Shastri Nagar Charitable & Welfare Trust (Regd.), Ludhiana V. ITO, Ludhiana

ITA 863/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8437 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 30-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Charitable institution; Rule of consistency; Bonafide belief
• Section: 143(3); 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NOS.863 TO 865/CHD/2015 (ASSESSMENT YEARS : 2006-07 TO 2008-09) SHASTRI NAGAR CHARITABLE & VS. THE INCOME TAX OFFICER, WELFARE TRUST (REGD), WARD VI (3), SHASTRI NAGAR, MODEL TOWN, LUDHIANA. LUDHIANA. PAN: AAETS5335G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK GOYAL RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 01.03.2016 DATE OF PRONOUNCEMENT : 02.03.2016 O R D E R ALL THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE DIFFERENT ORDERS OF LEARNED COMMISSIONER OF INC OME TAX (APPEALS)-4, LUDHIANA, ALL DATED 17.9.2015 FOR ASSE SSMENT YEARS 2006-07 TO 2008-09, CHALLENGING THE LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. IT IS STATED THAT THE FACTS ARE SAME IN ALL THE APPEALS. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSMENTS IN THESE CASES WERE COMPLETED AT DIFFER ENT 2 INCOMES. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE IS A TRUS T/AOP AND HAD CLAIMED EXEMPTION UNDER SECTION 11 OF THE ACT B UT IT HAD NOT BEEN REGISTERED UNDER SECTION 12AA OF THE ACT F OR THE ASSESSMENT YEARS UNDER APPEALS. THE ASSESSING OFFI CER NOTED THAT THE ASSESSEE HAD RECEIVED DONATIONS DURING THE YEARS AND AS PER SECTIONS 2(24) AND 11(1) (D) OF THE ACT, THE DONATIONS AND CORPUS DONATIONS RESPECTIVELY FORMED THE INCOME OF THE TRUST AND IN THE ABSENCE OF REGISTRATION UNDER SECT ION 12AA OF THE ACT, THE SAME IS TAXABLE. THEREFORE, AFTER DED UCTION OF EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF EARNING THAT GROSS RECEIPTS, THE NET INCOME WAS FOU ND, WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. THE ASSESSING OFFICER VIDE SEPARATE ORDERS LEVIED T HE PENALTIES AGAINST THE ASSESSEE. 4. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT (APPEALS) THAT THE RETURNS OF INCOMES WERE FILED FO R ASSESSMENT YEARS UNDER APPEALS UNDER NOTION/ADVICE THAT IT WAS A TRUST, WHICH WAS REGISTERED UNDER SECTION 12A OF THE ACT AND ACCORDINGLY, CLAIMED EXEMPTION. THE ASSESSEE A PPLIED FOR REGISTRATION OF TRUST UNDER SECTION 12A OF THE ACT WITH COMMISSIONER, PATIALA IN FEBRUARY, 1985 AND WAS UND ER BONAFIDE BELIEF THAT IT HAS DULY BEEN REGISTERED. THE COPIES OF THE CORRESPONDENCES BETWEEN THE ASSESSEE AND THE COMMISSIONER, PATIALA WERE FILED BEFORE THE ASSESS ING OFFICER. THE ASSESSEE FILED COMPLETE DETAILS OF EXPENSES AND 3 SUPPORTING VOUCHERS BEFORE THE ASSESSING OFFICER AN D NEVER ADMITTED TO WITHHOLD ANY FACT OR INFORMATION. THE CLAIM OF THE ASSESSEE WAS BONAFIDE AND SUPPORTED BY THE MATE RIAL ON RECORD. MERELY BECAUSE THE REGISTRATION WAS GRANTE D LATER ON, IS NO GROUND TO LEVY THE PENALTIES AGAINST THE ASSE SSEE. THE ASSESSEE HAD DECLARED COMPLETE PARTICULARS OF INCOM E IN THE RETURN OF INCOME AS WELL AS DURING THE COURSE OF AS SESSMENT PROCEEDINGS AND NOTHING WAS CONCEALED TO THE REVENU E DEPARTMENT. LATER ON, THE ASSESSEE WAS REGISTERED AS CHARITABLE TRUST UNDER SECTION 12AA OF THE ACT FROM ASSESSMENT YEAR 2013-14 BECAUSE THE LEARNED COMMISS IONER OF INCOME TAX-III, LUDHIANA GRANTED THE REGISTRATIO N VIDE ORDER DATED 17.9.2013 FROM ASSESSMENT YEAR 2013-14. ON THE SAME FACTS, PENALTY PROCEEDINGS UNDER SECTION 271(1 )(C) OF THE ACT WERE NOT INITIATED IN ASSESSMENT YEAR 2011-12. THE PENALTY PROCEEDINGS ON THE SAME FACTS HAVE BEEN DRO PPED FOR ASSESSMENT YEARS 2009-10 AND 2012-13. THE PENALTY PROCEEDINGS FOR ASSESSMENT YEAR 2010-11 ARE PENDING . THE LEARNED CIT (APPEALS), HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THERE WAS NO REGISTRATION G RANTED UNDER SECTION 12AA OF THE ACT IN FAVOUR OF THE ASSE SSEE IN THESE YEARS. THEREFORE, THE EXPLANATION-1 TO SECTI ON 271(1)(C) OF THE ACT WAS APPLIED AND THE APPEALS OF THE ASSES SEE WERE DISMISSED. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE LEVY OF PENAL TY UNDER SECTION 271(1)(C) OF THE ACT. THE LEARNED COUNSEL FOR THE 4 ASSESSEE RELIED ON THE DECISION OF THE HON'BLE SUPR EME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD., 322 ITR 158, IN WHICH IT WAS HELD AS UNDER : MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCT/ON OF I NTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVE NUE, PENALTY UNDER S. 271(L)(C) IS NOT ATTRACTED; MERE M AKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITS ELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. HE HAS ALSO RELIED ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. AMAR NATH, 16 DTR 326, IN WHICH IT WAS HELD AS UNDER : ASSESSEE HAVING WRONGLY CLAIMED EXEMPTION UNDER S. 10(36) IN RESPECT OF CAPITAL GAINS ON SALE OF SHARE S UNDER BONA FIDE BELIEF THAT HE IS ENTITLED TO SUCH EXEMPT ION ON THE BASIS OF THE LEGAL ADVICE AND FURNISHED ALL THE DETAILS RELATING TO CAPITAL GAINS ALONG WITH THE RE TURN, IT CANNOT BE HELD THAT THERE WAS MALA FIDE INTENTION T O CONCEAL INCOME AND, THEREFORE, LEVY OF PENALTY UNDE R S. 271(L)(C) WAS NOT JUSTIFIED. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRE D TO TRUST DEEDS, ORDERS OF THE ASSESSING OFFICER DROPPI NG SIMILAR PENALTY PROCEEDINGS AGAINST THE ASSESSEE 6. ON THE OTHER HAND, THE LEARNED D.R. RELIED ON T HE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF NEW BIJLI FOUNDRY VS. CIT, 135 ITR 593, IN WHICH THE FINDINGS OF THE TRIBUNAL REGARDING CONCEALMENT OF I NCOME AND FURNISHING OF INACCURATE RETURN HAD NOT BEEN DISPU TED. THE 5 LEARNED D.R. ALSO SUBMITTED THAT THE PENALTY IS STR ICTLY A CIVIC LIABILITY AND RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PR OCESSORS & OTHERS, 306 ITR 277 AND CIT VS. ATUL MOHAN BINDAL , 317 ITR 1. 6.1 ON CONSIDERATION OF THE FACTS OF THE CASE, IT MAY BE NOTED THAT THE ASSESSEE TRUST EXECUTED THE TRUST DE ED DATED 24.2.1984 AND WAS DULY REGISTERED. IT IS ALSO EXPL AINED THAT THE ASSESSEE APPLIED FOR GRANT OF REGISTRATION UNDE R SECTION 12A OF THE ACT WITH COMMISSIONER OF INCOME TAX, PAT IALA IN FEBRUARY, 1985. THEREFORE, THE ASSESSEE REMAINED U NDER BONAFIED BELIEF THAT IT HAS DULY BEEN REGISTERED TH OUGH NO FORMAL ORDER WAS PASSED UNDER SECTION 12AA OF THE A CT. MERELY BECAUSE THE CLAIM OF THE ASSESSEE FOR DEDUCT ION UNDER SECTION 11 OF THE ACT WAS NOT ACCEPTED, MAY NOT BE A GROUND FOR LEVY OF PENALTY. FURTHER, THE ASSESSEE WRONGLY CLAIMED EXEMPTION UNDER SECTION 11 OF THE ACT ON THE BASIS OF A LEGAL ADVICE AND DETAILS FURNISHED ON RECORD. THEREFORE, THE ASSESSEE WOULD NOT HAVE ANY INTENTION TO CONCEAL PA RTICULARS OF INCOME FROM THE REVENUE DEPARTMENT. THE ASSESSE E DISCLOSED COMPLETE FACTS IN THE RETURN OF INCOME AS WELL AS IN THE COMPUTATION OF INCOME FOR RECEIPT OF THE DONATI ONS AND INCURRING EXPENDITURE. THE AUTHORITIES BELOW AFTER GRANTING DEDUCTION OF THE EXPENSES CLAIMED, MADE THE SMALL A DDITION AGAINST THE ASSESSEE CONSIDERING THE DONATIONS AND CORPUS DONATIONS TO BE INCOME UNDER SECTION 2(24) OF THE A CT. THE ASSESSEE, THEREFORE, DISCLOSED COMPLETE FACTS BEFOR E THE 6 AUTHORITIES BELOW AND, THEREFORE, COULD NOT BE SAID TO HAVE CONCEALED PARTICULARS OF INCOME. THE SMALL INCOME WAS ASSESSED AGAINST THE ASSESSEE BECAUSE NO REGISTRATI ON WAS GRANTED UNDER SECTION 12A OF THE ACT. THE ASSESSEE HAS FILED COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2011-1 2 DATED 29.8.2014 IN THE PAPER BOOK AND THE ASSESSING OFFIC ER BY MENTIONING THE SAME FACTS AND CIRCUMSTANCES IN THE ASSESSMENT ORDER DID NOT INITIATE THE PENALTY PROCE EDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER ALSO PASSED THE ASSESSMENT ORDER FOR ASSESSMENT YEARS 20 09-10 AND 2012-13 MENTIONING THE SAME FACTS IN THE ASSESS MENT ORDER UNDER SECTION 143(3) OF THE ACT AND ALSO INIT IATED THE PENALTY PROCEEDINGS BUT VIDE SEPARATE ORDERS DROPPE D THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IT IS, THEREFORE, CLEAR THAT IN THREE YEARS, THE ASSESSING OFFICER DID NOT TAKE ANY ACTION AGAINST THE ASSESSEE ON THE SAM E FACTS AND CIRCUMSTANCES FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THEREFORE, THE ASSESSING OFFICER SHOUL D HAVE FOLLOWED THE RULE OF CONSISTENCY AND ON THE SAME SE T OF FACTS SHOULD NOT LEVY PENALTY AGAINST THE ASSESSEE IN ASS ESSMENT YEARS UNDER APPEALS. IT IS WELL SETTLED LAW THAT THE INCOME TAX AUTHORITIES SHALL HAVE TO MAINTAIN THE RULE OF CONSISTENCY. WE RELY UPON THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. RADHA SWAMI SATSANG, 193 ITR 321, THE DECISION IN THE CASE OF UOI VS. SATISH PANALAL SHA H, 249 ITR 221 AND THE DECISION OF DELHI HIGH COURT IN THE CAS E OF CIT VS. A.R.J. SECURITY PRINTERS, 264 ITR 276. FURTHER , THE EXPLANATION OF THE ASSESSEE WAS BONAFIDE THAT SINCE IT IS A 7 REGISTERED TRUST AND APPLIED FOR REGISTRATION OF TR UST BEFORE THE COMMISSIONER OF INCOME TAX, PATIALA, THEREFORE, THE ASSESSEE ON LEGAL ADVICE HAS MADE THE CLAIM OF EXEMPTION OF INCOME UNDER SECTION 11 OF THE ACT, THEREFORE, NO PENALTY IS LEVIABLE AGAINST THE ASSESSEE. 7. I ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTH ORITIES BELOW AND CANCEL THE PENALTY IN ALL THE ASSESSMENT YEARS. 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF MARCH, 2016. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 2 ND MARCH, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH