Madhya Pradesh High Court
Deputy Commissioner Of Income-Tax vs Rural Electrical Co-Operative Society ... on 27 January, 2005
Equivalent citations: [2005]279ITR319(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
JUDGMENT A.M. Sapre, J.
1. This is an appeal filed by the Revenue (Commissioner of Income-tax) under Section 260A of the Income-tax Act, 1961, against an order dated October 15, 1998, passed by the Income-tax Appellate Tribunal (for brevity hereinafter referred to as the Tribunal) in I. T. A. No. 271/Ind/ 94. This appeal was admitted for final hearing on the following substantial questions of law :
"1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the provisions of Explanation 4 to Section 271(1) are not applicable in the instant case ?
2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in cancelling the penalty under Section 271(1)(c) of Income-tax Act levied upon the assessee by the Assessing Officer ?"
2. Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik learned Counsel for the Revenue. None for the assessee.
3. In short, the question that arises for consideration in this appeal is in relation to imposition of penalty on the assessee amounting to Rs. 1,00,000 in the year in question, i.e., 1987-88, under Section 271(1)(c) ibid. It was set-aside by the Commissioner of Income-tax (Appeals) and the order of the Commissioner of Income-tax (Appeals) was maintained by the Tribunal holding, inter alia, that no case for imposing penalty under Section 271(1)(c) ibid is made out.
4. The assessee is a Government of India undertaking formed under the provisions of the M. P. Co-operative Societies Act. In the assessment year in question, due to non-disclosure of one entry, certain additions were made. This gave rise to initiation of penalty proceedings. In reply, the explanation of the assessee in substance was that it was not due to any deliberate intention on their part but it occurred due to the fact that accounts were prepared in the head office at Delhi, that the amount in question was at the disposal of the head office, that looking to the nature of the amount, the same was credited in the reserve account. It was also contended that the assessee being in the nature of a non-profit making society under the control of the Central Government, it never had any intention to conceal any income and/ or entry. It is this explanation which found favour with the Commissioner of Income-tax (Appeals) and the Tribunal, the imposition of penalty came to be set aside by both the Commissioner of Income-tax (Appeals) and the Tribunal, giving rise to the filing of this appeal by the Revenue.
5. Having heard the submissions of learned Counsel for the appellant (Revenue) and having perused the record of the case, we are of the opinion that no interference is called for in the impugned order as passed by the Tribunal.
6. In our opinion, once the factual explanation offered by the assessee found acceptance to the taxing authorities, then the High Court in its appellate jurisdiction which is well defined under Section 260A ibid the same cannot be re-examined on the facts again. It is only when it is noticed that the finding of fact is perverse or against any provision of law, or is incapable of being rendered due to any restrictions placed, a substantial question of law may emerge out of the impugned order.
7. So far as the applicability of the Explanation to Section 271(1)(c) is concerned, the same is not attracted. The issue of explanation was considered on the facts and it was held that the same was properly explained on the facts. Every concealment does not attract the rigour of Section 271(1)(c). It must be deliberate and intentional being in the knowledge of the assessee so as to evade payment of income-tax. The assessee being a non-profit organisation managed and controlled by the Government of India for supply/distribution of electricity in the State, it cannot be held that they had any deliberate intention to evade payment of tax. If due to some accountancy system maintained, one entry could not be subjected to tax, the same was rightly not made the basis for imposing a penalty of Rs. 1,00,000 under Section 271(1)(c) ibid.
8. In view of the aforesaid discussion, while concurring with the view taken by the Commissioner of Income-tax (Appeals) and the Tribunal, we dismiss the appeal filed by the Revenue (Commissioner of Income-tax).
No costs.