THE BUREAUS UNIQUE CO-OP GROUP HOUSING SOCIETY LTD.,PANCHKULA vs. ITO, W-5, PANCHKULA

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ITA 176/CHANDI/2019Status: DisposedITAT Chandigarh30 October 2019AY 2011-125 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961, was not justified. The Tribunal found that the assessee society, though mistakenly, made a claim for depreciation on the building as suggested by its Consultant Accountant. This claim was considered a bonafide claim. The Tribunal observed that there was no attempt on the part of the assessee to furnish inaccurate particulars of income, conceal its income, or evade payment of income tax. Therefore, the Tribunal concluded that the case was not fit for the levy of penalty under Section 271(1)(c). The penalty levied by the lower authorities was ordered to be deleted. The appeal of the assessee was allowed.

What were the facts?

The assessee, The Bureaus Unique Co-op Group Housing Society Ltd., Panchkula, is appealing an order dated 22.12.2018 by the Commissioner of Income Tax (Appeals)-3, Ludhiana, which confirmed the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The assessee, a cooperative group housing society, was allotted land by HUDA, and its 95 members contributed to the cost. A building was constructed, and flats were allotted to members. For Assessment Year 2011-12, the assessee claimed depreciation on the building, considering itself the owner. The Assessing Officer rejected this claim, stating the assessee neither owned the flats nor conducted business, and had not incurred capital expenditure. Consequently, depreciation was disallowed, and penalty proceedings under Section 271(1)(c) were initiated and confirmed by the CIT(A).

What were the issues?

1. Whether the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961, is justified when the assessee claimed depreciation on a building under a bonafide belief and on the advice of its accountant, without any intention to furnish inaccurate particulars or conceal income. Assessee's Contention: The assessee argued that the claim for depreciation was made under a bonafide belief and on the advice of its consultant accountant. There was no intention to furnish inaccurate particulars of income, conceal income, or evade tax. The society was duly audited by the Cooperative Societies. Although the depreciation claim resulted in losses, there was no intent to set off these losses against other income as the society did not generate income. The assessee revised entries in subsequent years, and even after reversal, there was no taxable income. The assessee contended it should not be penalized for a bonafide mistake. Revenue's Contention: The Revenue relied on the findings of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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आदेश/Order

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee, which is a Cooperative Group Housing Society, against the order dated 22.12.2018 of the Commissioner of Income Tax (Appeals)-3, Ludhiana [hereinafter referred to as ‘CIT(A)’] agitating confirmation of levy of penalty by the Assessing Officer u/s 271 (1)(c) of the Act.

2.

The brief facts relating to the issue are that the assessee society is registered with the Registrar of Co-operative Societies. The

ITA No. 176/Chd/2019- The Bureaus Unique Co-op Group Housing Society ltd, Panchkula 2 assessee was allotted 8500 sq. meters of land by the HUDA. The cost

of the land was contributed by the 95 members of the assessee

society. Thereafter five storey building was constructed and flats

were accordingly allotted to the members of the society. In the return

of income for assessment year under consideration, the assessee

society claimed depreciation on the building considering itself as the

owner of the building. The Assessing Officer, however, rejected the

claim of the assessee society observing that neither the assessee

owned the flats nor it was doing any business or profession and even

it had not incurred any capital expenditure on the same. The

Assessing Officer, therefore, held that the assessee was not entitled

to any depreciation on the building and accordingly disallowed the

same. The Assessing Officer also initiated penalty proceedings u/s

271 (1)(c) of the Act and imposed the impugned penalty which has

been duly confirmed by the CIT(A). The assessee, thus, has come in

appeal agitating the aforesaid levy of penalty u/s 271 (1)(c) of the

Act.

3.

We have heard the rival contentions of the Ld. Authorized

Representatives of both the parties and have gone through the record.

The Ld. Counsel for the assessee has submitted that the assessee

society under the bonafide belief and as advised by its Accountant,

claimed depreciation on building. There was no intention on the part

ITA No. 176/Chd/2019- The Bureaus Unique Co-op Group Housing Society ltd, Panchkula 3 of the assessee society to furnish inaccurate particulars of income or

to conceal its income. Even there was no attempt on the part of the

assessee to evade tax. That the assessee society was duly audited by

the Sub Inspector Audit, Cooperative Societies. The depreciation

claimed on the building was under bonafide belief and on the advise

of consultant accountant of the assessee society. That the assessee

society is not doing any business and there is no other source of

income except the contribution received from the members of the

society. Though the claim of depreciation has resulted into the claim

of losses but there are was no intention on the part of the assessee

society to set off these losses against any other income as the

assessee society is not in any activity of generation of income. That

subsequent to the denial of depreciation to the assessee society, the

assessee society in the subsequent years has revised entries relating

to the claim of depreciation. Even after reversing the entries in the

subsequent years, there is no taxable income of the assessee society.

That the assessee society should not be penalized for its bonafide

mistake.

4.

On the other hand, Ld. DR has relied on the findings of the

lower authorities.

5.

After considering the overall facts and circumstances of the

case and after considering the above submissions of the counsel for

ITA No. 176/Chd/2019- The Bureaus Unique Co-op Group Housing Society ltd, Panchkula 4 assessee, we are of the view, that in this case though the assessee

society mistakenly and, as suggested by its Consultant Accountant,

made a claim of depreciation on building which, in our view, was a

boanfide claim. There seems no attempt on the part of the assessee to

furnish inaccurate particulars of income or to conceal its income or

evade payment of income tax. In view of this, we do not find it a fit

case for levy of penalty u/s 271 (1)(c) of the Act.

The penalty levied by the lower authorities is accordingly

ordered to be deleted.

In the result, the appeal of the assessee is hereby allowed.

Order dictated and pronounced in the Open Court immediately

on completion of hearing.

Sd/- Sd/-

(अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 30.10.2019 “आर.के.”

आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

ITA No. 176/Chd/2019- The Bureaus Unique Co-op Group Housing Society ltd, Panchkula

5 आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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