M/s. Greenfields Public School Society, Delhi V. ADIT (E), New Delhi

ITA 6263/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6887 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: ALOK MITTAL
• Keywords: Principle of natural justice; Retrospective amendment; Wrong claim; Condonation of delay
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C, NEW DELHI BEFORE SHRI G. D. AGRAWAL, HONBLE VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NO.6263/DEL/2013 (ASSESSMENT YEAR 2006-07) GREENFIELDS PUBLIC SCHOOL SOCIETY, VS. ADIT(E), C/O GREENFIELDS PUBLIC SCHOL, TRUST CIRCLE-II, DILSHAD GARDEN, GTB ENCLAVE, NEW DELHI DELHI - 110093 GIR / PAN : AAATG1296L (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI ALOK MITTAL, CA RESPONDENT BY :SHRI T. VASANTHAN, SR. DR DATE OF HEARING: 13.07.2016 DATE OF PRONOUNCEMENT: 27.07.2016 ORDER PER BEENA A. PILLAI, JM: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE PENALTY ORDER DATED 25.10.2013 PASSED BY LD. CIT(A) XXI, NEW DELHI FOR THE ASSESSM ENT YEAR 2006-07 ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER IS BAD IN LAW, AS IT HAS BEEN PASSED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. THE D. A.O. HAS ERRED IN LEVYING THE PENALTY U/S 271(12)(C) UNDER THE GIVEN FACTS AND CIRCUMSTANCES. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S 12AA W.E.F. ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 2 I.T.A.NO.6263./DEL/2013 06.07.2009 PASSED BY DIT (EXEMPTION). THE ASSESSEE WAS NOT HAVING REGISTRATION U/S 12AA FROM THE ASSESSMEN T YEAR 1999-2000 TO 2006-07 AND SUCH INCOME OF THE ASSESSEE WAS NOT EXEMPTED U/S 11 OF THE ACT. THE C ASE OF THE ASSESSEE BEFORE LD. A.O. DURING THE ASSESSMENT PROCEEDING WAS THAT THE ASSESSEE HAD MADE AN APPLIC ATION FOR REGISTRATION U/S 12AA ON 31.10.2006 WITH RETROSPECTIVE EFFECT FROM ASSESSMENT YEAR 1999-2000 . FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FIEL D NIL RETURN OF INCOME ON THE PRESUMPTION THAT DIT(E) WIL L GRANT THE REGISTRATION U/S 12AA OF THE ACT WITH RETROSPECTIVE EFFECT. 2.2 LD. A.O. DISALLOWED THE EXEMPTION U/S 11 AS THE SAME WAS NOT AVAILABLE TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. HE COMPLETED THE ASSESSMENT AT RS.10,80,323/-. THE ASSESSING OFFICER ALSO LEVIED 100% PENALTY FOR THE ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS. AGGRIEVED BY THE LEVY OF PENALTY, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). LD . CIT(A) HELD AS UNDER: 2.2. I HAVE CONSIDERED THE PENALTY ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I DO NOT FI ND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSEE DID NOT APPLY FOR REGISTRATION U/S 12AA WHICH IT WAS REQUIRED W.E.F A.Y 1999-2000 AND HAS BEEN FILING THE NIL RETURN. THE ASSESSEE HAD FILED THE APPLICATION FOR REGISTRATION U/S 12AA ONLY ON 31/10/2006 AND AS SUCH THERE IS NEGLIGENCE ON THE PART OF THE ASSESSEE. IT IS APPARENT FROM THE ORDER OF THE AO THAT THE ASSESSEE FILED THE WRONG CLAIM OF EXEMPTION U/S 11 KNOWING FULLY THATS THE ASSESSEE 3 I.T.A.NO.6263./DEL/2013 WAS NOT HAVING REGISTRATION U/S 12AA AND AS SUCH THE AO IS JUSTIFIED TO MAKE THE ADDITIONS AND LEVY THE PENALTY. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT TH E ASSESSEE FILED INACCURATE PARTICULARS OF INCOME AS THE ASSESSEE HAD FILED THE NIL RETURN AS AGAINST THE TAXABLE INCOME OF RS. 10,80,323/- AND ACCORDINGLY THE ACTION OF THE AO IS CONFIRMED. 2.3 AGGRIEVED BY THE ORDER PASSED BY LD. CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE US NOW. 3. LD. A.R. SUBMITTED THAT LD. A.O. LEVIED PENALTY U/S 271(1)(C) OF THE ACT WITHOUT MENTIONING WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME HE SUBM ITTED THAT THERE IS NO SATISFACTION RECORDED BY THE LD. A .O. IN THE ASSESSMENT ORDER. THUS, HE SUBMITTED THAT THE ORDER PASSED BY THE A.O. SUFFER FROM JURISDICTIONAL DEFEC T. LD. A.R. SUBMITTED THAT AT NO STAGE THE ASSESSEE HAS TR IED TO FURNISH INACCURATE PARTICULARS OF INCOME. HE SUBMI TTED THAT THE ASSESSEE WAS UNDER GENUINE IMPRESSION THAT IT IS ENTITLED FOR EXEMPTION BEING A CHARITABLE ORGANIZAT ION AND ITS ACTIVITIES ARE WELL COVERED UNDER THE DEFINITIO N OF CHARITY AS DEFINED UNDER THE ACT. LD. A.R. SUBMITT ED THAT HE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT IT IS E NTITLED FOR EXEMPTION U/S 11/12AA OF THE ACT AS THE APPLICA TION DATED 31.10.2006 WAS FILED SEEKING REGISTRATION WIT H RETROSPECTIVE EFFECT FROM ASSESSMENT YEAR 1999-2000 . LD. A.R. SUBMITTED THAT AS THE APPLICATION WAS PENDING AS ON THE DATE OF FILING OF RETURN FOR THE YEAR UNDER CON SIDERATION 4 I.T.A.NO.6263./DEL/2013 AND THAT NO RESPONSE WAS ISSUED IN RESPONSE TO THE SAME WITHIN SIX MONTHS OF FILING OF THE APPLICATION, IT WAS UNDER BONA FIDE BELIEF THAT THE EXEMPTION HAS BEEN DEEMED TO BE ALLOWED TO THE ASSESSEE. LD. A.R. SUBMITTED THAT IT HAD ALSO RAISED THE CLAIM U/S 11 OF THE ACT IN THE RETU RN FILED FOR THE YEAR UNDER CONSIDERATION FOR THE REASON THA T IN THE EVENT THE APPLICATION DATED 31.10.2006 IS ALLOWED, THEN THE ASSESSEE WOULD BE IN A POSITION TO CLAIM EXEMPT ION U/S 12/12A OF THE ACT. LD. A.R. FURTHER SUBMITTED THAT THERE WAS NO INTENTION ON BEHALF OF THE ASSESSEE TO CONCEAL ANY INCOME OR TO FILE INACCURATE PARTICULAR S OF INCOME. HE PLACED HIS RELIANCE UPON VARIOUS DECISI ONS WHICH ARE AS UNDER: I) CIT VS RELIANCE PETROPRODUCTS P. LTD. (2010) 322 ITR 158 (S.C.); II) ACITVS SAHARA INDIA INVESTMENT CORPN. LTD. (201 0), 04 ITR (TRIB) 284 (DEL.); III) CITVS DHARAMPAL PREMCHAND LTD. (2010), 329 ITR 572 (DEL.); IV) M. S. BINDRA & SONS P. LTD. (2011) 336 ITR 125 (DEL.); V) HERO HONDA MOTORS LTD. S DCIT (2012), 14 ITR (TR IB), (DEL.); VI) CI VS MAHAVIR IRRIGATION P. LTD. (2012) 347 ITR 241 (DEL.; AND VII) KARAN RAGHAV EXPORTS P. LTD. VS CIT (2012), 34 9 ITR 112 (DEL.) 3.1 LD. A.R. SUBMITTED THAT THE APPLICATION DATED 31.10.2006 WAS REJECTED BY THE DIT (EXEMPTION) VIDE ORDER DATED 06.07.2009 WHICH WAS SUBSEQUENTLY GRANT ED BY DIT (EXEMPTION) W.E.F. ASSESSMENT YEAR 2006-07, DUE TO THE DIRECTIONS OF THIS TRIBUNAL. LD. A.R. SUBMI TTED THAT NO PENALTY CAN BE LEVIED AS THE CLAIM OF THE ASSESS EE IS 5 I.T.A.NO.6263./DEL/2013 BASED UPON A BONA FIDE BELIEF AND WHEN ALLOWABILITY OF A CLAIM IS DISPUTED, N PENALTY CAN BE LEVIED. 4. ON THE CONTRARY, LD. D.R. SUBMITTED THAT THE ASSESSEE HAS MADE THE APPLICATION SEEKING REGISTRAT ION U/S 12A OF THE ACT ON THE LAST DAY OF FILING OF RET URN FOR THE ASSESSMENT YEAR 2006-07. HE SUBMITTED THAT IT IS A N AFTERTHOUGHT AS BOTH THE APPLICATION AS WELL AS THE RETURN, ARE EVEN DATED. LD. D.R. THUS SUBMITTED THAT THE A SSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME AND THUS , IS COVERED UNDER EXPLANATION 1A TO 271(1)(C) OF THE AC T. 5. WE HAVE PERUSED THE RECORDS BEFORE US AND THE SUBMISSIONS ADVANCED BY BOTH THE PARTIES. IT IS OB SERVED THAT THE ASSESSEE WAS REGISTERED UNDER SOCIETIES REGISTRATION ACT IN THE YEAR 1968. THE ASSESSEE WA S ALSO GRANTED EXEMPTION U/S 10(22) OF THE ACT VIDE ORDER DATED 27.01.1994 ISSUED BY THE DIRECTOR OF EXEMPTION, TH E EXEMPTION U/S 10(22) WAS AVAILABLE TO THE ASSESSEE TILL ASSESSMENT YEAR 1998-99 AS SECTION 10(22) STOOD DEL ETED W.E.F. ASSESSMENT YEAR 1999-2000. FROM THE RECORDS PLACED BEFORE US, IT IS OBSERVED THAT THE ASSESSEE WAS UNDER A BELIEF THAT THE EXEMPTION IS AVAILABLE WITH THE ASSESSEE UNDER THE ACT. IT WAS SUBSEQUENTLY DURING THE YEAR UNDER CONSIDERATION THAT THE ASSESSEE REALIZED THAT THE EXEMPTION IS NOT AVAILABLE. IT WAS DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2004-05 THAT ASSESSEE REALIZED THE EXEMPTION BEING NOT AVAI LABLE 6 I.T.A.NO.6263./DEL/2013 VIDE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2004- 05 WHERE THE LD. A.O. REJECTED THE ASSESSEES CLAIM. 5.1 HON'BLE KARNATAKA HIGH COURT IN CASE OF CIT VS. COTTON AND GINNING FACTORY 359 ITR 565 HAS LAID DOW N AS UNDER: 'SECTION. 271 (L)(C) MAKES IT CLEAR THAT IF THE ASS ESSING OFFICER OR THE COMMISSIONER (APPEALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT AN Y PERSON HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, TH EN HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY STIPULATED IN THE AFORESAID PROVISION. THEN THE QUESTION IS, WHEN AN INCOME IS SAID TO BE CONCEALED SO AS TO ATTRACT THE PENALTY PROVISIONS. EXPLANATIO N 1 SETS OUT THE CIRCUMSTANCES WHICH JUSTIFIES LEVY OF PENALTY. IT READS AS UNDER: 'EXPLANATION. 1: WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSO N UNDER THIS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FO R THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEME D TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. ' 7 I.T.A.NO.6263./DEL/2013 31. AFTER INSERTION OF EXPLANATION 1 TO SECTION 271(1)(C), THE LAW ON CONCEALMENT AND PENALTY HAS BECOME STIFFER. THE EXPLANATION AS IT STANDS NOW IS A COMPLETE CODE HAVING THE FOLLOWING FEATURES: (1) EVERY DIFFERENCE BETWEEN REPORTED AND ASSESSED INCOME NEEDS AN EXPLANATION. (2) IF NO EXPLANATION IS OFFERED, LEVY OF PENALTY M AY JUSTIFIED. (3) IF EXPLANATION IS OFFERED, BUT IS FOUND TO BE F ALSE, PENALTY WILL BE EXIGIBLE. (4) IF EXPLANATION IS OFFERED AND IT IS NOT FOUND T O BE FALSE, PENALTY MAY NOT BE LEVIABLE, - (A) SUCH EXPLANATION IS BONAFIDE. (B) THE ASSESSEE HAD MADE AVAILABLE TO THE ASSESSING OFFICER ALL THE FACTS AND MATERIALS NECESSARY IN COMPUTATION OF INCOME. 32. THEREFORE THE EXPLANATION-I UNDERSTOOD IN THE PROPER CONTEXT, IN PARTICULAR, CLAUSE (C) OF SUB-SE CTION (1) OF SECTION 271 MAKES THE INTENTION OF THE LEGISLATURE MANIFEST. IT CLEARLY SETS OUT WHEN PENA LTY IS LEVIABLE AND WHEN PENALTY IS NOT LEVIABLE. THE CONDITION PRECEDENT FOR LEVYING THE PENALTY IS THE SATISFACTION OF THE AUTHORITY THAT THERE IS A CONCEALMENT OF THE PARTICULARS OF THE INCOME OR INACCURATE PARTICULARS ARE FURNISHED TO AVOID PAYME NT OF TAX. ' 5.2 FROM THE FACTS OF THE CASE, IT DOES NOT APPEAR THAT THE ASSESSEE HAS DELIBERATELY ABSTAINED ITSELF FROM PRESENTING SUCH APPLICATION IN TIME. IN THE APPLIC ATION DATED 31.10.2006 ASSESSEE HAS ALSO CLAIMED FOR 8 I.T.A.NO.6263./DEL/2013 CONDONATION OF DELAY AND HAS REQUESTED FOR REGISTRA TION TO BE GRANTED W.E.F. 01.04.1999. CONSIDERING THE ABOV E FACTS, WE ARE OF THE OPINION THAT THE IMPOSITION OF PENALTY U/S 271(1)(C) IS NOT JUSTIFIED AS THERE WAS COMPLET E DISCLOSURE OF FACTS AND THE CLAIM MADE BY THE ASSES SEE WAS NOT FOUND ACCEPTABLE IN LAW. WE, THEREFORE SET ASIDE THE PENALTY ORDER PASSED BY LD. A.O. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2016. SD./- SD./- (G. D. AGRAWAL) (BEENA A. PILLAI) VICE PRESIDENT JUDICIAL MEMBER DATE:27.07.2016 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) 9 I.T.A.NO.6263./DEL/2013 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 27/7/16 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 27/7 SR. PS/PS 7 FILE SENT TO BENCH CLERK 29/7 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER