Income Tax Appellate Tribunal - Pune
The Cosmos Co-Op. Bank Ltd.,, Pune vs Deputy Commissioner Of Income-Tax,, on 14 August, 2018
आयकर अपीलीय अिधकरण "बी
बी"
बी यायपीठ पुणे म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, PUNE
ी डी.
डी क णाकरा राव,ले
राव लेखा सद य,
सद य एवं ी िवकास अव थी,
अव थी याियक सद य के सम
BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA Nos. 1723 & 1724/PUN/2016
िनधा रण वष / Assessment Years : 2007-08 & 2008-09
The Cosmos Cooperative Bank Ltd.,
Cosmos Tower, Plot No.6,
ICS Colony, University Road,
Ganeshkhind, Shivajinagar,
Pune - 411007
PAN : AAAAT0742K .......अपीलाथ / Appellant
बनाम / V/s.
DCIT, Circle-7,
Pune ...... यथ / Respondent
Assessee by : Shri Sunil Ganoo
Revenue by : Shri A.K. Modi
सुनवाई क तारीख / Date of Hearing : 08.08.2018
घोषणा क तारीख / Date of Pronouncement : 14.08.2018
आदेश / ORDER
PER D. KARUNAKARA RAO, AM:
There are two appeals filed by the assessee under consideration involving A.Yrs. 2007-08 and 2008-09. They are filed against the separate orders of CIT(A)-5, Pune, commonly dated 31-05-2016. Penalties levied u/s.271(1)(c) of the I.T. Act is the issue in both these appeals.
We shall first take up the appeal for A.Y. 2007-08. 2
ITA Nos.1723 & 1724/PUN/2016 The Cosmos Cooperative Bank Ltd., ITA No.1723/PUN/2016 A.Y.2007-08
2. Assessee raised the following grounds and the same are extracted here as under :
"1. In the facts and circumstances of the case and in law, in the absence of conditions precedent for initiation and levy of penalty u/s.271(1)(c) of the I.T. Act, 1961, the impugned penalty is bad in law, patently illegal, void ab initio and hence the same may please be deleted.
2. In the facts and circumstances of the case and in law, the impugned penalty of Rs.8,16,41,860.00 as levied by the learned Assessing Officer u/s.271(1)(c) of the I.T. Act, 1961 and confirmed by the learned CIT(A) being arbitrary, perverse, bad in law and devoid of merits the same may please be vacated.
3. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal.
3. Briefly stated relevant facts of the case include that the assessee is a Cooperative Society and is engaged in the business of banking. Assessee filed the return of income on 29-10-2007 declaring loss of Rs.111.07 crores (rounded off). In the Assessment, the AO denied various claims by the assessee and eventually assessed the income of the assessee at Rs.53,95,04,919/- and levied penalty of Rs.8,16,41,860/-. In the First Appellate proceedings, the CIT(A) confirmed the penalty levied by the AO. Aggrieved with the order of CIT(A) the assessee is in appeal before us with the grounds mentioned above.
4. Before us, at the outset, Ld. Counsel for the assessee referring to the grounds submitted that this is a case where the AO failed to record valid satisfaction at the time of initiation as well as at the time of levying the penalty. Highlighting the legal requirement of making a specific reference to the specific limb of clause (c) of section 271(1) of the Act and relying on various binding judgments in the case CIT Vs. Shri Samson 3 ITA Nos.1723 & 1724/PUN/2016 The Cosmos Cooperative Bank Ltd., Perinchery (2017) 392 ITR 4 (Bom.) as well as the judgment of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565 Ld. Counsel demonstrated that the penalty levied by the AO is unsustainable in law. In this regard, he brought our attention to the assessment order as well as the penalty order highlighting the above legal deficiencies.
5. Per Contra, Ld. DR for the Revenue relied on the orders of AO/CIT(A).
6. We heard both the parties and perused the orders of the Revenue. On going through the facts of the case and the arguments of the Ld. Counsel on the specific legal issue, i.e. recording of proper satisfaction by the AO, we find that the AO initiated the penalty proceedings u/s.271(1)(c) of the Act for "for concealing and/or. for filing inaccurate particulars of income" whereas in the penalty order it was mentioned as "concealed the particulars of its income and has committed default within the meaning of section 271(1)(c) of IT Act, 1961...............". This manner of recording of satisfaction suggests the existence of ambiguity in the mind of the AO with reference to the applicable limb of clause (c). Therefore, we are of the opinion that considering the above referred binding judgments such penalty order is unsustainable in law legally. AO is under obligation to specify the correct limb at the time of initiation as well as at the time of levy of penalty. In view of the above deliberation on this issue, we are of the opinion that the penalty order is liable to be quashed on this legal issue. Thus, we set aside the order of CIT(A) and direct the AO to delete the 4 ITA Nos.1723 & 1724/PUN/2016 The Cosmos Cooperative Bank Ltd., penalty. Accordingly, the grounds of appeal raised by the assessee are allowed on technical grounds without going into the merits of the issue.
7. In the result, appeal of the assessee is allowed. ITA No.1724/PUN/2016
A.Y.2008-09
8. Regarding the appeal for A.Y. 2008-19 too, Ld. Counsel for the assessee as well as Ld. DR for the Revenue submitted that the arguments made in Appeal for A.Y. 2007-08 would apply to this appeal since the grounds, facts, issues and decision of AO/CIT(A) are same.
9. After hearing both the sides, we find the AO in the assessment order dated 29-12-2010 initiated penalty proceedings mentioning "Penalty proceedings are initiated for furnishing inaccurate particulars of income" whereas in the penalty order dated 28-08-2014, the AO levied penalty mentioning "I am satisfied that assessee, without sufficient and reasonable cause, under the deliberate intention concealed it's income by furnishing inaccurate particulars of income ." Therefore, similar ambiguity exists in this appeal too with reference to the applicable limb of clause (c). The reasoning given by us in Para No.7 above while dealing with appeal for A.Y. 2007-08 would apply to this assessment year also. Accordingly, we are of the opinion that the appeal of the assessee should be allowed on technical grounds without going into the merits of the additions. Thus, the grounds raised by the assessee are allowed.
5
ITA Nos.1723 & 1724/PUN/2016 The Cosmos Cooperative Bank Ltd.,
10. In the result, the appeal of the assessee is allowed.
11. To sum up, both the appeals of the assessee are allowed.
Order pronounced on 14th day of August, 2018.
Sd/- Sd/-
(िवकास अव थी /VIKAS AWASTHY) (डी. क णाकरा राव/D.
KARUNAKARA RAO)
याियक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
पुणे / Pune; दनांक / Dated : 14th August, 2018.
Satish आदेश क ितिलिप अ#ेिषत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-5, Pune.
4. The Pr. CIT-4, Pune.
5. बी"
िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, "बी बी ब च, पुणे / DR, ITAT, "B" Bench, Pune.
6. गाड" फ़ाइल / Guard File.
आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.