Krishi Upaj Mandi Samiti, (Grain) Sriganganagar V. I.T.O.Ward-2, Sriganganagar

ITA/122/2011

AI Insights

The case involves Krishi Upaj Mandi Samiti, a charitable trust, which appealed against the penalty imposed by the Income Tax Department under Section 271(1)(c) of the Income Tax Act, 1961. The trust had filed a return declaring no income, which was later assessed with additions and disallowances, leading to a penalty. The Commissioner of Income Tax (Appeals) initially set aside the penalty, but the Income Tax Appellate Tribunal restored it, leading to this appeal. The High Court examined whether the Tribunal was justified in restoring the penalty, considering the debatable nature of the assessee's claim regarding depreciation and the absence of any willful concealment or incorrect submission of accounts.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 691855 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 05-05-2017
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Krishi Upaj Mandi Samiti (2016) 388 ITR 605 (Raj.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: K K BISSA
• Assessee Lawyers: RAJESH CHOUDHARY
• Keywords: Assessment; Charitable Trust; Concealment of income; Depreciation; Income Tax; Penalty
• Section: 143(3); 142(1); 271(1)(c); 32(1); 12(A)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 122 / 2011 Krishi Upaj Mandi Samiti, (Grain) Sriganganagar ----Appellant Versus I.T.O.Ward-2, Sriganganagar ----Respondent _____________________________________________________ For Appellant(s) : Mr. Rajesh Choudhary For Respondent(s) : Mr. K.K.Bissa _____________________________________________________ HON'BLE MR. JUSTICE GOVIND MATHUR HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Judgment 05/05/2017 Being aggrieved by the order dated 3.8.2009, passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur, this appeal is before us to adjudicate following substantial question of law:- “Whether the Tribunal was justified in restoring the penalty imposed upon the assessee under Section 271(1)(c) when the claim of the assessee was a debatable one and there was no finding that assessee submitted false or incorrect accounts within the meaning of Section 271(1)(c)?” In brief, factual matrix of the case is that the assessee, a trust having registration under Section 12-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), failed to (2 of 5) [ITA-122/2011] file return of income till 31.10.2005, therefore, a notice under Section 142(1) of the Act of 1961 was issued on 2.1.20076 requiring the assessee to furnish its return of income for the assessment year concerned. A return was filed by the assessee on 3.2.2006 declaring no income. On being assessed under sub- section(3) of Section 143 of the Act of 1961, the Assessing Officer determined income of the assessee with certain additions and disallowances and while doing so proceedings to impose penalty as per provisions of Section 271(1)(c) of the Act of 1961 too were initiated. The assessee, being aggrieved by the additions and disallowances as well as initiation of penalty proceedings, preferred an appeal that travelled upto the Income Tax Appellate Tribunal consequent to which the income of the assessee was determined at Rs.3,22,48,549/-. A show cause notice then was issued for imposing penalty in response to which the assessee responded with assertion that there was no willful neglect or guilt in filing the return and disclosing correct particulars of the income. The Assessing Officer, after considering the explanation given, imposed a penalty in a tune of Rs.1,44,36,945/- i.e. equivalent to the tax liability said to be evaded. An appeal, giving challenge to the order imposing penalty, was filed before the Commissioner of Income Tax (Appeals), that came to be accepted by arriving at the conclusion that the assessee did not avoided filing of return deliberately and was also not guilty of dishonest conduct, hence, the penalty imposed was not correct. Aggrieved by the order passed by the Commissioner of Income Tax (Appeals) an appeal (3 of 5) [ITA-122/2011] was preferred before the Income Tax Appellate Tribunal, Jodhpur, that came to be accepted under the order impugned with finding that the assessee led no reliable material or evidence to substantiate his claim of depreciation nor the particulars of assets owned and eligible for depreciation allowance were brought on record to enable the tribunal to make inquiry as to how the explanation pertaining to availability of depreciation was bonafide or at least plausible. In appeal before us, it is submitted by learned counsel for the appellant that as per Section 271(1)(c) of the Act of 1961, where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of Section 153 a return of his income which he is required to furnish under Section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989 and until the expiry of the period aforesaid, no notice has been issued to him under clause (1) of sub-section (1) of Section 142 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of sub-section (1), be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of income at any time after the expiry of the period aforesaid in pursuance to the notice under Section 148 and further on such concealment the assessee is liable for penalty. In (4 of 5) [ITA-122/2011] the case in hand, as per learned counsel appearing on behalf of the assessee, the explanation submitted by the assessee was a bonafide one, plausible and relating to entitlement for availability of depreciation and as such there as no concealment. It is further submitted that the assessee, being a charitable institution registered under Section 12-A of the Act of 1961, availed 100% capital expenditure, therefore, was entitled to claim depreciation on capital assets and this aspect was advanced as explanation, hence, there was no concealment. It is also brought to our notice that a Division Bench of this Court in Commissioner of Income Tax v. Krishi Upaj Mandi Samiti, reported in (2016) 388 ITR 605 (Raj.), has taken a view that the Krishi Upaj Mandi Samiti is a charitable institution registered under Section 12-A of the Act of 1961, therefore, is entitled to have depreciation as per Section 32(1) of the Act of 1961. Learned counsel appearing on behalf of the revenue does not dispute this factual aspect of the matter. From perusal of the explanation tendered by the appellant assessee it is apparent that a debatable issue was there about depreciation available to the assessee. The assessee with a bonafide belief about availability of depreciation did not file return. The stand of the assessee was ultimately vindicated in the case of Commissioner of Income Tax v. Krishi Upaj Mandi Samiti (supra). The penalty under Section 271(1)(c) of the Act of 1961 could have (5 of 5) [ITA-122/2011] been imposed only if the assessee would have intentionally concealed the income in its returns or had given incorrect details of its expenditure as well as in the returns. In the case in hand there is neither concealment of particulars of income of the assessee nor there is furnishment of inaccurate particulars of income. The assessee with a bonafide belief about allowable depreciation did not file the return. The explanation given by the assessee was also debatable and ultimately that debate came to be decided in favour of the assessee. As such, we are of the opinion that there was no sufficient reason to subject the assessee for a penalty under Section 271(1)(c) of the Act of 1961. The question formulated stands resolved accordingly and the appeal is allowed. The order passed by the Income Tax Appellate Tribunal dated 3.8.2009 is set aside and the order passed by the Commissioner of Income Tax is restored. (VINIT KUMAR MATHUR)J. (GOVIND MATHUR)J. MathuriaKK/PS "