NEGUN UNION CO- OP AGRICULTURAL CREDIT SOCIETY LTD,BURDWAN vs. I.T.O WD - 2(2),BURDWAN, BURDWAN

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

-00/Kol/2013 A.Ys 03-04 & 04-05 Negun Union co-op. Agri Credit Society Ltd. v. ITO Wd-2(2) BWN Page 2 Shri Shuvo Chakraborty, Ld. Authorized Representative appearing on behalf of assessee and Shri Rajat Kumar Kureel, Ld. Departmental Representative appearing on behalf of Revenue.

by assessee are reproduced below:- “ITA No.1099/Kol/2013 (A.Y 03-04)

1. For that the confirmatory appellate order by Ld. CIT(A) is fully non speaking and shallow. No specific justification of such confirmation of penalty on addition base has given by Ld. CIT(A). Hence such non speaking order is bad in law and contumacious. Therefore, penalty is liable to be deleted.

2. For that part allowance of addition u/s 40A(3) by Ld. CIT(A) itself put the justification of penalty imposed since appellant’s view on such addition was partly accepted. So it is self contradictory. Therefore, spectre of concealment is fully absence in this case.

3. For that Appellants contention about exceptional circumstance prevail on cash payment (covered u/R 6DD(J) and circular No. 220 dt. 31.05.1977) and contradictory proposition taken by AO by impart two connotation of concealment and inaccurate particulars of income remain totally unaddressed in such cryptic and blurred Appellate order.

4. For that no penalty for concealment is imposable on any statutory part disallowance of Appellants claim as in this case where Appellant’s 100% deduction claim U/S 80P(2)(a)(i) was allowed to the tune of 500%. Therefore such statutory disallowance cannot be a fit case for concealment and such penalty is liable to be quashed.”

2) The assessee, during the year also earned its income from the non- members which is in contravention of the provisions of Section 80P(2)(a)(i) of the Act. The AO accordingly disallowed the entire deduction claimed u/s 80P of the Act. However, at the appellate stage Ld. CIT(A) allowed the deduction on the income arose from the dealing of the members but the income which was from non-members was added to the total income of the assessee.

3.1 The AO initiated the penalty proceedings under section 271(1)(c) of the Act on account of furnishing the inaccurate particulars of Income and confirmed the same by passing the penalty order on dated 21.05.2009.

Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us.

5.1 The mere fact that the assessee agreed to the inclusion of certain addition and disallowance or other amounts in the total income on account of his inability to prove the source or to avoid protracted litigation with the Department or that his representative consented in the imposition of the minimum penalty before the lower authorities does not by itself justify the levy of penalty. The observations of the Supreme Court in the case of CIT vs. Sir Shadilal Sugar Mills (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) are very relevant in this regard. The Supreme Court observed ".............from agreeing to addition it does not follow that the amount agreed to be added was concealed income. There may be hundred and one reasons for such admission but that does not absolve the Revenue from proving the mens rea of a quasi criminal offence". It is therefore, not possible to levy penalty automatically in a case where the assessee has agreed to certain additions. Mere fact that certain additions have been accepted or in respect of the income added, the explanations to Section 271 are attracted will not automatically result in the levy of penalty. There are a number of explanations A.Ys 03-04 & 04-05 Negun Union co-op. Agri Credit Society Ltd. v. ITO Wd-2(2) BWN Page 5 to u/s 271(1)(c) which deal with the concept of concealment. These explanations deal with the burden of proof. They are therefore, merely rules of evidence. Further they are rebuttable. Mere agreement of addition to income will alone not justify penalty. In every case it will be the facts alone that will be relevant. These explanations have been introduced and have undergone changes in view of certain judicial decisions. The explanations, in their evolution and development have sought to make the assessee more and more responsible in the discharge of the burden of proof. It is possible that the assessee may not be wanting to press for an explanation or its acceptance either with a view to avoid embarrassment to third parties or because the assessee wants to avoid protracted litigation with the Department. He may not want to offer an explanation to purchase peace. In such situations where there is no positive evidence against the assessee, penalty will not be leviable. In the instant case we find that the AO during the course of assessment gathers the information from the details/ records submitted by the assessee that the certain provisions of the Act have been contravened. There was no independent finding of the AO regarding the concealed income of the assessee. We also find the Civil Appeal No. 2463 of 2010 dated 17.03.2010 in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. the relevant portion which reads as under:-

“We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars.” Taking a consistent view in Civil Appeal No. 2463 of 2010 in the case of Reliance Petroproducts Pvt. Ltd. (supra) and facts and circumstances of the present appeal, we reverse the orders of authorities below and delete the penalty accordingly.

ITA No.1099-00/Kol/2013 A.Ys 03-04 & 04-05 Negun Union co-op. Agri Credit Society Ltd. v. ITO Wd-2(2) BWN Page 6 6. In the result, assessee’s appeal is allowed. Coming to for A.Y.04-05.