High Court Of Rajasthan
Anoopgarh Kraya Vikraya Sahakari Samiti Ltd. vs. ACIT, Sri Ganganagar
Section 271(1)(c), 45
Govind Mathur And Ms. Jaishree Thakur, JJ.
D.B. It Appeal No. 1 Of 2014
February 23, 2015
JUDGMENT
1. The substantial question of law under adjudication in this appeal is that :
“Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal 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 ?”
2. In brief, facts of the case are that the appellant-assessee filed its return of income on 15.2.1996 declaring total income of Rs.7490/-. The assessee sold one Dal Mill in the year previous to the assessment year for a consideration of Rs. 19,14,000/-. The assessee, however, did not declare any profit/ short term capital gain on the sale of Dal Mill by treating that as a long term capital gain. As per record, Written Down Value (WDU) of Dal Mill as on 1.4.1994 was Rs. 9,57,482/-. The assessee claimed depreciation on the Dal Mill during the assessment year 1985-86 to 1987-88, the same being depreciable asset. As already stated, the sale consideration for the Dal Mill was Rs. 19,14,000/- and the return down value of that as on 1.4.1994 was Rs. 9,57,482/-. The assessee, as such, gained Rs. 9,56,518/- but that was not declared in return of income filed. An action under Section 147 read with Section 148 of the Income Tax Act, 1961, thus, was initiated and the Assessing Officer made certain additions. The additions so made came to be affirmed by the Commissioner of Income Tax and also by the Income Tax Appellate Tribunal.
3. A notice as per Section 274 read with Section 271(1)(c) of the Act of 1961 was issued and the assessee in response thereto stated that it being a Co-operative Society is under the control of Government of Rajasthan and, therefore, the Dal Mill was sold with prior approval and sanction of the competent authority. As per the assessee, in the return of income it disclosed the transaction regarding sale of Dal Mill and also relating to sale of mill in the computation of income filed with the return of income. There was no concealment of particulars of income or submission of inaccurate particulars of income and the additions were made only on the basis of difference of opinion. The Assessing Officer did not accept the explanation and held that the assessee concealed its income from capital gains and also furnished inaccurate particulars of income that attracts provisions of Section 271(1)(c) of the Act of 1961, therefore, levied penalty @ 150% of on the total income concealed.
4. The appeal giving challenge to the order passed by the Assessing Officer came to be dismissed vide order dated 7.10.2010. The Commissioner of Income Tax (Appeals) while affirming the order passed by the Assessing Officer observed that the appellant failed to produce material evidence to substantiate its explanation that the claim made in return of income was bona fide one. The learned Commissioner of Income Tax accepted the finding given by the Assessing Officer that the instant one was not a case of difference of opinion, but relating to concealment of income and submission of inaccurate particulars of income.
5. The appeal preferred by the assessee before the learned Income Tax Appellate Tribunal also came to be dismissed by the order dated 14.9.2012 with a finding that the Dal Mill sold was a part of block of assets and the assessee claimed depreciation thereon from beginning till the year 1987 and the fact that the assessee is a Co-operative Society is not sufficient to absolve it from penal provisions as per Section 271(1)(c) of the Act of 1961.
6. The assessee after disposal of the appeal preferred an application seeking certain modifications in the order passed by the Tribunal and the application aforesaid came to be dismissed on 30.4.2013, however, by another order dated 31.7.2013, the penalty of 150% was substituted by 100%. Being aggrieved by the order passed by the Income Tax Appellate Tribunal dated 14.9.2012 and 31.7.2013 the instant appeal is preferred.
7. The argument advanced by learned counsel for the appellant is that as per Section 271(1)(c) of the Act of 1961 penalty could have been imposed only on satisfying that the assessee concealed particulars of income or furnished inaccurate particulars of such income. In the case in hand, there is no concealment or submission of inaccurate particulars of income. It is pointed out that the assessee while submitting return disclosed all necessary facts about sale of Dal Mill including the details pertaining to the depreciation claimed with assertion that the Dal Mill being a depreciable asset, the assessee claimed depreciation for the year 1985-86 to 1987-88. The facts furnished by the assessee were available on record and if the Assessing Officer was having any difference of opinion, he would have made necessary additions, but could not have imposed any penalty as nothing was concealed in the returns furnished.
8. Learned counsel for the Revenue on the other hand submits that the assessee failed to satisfy the basis on which he claimed depreciation, therefore, the penalty was rightly imposed.
Heard learned counsels.
9. Section 271(1)(c) of the Act of 1961 provides that if the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under the Income Tax Act, 1961 is satisfied that any person has concealed particulars of his income or has furnished inaccurate particulars of such income, shall be liable to pay penalty. The prime factors required to be considered while imposing penalty as per Section 271(1)(c) of the Act of 1961 are concealment of particulars of income or submission of inaccurate particulars of such income. In the case in hand, it is not in dispute that the assessee disclosed all details about its income including the fact about sale of Dal Mill with a consideration of Rs.19,14,000/- A depreciation was claimed by it by treating the same as a depreciable asset. The written down value too was referred but the error crept in treating the transaction as long term capital gain. The assessee committed the error in present set of facts and that cannot be treated as concealment of particulars of its income or furnishing inaccurate particulars of income. The error could have been rectified by the Assessing Officer by making necessary additions and for that the assessee is under obligation to pay tax but penalty could have not been imposed as per Section 271(1)(c) of the Act without satisfying concealment or submission of inaccurate particulars of income on the part of the assessee. Such satisfaction must reflect in the order of assessment as the penalty as per the provision under consideration is not automatic. Such a penalty must not be imposed ipse dixit. We are of the considered opinion that in the case in hand the powers under Section 271(a)(c) of the Act of 1961 were erroneously exercised.
10. In the result, the appeal succeeds with answer to the substantial question in the terms that the Income Tax Appellate Tribunal was not justified in confirming penalty imposed by 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. Consequent to the finding aforesaid the order passed by the Assessing Officer dated 16.7.2007, the order dated 7.10.2010 passed by the Commissioner of Income Tax, Bikaner and the order passed by the Tribunal dated 14.9.2012 are quashed to the extent of imposing penalty as per Section 271(1)(c) of the Act of 1961.
[Citation : 374 ITR 558]
