M/s. Co-operative Cane Development Union Ltd., Muzaffarnagar V. DCIT, Muzaffarnagar

ITA 6119/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3415 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.NO.6119/DEL./2014 ASSESSMENT YEAR 2006-2007 M/S. COOPERATIVE CANE DEVELOPMENT UNION LTD., BUDHANA, MUZAFFARNAGAR. PAN AAATC6332M VS. THE DCIT, CIRCLE-1, MUZAFFARNAGAR. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI ANKIT GUPTA, ADVOCATE FOR REVENUE : SHRI RAGHUNATH, SR. D.R. DATE OF HEARING : 21.11.2017 DATE OF PRONOUNCEMENT : 22.11.2017 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), MUZAFFARNAGAR, DATED 11 TH SEPTEMBER, 2014 FOR THE A.Y. 2006-2007, CHALLENGING THE LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSE E IS A COOPERATIVE SOCIETY AND CLAIMED EXEMPTION OF RS.1.4 5 CRORES UNDER SECTION 80P OF THE I.T. ACT, 1961. DURING THE ASSES SMENT PROCEEDINGS, 2 ITA.NO.6119/DEL./2014 M/S. COOPERATIVE CANE DEVELOPMENT UNION LTD., BUDHANA, MUZAFFARNAGAR. IT WAS NOTICED THAT ASSESSEE HAD RECEIVED INTEREST OF RS.17,67,059 WHICH IS ALSO CLAIMED EXEMPT. IT WAS CLAIMED BY THE ASSESSEE THAT INTEREST OF RS.11,92,784 WAS PAID AND THEREFORE, NE T INTEREST WAS ONLY AT RS.5,74,275. FINALLY, AFTER DISCUSSION, ASSESSME NT WAS COMPLETED AT NET TAXABLE INCOME OF RS.5,74,275. HOWEVER, THE PROCEEDINGS UNDER SECTION 263 WERE INITIATED AND IT WAS NOTICED THAT INTEREST OF RS.11,92,784 COULD NOT HAVE BEEN DEDUCTED OUT OF TH E INTEREST RECOVERED IN TERMS OF SECTION 14A OF THE I.T. ACT. THE LD. CIT SET ASIDE THE ORDER OF THE A.O. TO THAT EXTENT AND DIRECTED T HE A.O. TO MAKE FRESH ASSESSMENT. THE A.O. DIRECTED THE ASSESSEE TO EXPLAIN WHY THE INTEREST ALLOWED MAY NOT BE ADDED TO THE INCOME OF ASSESSEE AS THE SAME IS INTEREST ON LOAN TO EARN EXEMPT INCOME UNDE R SECTION 80P (2) OF THE I.T. ACT IN TERMS OF SECTION 14A. THE ASSESS EE AGREED FOR THE ADDITION. THE A.O. ACCORDINGLY MADE ADDITION OF RS. 11,92,784 AS THE SAME WAS NOT ALLOWABLE IN TERMS OF SECTION 14A OF T HE I.T. ACT. THE A.O. VIDE SEPARATE ORDER LEVIED PENALTY UNDER SECTI ON 271(1)(C) OF THE I.T. ACT. THE ASSESSEE EXPLAINED BEFORE LD. CIT(A) THAT IT IS AN ESTIMATED ADDITION AND ASSESSEE HAS NOT CONCEALED T HE PARTICULARS OF INCOME. IT WAS ALSO SUBMITTED THAT IN SIMILAR CIRCU MSTANCES, ITAT, 3 ITA.NO.6119/DEL./2014 M/S. COOPERATIVE CANE DEVELOPMENT UNION LTD., BUDHANA, MUZAFFARNAGAR. DELHI BENCH HAS ALLOWED THE APPEAL IN THE CASE OF A SSESSEE IN THE A.Y. 2007-08 IN ITA.NO.5480/DEL./2011 VIDE ORDER DA TED 13 TH SEPTEMBER, 2013. IT WAS THEREFORE, SUBMITTED THAT T HE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE LD. CIT(A), HOWEVER, DISMISSED THE APPEAL OF ASSESSEE. 3. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT PENALTY IS NOT LEVIABLE IN THE MATTER. THE A.O . SPECIFICALLY NOTED THE FACTS OF THE CASE WHEN ASSESSEE MADE THE CLAIM AT THE ORIGINAL ASSESSMENT STAGE. THE ASSESSEE DECLARED THE INTERES T RECEIVED WHICH WAS CLAIMED EXEMPT AS WELL AS EXPLAINED THE INTERES T PAID. THEREFORE, INCOME OF THE ASSESSEE WAS FOUND TAXABLE OF THE DIF FERENCE IN INTEREST AMOUNT OF RS.5,74,275. THE LD. CIT HOWEVER, DID NOT ACCEPT THE CONTENTION OF ASSESSEE IN PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT AND DIRECTED THE A.O. THAT NO DEDUCTION FOR EXP ENDITURE INCURRED IN RESPECT OF EXEMPT INCOME AGAINST TAXABLE INCOME IS ALLOWABLE UNDER SECTION 14A OF THE I.T. ACT. THE ASSESSEE AGR EED FOR ADDITION BEFORE A.O. IN SUCH FACTS AND CIRCUMSTANCES, IT IS CLEAR THAT ASSESSEE DECLARED COMPLETE FACTS BEFORE A.O. THAT INITIALLY THE A.O. ACCEPTED THE EXPLANATION OF ASSESSEE BY ALLOWING DEDUCTION O F THE INTEREST PAID 4 ITA.NO.6119/DEL./2014 M/S. COOPERATIVE CANE DEVELOPMENT UNION LTD., BUDHANA, MUZAFFARNAGAR. AGAINST THE INTEREST EARNED WHICH WAS CLAIMED AS EX EMPT. THEREFORE, IT IS NOT THE CASE OF CONCEALMENT OF PARTICULARS OF INCOME. ULTIMATELY, IT IS A CASE WHERE EXPENSES HAVE NOT BEEN ALLOWED. THEREFORE, MERE MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME OR TO CONCEAL THE PARTICULARS OF INCOME. WE RELY UPON THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS P. LTD., 322 ITR 158. IT MAY ALSO BE NOTED HERE THAT ASSESSE E SPECIFICALLY SUBMITTED BEFORE THE LD. CIT(A) THAT ISSUE IS COVER ED BY ORDER OF ITAT, DELHI BENCH IN THE CASE OF ASSESSEE FOR SUBSEQUENT A.Y. 2007-08 DATED 13 TH SEPTEMBER, 2013 (SUPRA), IN WHICH ON IDENTICAL FAC TS PENALTY WAS CANCELLED BY THE LD. CIT(A) AND DEPARTM ENTAL APPEAL HAVE BEEN DISMISSED. THE FINDINGS OF THE TRIBUNAL I N PARAS 10 AND 11 ARE REPRODUCED AS UNDER : 10. IN THE PRESENT CASE, THERE IS NO DOUBT THAT A SSESSEE HAD DISCLOSED BANK INTEREST IN ITS P&L ACCOUNT AS A SEPARATE ITEM AND HAD ENCLOSED THE SAID P&L ACCOUNT WITH THE RETURN OF INCOME. THE ASSESSING OFFICER ON THE BASIS OF THIS P&L ACCOUNT CAME TO KNOW THAT THE TOTAL INCOME INCLUDED BANK IN TEREST AMOUNTING TO RS.15,88,141/-. THE ASSESSEE HAD CLAIM ED THE BANK INTEREST INCOME AS EXEMPT U/S 80P OF THE ACT ON A BONA 5 ITA.NO.6119/DEL./2014 M/S. COOPERATIVE CANE DEVELOPMENT UNION LTD., BUDHANA, MUZAFFARNAGAR. FIDE BELIEF THAT TOTAL INCOME OF SOCIETY WAS EXEMPT U/S 80-P AND FULL PARTICULARS THEREOF WERE SUBMITTED TO THE ASSE SSING! OFFICER. THE ASSESSING OFFICER MADE THE DISALLOWANCE AS IN H IS OPINION! THIS AMOUNT COULD NOT FORM PART OF EXEMPT INCOME U/ S. 80P OF THE ACT. THE BONA FIDE ERROR OR BONAFIDE CLAIM CONS TITUTES VALID DEFENCE AGAINST THE CHARGE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE MERE MAKING OF A CLAIM W HICH IS NOT SUSTAINABLE IN LAW CANNOT AMOUNT TO FURNISHI NG OF INACCURATE PARTICULARS REGARDING INCOME OF ASSESSEE . THE LD CIT(A) AFTER RELYING UPON A NUMBER OF JUDICIAL PRON OUNCEMENTS HAS RIGHTLY DELETED THE PENALTY. THEREFORE, WE DO N OT SEE ANY INFIRMITY IN THE ORDER OF LD. CIT(A). 11. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE R EVENUE IS DISMISSED. 4. THE LD. CIT(A) DID NOT ADVERSELY COMMENTED UPON THIS SUBMISSION OF THE ASSESSEE. SINCE ON IDENTICAL FACT S THE LD. CIT(A) HAS CANCELLED THE PENALTY WHICH IS CONFIRMED BY THE TRIBUNAL, THEREFORE, PENALTY NEED NOT TO BE LEVIED IN ASSESSM ENT YEAR UNDER APPEAL AS WELL. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT PENALTY NEED NOT BE IMPOSED IN THE FACTS AND C IRCUMSTANCES OF 6 ITA.NO.6119/DEL./2014 M/S. COOPERATIVE CANE DEVELOPMENT UNION LTD., BUDHANA, MUZAFFARNAGAR. THE CASE. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 22 ND NOVEMBER, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT B BENCH, DELHI 6. GUARD FILE. //BY ORDER // ASST. REGISTRAR, ITAT, DELHI BENCHES DELHI.