TMI Blog2009 (7) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... a State Government Undertaking created under the Warehousing Corporation Act, 1962. The creation of the respondentassessee was with the aim of building warehouses all over the State of Haryana, for storage of food grains on behalf of the Food Corporation of India. 2. It would be pertinent to mention, that the respondent-assessee was assessed to income tax for the assessment year 1993-94 at Rs.1,04,61,330/- vide order dated 21.4.2006, as against a nil income tax return, submitted by the respondent-assessee on 31.12.1993. The Assessing Officer, accordingly arrived at the conclusion, that by filing a nil income tax return for the assessment year 1993-94, the respondent-assessee had sought to evade income tax to the tune of Rs.1,04,61,330/-. The minimum penalty imposable for the same being the quantum of tax evaded, the Assessing Officer imposed the penalty of Rs.1,04,61,330/-. The aforesaid determination at the hands of the Assessing Officer was affirmed by the Commissioner of Income Tax (Appeals) vide his order dated 2.9.2006. 3. The instant appeal has been preferred against the order passed by the Income Tax Appellate Tribunal dated 4.10.2007 by which the orders passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. And as such, the decision rendered by the Income Tax Appellate Tribunal that the warehousing Corporation receipts and commission was entitled to exemption under section 10(29) of the Act, was also upheld by the High Court. The revenue had preferred an appeal against the aforesaid decision of the Allahabad High Court before the Apex Court. The Supreme Court while disposing of Civil Appeal Nos.1240 and 1241 of 1979 (filed against the aforesaid order passed by the Allahabad High Court) passed the following order on 9.4.1996:- "In view of the decision of this Court, in the case of the Union of India Another, U.P.State Warehousing Corporation, 187 ITR 54 which affirms the view taken in the impugned judgment. These appeals are dismissed. No costs". It is,therefore, apparent that the Supreme Court did not find any justification to interfere with the order passed by the Allahabd High Court in the judgment referred to hereinabove. 6. It would also be pertinent to mention that on the same issue, the opinion expressed by a Division Bench of the Madhya Pradesh High Court in M.P.Warehousing Corporation (1982) CIT, 133 ITR 158, was at variance with the one rendered by the Alla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the Allahabad High Court (paragraph 5 above) on the one hand, and by the High Courts of Madhya Pradesh (paragraph 6 above), Karnataka (paragraph 7 above) and Rajasthan (paragraph 8 above), it is apparent that the matter needed to be settled by the Apex Court. The Supreme Court referred the issue,namely, whether the entire income of a Warehousing Corporation, was exempt under section 10(29) of the Act, or whether rental income charged for storage, processing or fecilitating the marketing of commodities in godowns and warehouses alone, was exempt from the liability of tax, to a larger Bench in CIT v. Gujarat State Warehousing Corporation (2000) 245 ITR 1. 10. In so far as the present appeal is concerned, as already noticed hereinabove, the entire income of the respondent-assessee, was accepted by the revenue as exempt from the liability of tax, upto the assessment year 1991-92. However, based on the judgments rendered by different High Courts (other than Allahabad High Court), referred to in the foregoing paragraphs, the revenue concluded, that income drawn by the respondentassessee from all heads other than rental income earned by it from letting out godowns and wareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view, that the respondent-assessee had earned income from fumigation charges (Rs.12,85,543/-), as well as, from waybridge charges (Rs.1,23,731/-). Although, it was submitted on behalf of the respondent-assessee, that it had incurred losses under both the aforesaid heads, yet the income of the respondent-assessee under the aforesaid heads, was assessed as Rs.1,10,000/-. The Assessing Officer also arrived at the conclusion, that the respondent-assessee had earned income of Rs.17,27,481/- by way of interest on loans advanced to the Haryana State Federation of Cooperative Sugar Mills (Sugar Federation). It was also held, that the Haryana Warehousing Corporation had earned income of Rs.2,24,34,767/- by way of trading in wheat. Additionally, the respondent assessee was found to have earned income of Rs.80,831/- on account of forfeiture of earnest money from contractors who had been given contracts for constructing godowns. The Haryana Warehousing Corporation was additionally found to have earned incomes of Rs.14,510/- (for receipt of tender fee) Rs.10,652/- (on account of stitching charges), Rs.7,29,360/- (by way of sale of covers), and lastly, a sum of Rs.12,22,035/- (described as super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eligible deduction was actually less than what was claimed. Once the assessee had claimed a deduction, that particular part of income was exempt, the assessee was under a legal obligation to realize that the expenses related to this income were not to be set off against the taxable income". Based on the aforesaid determination, the Appellate Authority upheld the imposition of the minimum penalty of Rs.1,04,61,330/- for concealment of income under section 271(1)(c) of the Act, vide its order dated 2.9.2006. 16. Dissatisfied with the orders passed by the Assessing Officer dated 30.3.2006, as also by the Appellate Authority dated 2.9.2006, the respondent-assessee preferred an appeal before the Income Tax Appellate Tribunal. 17. The Income Tax Apepllate Tribunal, inter alia, took into consideration the following issues canvassed on behalf of the respondentassessee:-Firstly, that the respondent-assessee had relied on the judgment rendered by the Allahabad High Court in CIT v. U.P. Warehousing Corporation 195 ITR 273, as against which a petition for Special Leave to Appeal preferred by the revenue has been dismissed by the Supreme Court. Relying on the aforesaid judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct matter of challenge at the hands of the revenue through the instant appeal. When the instant appeal came up for hearing for the first time on 11.2.2009, keeping in mind the fact that the Income Tax Appellate Tribunal had clearly and unambiguously recorded that the respondentassessee i.e., the Haryana Warehousing Corporation had not furnished any inaccurate particulars, nor concealed its income. And also because the appellant revenue had not controverted the aforesaid factual position in the grounds of appeal raised by it. Learned counsel for the appellant-revenue was confronted with the aforesaid factual position. Learned counsel sought, and was afforded an adjournment, to obtain instructions on the matter. While allowing the aforesaid adjournment, this Court passed the following order on 11.2.2009:- " The issue under consideration in the present appeal is, whether the respondent-assessee is guilty of having furnished inaccurate particulars. In this behalf, it would be pertinent to mention, that the respondent-assessee in its return claimed exemption under section 10(29) of the Income Tax Act, 1961. It is the vehement contention of the learned counsel for the appellant, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon legitimate controversies between quarreling parties, but also discharges the executive function of decision making. In furtherance of the intention expressed by this Court the revenue took two steps. Firstly, it moved civil miscellaneous application No.12383-CII-of 2009, so as to place on the record of this case an affidavit of the Commissioner of Income, Panchkula, dated 19.5.2009. And secondly, it engaged services of a senior counsel to represent the revenue in the instant appeal before this Court, so as to require this Court to discharge its executive function of decision making. 21. Before learned senior counsel commenced to address arguments, we invited his attention to the factual position noticed in the preceding paragraph. Learned senior counsel expressed his helplessness, he was professionally duty bound to canvass the appeal on behalf of the revenue. We granted him the liberty to raise submissions without any interference during the course of hearing, so as to enable him to discharge his professional responsibility. The few submissions raised by him have individually been dealt with in the succeeding paragraphs. 22. The first submission advanced by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing out of the judgment rendered by the Gujarat High Court came to be referred to a larger Bench by the Supreme Court itself in CIT v. Gujarat Warehousing Corporation, (2000)245 ITR 1. It is, therefore, apparent that the legal position, which was subject matter of consideration was still in flux and had not attained finality. It would not therefore be correct to state that the filing of the return by the respondent-assessee in any way lacked bona fide. In view of the above, in our view, the first contention advanced on behalf of the appellant-revenue is wholly misconceived. We may also add herein, that the acceptance of the instant plea would lead to the inference, that an assessee who canvasses a claim on the basis of its (assessee's) interpretation of the law, would be liable to penal action in case the revenue finds that the claim raised by the assessee is not acceptable. Such a determination would place curbs on the rights of an assessee, to raise claims it believes to be genuine, under the law. We are satisfied, that no such fetters can be placed on the rights of the assessee to raise genuine claims in its return. In the facts and circumstances disclosed hereinabove, we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- (a) to (b) xx xx (c ) has concealed the particulars of his house or furnished inaccurate particulars of such income, or (d) xx xx he may direct that such person shall pay by way of penalty (i) to (iii) xx xx Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. Explanation- 2 to 5-A xx xx". The essential pre-requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty under the Central Excise Act, 1944, irrespective of the fact whether it was an intentional or innocent ommission. In other words, the Apex Court was examining a proposition, whether mens-rea was an essential ingredient before penalty under section 11AC of the Central Excise Act, 1944 could be levied. In view of the factual position noticed hereinabove, the issue of mens-rea does not arise in the present controversy because the ingredients before any penalty can be imposed on an assessee under section 271 (1)(c) of the Act, were not made out in the instant case, as has been concluded in the foregoing paragraph. Thus viewed, the judgment relied upon by the learned counsel for the appellant-revenue is, besides being a judgment under a different legislative enactment, is totally inapplicable to the facts and circumstances of this case. Accordingly, we find no merit even in the second contention advanced by the learned counsel for the appellant-revenue. 27. The third contention advanced on behalf of the appellant-revenue was, that the finding recorded by the Income Tax Appellate Tribunal, that since the Assessing Officer vide his assessment order dated 15.12.1993 had accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph 17 hereinabove (in terms of the decision rendered by the Income Tax Appellate Tribunal). The aforesaid factual/legal position has neither been controverted in the grounds of appeal, nor in the affidavit filed by the Commissioner of Income Tax, Panchkula, dated 19.5.2009. As such, we find no merit in the first plea. The second plea, noticed above, is in fact ridiculous, on account of the fact that the claim of the respondent assessee for exemption under section 10(29) of the Act was acceded to during the course of assessment for the year 1991-92 (vide order dated 15.12.1993). It was in fact, to our mind,wholly justified for the respondentassessee to seek the same exemption when it filed return for the assessment year 1993-94 on 31.12.1993 i.e., a mere 15 days after the same plea raised by the respondent-assessee had been acceded to. For the aforesaid reason, we find no merit even second plea advanced by the learned counsel for the appellant-revenue. 28. No other submission, besides those noticed above, was raised on behalf of the respondent-assessee, during the course of hearing of the instant appeal. 29. In fact, to our mind all the five issues taken into considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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