K.U.M.S.SANGARIA vs. I.T.O.WARD-1,HANUMANGARH

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ITA/9/2013HC RajasthanRJHC01012274201323 January 20183 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the issue was squarely covered by its previous decision in Krishi Upaj Mandi Samiti, (Grain) Sriganganagar vs. I.T.O. Ward-2, Sriganganagar. The Court found that a debatable issue existed regarding the depreciation available to the assessee. The assessee, acting with a bonafide belief about the availability of depreciation, did not file a return. This stand was ultimately vindicated in favor of the assessee in a prior case. The Court reasoned that a penalty under Section 271(1)(c) could only be imposed if the assessee intentionally concealed income or provided incorrect details. In this case, there was neither concealment of particulars nor furnishing of inaccurate particulars. The explanation provided by the assessee was also debatable and was ultimately decided in their favor. Therefore, there was no sufficient reason to impose a penalty under Section 271(1)(c). The ITAT's order was set aside, and the order of the Commissioner of Income Tax was restored.

What were the facts?

The appellant, Krishi Upaj Mandi Samiti, Suratgarh, Sangaria, filed an appeal against the judgment of the Income Tax Appellate Tribunal (ITAT) which had dismissed their appeal. The ITAT's decision confirmed a penalty imposed upon the assessee under Section 271(1)(c) of the Income Tax Act, 1961. The core of the dispute revolves around whether the assessee had concealed income or furnished inaccurate particulars, leading to the penalty. The procedural history indicates that the assessee challenged the penalty imposed by the Assessing Officer, which was upheld by the Commissioner of Income Tax, and subsequently by the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was justified in confirming the penalty imposed upon the appellant-assessee under Section 271(1)(c) of the Income Tax Act, 1961, when the issue regarding the availability of depreciation was a debatable one and there was no specific finding that the assessee had submitted false or incorrect accounts? Assessee's Contention: The assessee argued that the issue regarding depreciation was debatable and that they acted with a bonafide belief. They contended that there was no specific finding of false or incorrect accounts submitted by them, and therefore, the penalty under Section 271(1)(c) was not sustainable. Revenue's Contention: The judgment notes that the learned counsel for the revenue did not dispute the factual aspect of the matter concerning the debatable nature of depreciation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 153,Section 139,Section 142,Section 148

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 9 / 2013 Krishi Upaj Mandi Samiti, Suratgarh, Sangaria Versus 1.T.O.Ward-1,Hanumangarh For ~ e s ~ o n d e . n t ~ ! j ; $b +. :$Mr. K.K. Bissa & "- c~ i a .; l V * .<' 1 \ r ..wL-- '\",% ,b. I J , k7%.?:rv,T ., '- -.i %,?' * I\\ "- HON'BLE MR. JUSTICE K. S. JHAVERI 1, ,L.. ( ,.p l, HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI i r * P J<~.d.q.m:e n t 1 By way of this appeal, the appellant has assailed the

judgment the appea tri bunal has dismissed

2.

This court whil eal framed following substantial question o '(1) ~hktfkr o,n the :facts and in the circumstances of the case, the ITAT was juB3tifi,ed, , in gonfirming the penalty imposed upon the appellant- assessee under Section 271(1)(c) of the assessee was a debatable one and there was no specific finding that the assessee had submitted false or incorrect accounts?"

3.

Now the issue is squarely covered by the decision of this Court in Krishi Upaj Mandi Samiti, (Grain) Sriganganagar vs, I.T.O.

Ward-2, Sriganganagar (D.B. Income Tax Appeal No.122/2001) decided on 5.5.2017 wherein, it has been held as under :- "In appeal before us, it is submitted by learned counsel for the appellant that as per Section 271(1)(c) of the Act of 1961, where any person fails, without reasonable cause, to furnish within the period specified in sub-section ( 1 of Section 153 a return of his income which he is required to furnish under Section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989 and until the expiry of the period aforesaid, no notice has been issued to him under clause ( I ) of sub-section ( I ) of Section 142 and the Assessing 0ffice.r or the Commissioner (Appeals) is w t

satisfied that i n respect of'such assessment year such person has taxable i,ncome, then, such person shall, for the purposes of clause (c) of sub-section (I), be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes aGefurn of income a t any time after the expiry ofthehperiod af&esaid in pursuance to the notice under ~ection'148 and is liable for n hand, as per assessee, the bonafide one, availability of cealment. It is ng a charitable the Act of 1961, , was entitled to this aspect was no concealment. ision Bench of this Court in Com Krishi Upaj Mandi Raj.), has taken a view that the i is, a charitable of the Act of 1961, ion as per Section *4 xw**5,-..Lwwt.-.".--41 .-I-" .-.. " ". Learned ~ou:n+gl:~$~~egri.11~,g :<QQ .behalf of the revenue does not dispute this factual aspect of the matter. From perusal of the explanation tendered by the appellant assessee it is apparent that a debatable issue was there about depreciation available to the assessee. The assessee with a bonafide belief about availability of depreciation did not file return. The stand of the assessee was ultimately vindicated in the case of Commissioner of Income Tax v. Krishi Upaj Mandi Samiti (supra). The penalty under Section 271(1)(c) of the Act of 1961 could have (5 of 5) [ITA-122/2011] been imposed only if the assessee would have intentionally concealed the income in its returns or had given incorrect details of its expenditure as well as in the returns. I n the case in hand there is neither concealment of particulars of income of the assessee nor thexe' is furnishment of inaccurate particulars of income. The assessee with a bonafide belief about allo.wa.bbe..dep~eciation did not file the return. The explanation given by the assessee was also debatable and ultimately that debate came to be decided in favour of the assessee. As such, we are of the opinion that there was no sufficient reason to subject the assessee for a penalty under Section 271(1)(c) of the Act of 1961. The question formulated stands resolved accordingly and the appeal is allowed. The order passed by the Income Tax Appellate Tribunal dated 3.8.2009 is set aside and the order passed by the Commissioner of Income Tax is restored. " '\&$ '& C&* " 4 662% -%?

4.

I n that . \l)e.wJof t+ 2 the matter, the issue is ansbweer@l in favour of P /c x the assess>ee and against the department. ,A I*?" ' f

5.

The appeal stand allowed. : y A * . * * ,'r.*2 " ,,. 1 1

(D R, PUS p E D RA'S 3, N~G~H i : ~ R:AT~>;' J: b (K. S. JHAVER1)J. ,? //bm gandhi 61

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