Rajasthan High Court - Jodhpur
C.I.T., Udaipur vs M/S Chittorgarh Kendriya Sah. Bank Ltd on 17 October, 2013
Bench: Dinesh Maheshwari, P.K. Lohra
ITA No.77/2013
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D.B. INCOME TAX APPEAL NO.77/2013
CIT, Udaipur
Vs.
M/s Chittorgarh Kendriya Sahakari Bank Limited
DATE OF ORDER: 17th October 2013.
HON'BLE MR. JUSTICE DINESH MAHESHWARI
HON'BLE MR. JUSTICE P.K. LOHRA
Mr.K.K.Bissa for the appellant
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BY THE COURT:
Having heard the learned counsel for the appellant and having perused the material placed on record, we are satisfied that no substantial question of law is involved in this appeal filed by the revenue under Section 260-A of the Income Tax Act, 1961 ['the Act'] against the order dated 17.12.2012 passed in ITA No.387/JU/2011 by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ['the ITAT'] for the assessment year 2007-08.
The sum and substance of the matter could be noticed in the following: The assessee is a co-operative society, engaged in the business of banking and providing credit facilities to its members and public in general. The assessee had earlier been claiming, and was being allowed, deduction under Section 80P(2) of the Act for being eligible therefor. The assessee also claimed the similar deduction for the assessment year 2007-08, which has not been allowed by the Assessing Officer ['the AO'] due to change in law, whereby the assessee was rendered ineligible for this deduction. ITA No.77/2013 2
It appears that the assessee filed its original return for the assessment year 2007-08 on 30.10.2007, declaring total income at Rs.3,90,26,699/- while claiming deduction of Rs.50,000/- under Section 80P(2)(c)(ii). Subsequently, a revised return was filed by the assessee on 13.12.2007, declaring income of Rs.82,88,771/-. In this revised return, in addition to the claim of deduction under Section 80P(2)(c)(ii) amounting to Rs.50,000/-, the assessee also claimed further deduction of Rs.3,07,37,988/- under section 80P(2)(d) of the Act. However, on being informed by the AO after scrutiny about amendment of Section 80P, the assessee filed re- revised return on 29.12.2009, seeking to withdraw the claim of above deduction. The AO found the re-revised return not a valid one; and completed the assessment on total income of Rs.3,90,76,700/-, disallowing both the claims of deduction under Section 80P(2)(c)(ii)) and 80P(2)(d) made in the first revised return. During the assessment proceedings, penalty notice was also issued with reference to such claims of deduction, requiring the assessee to show cause as to why penalty under Section 271(1)(c) should not be imposed on it for alleged concealment of particulars of income/furnishing of inaccurate particulars of income.
The assessee submitted that in essence, it was a technical error, which occurred due to amendment of the provisions of Section 80P of the Act; and the mistake was sought to be rectified in the re-revised return. The assessee also submitted that the penalty could be levied under Section 271(1)(c) only in a case of deliberate concealment of ITA No.77/2013 3 particulars of income or deliberate furnishing of inaccurate particulars, which had not been the case here. The AO, however, rejected the contentions of the assessee and held that the assessee had intentionally claimed inadmissible deductions under Section 80P(2) to reduce the taxable income; and proceeded to impose the penalty under Section 271(1)(c) of the Act to the tune of Rs.93,70,460/-.
In the appeal preferred by the assessee, the learned Commissioner of Income Tax (Appeals), Udaipur ['the CIT(A)'] was convinced that the claim of deduction by the assessee had not been that of concealment of income or furnishing of inaccurate particulars; and in the given fact situation, penalty under Section 271(1)(c) was not attracted. The CIT(A) found the case of the assessee bona fide and, accordingly, set aside the order imposing penalty by his order dated 12.09.2011 while observing, inter alia, as under:-
"3.3.3. The making a claim of deduction under the law and its disallowance cannot be treated either as concealment of income or furnishing inaccurate particulars of income as held by the Honourable Supreme Court in the case of CIT Vs. Reliance Petro Products (P) Ltd in context of disallowance of the claim regarding interest on loan taken by the assessee which was disallowed under section 14A of the Act. It has been held that merely because the assessee claimed deduction of interest expenditure which has not been accepted by the Revenue, penalty under section 271(1)(c) is not attracted and mere making the claim which is not sustainable in law by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Similarly, the Honourable High Court of Gujarat in the case of CIT Vs. Manibhai & Bros. (supra) it has been held that if an assessee wrongly claims some deduction under a bona fide mistake, he cannot be considered liable for penalty. In the present case, the appellant has claimed deduction under section 80P which was surrendered by filing the revised return as soon as the A.O. confronted to the amendment made in section 80P (4) according to which such deduction is not allowable in the case of the appellant.
In view of above discussion, it is held that the explanation filed for claim of deduction under section 80P and its withdrawal by way of filing the revised return was bonafide and does not fall in the category of concealment ITA No.77/2013 4 or furnishing inaccurate particulars of income. Accordingly, the penalty of Rs.93,70,500 levied under section 271(1)(c) is cancelled."
The order aforesaid was questioned by the Revenue in ITA No.387/JU/2011 before the ITAT. The ITAT agreed with the observations and findings of the CIT(A) and dismissed the appeal by its impugned order dated 17.12.2012 while observing, inter alia, as under:-
"6. Reverting to the facts of the case and after considering the rival submissions, we have found that this is not a fit case for levying penalty as in this case neither the assessee has concealed the particulars of income nor has furnished inaccurate particulars of income. This is simply a case of bonafide mistake which has occurred due to change of law applicable in this year. The assessee had been claiming and was being allowed similar claims of deductions in earlier Assessment Years also. After giving our thoughtful consideration to the facts of this case vis-a-vis the legal position narrated above, we are of the considered opinion that when a wrong claim is made under some bonafide mistake, that cannot be a ground for imposition of penalty u/s 271(1)(c) of the Act. The assessee has been making similar claim and the same were being allowed in earlier assessment years. Due to sudden change in law, this claim was not allowed and the assessee also corrected its mistake by filing a revised return, it is not a case of willful wrong claim. Therefore, we do not find any mistake in the order of the ld.CIT(A) and confirm the deletion of impugned penalty. The appeal of the revenue deserves to be dismissed. We, dismiss the same."
The Revenue seeks to question the order so passed by ITAT with the submissions that in the original return, no claim for deduction was made but it was made by filing the revised return and, thereafter, when confronted, the assessee attempted to file a belated re-revised return. Thus, according to the Revenue, the finding of ITAT that it were a case of bona fide mistake, is not justified. It is contended that the attempt of the assessee to reduce the taxable income by claiming inadmissible deduction tantamount to furnishing of inaccurate particulars of income and the AO had rightly imposed the ITA No.77/2013 5 penalty in this case.
In our view, the submissions of the Revenue fall short of making out a substantial question of law worth consideration.
The assessee is a Co-operative Bank and had been entitled to the deduction under Section 80P(2) of the Act before the year in question and had been allowed such deduction. It is no doubt true that in the original return for the year in question, the assessee claimed deduction of Rs.50,000/- under Section 80P(2)(c)(ii)of the Act and in the revised return dated 13.12.2007, besides the above, the assessee also claimed deduction of Rs.3,07,37,988/- under Section 80P(2)(d) of the Act. However, with the amendment in Section 80P and insertion of Sub-section (4) from 01.04.2007, assessee was, admittedly, not entitled to such deductions.
The assessee, a banking institution and a registered co- operative society, of course, ought to have been remained vigilant while filing its return or revised return but, it remains a fact that earlier, the deduction in question under Section 80P (2) was being allowed to the assessee, for being a co- operative society engaged in the business of banking and providing credit facilities. It was by virtue of insertion of Sub- section (4) by Finance Act, 2006 with effect from 01.04.2007 that the provisions of Section 80P were made inapplicable in relation to any Co-operative Bank other than the Primary Agriculture Credit Society or Primary Co-operative Agriculture and Rural Development Bank. Apparently, the claim for this deduction in the assessment year 2007-08 had been a matter ITA No.77/2013 6 of bona fide mistake and could not have been taken to be a case of concealment of particulars of income or furnishing of inaccurate particulars of income. In fact, when confronted with the legal position, the assessee filed re-revised return, albeit belatedly, withdrawing such claim of deduction.
The Appellate Authorities i.e., CIT(A) and ITAT have, in our view, rightly examined the matter with reference to the decision in CIT Vs. Reliance Petroproducts Pvt. Ltd.: (2010) 322 ITR 158 wherein, the Hon'ble Supreme Court has, inter alia, held as under:-
"......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 inaccurate particulars."
The Appellate Authorities have also rightly taken into consideration that on being confronted with the legal position, the assessee attempted to correct the mistake by filing re- revised return. In the totality of circumstances of this case, the Appellate Authorities cannot be faulted in not finding it to be a case of making a willfully wrong claim by furnishing inaccurate particulars. We find nothing of error or infirmity in the approach on the part of the Appellate Authorities leading to any substantial question of law.
Accordingly and in view of the above, the appeal stands dismissed.
(P.K. LOHRA),J. (DINESH MAHESHWARI),J. MK ITA No.77/2013 7