-P WAS ALSO RESTRICTED TO THE ALLOWABILITY OF THE SAME. THE A SSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT MADE ADDITION AS TH ESE AMOUNTS WERE NOT ALLOWABLE AS DEDUCTION. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 5. DURING THE COURSE OF PENALTY PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE THAT DUE TO IGNORANCE OF THE PROVISIONS OF THE I. T. ACT THE AS SESSEE CLAIMED DEDUCTION UNDER SECTION 80-P OF THE ACT. THE ASSESSEE FILED RETURN IN RESPONSE TO NOTICE UNDER SECTION 148 REVISING THE CLAIM UNDER SECTION 80-P. THE ASSESSEE HAD NOT CONCEALED ANY FACTS IN THE ORIGINAL RETURN. THE ASSESSEE WAS UNDER A BONAFIDE BELIEF IN NOT INCLUDI NG SUCH ITEM BEING NOT LIABLE TO TAX. THEREFORE, THERE WAS NO CONSCIOUS CONCEALMENT, NO M ALAFIDE / CONDUCT WAS NOT CONTUMACIOUS AND, THEREFORE, PENALTY WAS NOT LEVIABLE. IT WAS A LSO SUBMITTED THAT THE ASSESSEE SOCIETY WAS CONTROLLED AND MANAGED BY THE GOVT. OFFICERS. NO P ERSONAL INTEREST WAS INVOLVED FOR CLAIMING WRONG DEDUCTION. THE SOCIETY IS RUN UNDER THE PROV ISION OF RAJASTHAN CO-OPERATIVE SOCIETY, JAIPUR, AND THE SOCIETY IS MANAGED BY OFFICER NOMIN ATED BY THE STATE GOVT. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT IGNORANCE OF LAW WAS NOT AN EXCUSE. ONLY AFTER THE ASSESSING OFFICER HAD CALLE D FOR THE CLARIFICATION REGARDING THE DEDUCTIONS AND PROVISIONS BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE HAD FILED REVISED RETURN. THEREFORE, IT COULD NOT BE SAID THAT THE A SSESSEE HAD FILED THE REVISED RETURN VOLUNTARILY. ONLY WHEN THE ASSESSEE CAME TO KNOW ABOUT THE NOTIC E UNDER SECTION 148 IT CHOSE TO FILE THE REVISED RETURN. THE ASSESSING OFFICER FURTHER NOTE D THAT THE ASSESSEE WAS ASSISTED BY CHARTERED ACCOUNTANT AND ITS AFFAIRS WERE HANDLED BY AN OFFIC ER NOMINATED BY THE STATE GOVT. THERE WAS 4 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. NO REASON FOR MAKING FALSE CLAIM OF DEDUCTION. THE ASSESSING OFFICER ALSO NOTED THAT WRONG CLAIM MADE BY THE ASSESSEE UNDER SECTION 80-P AMOUNTS TO FILING OF INACCURATE PARTICULARS OF INCOME. HE, THEREFORE, IMPOSED PENALTY UNDER SECTION 271(1) (C) OF THE ACT IN BOTH THE YEARS. 6. BEFORE THE LD. CIT (APPEALS) THE ASSESSEE REITER ATED SIMILAR ARGUMENTS AS ADVANCED BEFORE THE ASSESSING OFFICER. IT HAS BEEN SUBMITTED THAT THE ASSESSEE FILED RETURN VOLUNTARILY IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT WHILE RECTIF YING THE MISTAKE THAT CREPT IN THE ORIGINAL RETURN OF INCOME WITHOUT DEMANDING THE REASONS FOR ISSUE OF NOTICE. IT HAS BEEN POINTED OUT THAT AS THERE WAS LOSS OR NOMINAL PROFIT IN EARLIER YEAR S, THE OFFICER OF THE SOCIETY WAS UNDER PRESUMPTION THAT THE SOCIETY WAS NOT REQUIRED TO PA Y TAX AS IT WAS DOING AGENCY WORK ON BEHALF OF THE GOVERNMENT. IT HAS BEEN FURTHER POINTED OUT THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF ENTIRE PROFIT UNDER SECTION 80-P BECAUSE THE CHARTE RED ACCOUNTANT HAD MENTIONED IN HIS AUDIT REPORT IN FORM 3-CD IN PARA 26 THAT ENTIRE PROFIT U NDER SECTION 80-P OF I. T. ACT WAS ADMISSIBLE FOR DEDUCTION UNDER CHAPTER VI-A. THE ASSESSEE ALS O PLACED RELIANCE UPON VARIOUS JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS CONTENTION. THE L D. CIT (APPEALS) ON CONSIDERATION OF FACTS NOTED THAT THE ASSESSING OFFICER HAVING DETECTED WR ONGFUL CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME ISSUED NOTICE UNDER SECTION 148 FO R THE PURPOSE OF MAKING THE DISALLOWANCE OF SUCH EXCESSIVE CLAIM, WHICH WAS WITHDRAWN IN THE RE TURNS OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 148. THEREFORE, THE ASSESSEE COULD N OT BE EXONERATED FROM THE OFFENCE OF FILING INACCURATE PARTICULARS OF INCOME AS SUBSEQUENT COND UCT WOULD NOT EXPATRIATE THE GUILT AND DID NOT OBLITERATE THE OFFENCE OF CONCEALMENT WHICH WAS COM PLETE ON SUPPRESSION OF FACTS IN THE ORIGINAL RETURNS OF INCOME. HE PLACED RELIANCE ON THE DECIS ION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF KUMAR JAGDISH CHANDRA SINHA VS. CIT 137 ITR 732 (CAL). THE LD. CIT (A) ALSO NOTED THAT THE ASSESSEE AFTER DETECTION OF CONCEALMENT BY THE ASSESSING OFFICER IN THE ORIGINAL RETURN HAD FILED REVISED RETURN WITHDRAWING SUCH EXCESS CLAIM. SINCE THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-P, THE ASSESSEE HAD FILE D INACCURATE PARTICULARS OF ITS INCOME. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT IT HAD CLAIMED DEDUCTION OF ENTIRE PROFIT UNDER SECTION 80-P ON THE BASIS OF TAX AUDIT REPORT, LD CIT(A) OB SERVED THAT THERE WAS NO CLARIFICATION OR SUBMISSION FROM SUCH CHARTERED ACCOUNTANT THAT HE H AD ADVISED THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80-P. THE AUDIT REPORT ITSELF COULD N OT BE TERMED AS AN ADVICE WHICH LED THE 5 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. ASSESSEE TO ACT IN A PARTICULAR MANNER. THEREFORE, THE ASSESSEE COULD NOT TAKE SHELTER BEHIND THE TAX AUDIT REPORT TO WASH ITS HANDS OF ANY MISDEED C OMMITTED. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT RETURN WAS FILED WITHOUT RECEIVING RE ASONS RECORDED FOR ISSUE OF NOTICE THE LD. CIT (A) OBSERVED THAT THIS FACT ESTABLISHES THAT THE AS SESSEE WAS AWARE OF THE MISTAKE COMMITTED EARLIER. THEREFORE, THE CLAIM MADE BY THE ASSESSEE IN THE ORIGINAL RETURN WAS NOT INADVERTENT. THE ASSESSEE WAS AWARE OF THE WRONG CLAIM MADE BY I T. ACCORDINGLY, THE LD. CIT (APPEALS) UPHELD THE PENALTY IN BOTH THE YEARS. 7. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT IN TAX AUDIT REPORT THE CHARTERED ACCOUNTANT HAD CLEARLY INDICATED THAT THE PROFITS W ERE EXEMPT UNDER SECTION 80-P OF THE ACT. THEREFORE, THE SAME WAS NOT ADDED BACK IN THE ORIGI NAL RETURN OF INCOME. THE ASSESSEE HAD DISCLOSED THE PROVISIONS MADE UNDER SECTION 80-P IN THE PROFIT AND LOSS ACCOUNTS. THEREFORE, ALL NECESSARY FACTS FOR COMPLETION OF ASSESSMENTS WERE DISCLOSED. HE FURTHER SUBMITTED THAT THERE WAS NO CONCEALMENT OF FACTS AND, THEREFORE, PENALTY UNDER SECTION 271(1)(C) WAS NOT IMPOSABLE. HE PLACED RELIANCE ON THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS P. LTD. 230 CTR (SC) 320. HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INTERNATIONAL AUDIO VISUAL 2 88 ITR 570 (DEL). ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS) . 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THESE CASES RETURNS OF INCOME WERE FILED UNDER SECT ION 139(1) WHEREIN PROFIT EARNED WAS CLAIMED AS DEDUCTION UNDER SECTION 80-P OF THE ACT IN BOTH THE YEARS. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 AFTER RECORDING THE REASONS THAT PROVISION FOR GRATUITY, SALARY, EMPLOYEES WELFARE, PROVISION FOR LAND AND BUILDING ETC. HAS BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THE SAME HAS NOT BEEN ADDED BACK IN THE COMPUTATION OF INCOME. THE ASSESSEE BEING CO-OPERATIVE MARKET AND SOCIETY HAD CLAIMED THE ENT IRE INCOME AS DEDUCTION UNDER SECTION 80-P. THE ASSESSEE FILED RETURNS IN RESPONSE TO NOTICE UN DER SECTION 148 AND ADDED THE PROVISIONS MADE WHICH WERE DEBITED IN THE PROFIT AND LOSS ACCOUNT O F RESPECTIVE YEARS. WE HAVE ALSO GONE THROUGH THE TAX AUDIT REPORT FOR BOTH THE YEARS. I N TAX AUDIT REPORT FOR ASSESSMENT YEAR 2003-04 6 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. AGAINST COLUMN NO. 26, M/S. MUKESH K. AGGARWAL & CO ., CHARTERED ACCOUNTANTS HAVE MENTIONED THAT THE ENTIRE PROFIT WAS ADMISSIBLE FOR DEDUCTION UNDER SECTION 80-P OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE COLUMN NO. 26 IS REPRO DUCED AS UNDER:- 26. SECTION-WISE DETAILS OF DEDUCTION, ENTIRE PROFIT UNDER SECTION 80-P OF I. T. ACT, IF ANY, ADMISSIBLE UNDER CHAPTER VI-A : 1961. IN ASSESSMENT YEAR 2004-05 THE TAX AUDIT REPORT SPE CIFIES NIL DEDUCTION AGAINST THIS COLUMN. THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME HAS D EBITED PROVISION FOR GRATUITY, SALARY AND ENCASHMENT, PROVISION FOR BAD DEBT, EXPENSES WELFAR E FUND ETC. THOUGH THE ASSESSEE IN THE REVISED RETURN HAS ADDED THE PROVISIONS TO THE INCO ME IN BOTH THE YEARS, BUT THE ASSESSING OFFICER HAD NOT GIVEN ANY FINDING AS TO WHY THE PROVISION F OR GRATUITY FUND, SALARY ENCASHMENT, BAD DEBTS, WELFARE EXPENSES ETC. WERE NOT ALLOWABLE AS DEDUCTION. IT IS ALSO A FACT THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY CONTROLLED AND MANAGED BY TH E STATE GOVT. AND IS ENGAGED IN BUSINESS OF PUBLIC DISTRIBUTION, SUPPLY OF WHEAT, SUGAR, FERTIL IZERS, SEEDS ETC. THEREFORE, THERE CANNOT BE A CASE WHERE THE ASSESSEE HAD MADE ATTEMPT TO CONCEAL THE INCOME. IN THE ORIGINAL RETURN OF INCOME THE PROVISIONS DEBITED HAVE BEEN DULY DISCLO SED IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT H AS NOT MENTIONED A SINGLE WORD AS TO WHY THE PROVISIONS WERE NOT ALLOWABLE AS DEDUCTION. 9. HONBLE SUPREME COURT IN THE CASE OF CIT VS. REL IANCE PETRO PRODUCTS (SUPRA) HAS HELD THAT THE WORDS INACCURATE AND PARTICULARS IN CO NJUNCTION THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN A CASE WHERE THERE IS NO FINDING THAT ANY DETAILS S UPPLIED BY THE ASSESSEE IN THE RETURN WERE NOT FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, PENALT Y UNDER SECTION 271(1)(C) WAS NOT IMPOSABLE. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 7 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. 10. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INTERNATIONAL AUDIO VISUAL (SUPRA) HELD THAT THERE WAS NOTHING TO SUGGEST THAT THE ASSESSEE WAS IN ANY MANNER TRYING TO MISLEAD THE AO. IT APPEARED THAT THE ASSESSEE HAD A BONAFIDE BELIEF THAT BY SELLING DUBBING RIGHTS TO A FOREIGN COMPANY HE WAS SELLING GOODS OR MERCHANDISE WITHIN THE MEANING OF SECTION 80-HHC. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-HHC WHI CH WAS NOT ALLOWED BY THE AO. UNDER THESE CIRCUMSTANCES SINCE THERE WAS NO CONCEALMENT OF PRIMARY FACTS IT COULD NOT BE SAID THAT THE ASSESSEE WAS LIABLE TO SUFFER A PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT. 11. IN THE CASE OF T. ASHOK PAI VS. CIT 292 ITR 11 HONBLE SUPREME COURT OBSERVED THAT IN PENALTY PROCEEDINGS THE MATTER MUST BE CONSIDERED A FRESH FROM AN ANGLE DIFFERENT FROM ASSESSMENT, IT BEING NOT A CASE WHERE PENALTY WAS I MPOSED FOR BREACH OF COMMERCIAL STATUTE WHERE EXISTENCE OF BONAFIDE MAY NOT BE OF MUCH IMPO RTANCE AND ALSO NOT A CASE WHERE PENALTY WAS MANDATORILY IMPOSABLE. PENALTY UNDER SECTION 2 71(1)(C) WAS NOT CALLED FOR. HONBLE SUPREME COURT HAS FURTHER HELD THAT BEFORE HAVING R ECOURSE TO EXPLANATION THE ASSESSING OFFICER MUST ARRIVE AT A FINDING THAT EXPLANATION OFFERED B Y THE ASSESSEE, IF ANY, WAS FALSE. THE ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT SUCH EXP LANATION WAS NOT ONLY BONAFIDE, BUT ALL THE FACTS RELATING TO SAME AND THE MATERIAL TO THE INCO ME WERE NOT DISCLOSED BY HIM. 12. IN THE CASE OF YOGESH R. DESAI VS. CIT, ITAT, MUMBAI BENCH 38 DTR (MUM.) (TRIB.) 101 DEDUCTION UNDER SECTION 80-O WAS CLAIMED ON T HE BASIS OF ADVICE OF THE TAX CONSULTANT SUPPORTED BY THE TAX AUDIT REPORT. BONAFIDE BELIEF OF THE ASSESSEE WAS NOT CONTROVERTED BY THE REVENUE. IT WAS NOT THE CASE OF THE REVENUE THAT TH E ASSESSEE HAD NOT DISCLOSED COMPLETE PARTICULARS OF INCOME. THE DEDUCTION CLAIMED ON TH E ADVICE OF THE TAX CONSULTANT SUPPORTED BY TAX AUDIT REPORT IT WAS HELD THAT THERE WAS NO CONC EALMENT OR FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. 8 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. 13. LET EXAMINE FACTS OF THE CASE BEFORE US IN THE LIGHT OF JUDICIAL PRONOUNCEMENT REFERRED TO ABOVE. IN THE CASE BEFORE US THE ASSESSING OFFICER HAD JUST ACCEPTED THE RETURNED INCOME FILED IN RESPONSE NOTICE U/S 148 OF THE ACT. IN THE CASE OF THE ASSESSEE THE BOOKS OF ACCOUNTS HAVE ALSO BEEN AUDITED BY THE ACCOUNTANT FOR CO-OPERATIVE SOC IETY AND NO OBJECTION WAS RAISED BY HIM IN RESPECT OF THE AMOUNT DEBITED IN PROFIT AND LOSS AC COUNT. THE ASSESSEE HAD DISCLOSED THE PROVISIONS IN THE PROFIT AND LOSS ACCOUNT. THE CHA RTERED ACCOUNTANT IN TAX AUDIT REPORT FOR ASSESSMENT YEAR 2003-04 HAS MENTIONED THAT THE ENTI RE PROFIT WAS DEDUCTIBLE UNDER SECTION 80-P OF THE ACT. EVEN IF THE ASSESSEE HAD ADDED THE PRO VISIONS IN THE RETURN OF INCOME IT WOULD HAVE CLAIMED THE ENTIRE INCOME AS EXEMPT UNDER SECTION 8 0-P ON THE BASIS OF TAX AUDIT REPORT. THEREFORE, THE ASSESSEE HAD DISCLOSED ALL THE MATER IAL FACTS NECESSARY FOR COMPUTATION OF INCOME IN THE PROFIT AND LOSS ACCOUNT. IT IS NOT THE CASE OF THE REVENUE THAT THE EXPENDITURE HAS BEEN CAMOUFLAGED UNDER SOME OTHER HEAD. THE ASSESSING O FFICER HAD NOT DISCUSSED A SINGLE WORD IN THE ASSESSMENT ORDER AS WELL AS PENALTY ORDER AS TO WHY THE EXPENSES CLAIMED WERE NOT ALLOWABLE AS DEDUCTION. THE ASSESSEE HAS OFFERED EXPLANATIO N THAT CLAIM FOR DEDUCTION UNDER SECTION 80-P HAS BEEN MADE ON THE BASIS OF ADVICE OF THE CHARTER ED ACCOUNTANT. IN THE TAX AUDIT REPORT NO ITEM OF EXPENSES CLAIMED HAS BEEN INDICATED WHICH P RIMA FACIE ARE DISALLOWABLE. THEREFORE, IN OUR CONSIDERED OPINION, THE ASSESSEE WAS UNDER A BO NAFIDE BELIEF THAT THE AMOUNT DEBITED TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF PROVISIONS MA DE WAS ALLOWABLE AS DEDUCTION. THE ASSESSING OFFICER HAS NOT ARRIVED AT A FINDING THAT EXPLANA TION OFFERED BY THE ASSESSEE WAS FALSE AND THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT BONAF IDE AND ALL THE FACTS RELATING TO SAME AND THE MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. HENCE IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THEREFORE, PENALTY UNDER SECTION 271(1)(C) IS NOT IMPOSABLE. IN VIEW OF ABOVE FACTS , WE CANCEL THE PENALTY IN BOTH THE YEARS. 14. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 26 TH AUGUST, 2011. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER AT NEW DELHI . 9 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009. DATED : 26 TH AUGUST, 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT. 10 I. T. APPEAL NOS. 587 & 588 (JODH.) OF 2009.