C.I.T., BIKANER vs. THE GANGANAGAR KENDRIYA SAHAKARI BANK L.

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ITA/272/2013HC RajasthanRJHC01034342201306 May 20163 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeals did not raise any substantial question of law. The Tribunal's finding that the assessee's claim was a wrong claim driven by a situation created as a result of the amendment in Section 80P(4), rather than a consciously false claim, was upheld. The Court agreed with the Tribunal's reliance on the Supreme Court decision in CIT vs. Reliance Petroproducts Pvt. Ltd. (322 ITR 158), which established that making an incorrect claim does not equate to furnishing inaccurate particulars. Since the revenue did not demonstrate that the particulars of income supplied by the assessee were incorrect, erroneous, or false, a mere wrong claim made under a misconception of exemption availability could not attract penalty under Section 271(1)(c). Therefore, the appeals filed by the revenue were dismissed.

What were the facts?

The appeals by the Commissioner of Income Tax (CIT), Bikaner, challenge orders of the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, dated June 18, 2013, and July 23, 2014. These ITAT orders set aside penalties imposed on the assessee, The Ganganagar Kendriya Sahakari Bank Ltd., under Section 271(1)(c) of the Income Tax Act, 1961. The penalties, amounting to Rs. 1,09,75,240 for assessment year 2007-08 and Rs. 50,00,000 for assessment year 2008-09, were levied by the Assessing Officer (AO) and affirmed by the CIT(Appeals). The penalties arose from the disallowance of deductions claimed under Section 80P(2)(a) due to an amendment to Section 80P(4) effective from April 1, 2007.

What were the issues?

1. Whether the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, is sustainable when the assessee made a wrong claim due to a misconception arising from an amendment in the law, rather than consciously furnishing inaccurate particulars. The assessee contends that the claim was made under a misconception of the law due to the amendment of Section 80P(4) and not with intent to conceal income or furnish inaccurate particulars. The revenue argues that the assessee, being a cooperative bank assisted by Chartered Accountants, cannot claim bona fide ignorance and that the false claim was made consciously. The revenue relies on the fact that the assessee availed assistance from experts. The ITAT held that it was a case of a wrong claim driven by a situation created by the amendment, not a conscious false claim. The ITAT relied on the Supreme Court decision in CIT vs. Reliance Petroproducts Pvt. Ltd. (322 ITR 158) which held that an incorrect claim does not tantamount to furnishing inaccurate particulars. The High Court noted that the revenue did not contend that the particulars of income supplied were incorrect, erroneous, or false.

Which sections of the Income-tax Act were involved?

Section 80P,Section 271(1)(c),Section 80P(2)(a),Section 80P(4)

AI-generated summary — verify with the full judgment below

1

1.

(D.B.INCOME TAX APPEAL NO.272/13)

2.

(D.B.INCOME TAX APPEAL NO.10/15) Dated:- 6.5. 16. HON'BLE MR.JUSTICE SANGEET LODHA HON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.Sheetal Kumbhat, for the appellant.

1.

These appeals are directed against orders dated 18.6.13 and 23.7.14 of Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur passed in I.T.A. No.417/Ju/2011 and I.T.A.No.139/Jodh/2014 respectively, whereby the penalty imposed on the assessee by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961 ( for short “the Act”), affirmed by Commissioner of Income Tax (Appeals) [CIT (A)], Bikaner, relating to the assessment year 2007-08 and 2008-09, stands set aside.

2.

The assessee, a cooperative bank, filed Returns of income for the assessment year 2007-08 and 2008-09, claiming deductions under Section 80P (2) (a) of the Act. During the course of assessment proceedings, it was revealed that the claim of deduction under Section 80P(2)(a) is not allowable as per the 2 provisions of Section 80P(4) as amended w.e.f. 1.4. 07. After seeking clarification of the assessee, the claim of the assessee under Section 80P(2)(a) was disallowed. Consequently, the penalty proceedings under Section 271(1)(c) of the Act, were initiated against the assessee for giving inaccurate particulars and claiming wrong deductions. The AO imposed the penalties of Rs.1,09,75,240/- and Rs.50,00,000/- on the assessee under Section 271(1)(c) of the Act for the assessment year 2007-08 and 2008-09 respectively. The appeals preferred by the assessee against the penalty orders were dismissed by the CIT(A), Bikaner. Aggrieved thereby, the appeals preferred by the assessee have been allowed by the ITAT as aforesaid. Hence, these appeals.

3.

Learned counsel appearing for the appellant contended that the assessee had made false claim consciously and thus, the penalty imposed under Section 271(1)(c), cannot be faulted with. Learned counsel submitted that the false claim raised by the assessee, which is availing the assistance of the Chartered Accountants, having expertise in the tax laws, cannot be said to be bona fide.

4.

Indisputably, an amendment in Section 80P (4) excluding the cooperative societies from the ambit of benefits under proviso to Section 80P(2), came into force w.e.f. 1.4.07 and therefore, the assessee being under misconception regarding

3 availability of benefit of exemption, cannot be ruled out. The learned ITAT has categorically held that it cannot be said to be a case of consciously making a false claim rather, it is a case of making a wrong claim driven by situation created as a result of amendment in the relevant provision. In this regard, the ITAT has relied upon a decision in the matter of “CIT vs. Reliance Petroproducts Pvt. Ltd.”, 322 ITR 158, wherein the Hon'ble Supreme Court categorically held that by no stretch of imagination can making of an incorrect claim tantamount to furnishing inaccurate particulars.

5.

It is not the case of the Revenue that the particulars of the income supplied by the assessee in its return are found to be incorrect, erroneous or false and thus, merely a wrong claim made by the assessee under misconception of availability of exemption cannot attract provisions of penalty under Section 271(1)(c) of the Act. The issue in this regard having been settled by the Hon'ble Supreme Court in Reliance Petroproducts Pvt. Ltd.'s case (supra), relied upon by the ITAT, no substantial question of law arises for consideration of this court in the present appeals.

6.

Accordingly, the appeals are hereby dismissed. (KAILASH CHANDRA SHARMA),J. (SANGEET LODHA),J. Aditya/

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