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Before: Shri Chandra Poojari & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
These four appeals of the Department, pertaining to the same assessee, are directed against the common order passed by the ld. Commissioner of Income Tax (Appeals), Puducherry dated 30.12.2016 relevant to the assessment years 2008-09, 2009-10, 2011-12 and 2012-13, whereby the Department has challenged in deleting the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 [“Act” in short].
All appeals of the Revenue are found to have been filed late by 19 days before the Tribunal. By referring to the petition for condonation of delay, the ld. DR has submitted that while the appeal papers were processed for filing appeal, the records of the case inadvertently got mixed up with other files and moreover there was postal delay in receiving the files from the CIT, Puducherry. As soon as the appeals received, the same are filed with a delay of 19 days. The ld. DR, citing the above reasons requested for condoning the delay and to admit the appeals for hearing. The ld. Counsel for the assessee did not object to the submissions of the ld. DR and therefore, we condone the delay of 19 days in filing the appeals and admit the appeals for hearing.
Brief facts of the case are that the assessee bank filed its return of income on 27.09.2009 for the assessment year 2009-10 claiming current year loss of ₹.2,99,20,008/- and admitting a NIL income. The return of income was processed under section 143(1) of the Act. Subsequently, the assessment was reopened under section 147 of the Act and assessment was completed under section 143(3) r.w.s. 147 of the Act on 06.03.2015 determining assessed income of the assessee at ₹.4,36,56,820/- by making various additions including disallowance made under section 36(1)(viia) of the Act. For remaining assessment years also, similar additions were made in the assessment order. Penalty proceedings are also initiated under section 271(1)(c) of the Act by issuing notice under section 274 r.w.s. 271(1)(c) of the Act. In the penalty order, the Assessing Officer has observed that the assessee bank has deliberately concealed its particulars of income and accordingly, he levied penalty under section 271(1)(c) of the Act for all the above assessment years.
The assessee carried the matter in appeal before the ld. CIT(A). By following the decision of the Tribunal in & 2806/Mds/2014 dated 29.05.2015 for the assessment years 2007-08 and 2010-11 in assessee’s own case, the ld. CIT(A) deleted the penalties levied under section 271(1)(c) of the Act.
On being aggrieved, the Revenue is in appeal before the Tribunal for all the assessment years. Once the matter of claiming deduction under section 36(1)(viia) of the Act attains finality that the assessee cannot claim such deduction, if the assessee continues to claim such deduction in subsequent assessment years clearly amounts to furnishing of inaccurate particulars to evade taxation, thereby warranting levy of penalty under section 271(1)(c) of the Act and pleaded that the penalty levied should be confirmed for the subsequent assessment years. On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A).
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. Against the addition towards wrong claim of deduction under section 36(1)(viia) of the Act, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty for the assessment years under appeal. The ld. CIT(A) deleted the penalty by following the decision of the Tribunal in assessee’s own case for the assessment years 2007-08 and 2010-11 on similar penalty.
6.1 Against the penalty levied under section 271(1)(c) of the Act for the assessment years 2007-08 and 2010-11 towards making similar wrong claim of deduction under section 36(1)(viia) of the Act, during the course of appellate proceedings, the assessee has contended before the ld. CIT(A) that only due to wrong interpretation of the provisions of section 36(1)(viia) of the Act, the assessee bank has claimed deduction. While passing the assessment order under section 143(3) r.w.s. 147 of the Act for the assessment years 2007-08, the Assessing Officer has elaborately discussed about the allowability of deduction under section 36(1)(viia) of the Act and held that the assessee bank is not eligible to claim such deduction and therefore, it cannot be held that the Assessing Officer has merely made the disallowance. While adjudicating the appeals for the assessment years 2007-08 and 2010-11 against confirmation of penalty, the Tribunal has also observed that the claim of deduction under section 36(1)(viia) of the Act is not allowable as per statutory provisions. However, the Tribunal has also observed that it cannot be said that the assessee has furnished inaccurate particulars, may be, it was the first time the assessee made such claim of deduction.
6.2 It is not the case of the assessee that the assessee has made a claim, which was merely disallowed by the Assessing Officer. By the assessment order passed under section 143(3) r.w.s. 147 of the Act dated 22.03.2013, the assessee would be clear that it had made a wrong claim of deduction and therefore, against penalty order, the assessee has contended before the ld. CIT(A) that due to wrong interpretation of the provisions of section 36(1)(viia) of the Act, the assessee made the wrong claim of deduction, but deliberately making wrong claim of deduction in subsequent assessment years could tantamount furnishing of inaccurate particulars in the return of income to evade taxation, which warrant penal proceedings under section 271(1)(c) of the Act. Therefore, the decision of the Tribunal in earlier assessment years has not application to the facts of the present case. It is not the case of the assessee that the Assessing Officer has merely made the disallowance, and if it is so, the assessee would have preferred further appeal before the ld. CIT(A) against quantum addition. In this case, there is nothing available on record that against the quantum addition, the assessee has preferred further appeal before the higher forum. It is clear cut case of furnishing inaccurate particulars in the return of income claiming the deduction which is not permissible under the Act only to evade taxation. Accordingly, we set aside the order of the ld. CIT(A) and confirmed the penalty levied under section 271(1)(c) of the Act so that the assessee should refrain from making such wrong claim of deduction and escape from taxation.
In the result, all the appeals of the Revenue are allowed. Order pronounced on the 24th August, 2017 at Chennai.