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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘C’
Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD – BENCH ‘C’
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 2546/Ahd/2017 �नधा�रण वष�/Assessment Year: 2013-14 Balva Dudh Utpadak Sahakari ITO, Ward-4 Mandali Ltd., At & Post: Balva Vs Mehsana. Tal: Halol, Gandhinagar 382 721. अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri Nitesh Thakkar Revenue by : Shri O.P. Pathak, Sr.DR
सुनवाई क� तार�ख/Date of Hearing : 18/03/2019 घोषणा क� तार�ख /Date of Pronouncement : 19/ 03/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(A), Gandhinagar dated 14.8.2017 passed for the Asstt.Year 2013-14.
It is pointed out by the Registry that the appeal of the assessee is barred by limitation by 27 days. In order to explain the delay in filing the appeal, the assessee has filed an affidavit stating interalia that the concerned staff of the assessee did not inform the management and kept the order of CIT(A) in his table and went on leave. The factum of receipt of order of the ld.CIT(A) has not been intimated to the assessee. When the assessee came to know about the same immediately approached its counsel for filing the appeal before the Tribunal. Therefore, delay was caused due to negligence on the part of its staff, and the assessee has no
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mala fide intention to get its appeal delayed before this Tribunal. Therefore, delay in filing the appeal may be condoned and the appeal of the assessee be adjudicated on merit.
After considering the submissions of the assessee, we are of the view that the assessee is prevented by reasonable cause in not getting the appeal filed in time before the Tribunal. Therefore, we condone the delay and proceed to dispose of the appeal on merit.
Assessee has filed its return of income on 13.11.2014 declaring total income at NIL. On scrutiny of the accounts, it revealed to the AO that the assessee has earned interest income from fixed deposits made with State Bank of India (SBI). According to the AO, there was a difference of interest income amounting to Rs.1,93,793/-shown by the assessee as well as disclosed by the bank. When, the AO confronted the assessee with regard to difference in the interest income, then it was contended that a sum of Rs.1,93,793/- is the interest receivable and not received in the F.Y.2013-14. It was received in the F.Y.2014-15 and duly accounted in the books. It was further contended that since assessee is entitled for exemption under section 80P, therefore, it does not make any difference. The ld.AO was not satisfied with the contention of the assessee, and he made addition. Similarly, the assessee claimed exemption of interest income under section 80P(2), but disallowed to the assessee.
Third item considered by the AO for visiting the assessee with penalty is shortage on account of ghee stock claimed by the assessee. The ld.AO has observed that the assessee has disclosed NIL income whereas it was determined at Rs.3,02,777/- vide assessment order dated
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27.11.2015 passed under section 143(3) of the Act. He considered three items, viz. (a) addition on account of interest income of Rs.61,918/-; (b) addition on account of disallowance claimed for pilferage and waste in ghee account of Rs.4,480/-, and (c) denial of exemption under section 80P(2) of interest income earned from nationalized banks. He observed that taxes on all these items worked out Rs.90,469/-. According to the AO, it amounts to deemed concealment of income within the ambit of Explanation 1 appended to section 271(1)(c) of the Act. Hence, penalty deserves to be imposed upon the assessee. Appeal to the ld.CIT(A) did not bring any relief to the assessee.
We have considered rival contentions and gone through the record. Section 271(1)(c) of the Income Tax Act, 1961 has direct bearing on the controversy. Therefore, it is pertinent to take note of the section.
"271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act,
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(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 CIT 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 or 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.”
A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provision regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the
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Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished.
In the light of the above, if we examine the facts of the present case, then it would reveal that the assessee has given explanation with regard to disclosure of interest income from fixed deposits with nationalized banks. It was contended by the assessee that it did not receive interest income because fixed deposits were not matured in this year. To our mind, the assessee has bona fide belief and it has disclosed all complete details. It has given an explanation which was not found to
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be false. With regard to disallowance out of ghee, it was contended that it has shortage of 15 kgs. of ghee on account of pilferage or wastage. It became inedible, and therefore, it claimed the loss. There was a natural consequence in the working of the assessee-society. Similarly, food items might have deteriorated on account of time gap between the purchases and sales etc. There is no mala fide intention at the end of the assessee. As far as exclusion of interest income from exempt under section 80P(2) is concerned, this disallowance has been confirmed by the ld.CIT(A) after taking into consideration decision of Hon’ble Gujarat High Court in the case of SBI Employees Co. op. Credit & Supply Society Ltd., 389 ITR 578. This decision has come subsequent to the return filed by the assessee. Therefore, prior to this decision, the position was not clear and remained debatable whether interest income from FDR made with nationalised banks will qualify for exemption under section 80P(2) or not. There are certain decisions also which are in favour of the assessee. Considering all these, we are of the view that assessee does not deserve to be visited with the impugned penalty, which is hereby cancelled and ground of the appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed.
Pronounced in the Open Court on 19th March, 2019.
Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated, 19/03/2019