TMI Blog2018 (6) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars - No penalty to be invoked - Decided in favour of assessee - ITA.NO.1529 And 1531/MUM/2016 - - - Dated:- 28-5-2018 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, HON'BLE ACCOUNTANT MEMBER For The Assessee : Shri Anil Sathe For The Revenue : Shri M.C. Omi Ningshen ORDER PER C.N. PRASAD (JM) 1. These two appeals are filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals), Mumbai -1 in sustaining the penalty levied u/s. 271(1)(c) of the Act. 2. Ld. Counsel for the assessee at the outset submitted that penalty was levied for the reason that the Exemption u/s. 11 was denied to the assessee. Learned Counsel for the assessee submitted that there is no concealment of income or furnishing of inaccurate particulars of income by the assessee. The penalty was imposed for withdrawal of Exemption u/s. 11 of the Act by the Assessing Officer. The claim made by the assessee u/s.11 of the Act was a bonafide claim which was made based on various judicial pronouncements and whether the assessee is entitled for Exemption u/s. 11 of the Act or not is a debatable one and there is no concealmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007-08 on 31.10.2007 declaring total loss of ₹ 1,29,54,737/-. The Assessing Officer (AO) completed the assessment on 18.12.2009 determining the loss at ₹ 39,11,377/-. The assessee also filed its return of income for the A.Y. 2008-09 on 30.09.2008 declaring Nil income. The AO completed the assessment on 02.12.2010 determining the income at ₹ 1,19,92,709/-. During the course of the impugned assessment years, the AO took into account the decision of ITAT in the case of the assessee for the A.Y. 1989-90 wherein it has been held that the activities of the assessee were not of charitable nature and it was running the business of publishing newspaper. Thus exemption u/s 11 was denied to the assessee. The AO found that the activities of the assessee in the impugned assessment years were same as the one in the A.Y. 1989-90. In view of the above, the A.O. imposed a minimum penalty of ₹ 19,32,534/- for the A.Y. 2007-08 and ₹ 18,62,354/- for the A.Y. 2008- 09 u/s 271(1)(c) of the Act. 4. The assessee preferred appeal against the order of the AO before the learned CIT(A). It is found by the learned CIT(A) that the assessee trust was granted registration u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-96, 1996-97, 1998- 99 and 2003-04 has explicitly recorded a finding of fact and held that the objects of trust, as a whole, are for charitable purpose falling within the meaning of section 2(15) of the Act. For the A.Y. 1998-99, 2000-01, 2003-04, 2007-08 and 2008-09, the decision has been reversed by the ITAT. Once, this proposition is accepted, the issue of grant of exemption in the case of the assessee can at best be described as a debatable issue. The learned CIT(A) relied on the judgement of the Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd [2010] 189 Taxman 322 (SC), wherein it has been held that penalty cannot be levied merely because the AO and the assessee hold a divergent view on allowablity of a claim for deduction. He also relied on the decision in the case of Dilip N. Shroff 210 CTR 228 (SC) and deleted the penalty imposed by the AO. 5. Before us, the learned DR referred to page 17 of the order of the learned CIT(A) wherein he has mentioned that the quantum appeals of the assessee for the A.Y 2007-08 and 2008-09 have been dismissed by both the CIT(A) and the ITAT. He also relied on the order of the AO. 6. Per contra, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the trust during the relevant assessment years and if so to follow the decision of Hon'ble Supreme Court (cited supra) if the income is so utilised and otherwise to decide according to law. Thus, these appeals of the assessee are allowed for statistical purpose only . 7.2 In the case of the assessee for the A.Y. 1996-97, 1998-99 and 2003-04 (ITA No. 291, 292 293/Mum/2007), the issue before the Tribunal was whether the surplus funds utilised for acquisition of assets for business purposes would amount to application of income or not for charitable purpose. The Tribunal held that the expenditure in respect of those fixed assets in respect of which depreciation has been claimed and allowed to the assessee cannot be treated as application of income. However, the balance amount spent for acquisition of fixed assets, on which no depreciation has been allowed, is to be treated as application of income as per the test laid down by the Tribunal in assessee s own case for A.Y. 1989-90. Accordingly, the Tribunal restored the issue to the file of the AO to decide the same in the light of their decision for the A.Y. 1989-90 and to determine the application of income accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken. 7.5 The Tribunal concluded that the assessee s case was wholly unmaintainable and dismissed the appeal. 7.6 Let us now go back to the background on which the AO has imposed penalty u/s 271(1)(1) of the Act. In the assessment order for the A.Y. 2007-08, the AO has made the following additions: 1 Non-Pyament of Employees employers Contribution of Provident fund Rs.22,57,426/- 2 Non-payment/late payment of ESIC contribution ₹ 3,21,183/- 3 Penalty for contravention of law ₹ 5,910/- 4 Non-deduction of IDS on payments attracting Provisions of section 40(a)(ia) ₹ 21,30,302/- 5 Prior Period Expenses disallowed u/s 43B ₹ 23,92,292/- 6 Disallowance u/s 40A(2b) ₹ 2,97,527/- Total ₹ 74,04,640/- 7.7 However, the learned CIT(A], considering the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances must be taken into account. 7.12 The question arises whether penalty u/s 271(1)(c) is leviable on the additions / disallowances made by the A.O. as narrated at para 7.7 and 7.9 here-in-above. We may gainfully refer to the judgement of the Hon'ble Supreme Court in Reliance Petroproducts (P.) (supra) wherein it has held: A glance of provision of section 271(1)(c ) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The instant case was not the case of concealment of the income. That was not the case of the revenue either. It was an admitted position in the instant case that no information given in the return was found to be incorrect or inaccurate. It was not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. The revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. [Para 10] Therefore, the appeal filed by the revenue had no merits and was to be dismissed. 7.13 The present factual matrix is to be tested on the anvil of the above enunciation of law. In the light of the decision referred here-in-above, we uphold the order of the learned CIT(A). 6. Similarly, for the Assessment Year 2010-11 following the order of the Tribunal for the Assessment Years 2007-08, 2008-09 the Tribunal uphold the deletion of penalty observing as under: 3. We have heard the counsels for both the parties and also perused the orders passed by Ld. CIT(A) and Hon'ble ITAT as mentioned above in assessee's own case. We find that Ld. CIT(A) has passed a common order in the case of assessee in respect of AY 2007-08, 2008-09 and 2010-11 as the facts were identical in all the years. Since the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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