Dy. CIT, Circle-1, Nashik V. M/s. Godavari Urban Co-op Bank Ltd., Nashik

ITA 871/PUN/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4321 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RA J IV HARIT
• Keywords: Wrong claim; Revised return
• Section: 43B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 871/PN/2012 (ASSTT.YEAR : 2008-09) DY.CIT, CIRCLE-1, NASHIK. .. APPELLANT VS. M/S. GODAVARI URBAN CO-OP. BANK LTD., NMC OLD BUILDING, SHARANPUR ROAD, NASHIK 422002. PAN NO.AAAAG 0490R .. RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI RAJIV HARIT DATE OF HEARING : 26-07-2013 DATE OF PRONOUNCEMENT : 31-07-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 22- 02-2012 OF THE CIT(A) I, NASHIK RELATING TO ASSESS MENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. IT FILED ITS R ETURN OF INCOME DECLARING TOTAL INCOME OF RS.36,18,680/- ON 26-09-2008. IT FILED I TS REVISED RETURN DECLARING TOTAL INCOME OF RS.35,03,310/- ON 20-09-2009. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSE E HAS DEBITED THE FOLLOWING PROVISIONS TO THE EXTENT OF RS.45,55,343/- WHICH WA S NOT ADMISSIBLE EXPENDITURE UNDER THE PROVISIONS OF THE ACT. PARTICULARS AMOUNT DEDUCTION U/S.80P RS.43,89,368/- U/S.40(A)(IA) RS.1,35,975/- U/S.43B RS.30,000/- TOTAL RS.45,55,653/- 2 THE ASSESSING OFFICER DISALLOWED THE ABOVE EXPENDIT URE. THE ASSESSEE DID NOT PREFER ANY APPEAL. THE ASSESSING OFFICER THEREAFTE R LEVIED PENALTY OF RS.13,53,230/- U/S.271(1)(C) OF THE INCOME TAX ACT. 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT DURING T HE PERIOD UNDER CONSIDERATION THE BANK CLAIMED DEDUCTION U/S.80P(2) OF THE I.T. ACT AT RS.43,89,368/- BY WAY OF INTEREST DERIVED FROM ITS INVESTMENTS IN OTHER CO- OPERATIVE BANKS. AS PER THE AMENDED PROVISIONS OF FINANCE ACT, 2006 SECTION 80P WILL NOT APPLY TO ANY CO-OPERATIVE BANK OTHER T HAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR E AND RURAL DEVELOPMENT BANK. THE BANK CLAIMED THE SAID DEDUCTION ON THE B ASIS OF VARIOUS CONFLICTING OPINIONS RECEIVED FROM EXPERTS AND SAME WAS ALSO ME NTIONED DURING ASSESSMENT PROCEEDINGS. ON THE BASIS OF CONFLICTIN G OPINIONS BANK DID NOT CLAIM DEDUCTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT BUT HAS ONLY CLAIMED DEDUCTION U/S.80P(2)(D) WHICH IS MEANT FOR DIVIDEND AND INTEREST RECEIVED FROM OTHER COOPERATIVE BANKS. AT THE TIME OF FILING OF INCOME TAX RETURN SOME EXPERTS HAVE ADVISED THE BANK THAT THOUGH THE FINAN CE ACT, 2006 HAS WITHDRAWN THE DEDUCTION U/S.80P FOR CO-OPERATIVE BANK BUT A C OOPERATIVE BANK IS BASICALLY REGISTERED AS A CO-OPERATIVE SOCIETY AND LATER THEY GET A LICENCE FROM RBI TO CONDUCT BANKING BUSINESS. THERE WAS NEITHER ANY MALAFIDE INTENTION ON THE PART OF THE BANK TO EVADE PAYMENT OF TAX NOR TH E BANK DID CONCEAL ANY PARTICULARS OF INCOME. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 32 2 ITR 158 AND VARIOUS OTHER DECISIONS WERE BROUGHT TO THE NOTICE OF THE LD. CIT (A). IT WAS ACCORDINGLY 3 ARGUED THAT NO PENALTY U/S.271(1)(C) IS LEVIABLE UN DER THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE PENALTY BY HOLDING AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE ASSESSMENT ORDER, THE PENALTY ORDER, THE RIVAL SUBMISSIONS AND THE POSITI ON OF LAW AS WELL AS THE DECISIONS CITED BY THE A.O. AND THE APPELLANT. THE APPELLANT HAS DEBITED EXPENDITURE ON ACCOUNT OF DEDUCTION U/S 80P(2), U/S 40(A)(IA), AND U/S. 43B. HOWEVER, IN COMPUTATION OF INCOME THE SAID PROVISIONS REMAINED TO BE DISALL OWED BY THE APPELLANT WHILE ARRIVING AT THE TOTAL INCOME. THE CO-OPERATIVE AUDI TOR AS WELL AS THE TAX AUDITOR HAD NOT POINTED OUT THE SAID DISCREPANCY TO THE APPELLA NT BANK. 4.4 FROM THE ABOVE PROVISION OF THE ACT, IT IS EVI DENT THAT FOR DECIDING THE ISSUE WHETHER PENALTY U/S. 271(1)(C) IS ATTRACTED OR NOT, THERE HAS TO BE EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF SUCH INCOME. ON PERUSAL OF THE FACTS OF THE CASE, IT HAS BEEN NOTIC ED THAT THE APPELLANT HAS FILED AUDITED PROFIT AND LOSS ACCOUNT WHEREIN THE DEDUCTI ON U/S. 80P(2), U/S.40(A)(IA), AND U/S. 43B HAVE BEEN CLEARLY REFLECTED. HOWEVER, IN COMPUTATION OF INCOME FILED, THE DISALLOWANCE OF DEDUCTIONS HAS NOT BEEN MADE. T HE AO MADE ADDITIONS OF RS.45,55,343/- ON ACCOUNT OF DEDUCTION U/S. 80P(2), U/S 40(A)(IA), AND U/S.43B. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS NOT CONCEALED PARTICULARS OF INCOME OR HAS NOT FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE HON'BLE HIGH COURT OF ORISSA WHILE DECIDING THE SIMILAR ISSUE AS TO WHETHER THE PENALTY U/S. 271(1)(C) CAN BE LEVIED ON DISALLO WANCE OF CLAIMS OF EXPENDITURE IN FAVOUR OF THE ASSESSEE IN THE CASE OF CIT VS. INDIA N METAL & FERRO ALLOYS LTD. 211 ITR 35 (ORISSA} HAS MADE THE FOLLOWING OBSERVATION:- 'THE EXPRESSIONS 'HAS CONCEALED PARTICULARS OF INCO ME' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEF INED EITHER IN SECTION 271(1)(C) OR ELSEWHERE IN THE ACT. ONE THING IS CER TAIN THAT THESE TWO CIRCUMSTANCES ARE NOT IDENTICAL IN DETAILS ALTHOUGH THEY MAY LEAD TO THE SAME EFFECT, NAMELY KEEPING OF A CERTAIN PORTION OF INCOME. THE FORMER IS DIRECT AND THE LATTER MAY BE INDIRECT IN ITS EXECUT ION. THE WORD 'CONCEALED' IS DERIVED FROM THE LATIN 'CONCELARE' WHICH IMPLIES TO HIDE. WEBSTER IN HIS NEW INTERNATIONAL DICTIONARY EQUATES ITS MEANING 'T O HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVEN T THE DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF. THE OFFENCE OF CONCEALMENT I S THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF I.T. AUTHORITIES.' THE HON'BLE ITAT, AHMEDABAD 'A' BENCH WHILE DECIDIN G THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF DCIT VS. GUJA RAT STATE CO-OP. HSG. FINANCE CORPORATION LTD. (2010) 134 TTJ-07 (AHD), HAS HELD THAT IF THE ASSESSEE HAS FILED ALL THE INFORMATION REGARDING CLAIMS OF EXPENDITURE IN THE RETURN OF INCOME, WHICH ARE NOT FOUND TO BE FALSE OR INCORRECT, THEN EVEN I F THE CLAIM OF EXPENDITURE IS DISALLOWED, PENALTY U/S.271(1)(C) IS NOT ATTRACTED. 4 IN THE CASE UNDER APPEAL, THE APPELLANT HAS FURNISH ED ALL THE PARTICULARS / INFORMATION REGARDING DEDUCTIONS CLAIMED BY IT AND HAS NOT CONCEALED ANY PARTICULARS AND THE SAID PARTICULARS FILED ARE ALSO NOT FALSE OR ERRONEOUS. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONS IDERED OPINION THAT THE APPELLANT HAS NOT CONCEALED PARTICULARS OF INCOME OR HAS NOT FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND HENCE PENALTY U/S. 2 71(1)(C) IS NOT LEVIABLE FOR MERE DISALLOWANCE OF CLAIM OF EXPENDITURE. 4.5 THE APPELLANT HAS NOT CHALLENGED THE ASSESSMEN T ORDER U/S.143(3) DATED 30/11/2010 IN APPEAL AND HAS WITHDRAWN THE CLAIM OF DEDUCTION U/S.80P(2)(D) CLAIMED IN THE RETURN OF INCOME DURING THE ASSESSME NT PROCEEDINGS. ORDER U/S 154 DATED 06/01/2011 HAS BEEN PASSED AND THE DEMAND HAS BEEN REVISED TO RS.18,73,075/- WHICH HAS BEEN PAID BY THE APPELLANT . 4.6 THE PENALTY U/S. 271(1)(C) IS ALSO NOT JUSTIFIE D AS MERE MAKING OF CLAIM OF EXPENDITURE OR DEDUCTION WHICH IS NOT SUSTAINABLE I N LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS PROPOSITION OF LAW IS SUPPORTED BY THE FOLLOWING DECISIONS: 1. CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 230 CTR 320 (SC) 2. CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. (2011) 322 ITR 73 ( P&H) 3. CIT VS. MANIBHAI & BROTHERS (2007) 294 ITR 501 ( GUJ.) 4.7 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY VARIOUS DECISIONS REFERRED TO IN PRECE DING PARAGRAPHS, IT IS HELD THAT THE A.O. IS NOT JUSTIFIED IN IMPOSING PENALTY U/S. 271(1)(C) OF RS.13,53,230/-. THE IMPUGNED PENALTY ORDER DATED 18-05-2011 IMPOSING PE NALTY OF RS.13,53,230/- IS, THEREFORE, CANCELLED. THE AO IS DIRECTED ACCORDING LY. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE P ENALTY OF RS. 13,53,230/-. IMPOSED ON THE ASSESSEE ON ACCOUNT OF CLAIMING DEDUCTION U/S 80P(2) FOR WHICH IT WAS NOT ENTITLED TO. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE P ENALTY IN SPITE OF THE FACT THAT THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS AND CONCEALED THE INCOME WITHIN THE MEANING OF EXPLANATION (1) OF SEC 271(1)(C) OF THE INCOME TAX ACT. 3. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING O FFICER MAY BE RESTORED. 4. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDE NCE TO SUBSTANTIATE HIS CASE. 5. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIFY , AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCA SION DEMANDS. 5 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPP OSED THE ORDER OF THE CIT(A). HE SUBMITTED THAT ALTHOUGH THE ASSESSEE WA S AWARE OF THE FACT THAT IT IS NOT ENTITLED TO CLAIM THE DEDUCTION U/S.80P THE ASS ESSEE STILL CLAIMED THE DEDUCTION. THEREFORE, IT HAS FILED INACCURATE PART ICULARS OF INCOME AND THEREFORE IS LIABLE TO LEVY OF PENALTY U/S.271(1)(C ). REFERRING TO VARIOUS DECISIONS HE SUBMITTED THAT SINCE THE BONAFIDENESS OF THE ASSESSEE IN THE INSTANT CASE IS DOUBTFUL, THEREFORE, THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S.80P. 7. THE LD. COUNSEL FOR THE ASSESSEE ON OTHER HAND H EAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SHAHABAD COOPERAT IVE SUGAR MILLS LTD. HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT MAKING A WRONG CLAIM FOR DEDUCTION IS NOT AT PAR WITH CONC EALMENT OR GIVING INACCURATE INFORMATION, WHICH MAY CALL FOR LEVY OF PENALTY U/S .271(1)(C) OF THE INCOME TAX ACT. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAI D DECISION HAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT A MOUNT TO FURNISHING INACCURATE PARTICULARS. HE ACCORDINGLY SUBMITTED T HAT THE ORDER OF THE LD.CIT(A) BEING IN ACCORDANCE WITH LAW SHOULD BE UP HELD. 6 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. THE ONLY QUESTION TO BE DECIDED IN THE IMPUGNED APPEAL IS AS TO WHETHER LEVY OF PENALTY U/S.271(1)(C) OF THE INC OME TAX ACT IS JUSTIFIED FOR CLAIMING THE DEDUCTION U/S.80P(2) WHEN THE ASSESSEE IS NOT ENTITLED TO THE SAME. WE FIND THE ASSESSEE BEFORE THE ASSESSING OFFICER D URING PENALTY PROCEEDINGS HAS CATEGORICALLY STATED THAT THE CLAIM OF DEDUCTIO N U/S.80P WAS MADE BY THE BANK BASED ON CONFLICTING OPINIONS RECEIVED FROM EX PERTS. FURTHER, THE FULL PARTICULARS OF DEDUCTION CLAIMED WERE VERY MUCH AVA ILABLE IN THE RETURN OF INCOME. 8.1 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT A MERE MAK ING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAWS BY ITSELF WILL NOT AMOUNT TO FU RNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING OF INACCURATE PA RTICULARS. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHAHABAD COOPERATIVE SUGAR MILLS LTD. (SUPRA) HAS HELD THAT MAKING A WRONG CLA IM FOR DEDUCTION IS NOT AT PAT WITH CONCEALMENT OR GIVING INACCURATE INFORMATI ON, WHICH MAY CALL FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. THE VARI OUS OTHER DECISIONS RELIED ON BY THE ASSESSEE BEFORE THE LD.CIT(A) ALSO SUPPORT T HE CASE OF THE ASSESSEE. IN VIEW OF THE ABOVE DECISIONS AND IN VIEW OF THE DETA ILED ORDER PASSED BY THE LD.CIT(A) ON THIS ISSUE WE FIND NO INFIRMITY IN HIS ORDER DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S.271(1)(C) OF TH E I.T. ACT. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROU NDS RAISED BY THE REVENUE. 7 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31ST DAY OF JULY 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 31 ST JULY 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE