Krishi Upaj Mandi Samiti, Nohar V. I.T.O.Ward-1, Hanumangarh

ITA/118/2011

AI Insights

The case involves Krishi Upaj Mandi Samiti, Nohar, the appellant, contesting a penalty imposed by the Income Tax Department under section 271(1)(c) for alleged concealment of income. The primary legal question was whether the Tribunal was justified in restoring this penalty when the assessee's claim was debatable and there was no evidence of false or incorrect accounts. The High Court referenced a similar case, Krishi Upaj Mandi Samiti, (Grain) Sriganganagar vs. I.T.O. Ward-2, Sriganganagar, which had established that the assessee, being a charitable institution, was entitled to depreciation and that the issue was debatable. Consequently, the court ruled in favor of the appellant, stating that the penalty was not applicable as there was no intentional concealment of income.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 799895 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 23-01-2018
• Assessment Year: misc
• Other Referred Cases: Krishi Upaj Mandi Samiti, (Grain) Sriganganagar vs. I.T.O. Ward-2, Sriganganagar, Commissioner of Income Tax v. Krishi Upaj Mandi Samiti
• Laws Referred To: Income Tax Act of 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: K K BISSA
• Assessee Lawyers: RAJESH CHOUDHARY
• Keywords: Charitable institution; Concealment of income; Debatable claim; Depreciation; Income tax appeal; Penalty
• Section: 148; 271(1)(c); 153; 139; 32(1); 142; 12(A)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 118 / 2011 Krishi Upaj Mandi Samiti, Nohar ----Appellant Versus I.T.O.Ward-1,Hanumangarh ----Respondent _____________________________________________________ For Appellant(s) : Mr.Rajesh Choudhary. For Respondent(s) : Mr.KK Bissa. _____________________________________________________ HON'BLE MR. JUSTICE K. S. JHAVERI HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI Judgment / Order 23/01/2018 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the department. 2. While admitting the appeal, this Court framed following substantial question of law :- \"(i) 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)?\" 3. Now the issue is squarely covered by the decision of this Court in Krishi Upaj Mandi Samiti, (Grain) Sriganganagar vs. I.T.O. Ward-2, Sriganganagar (D.B. Income Tax Appeal No.122/2001) decided on 5.5.2017 wherein, it has been held as under :- \"In appeal before us, it is submitted by learned counsel (2 of 3) 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 (3 of 3) 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.\" 4. In that view of the matter, the issue is answered in favour of the assessee and against the department. In view of the above, the appeal is allowed in terms of the aforesaid judgment. (DR. PUSHPENDRA SINGH BHATI)J. (K. S. JHAVERI)J. S.Phophaliya/- "