ITO, Mandi V. M/s Agriculture Produce Market Committee, Mandi

ITA 969/CHANDI/2011

• Counselvise Citation: 96921514 RSA 2011
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 07-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: AJAY VAIDYA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.969 TO 973/CHD/2011 A Y: 2003-04 TO 2007-08 ITO, V M/S AGRICULTURE PRODUCE SUNDERNAGAR, MARKET COMMITTEE, DISTT.MANDI DHANOTU, DISTT.MANDI, (HP). (HP). PAN: AANFA-5153D (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. JAISHREE SHARMA RESPONDENT BY : SHRI AJAY VAIDYA DATE OF HEARING : 14.12.2011 DATE OF PRONOUNCEMENT : 20.12.2011 ORDER PER BENCH IN ALL THESE APPEALS, THE REVENUE CHALLENGED THE DE LETION OF PENALTY BY THE CIT(A) IMPOSED BY THE AO U/S 271( 1)(C) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'), FOR THE A SSESSMENT YEAR 2003-04 AT RS.23,53,529/-, ASSESSMENT YEAR 200 4-05 AT RS.23,47,474/-, ASSESSMENT YEAR 2005-06 AT RS.58,07 ,991/-; ASSESSMENT YEAR 2006-07 AT RS.63,71,788/- AND ASSES SMENT YEAR 2007-08 AT RS.38,72,816/-. 2. THE CIT(A) DELETED THE IMPUGNED PENALTIES LEVIED U/S 271(1)(C) OF THE ACT BY THE AO FOR VARIOUS YEARS VI DE COMMON ORDER DATED 18.07.2011. 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, BOTH LD. 'AR' AND LD. 'DR' WERE FAIR ENOUGH TO STATE THAT TH E ISSUE IS COVERED BY THE DECISION OF OUR COORDINATE BENCH IN THE CASE OF 2 M/S AGRICULTURE PRODUCE MARKET COMMITTEE, SOLAN V D CIT, CIRCLE PARWANOO IN ITA NO. 1229/CHD/2010 DATED 01.1 2.2010. 4. WE HAVE CAREFULLY PERUSED THE IMPUGNED ORDER PAS SED BY THE TRIBUNAL, RELIED UPON BY THE LD. 'AR' AND FOUND THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBU NAL. FINDINGS OF THE LD. CIT(A), AS RECORDED IN THE COMM ON ORDER IN RESPECT OF THE ASSESSMENT YEARS UNDER REFERENCE, AR E REPRODUCED HEREUNDER : 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS OF THE CASE CAREFULLY. I HAVE AL SO GONE THROUGH THE ORDER OF HON'BLE ITAT, CHANDIGARH BENCH, CHANDIGARH IN THE CASE OF M/S AGRICULTURE PRODUCE MARKET COMMITTEE, SOLAN (SUPRA). MOREOVER, IN THE CASE OF M/S H.P.MARKETING BOARD, KHALINI, SHIMLA THE PENALTY LEVIED BY THE ITO U/S 271(1)(C) OF THE ACT ALREADY STANDS CANCELLED BY MY PREDECESSOR VIDE ORDER DATED 01.12.2010 IN APPEAL NO.IT/123/2009-10/SML. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THAT DECIDED BY THE HON'BLE JURISDICTIONAL ITAT (SUPRA). IN THE SAID DECISION THE HON'BLE ITAT HELD THAT IN SUCH CASES WHERE THE ASSESSEE HAD MADE A BONAFIDE CLAIM AND FURNISHED COMPLETE PARTICULARS WITH REGARD TO ITS CLAIM, THE DISALLOWANCE OF SUCH A CLAIM ON ACCOUNT OF DIFFEREN CE OF OPINION AND INTERPRETATION OF LAW DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. MERE NON-ACCEPTABILITY OF A CLAIM IN LAW DOES NOT JUSTIFY INVOKING EXPLANATION TO SECTION 271(1)(C) OF THE ACT AND, THEREFORE THE AO/CIT(A) ERRED IN LEVYING THE PENALTY BASED ON SAID EXPLANATIONS. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT BENCH, THE PENALTY IMPOSED U/S 271(1)(C) FOR THE YEARS UNDER APPEAL, IS ORDERE D 3 TO BE CANCELLED. THE APPELLANT SUCCEEDS ON THIS GROUND OF APPEAL. 5. LD. CIT(A) HAS FOLLOWED THE DECISION OF THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S AGRICULTURE PRO DUCE MARKET COMMITTEE, SOLAN (SUPRA). THE RELEVANT AND OPERATIVE PART OF THE SAID DECISION IS REPRODUCED HEREUNDER : 7. THE APPEAL OF ASSESSEE IN ITA NO. 1229/CHD/2010 IS AGAINST THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE ASSESSEE WAS HELD TO HA VE FURNISHED INACCURATE PARTICULARS OF INCOME IN CLAIMING ITS STATUS AS LOCAL AUTHORITY AGAINST THE COMPUTATION OF INCOME IN THE HANDS OF THE ASSESSEE IN THE STATUS OF AOP. THE ASSESSING OFFICER LEVIE D THE PENALTY OF RS. 28,05,869/- UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE LD. CIT(A) UP HELD THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 8. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE CLAIM OF THE ASSESSEE OF BEING ASSESSED AS LOCA L AUTHORITY WAS NOT ACCEPTED AND SUCH AN INCORRECT CLAIM DOES NOT MAKE ASSESSEE LIABLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN VIEW OF THE RAT IO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS PVT LTD [322 ITR 158 (SC)] AND HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MILLS LTD [322 ITR 73 (P&H)]. THE LD. DR FOR THE REVENUE POINTED OUT TH AT THE ASSESSEE HAD INTENTIONALLY CLAIMED THE DEDUCTIO N AFTER CLAIMING THE STATUS OF LOCAL AUTHORITY AND IN VIEW OF SUCH CLAIM, THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME, JUSTIFYING THE LE VY OF PENALTY U/S 271(1)(C) OF THE ACT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ISSUE RAISED BY THE 4 ASSESSEE IN THE PRESENT APPEAL IS AGAINST THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE HAD FILED THE RETURN OF INCOME UNDER THE STATUS OF LOCA L AUTHORITY AND CLAIMED THE INCOME BEING EXEMPT. HOWEVER, THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED IN THE STATUS OF THE AOP AND THE SURPLUS OF THE ASSESSEE SOCIETY WAS BROUGHT TO TAX. THE AUTHORITIES BELOW LEVIED THE PENALTY U/ 271(1)( C) OF THE ACT UPON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT IT HAD FURNISHED COMPLETE PARTICULARS OF ITS INCOME AND HAD MADE A BONAFIDE CLAIM MERELY BECAUSE THE SAID CLAIM WAS REJECTED DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME, JUSTIFYING THE LE VY OF PENALTY U/S 271(1)(C) OF THE ACT. WE FIND MERI T IN THE CLAIM OF THE ASSESSEE. IN SUCH CASES WHERE T HE ASSESSEE HAD MADE A BONAFIDE CLAIM AND FURNISHED COMPLETE PARTICULARS WITH REGARD TO ITS CLAIM, THE DISALLOWANCE OF SUCH A CLAIM ON ACCOUNT OF DIFFEREN CE OF OPINION AND INTERPRETATION OF LAW DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. MERE NON-ACCEPTABILITY OF A CLAM IN LAW DO ES NOT JUSTIFY INVOKING EXPLANATION TO SECTION 271(1)( C) OF THE ACT AND, THEREFORE, THE ASSESSING OFFICER / CIT(A) ERRED IN LEVYING THE PENALTY BASED ON THE SA ID EXPLANATION. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS PVT LTD [322 ITR 158 (SC)] AND HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MILLS LTD [322 ITR 73 (P&H)]. ACCORDINGLY, WE HOLD THAT THE ASSESSEE I S NOT LIABLE TO THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. 5 6. RESPECTFULLY FOLLOWING THE DECISION REPRODUCED A BOVE, FINDINGS OF THE LD. CIT(A) IN RESPECT OF VARIOUS AP PEALS FOR VARIOUS ASSESSMENT YEARS, UNDER REFERENCE ARE UPHEL D AND THE APPEALS OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DEC.,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 20 TH DEC.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH