TMI Blog2017 (11) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has made the claim in the return of income and has submitted all relevant documents. Further it was a debatable issue, therefore, in this year also, we sustain the order of the ld. CIT(A). The other issue for levy penalty of ₹ 9,45,825/- was that income over expenditure. The issue was debatable and it was simply a difference of opinion between A.O. and assessee society. The assessee had neither concealed income nor filed inaccurate particulars of income. On this issue also, we agree with the findings of the ld. CIT(A) that this was a debatable issue and there was different opinion on such issue. Considering all these facts, we find no fault in the order of the ld. CIT(A) and accordingly, we sustain the same. - Decided against revenue - ITA No. 330/JP/2015, ITA No. 1029 And 1030/JP/2016 - - - Dated:- 30-10-2017 - SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM For The Assessee : Shri S.L. Poddar (Adv) For The Revenue : Shri Varinder Mehta (CIT) Shri R.A. Verma (Addl.CIT) ORDER PER: BHAGCHAND, A.M. These are the appeals filed the assessee and the revenue emanates from the separate orders of the ld. CIT(A)-4, Jaipur dated 23/02/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has deleted the penalty by holding as under: 3.1.2 I have duly considered assessee's submission and carefully gone through assessment order penalty order passed by the AO. I have carefully perused the case record also. I have also carefully gone through the Hon ble ITAT Bench Jaipur's order dated 15/3/2012 in ITA No 1062/JP/2011 for AY 2008-09 and also perused the case records. I have taken a note of factual matrix of the case as well as applicable case laws relied upon. Assessee, being a society, is registered u/s 12AA of the Act, accordingly its income is exempt u/s 10(23C) of the Act. The appellant society applies its income and funds accrued from institutes namely Global Institute of Technology Global Collage of Technology for charitable purposes as defined u/s 2(15) of the Act. On perusal of audit report submitted u/s 12A(b) of the Act, it is seen that an amount of income of the previous year applied to charitable purpose during the year is at ₹ 44,27,077.89 whereas addition to fixed assets is at ₹ 10,37,64,384.26. AO in the assessment order on pg 3 has mentioned that the issue relating to sec. 10(23C) of the Act has been decided by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of case record and submissions made before the AO, it is seen that assessee has not controverted AO s findings. Even during the appellate proceeding, assessee has again failed to controvert AO s findings with regard to ₹ 55,83,342/= Transfer to General Reserves. In fact, this is also not as per accountancy norm. Before penalty is imposed, AO is supposed to satisfy himself/herself that the assessee has concealed income, or that the assessee has furnished inaccurate particulars or that the case of the assessee is covered by deeming fiction of one of the Explanations appended to Section 271(1) (c) of the Act. Further, it is also well settled in law that penalty proceedings are distinct from the assessment proceedings and based on the findings in the assessment order per se, penalty cannot be imposed. Therefore, for the sake of adjudication, it has to be decided that when assessee has deliberately made the said amount Transfer to its General Reserve, then whether it constitutes a case of furnishing inaccurate particulars or concealment, which is being decided in para below. 3.1.3 It is a fact that the satisfaction for concealment of particulars of income or furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of income. Therefore, in view of above discussion, AO's action for treating amount of ₹ 55,83,342/=Transfer to General Reserve (i) Computer bank receipts ₹ 12,500/= (ii) Book Bank Income ₹ 6,05,000/= (iii) Forms/Late fees ₹ 41,50,842/= and (iv) Profit on sale of equity share ₹ 8,15,000/=, a case of concealment as well as furnishing of inaccurate particulars ; cannot be justified in the eyes of law, hence deleted. 3.1.4 Therefore, in view of facts and circumstances of the case as discussed above, penalty levied of ₹ 17,51,000/= is hereby deleted. Assessee s appeal in ground No 2 is allowed. Similar findings has also been given by the ld. CIT(A) in A.Y. 2012-13 where revenue in appeal i.e. in ITA No. 1030/JP/2015 while deleting the penalty levied by the Assessing Officer. 5. Now the revenue is in appeals before the ITAT. The ld CIT DR has relied on the order of the Assessing Officer. On the contrary, the ld AR of the assessee has relied on the order of the ld. CIT(A). 6. We have heard both the sides on this issue. The assessee society is registered U/s 12AA of the Income Tax Act, 1961 (in short the Act), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the Ld. CIT(A)-4, Jaipur has erred in upholding the order dated 10.03.2014 passed by the Ld. ACIT, Central Circle- 3, Jaipur under section 271(1)(c) of the Income Tax Act, 1961 levying a penalty of ₹ 19,57,310/- without appreciating the fact that the penalty u/s 271(1)(c) of the Income Tax Act, 1961 is leviable only in cases where there is willful concealment of income or willful furnishing of inaccurate particulars of income. 2. Under the facts circumstances of the case and in law, the Ld. CIT(A)-4, Jaipur has erred in coming to the conclusion that the assessee has furnished the inaccurate particulars of its income. 3. Under the facts and circumstances of the case and in law, the Ld. CIT(A)-4, Jaipur has not appreciated the ratio laid by the Hon'ble Supreme Court of India in the case of CIT vs Reliance Petroproducts (P) Ltd (2010) 322 ITR 158 (SC) wherein it was held that the mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. 4. Under the facts and circumstances of the case and in law, the Ld. CIT(A)-4, Jaipur has erred in le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has made advances to the persons referred in sec. 13(3) of IT Act. Similarly, investment in violation of sec. 11(5) was also noticed. In view of these facts as against the declared income at Nil, the AO assessed the income at ₹ 6075130 which included surplus of income over expenditure of ₹ 3117688 and other additions on account of income from sale of admission form, income from late fees, income from book bank, disallowance of wrong claim of depreciation and donations. The assessee has preferred appeal against the AO s order before the worthy CIT(A) and the action of the AO was confirmed. However while deciding such appeal the worthy CIT(A) directed the AO to allow benefit of carry forward business losses of earlier years. Due to such finding of worthy CIT(A) the positive income of ₹ 6075130 was reduced to nil income. As the assessee has wrongly claimed exemption u/s 10(23)(c) as also that benefit of sec. 11 12 was also to be disallowed because of violations in terms of sec. 13(3)/ 11(5) of IT Act, therefore while completing the assessment the AO also initiated penalty proceedings u/s 271(1)(c) of IT Act. During the proceedings before the AO t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definitely with a malafide intention of not paying the tax. As regards rejection of claim u/s 11 12 of IT Act it is noted that the appellant has violated provision of sec. 13(3) as well as 11(5) of IT Act and the appellant has not disputed such fact that such violations were made and benefit u/s 11 12 was not to be allowed. Therefore even the claim of benefit u/s 11 and 12 was absolutely wrong and with the malafide intention of not paying due tax on the income. Such action of the AO has also been confirmed by the First appellate authority. Similarly, the various additions made by the AO are also confirmed by the first appellate authority. As regards these additions the appellant has not disputed the finding of the AO or of the first appellate authority. It is also not a case that such disallowance has been made by the AO simply on the reason that proper explanation was not furnished by the assessee and the fact is that such additions were made because these were not at all of allowable nature and there was no two opinion on the fact that such additions were to be made as per the provisions of IT Act. As regards the another contention of the assessee that there was no malafide i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Id. AR of the assessee that since the Id. CIT(A) have passed the order following the judgment of IT AT, therefore, there is no infirmity in the order of the same. If the carried forward losses are allowed to the assessee then the income will remain negative and the issue in question as to Section 11 and 12 will not arise. If the order passed by the Id. CIT(A) is upheld then the C.O. of the assessee becomes infructuous. 2.6 The Id. DR is heard. 2.7 We have heard the rival contentions and perused the materials available on record. We find no infirmity in the order of the Id. CIT(A) who has followed the order of this Bench in assessee's own case for the assessment year 2008-09 (ITA No. 1062/JP/2011 dated 15-03-2012) holding that the assessee is eligible to benefits of set off of earned forward losses. Respectfully following the decision of this Bench (supra), we dismiss the appeal of the Revenue. Since the appeal of the Revenue is dismissed, therefore, the grounds of the assessee will become infructuous as contended by the Id. counsel for the assessee. 3.0 In the result, the appeal of the Revenue as well as C.O. of the assessee are dismissed. It was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. 12. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect ; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms ; (i) an item of receipt may be suppressed fraudulently ; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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