THE GOVT. TELE COMMUNICATION EMPLOYEES CO-OP. SOCIETY LTD.,CHENNAI vs. ITO, NCW-11(1),, CHENNAI

5 On the other hand, the ld. DR strongly supported the order passed by the ld. CIT(A) as well as Assessing Officer. to 2743 /Chny/2024 6 We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In the assessment order, the Assessing Officer has noted that the interest from deposits with trusts and savings accounts has been charged under section 56 of the Act, which is not secured by loans. It was the earnings of the society from its appropriations from net profit. Section 57 of the Act provides for deductions of any other expenditure not being in the nature of capital expenditure laid out or expended wholly or exclusively for the purpose of making or earning “income from other sources” of Chapter IV-F of the Act. The primary objective of the society is to extend credit facilities to the members. The interest income from deposits with trusts and savings account interest was from such deposits only and was totally independent of the deposits collected by the assessee from its members or loans borrowed from banks. Hence proportionate interest and finance charges are not allowed as expenditure. Accordingly, the ld. CIT(A) confirmed the order of the Assessing Officer. 7 Similar issue on an identical facts and circumstances was subject matter in appeal before the Tribunal in assessee’s own case for the assessment years 2012-13 and 2013-14 in & 2899/Chny/2016 vide order dated 02.12.2020, the Tribunal has observed and held as under: 11. We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below.

The only issue for consideration is the expenditure incurred by the Assessee to earn the interest income. The case of the Assessee is that the Assessing Officer has treated the interest income earned by the Assessee has income from other sources and estimated the expenditure only. In the to 2743 /Chny/2024 Assessment Order, the Assessing Officer has not properly considered the expenditure incurred by the Assessee to earn the interest income and simply estimated the interest expenditure.

13. In our view, it is not correct. Thus we set aside the order passed by the learned Commissioner of Income Tax (Appeals) on this count and remit back the matter back to the Assessing Officer to adjudicate the issue afresh in accordance with law de novo.”

Respectfully following the decision of the Coordinate Benches of the Tribunal in assessee’s own case for the assessment years 2012-13 and 2013- 14 vide order dated 02.12.2020 (supra), we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to adjudicate the issue afresh in accordance with law de novo after affording an opportunity of being heard to the assessee.

Though the ITAT has only remitted the issue of considering the expenses against interest receipts from FDs, the Assessing officer made an assessment afresh u/s 143(3) r/w 254 on 13/04/2022 as if the assessment itself is set aside and determined the taxable income as under after considering the interest paid against interest receipts from FDs and savings Bank Interest. 10 The Assessing officer initiated penalty proceedings u/s 271(1)(c) in the aforesaid order passed on 13/04/202 for furnishing inaccurate particulars of income. During the course of penalty proceedings, the appellant had submitted its response against the proposal to levy penalty under section 271(1)(c). The Assessing officer however levied penalty of Rs.7,34,291/-u/s 271(1) by taking the above income assessed of Rs. 23,76,348/-. to 2743 /Chny/2024 11 Firstly, the appellant submits that it has furnished all the particulars of income in the return of income and claimed exemption u/s 80P on the interest income earned. This claim was only disallowed by the assessing officer and the appellant agitated the issue till the level of the ITAT. The appellant submits that it cannot be charged with furnishing of inaccurate particulars of income simply because the claim made by the appellant was not allowed by the assessing officer. The appellant rely on the decision of the Apex Court in the case of Reliance Petro Products Ltd. (189 Taxmann 322) wherein it was held as under:- `"Merely because assessee had claimed expenditure which claim was not accepted or was not acceptable to the appellant (Department) that by itself would not in our opinion attract penalty under section 271(1)(c) of the Act. If court accepts contention then in case of every return where claim made is not accepted by Assessing officer for any reason, assesse will invite penatlyunder section 271(1)(c) of Act That is clearly not intendment of. Legislature’’.

Per contra, the ld. DR relied upon the orders of the lower authorities and pleaded for the dismissal of appeal.

We have heard the rival submissions, perused the appeal records and the earlier order of the co-ordinate bench of Tribunal dated 10.02.2022 in 2703/Chny/2018, 558 & 559/Chny/2020. We find that in the I.T.A. Nos. 2898 & 2899/Chny/2016 vide order dated 02.12.2020 the Tribunal observed and held as under:- ’12. The only issue for consideration is the expenditure incurred by the Assessee to earn the interest income. The case of the Assessee is that the Assessing Officer has treated the interest income earned by the Assessee has income from other sources and estimated the expenditure only. In the Assessment Order, the Assessing Officer has not properly considered the expenditure incurred by the Assessee to earn the interest income and simply estimated the interest expenditure.’ 13. In our view, it is not correct. Thus we set aside the order passed by the learned Commissioner of Income Tax (Appeals) on this count and remit back the matter back to the Assessing Officer to adjudicate the issue afresh in accordance with law de novo.”

It is crystal clear that the co-ordinate bench of Tribunal referred supra has been followed verbatim in order of Tribunal dated 10.02.2022 in 2703/Chny/2018, 558 & 559/Chny/2020. The only issue was ‘the expenditure incurred by the Assessee to earn the interest income’ and nothing beyond. We also find that out of various issues raised only issue to 2743 /Chny/2024 was set aside by the Tribunal is to see ‘the expenditure incurred by the Assessee to earn the interest income’. It is also on record that no penalty has been initiated pursuant to the original assessment orders in AYs 2011-12, 2014-15 & 2016-17 except AY 2015-16 and that too under both limbs of section 271(1)(c) which was on the face of it unsustainable. We are of the considered view that the assessee cannot be put to worse situation by the AO when an issue was remitted back to the Assessing Officer to adjudicate the issue afresh in accordance with law de novo by the Tribunal for a limited purpose. It is trite law, settled by a catena of Supreme Court judgments, that the Revenue cannot beat around the bush and keep changing the goal post at each stage. Once the Revenue had taken a particular stand, the same cannot be completely changed and/or supplemented by a different reason or ground.

We further find that quantification/re-work of expenditure to earn interest income on the direction of the Tribunal does lead to concealment of income or furnishing of inaccurate particulars of income. The AO has not pin pointed any inaccurate particulars in the return of income filed by the assessee pursuant to notice u/s 148. Hence, in the light of above factual matrix, we delete the penalty levied.

Since the issue and grounds of appeal