The ACIT, Mehsana Circle, Mehsana V. Mehsana Dist.Co.Op.Milk Producers Union Ltd., Mehsana

ITA 84/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9003 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-09-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 09-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Keywords: Source of fund; Wrong claim; Set aside
• Section: 271(1)(c); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI R.V.EASWAR, VICE-PRESIDENT AND P.K. BANSAL, ACCOUNTANT MEMBER) ITA NO.84/AHD/2009 [ASSTT.YEAR : 2000-2001] ACIT, MEHSANA CIRCLE MEHSANA. VS. MEHSANA DIST CO-OP. MILK PRODUCERS UNION LTD. MEHSANA. REVENUE BY : SHRI SHELLEY JINDAL ASSESSEE BY : SHRI YOGESH SHAH O R D E R PER R.V.EASWAR, VICE-PRESIDENT : THESE TWO APPEALS HAVE BEEN FILED BY THE DEPARTMENT CHALLENGING THE CONSOLIDATE D ORDER DATED 29-10-2008 PASSED BY THE CIT(A) CANCELLING THE PENALTIES OF RS .78,35,511/- AND RS.60,86,169/- RESPECTIVELY IMPOSED FOR THE ASSESSM ENT YEARS 2000-2001 AND 2002-2003 UNDER SECTION 271(1)(C) OF THE I.T.ACT. S INCE THE BASIS OF THE LEVY OF PENALTIES IS THE SAME FOR BOTH THE YEARS AND THE AS SESSEE IS ALSO THE SAME, THE APPEALS ARE DISPOSED OF BY A COMMON ORDER. 2. THE ASSESSEE IS A MILK PRODUCERS UNION FORMED U NDER THE CO-OPERATIVE SOCIETIES ACT. THE AO LEVIED THE PENALTY WITH REF ERENCE TO BOTH ALLEGED UNDER VALUATION OF CLOSING STOCK AS ALSO FOR MAKING AN EX CESS CLAIM UNDER SECTION 80P OF THE ACT THAN WHAT THE ASSESSEE WAS ENTITLED TO. THE CIT(A) NOTED THAT SO FAR AS THE PENALTY FOR ALLEGED UNDER VALUATION O F CLOSING STOCK IS CONCERNED, A SIMILAR PENALTY LEVIED FOR THE ASSESSMENT YEAR 1998 -99 AND 2001-02 WAS CANCELLED BY THE TRIBUNAL BY ORDER DATED 26-10-2007 . FOLLOWING THE SAID ORDER HE CANCELLED THE PENALTY ON THIS COUNT. AS REGARDS THE DEDUCTION UNDER SECTION 80P(2)(D), THE CIT(A) HAS NOTED THAT THE CLAIM WAS DISALLOWED NOT ON THE GROUND THAT IT WAS A FALSE CLAIM BUT IT WAS DISALLO WED ON THE GROUND THAT THE ASSESSEE WAS NOT ELIGIBLE FOR THE SAME, KEEPING IN VIEW THE PAST HISTORY PAGE - 2 ITA NO.84/AHD/2009 -2- REGARDING THE SOURCE OF FUNDING THE FIXED DEPOSITS. HE OPINED THAT THERE WERE DIFFERENT AUTHORITIES TAKING DIFFERENT VIEWS ON THI S ISSUE IN THE EARLIER YEARS AND IT IS AN ON-GOING LITIGATION. HE FURTHER HELD THAT THERE WAS NOTHING IN THE ASSESSMENT ORDER OR THE PENALTY ORDER TO SHOW THAT THE ASSESSEE PRESENTED AN UNTRUE PICTURE OF THE AFFAIRS OR HELD BACK ANY INFO RMATION OR FILED INACCURATE PARTICULARS TO PRESS ITS CLAIM. IN THIS VIEW OF TH E MATTER, HE CANCELLED THE PENALTY LEVIED IN RESPECT OF THE DISALLOWANCE OF TH E CLAIM UNDER SECTION 80P(2)(D). 3. THE REVENUE IS IN APPEAL FOR BOTH THE YEARS QUES TIONING THE ORDERS OF THE CIT(A) CANCELLING THE PENALTIES. AT THE TIME OF TH E HEARING OUR ATTENTION WAS DRAWN TO THE ORDER OF THE TRIBUNAL DATED 26-10-2007 IN ITA NOS.3170 AND 987/AHD/2007 FOR THE ASSESSMENT YEAR 1998-99 AND 20 01-02 BY WHICH THE TRIBUNAL CANCELLED THE PENALTY LEVIED WITH REFERENC E TO THE ALLEGED UNDER VALUATION OF THE CLOSING STOCK. OUR ATTENTION WAS ALSO DRAWN TO THE ORDER OF THE TRIBUNAL DATED 7-8-2009 IN MA NOS.162/A/2008, 171/A /2008 TO 160 TO 165/A/2008 DATED IN WHICH IT WAS HELD AS UNDER WITH REGARD TO THE CLAIM OF EXEMPTION UNDER SECTION 80P(2)(D). 27. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBM ISSIONS, FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF SEC TION 80P(2)(D) OF THE ACT, WE ARE OF THE VIEW THAT IF THE ASSESSEE BEING A COOPERATIVE SOCIETY HAS DERIVED ANY INCOME BY WAY OF INTEREST OR DIVIDE ND FROM THE INVESTMENT MADE WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME WILL BE EXEMPT. THE AO HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS DERIVED INTEREST FROM COOPERA TIVE/COOPERATIVE BANK. FROM THIS OBSERVATION IT IS NOT CLEAR WHETHE R INTEREST/DIVIDEND INCOME HAS BEEN DERIVED FROM COOPERATIVE SOCIETY. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTI ES, RESTORE THIS ISSUE TO THE FILE OF AO WITH THE DIRECTION THAT THE AO SHALL ALLOW THE DEDUCTION U/S.80P(2)(D) TO THE ASSESSEE IF AFTER VERIFYING HE FINDS THAT THE ASSESSEE HAS DERIVED THIS INTEREST/DIVIDEND INCOME FROM ITS INVESTMENTS MADE WITH THE COOPERATIVE SOCIETY. IN CASE HE FINDS THAT THE ASSESSEE HAS NOT DERIVED INTEREST OR DIVIDEND INCOME FROM THE INVEST MENTS MADE WITH THE COOPERATIVE SOCIETY, DEDUCTION TO THAT EXTENT WILL NOT BE ALLOWED. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND A LLOW THE GROUND TAKEN BY THE REVENUE. PAGE - 3 ITA NO.84/AHD/2009 -3- IT IS PERTINENT TO NOTE THAT THE ORDER OF THE TRIB UNAL DATED 7-8-2009 INCLUDED THE ASSESSMENT YEARS 1998-99 AND 2001-02 A LSO. 4. THE RESULT IS THAT SO FAR AS THE PENALTY LEVIED WITH REFERENCE TO THE ALLEGED UNDER VALUATION OF CLOSING STOCK IS CONCERN ED THE TRIBUNAL HAS CANCELLED THE SAME IN ITS ORDER FOR THE ASSESSMENT YEARS 1998-99 AND 2001-02. SINCE THE FACTS AND BASIS OF THE PENALTY REMAINS TH E SAME FOR THE YEARS UNDER APPEAL, THE CIT(A) WAS RIGHT IN CANCELLING THE PENA LTY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL. AS REGARDS THE PENALTY LEVI ED FOR DISALLOWANCE OF THE CLAIM FOR DEDUCTION UNDER SECTION 80P(2)(D), THE TR IBUNAL HAS HELD IN ITS ORDER DATED 7-8-2009 RECTIFYING ITS APPELLATE ORDER DATED 19-10-2007 WHICH INCLUDED THE ASSESSMENT YEARS NOW UNDER APPEAL THAT THE MATT ER REQUIRES FRESH LOOK AND VERIFICATION OF FACTS IN THE HANDS OF THE AO AND AC CORDINGLY HAS RESTORED THE SAME TO HIM FOR FRESH DISPOSAL. THE PENALTY LEVIED WITH REFERENCE TO THE CLAIM UNDER THE ABOVE SECTION CANNOT THEREFORE STAND. TH E CIT(A) HAS CANCELLED THE PENALTY WITH REFERENCE TO THIS POINT ON THE GROUND THAT IT IS A CASE OF ON-GOING LITIGATION WHERE DIFFERENT AUTHORITIES HAVE TAKEN D IFFERENT VIEWS AND THE ASSESSEE HAS NOT FURNISHED ANY UNTRUE PARTICULARS O R WITHHELD ANY FACTS. WITHOUT EXPRESSING ANY OPINION ON THIS ASPECT, WE U PHOLD THE ORDER OF THE CIT(A) CANCELLING THE PENALTY WITH REGARD TO THE CL AIM UNDER THE ABOVE SECTION ON THE SHORT GROUND THAT THE ISSUE HAS BEEN RESTORE D TO THE FILE OF THE AO FOR FRESH CONSIDERATION AND ACCORDINGLY NO PENALTY CAN SURVIVE NOW. THE ULTIMATE RESULT IS THAT THE ORDER OF THE CIT(A) CANCELLING T HE PENALTY IS UPHELD FOR BOTH THE YEARS AND THE APPEALS OF THE DEPARTMENT ARE DIS MISSED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN OPEN COURT ON18TH SEPTEMBER, 20 09. SD/- SD/- (P.K. BANSAL) ACCOUNTANT MEMBER (R.V.EASWAR) VICE-PRESIDENT PAGE - 4 ITA NO.84/AHD/2009 -4- PLACE : AHMEDABAD DATE : 18-09-2009 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD