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

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ITA/113/2012HC RajasthanRJHC01051355201223 January 20185 pages
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What did the High Court hold?

The High Court held that the issue of depreciation available to the Krishi Upaj Mandi Samiti was a debatable one. The assessee had acted with a bonafide belief regarding the availability of depreciation and did not file a return based on this belief. The court referenced its own prior decision in Krishi Upaj Mandi Samiti, (Grain) Sriganganagar vs. I.T.O. Ward-2, Sriganganagar, which had held that penalties under Section 271(1)(c) could only be imposed if there was intentional concealment of income or furnishing of incorrect details. In this case, there was neither concealment nor inaccurate particulars. The assessee's explanation was also debatable and was ultimately decided in their favour. Therefore, there was no sufficient reason to subject the assessee to a penalty under Section 271(1)(c). The appeals were allowed, and the ITAT's order was set aside, restoring the order passed by the Commissioner of Income Tax.

What were the facts?

These appeals by Krishi Upaj Mandi Samitis (appellants) challenge orders of the Income Tax Appellate Tribunal (ITAT) that confirmed penalties imposed under Section 271(1)(c) of the Income Tax Act, 1961. The ITAT had dismissed the appeals of the assessees. The assessees are Krishi Upaj Mandi Samitis located in Suratgarh, Ridmalsar, Gangapur, and Bijaynagar. The revenue is represented by the Income Tax Officer (ITO). The assessment years are not explicitly stated for all appeals, but the context suggests they pertain to periods where the issue of depreciation for charitable institutions was debated. The core of the dispute revolves around the imposition of penalties for alleged concealment of income or furnishing inaccurate particulars, stemming from claims for depreciation.

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 claim of the assessee 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 claim for depreciation was a debatable issue, and there was no specific finding of false or incorrect accounts. They relied on the principle that penalties under Section 271(1)(c) should not be imposed when the claim is debatable and made in good faith. They also referred to a Division Bench decision in Commissioner of Income Tax v. Krishi Upaj Mandi Samiti, which held that Krishi Upaj Mandi Samitis, being charitable institutions registered under Section 12-A, are entitled to depreciation as per Section 32(1). Revenue's Contention: The judgment notes that the revenue did not dispute the factual aspect regarding the assessee being a charitable institution entitled to depreciation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 153,Section 148,Section 142,Section 32(1),Section 12-A

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. Ill / 2012 Krishi Upaj Mandi Samiti, Suratgarh Versus I.T.O. Suratgarh Connected With ,a ba,i. wf~g..*, D.q.fI5n~am.e Tax AppeallNo? 2s12 / 2012 d l -8 Krishi Upaj ~angiiisami6, Ridmalsar -? / = - \ Versus I.T.O. Ward-2, Sriganganagar 'Y .. . .- ' b ----Respondent i 7 % it#^. * i s * s s a D.B. Ifi%ome'Tax Appeal No. . 113 / 2012 Krishi Upaj Mandi ~ ~ ~ i g ~ + ~ d ~ ~ ~ , t g ~ f & ~ g & ~ ~ ~ * I ii~k -,$, .re.+$ c,4 &G&T8&32pk3G3ggi'@M&T? ----Appellant ' 8 VerS~ 5, 73 * ' 1 I;,! > 3; $1 ;i~/ ;j E"& 3 R 6.B s i( I.T.O. Ward-I, Han~mang,a~l$~. '?, it fl C- 9 . ,% " 5 ' ) Y C ,$a n + D.B. Inc,ome Tax Appeal ,No,. 114 / 2012 Krishi Upaj Mandi Samiti, Bijayliagar Versus I.T.O. Suratgarh D.B. Income Tax Appeal No. 116 / 2012 Krishi Upaj Mandi Samiti, Jetsar Versus (Uploaded on 18/07/2024 at 03:03:54 PM) (Downloaded on 28/10/2026 at 12:25:07 AM) I.To. Suratgarh For Appellant(s) : Mr. Rajesh Choudhary For Respondent(s) : Mr. K.K. Bissa , F ^tP -, h 4 %

HONIB,tE M@. ~ U S T ~ C E K. S. JHAVERI 8 % a - 4 @ i " Z ( HON'BL-E i. t+ ,>*> @R. JUSTICE PUSHPENDRA s$.NGH, BHATI C D , ":'a W XFS ".. Judament b Llr fy$F !i 8 ""C y;4h I. I n all these appeals co,mmon question of law and facts are i.>;8.t,, " j 6 involved hence they are .:+$, -. -de~'Bkd~bythihconimon .# y* judgment. \*,<~:*&q;&+% ;p''*:,p,; * '"P? .$*c '%". 2 I("&* J(.;>

2.

By way of these "the appellants have assailed the judgment and order of tribunal has dismissed

the appeal of the asses

3.

This court while adm'itjting .. I?!! t i % r r q 'We 4i.x appeals T framed following i . $ A j3d ..( : i, bk k &p+ -An* F h,sc %&$$bi'k ,h,:i'i *@?$ j b.f&%k$f%, rg&sj3>*k$%% substantial question O [ ~ ~ ~ ~ ~ W ~ - ~ @ $ ~ ~ . ~ Z ~ ~ ~ ~ ~ ~ , . ~ tJrc2F ..-..Hdv'p' r r t i :~,w.njv+,,~-. .,. -> , ,-%, ./<$P"L'% SXP;~-WP+ ; J r t k .k@U ,; 1 *%;&&,$ k w *% -:dh?~~a7---~#%z Zr '\,4 1 11 Appeal No. l l l ~ ~ 0 ~ 2 ( ~ d m i t t e d on 13.01.2014) wQ, ,, :& I. ". ., " **$y*7.%:A7-,--~, ---1.. -_ . _. ____-_. '(I) W h e t h e ~ o n the facts and in the ci rcu n;l$*a:n"'?&.; of th,eT 'case, the ITAT was ,j;ti.i"eb ...' in confirming 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?" Appeal No. 112/2012(Adrnitted on 13.01,.2014) (I) Whether on the facts and in the circumstances of the case, the ITAT was justified in confirming the (Uploaded on 18/07/2024 at 03:03:54 PM) (Downloaded on 28/10/2026 at 12:25:07 AM) 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?" Appeal No. 113/2012(Admitted on 13.01.2014) ( 1 Whether on the facts and in the circumstances of the case, the ITAT was justified-* in. 4n; confirming the &\ \ l,?--f! ih ,,/-=& penalty{ y,4ih ihposed g ppon +~i. {&he %. J f rt ,appellant- ,** ... aSSesS.ee under Sectionw~271?(l).~c) of "~@e"~ncome- ax Act, 1961 hhkn'5Ghke y.:;: i? , , ;(aim of the assessee was,,a, . debatable one and there was n'GA .A Pt t"?> 'tr j22; ;3 specific finding that the assessee had --rk. i submitted false or incorrect accounts. Appeal No. 114/2012(~amitted on 13.01.2014) I" * ""% 42 the , , *< , ". 1: .u:pdh .th.@$ a p pel la nt- ::'":;Jra"'"';*+<tpL,7P~ .t Sectton- ~ 2 7 1 (l)(c) of ,J. ;+&$>j<f4iek@ 6 1 when t h e p r ra f ~ ~ f b

~PY claim 0:Q assessee was a & I j \ %:! : $ $ , ' * i t debatable! onel. a:~d.: tihere was no specific find,irig that the assessee had su bmibted . . . -faJse-or. lclj* A S f *=a A i,fl~or~ept *.,. accounts. :$$y ;::2:2,/&-+; $ $ J;@&-*y %- ,*, , , , p. \$ + * ,s 4 .... , ,. . , <.ijk& <> $ 2 ~ . y'#J;-M>c *! >$,, 2;-L.g2:v,~ : ?.?I Appeal No. 116/8;0.1~2~(,,Rdm;ift~d&n .,13.6;1.2014) y tjl?:;c .:~.*'e~xs:i!!$ -::;;$& ?Xj?..+ -..?-.#$ .% . -, .... , $, 2;5,$?t JJ ,>,.z \ r . . i > ~ : * b ~ ~ - * < y @ ; g ~ ~ ~ ~ $ '(1) wh?the"pC1.%n;fhe fXc$"s and in the - ci rcu ms~3nses~~o@~t~e~~eaS~I t h e ITAT 5 . 3 -.&$ q .FW,3 byff %&{ q-8 was jbshf~ed - In confl~ming the penalty imposed upon the appellant- assessee under Section 271(1)(c) of the Income-Tax Act, 1961 when the claim of the assessee was a debatable one and there was no specific finding that the assessee had submitted false or incorrect accounts. (Uploaded on 18/07/2024 at 03:03:54 PM) (Downloaded on 28/10/2026 at 12:25:07 AM) 3 . 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 ( I ) of Section 153 a return . of.\tiis 3 + J. inicqme-. - r ,

which he is required to furnish undey+Se.~tLqn 2139' ine,respect.of any assessment year s. \$< 53 commencixi"g an 'or after the 1st day o f ~ p ~ i l ; 1989 and until the expirUf' the period aforesaid, no notice;has been issued to him,, bnder clause (1) of sub-section (I) of section 142 a n d f h e Assessing 0ffice:r or the Commissioner ('Appeals) is s3:ki:sfied that in respect of such assessment year such. person h& taxable income, then, such person shall,qfdr the rson furnishes ection 148 and e is liable for e assessee, the a bonafide one, r availability of oncealment. It is further subm eing a charitable institution registe of the Act of 1961, availed I0O0/o ore, was entitled to d this aspect was advanced as e was no concealment. It is also brou Division Bench of this Court in Com Krishi Upaj Mandi Samiti, reported - i , p . & ~ ~ $ & j - 3 8 8 ~ ~ ~ d ~ 6 ~ 5 (Raj.), has taken a ?&;:*a p*w&$ c2, y'y q 5 F-? view that the K ~ r s k r rUfl'EI~8 M.a,nCfi'@&amiti is a charitable institution registered under Section 12-A of the Act of 1961, therefore, is entitled to have depreciation as per Section 32(1) of the Act of 1961. Learned counsel appearing on 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 (Uploaded on 18/07/2024 at 03:03:54 PM) (Downloaded on 28/10/2026 at 12:25:07 AM) Income Tax v. Krishi Upaj Mandi Samiti. (supra). The penal& under Section 271(1)(c) of the Act of 1_961 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 w d l as in the returns. In the case in hand there is neither concealment of particulars of income of the assessee nor there is furnishment of inaccurate particulars of income. The assessee with a bonafide belief about allowable depreciation 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 v)las:,n.o sutfi~ient reason to subject the assessee for a, pehaly, under. Sect'iog 27J (l)(c) of the Act of 1961. {-' ' + .'. *wv.,% \, C Ir -5 si Th'@q.tfestion formulated stands re'selFe'd accordingly and t'h'er~appeal is allowed. The order passed-b$~f~e Income ~ a x i ~ p 6 e l l a t e Tribunal d3ated 3.8.2009 is set d+si'd.&and y2 the or$e> passed by the Commissioner of 1ncoW:e ,/ ;>Tax ., is restored." V e&T[a&& ,&/ m. T4. j,T;Tw;" "? ';c3i+M$pd-.- &%

4.

I n that view of ,f _ the~:ma&t&&@"ig?&eiS?lnswered . * ;" --, ;:%% .& Ls+.+. 4- in favour of , *

. ' .I .> ,. k f - k e b r p the assessee and ag

5.

The appeals stan (DR. PUSHPENDRA SI' //bmg 156, 157, 158, 159, 161 (K. S. JHAVER1)J. Powered by TCPDF (www.tcpdf.org) (Uploaded on 18/07/2024 at 03:03:54 PM) (Downloaded on 28/10/2026 at 12:25:07 AM)

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