ADIT (E), Inv. Circle-I,, v. Association of Corporation & Apex Society of Handloom,,

ITA 1127/DEL/2006 | 2001-2002
Pronouncement Date: 16-02-2012 | Result: Dismissed

Appeal Details

RSA Number 112720114 RSA 2006
Assessee PAN LJULY1997A
Bench Delhi
Appeal Number ITA 1127/DEL/2006
Duration Of Justice 5 year(s) 10 month(s) 11 day(s)
Appellant ADIT (E), Inv. Circle-I,,
Respondent Association of Corporation & Apex Society of Handloom,,
Appeal Type Income Tax Appeal
Pronouncement Date 16-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 16-02-2012
Date Of Final Hearing 11-08-2011
Next Hearing Date 11-08-2011
Assessment Year 2001-2002
Appeal Filed On 05-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: H NEW DELHI BEFORE SMT. DIVA SINGH JUDICIAL MEMBER AND SHRI B.K. HALDAR ACCOUNTANT MEMBER ITA NOS: 1259 1260 & 1261/DEL/2008 A.Y. : 1998-99 1999-2000 2000-01 A N D ITA NOS: 1127/DEL/2006 A.Y. : 2001-02 DY.DIT (E) INV.CIRCLE 1 VS. M/S ASSOCIATION OF CO RPORATIONS & NEW DELHI APEX SOCIETIES OF HANDLOOMS HANDLOOM PAVILION NEAR GATE NO.2 PRAGATI MAIDAN NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : MS. REENA S.PURI CIT D.R. RESPONDENT BY : SH. K.V.S.R.KRISHNA C.A. O R D E R PER DIVA SINGH JUDICIAL MEMBER THESE FOUR APPEALS FILED BY THE REVENUE ARE BEING DECIDED BY A COMMON ORDER AS THE STAND OF THE PARTIES BEFORE THE BENCH IS THAT FACTS AND CIRCUMSTANCES QUA THE ISSUE INVOLVED IS IDENT ICAL. 2. ITA 1127/DEL/2006 IS AGAINST THE ORDER DT. 27.1. 2006 OF CIT(A)-XI NEW DELHI; ITA 1259/DEL/2008 TO ITA 1261/DEL/2008 A RE AGAINST SEPARATE ORDERS DT. 21.1.2008 OF CIT(A)-XXI NEW D ELHI PERTAINING TO A.Y. 2001-2002 1998-99 1999-2000 AND 2000-2001 A.YEARS RESPECTIVELY. ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 2 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 3. IN EACH OF THESE APPEALS THE REVENUE IS AGGRIEVE D BY THE ACTION OF THE CIT(A) IN QUASHING THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C ). 3.1. WHEREAS THE GROUND IN ITA 1127/DEL/2006 PERTAI NING TO A.Y. 2001-02 READS AS UNDER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 62 08 937/- IMPOSED U/ S 271(1)(C ) IGNORING THE FACT THAT THE ASSESSEE HAD WILLFULLY FURNISHED INAC CURATE PARTICULARS OF ITS INCOME BY TREATING ACCRUED INTEREST INCOME OF RS. 1 76 89 280/- AS LIABILITY INSTEAD OF INCOME. 3.2. THE DEPARTMENTAL GROUND IN THE REMAINING 3 YEA RS IS IDENTICAL APART FROM THE DIFFERENCES IN THE AMOUNTS INVOLVED. FOR READY REFERENCE WE REPRODUCE THE GROUNDS FROM ITAS 1259/DEL/2008. ITA 1259/DEL/2008 (A.Y.) 1998-99 : ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE LD.CIT(A) HAS ERRED IN D ELETING THE PENALTY AMOUNTING TO RS. 63 13 839/- (IN ITA 1260/D EL/2008 ) : AMOUNT INVOLVED RS.72 54 807/-; AND IN ITA 1261/DEL /2008: AMOUNT INVOLVED RS.1 16 03 875/-) IMPOSED U/S 271( 1)(C ) OF THE INCOME TAX ACT 1961. 4. THE RELEVANT FACTS AS FOUND DISCUSSED IN THE PEN ALTY ORDER FOR A.Y. 2001-2002 ARE THAT AS AGAINST THE NIL INCOME DECLAR ED BY THE ASSESSEE THE ASSESSMENT U/S 147/143(3) WAS COMPLETED ON A PO SITIVE INCOME OF RS. 1 30 18 281/-. THE ASSESSEES CLAIM THAT THIS INCOME DID NOT BELONG TO IT AS SUCH WAS SHOWN ON THE LIABILITY SIDE OF TH E BALANCE SHEET WAS NOT ACCEPTED AND THE AO MADE AN ADDITION OF RS. 1 86 89 280/- TREATING THE INTEREST INCOME AS ASSESSEES INCOME. ON ACCOUNT O F THIS REASON PENALTY PROCEEDINGS WERE INITIATED AND SHOW CAUSE NOTICE WA S ISSUED TO THE ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 3 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 ASSESSEE WHICH REMAINED UNEXPLAINED. THEREAFTER AN OTHER SHOW CAUSE NOTICE U/S 274 READ WITH SECTION 271(1)(C ) WAS ISS UED TO THE ASSESSEE. 4.1. THE ASSESSEE IN RESPONSE TO THE SAME SUBMITTED THAT THE ASSESSEE HAD ITSELF SHOWN RS. 9.80 81 863/- ON THE LIABILITY SIDE OF THE BALANCE SHEET UNDER THE HEAD LOANS & ADVANCES AND HAD EX PLAINED IN THE QUANTUM PROCEEDINGS THAT WHY THE ASSESSEE HAS NOT T AKEN THE SAID INTEREST INCOME FROM THE FDRS AS ITS OWN INCOME. T HE EXPLANATION OFFERED IN THE QUANTUM PROCEEDINGS WAS RELIED UPON. THE STAND TAKEN IN THE QUANTUM PROCEEDINGS WAS REITERATED TO BE THE CO RRECT LEGAL VIEW. IT WAS URGED THAT THE INTEREST ON FDRS CANNOT BE CALL ED TO HAVE ACCRUED/RECEIVED BY THE ASSESSEE. IT WAS FURTHER U RGED THAT ALL NECESSARY FACTS WERE DISCLOSED AS SUCH IT COULD NOT BE CALLED TO BE EITHER A CASE OF CONCEALMENT OF INCOME OR OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. RELIANCE WAS PLACED UPON C IT VS. MUSSADILAL RAM BHASORE (1987) 165 ITR 14 (SC) AND CIT VS. RAJ AJI BHAROSE & CO. (2001) 250 ITR 225 FOR THE PROPOSITION THAT THERE I S NOTHING TO SUGGEST GROSS OR WILLFUL NEGLECT OR FRAUD; AND THAT THE EX PLANATION OFFERED BY THE ASSESSEE IS BONAFIDE RESPECTIVELY. 4.2. NOT CONVINCED WITH THE EXPLANATION OFFERED AND TAKING NOTE OF THE FACT THAT THE SOCIETY HAD RECEIVED BANK INTEREST O N FDRS AMOUNTING TO RS. 9 80 81 363/- WHICH WAS NOT SHOWN AS INCOME. TH E A.O. OBSERVED THAT THE ASSESSEE HAD TAKEN THE ENTIRE AMOUNT OF INTEREST INCOME DIRECTLY IN THE BALANCE SHEET IN THE LIABILITY SIDE UNDER THE HEAD LOANS & ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 4 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 ADVANCES INSTEAD OF SHOWING THIS AMOUNT AS INCOME IN THE INCOME SIDE OF THE I&D A/C AS PER PROVISION OF SECTION 11 AND 1 2 APPLICABLE TO THE ASSESSEE. AS SUCH OUT OF TOTAL INTEREST OF RS. 9 80 81 363/- IN THE QUANTUM PROCEEDINGS IT HAD BEEN HELD THAT RS. 1 76 89 280/- ACCRUED DURING THE ACCOUNTING PERIOD 1.4.2000 TO 31.3.2001 AND THE SAME HAS BEEN TAKEN AS INCOME WHICH ACTION HAD BEEN CONFIRM ED IN APPEAL BY THE CIT(A) XXVII NEW DELHI VIDE APPEAL NO. 80/2004-05 DT. 5.11.2004. ACCORDINGLY THE AO CONCLUDED IN THE PENALTY PROCEE DINGS THAT THE ASSESSEES EXPLANATION THAT IT WAS A DEBT ON ACCOU NT OF WHICH REASON THE INTEREST INCOME WAS TREATED AS LIABILITY WAS NOT AC CEPTABLE. CONSEQUENTLY PENALTY AMOUNTING TO RS.62 08 937/- WA S IMPOSED HOLDING THAT THE ASSESSEE HAS WILLFULLY FURNISHED INACCURAT E PARTICULARS. 5. AGGRIEVED BY THIS THE ASSESSEE CAME IN APPEAL BE FORE THE CIT(A). 5.1. BEFORE THE CIT(A) IT WAS AGITATED THAT MERELY BECAUSE THE ADDITION IN THE QUANTUM ORDER HAS BEEN UPHELD IT CANNOT BE A GROUND TO ALLEGE CONCEALMENT OF INCOME; THAT THE AO DID NOT APPRECIA TE THAT ALL RELEVANT FACTS STOOD DISCLOSED BY THE ASSESSEE; THAT COMPLET E FACTS UNDER LIABILITIES UNDER THE SUB HEAD LOANS AND ADVANCES IN THE BALANCE SHEET AS ON 31.3.2001 AS INTEREST ON FIXED DEPOSITS UNDE R LIEN AGAINST BANK GUARANTEE AND ALSO IN THE NOTES IN ACCOUNT NOTE N O.6 FOR NOT TAKING THE INTEREST ON FDR AS INCOME STOOD DISCLOSED; THAT ON THESE FACTS THE ALLEGATION OF CONCEALMENT WAS UNWARRANTED AS SUCH T HE PENALTY DESERVES TO BE DELETED; THAT THE AO FAILED TO APPRECIATE TH AT THE ASSESSEE HAS ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 5 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 FURNISHED CORRECT PARTICULARS OF INCOME; THAT THE A SSESSEES EXPLANATION IS BASED ON SOUND PRINCIPLES OF TAXATION OF INCOME ; THAT INTEREST CAN BE TAXED AS ASSESSEES INCOME ONLY WHEN ASSESSEE HAS R IGHT TO RECEIVE SUCH INTEREST INCOME AS HELD BY THE APEX COURT IN E.D.SA SSONS & CO. VS CIT (1959) 26 ITR 27 (SC); THAT ON ACCOUNT OF THIS REAS ON ALSO THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME; THAT EXPLANATION 1 TO SEC. 271(1)(C ) IS ALSO NOT A TTRACTED AS THERE IS NO FAILURE TO OFFER AN EXPLANATION BY THE ASSESSEE; T HAT THIS IS NOT A CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE HAS B EEN PROVED TO BE FALSE; THAT MERELY BECAUSE THE AO DID NOT AGREE W ITH THE VIEW OF THE ASSESSEE THAT CANNOT BE A GROUND FOR LEVY OF PENALT Y. IN FACT IT WAS URGED THE ISSUE HAS ARISEN ON ACCOUNT OF DISCLOSURE BY T HE ASSESSEE ITSELF AND THE A.O. HAS TAKEN COGNIZANCE OF THIS NAMELY IN TH E BALANCE SHEET AND INCOME & EXPENDITURE A/C READ WITH NOTES THEREON IN PARTICULAR NOTES NO.6 WHERE THE ASSESSEE HAS CLEARLY STATED THAT A SUM OF RS.9 80 81 363/- EARNED AS INTEREST ON FIXED DEPOSI T UPTO 15.12.2000 IS SHOWN UNDER THE HEAD LOANS AND ADVANCES AND NOT T AKEN IN THE INCOME & EXPENDITURE ACCOUNT COPIES OF THE AUDITED ACCOU NTS OF THE SOCIETY FILED IN THE PAPER BOOK (RELEVANT PAGES 68 TO 72) WERE REFERRED TO. 5.2. ON FACTS WHICH HAD BEEN TAKEN INTO CONSIDERAT ION IN THE PENALTY PROCEEDINGS THE FOLLOWING SUBMISSIONS WERE MADE:- THE FLOW OF TRANSACTIONS TO HIGHLIGHT WHAT ACTUALL Y TRANSPIRED IS GIVEN BELOW FOR A CLEARER UNDERSTANDING OF THE M ATTER WHICH ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 6 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 IS GIVEN TO THE ASSESSING OFFICER AS WELL AS BORNE OUT OF THE STATEMENT OF AUDITED ACCOUNTS. RS. 40.00 CRORES RECEIVED AS ADVANCE FROM THE GOVT. OF BIHAR IN THE MONTH OF MARCH 1997. BANK ACCOUNT DEBITED A ND THE CORRESPONDING CREDIT GIVEN TO THE GOVT. OF BIHAR A ND SHOWN UNDER LOANS & ADVANCES. THIS ADVANCE OF RS. 40.00 CRORES WAS GIVEN AGAINST A BANK GUARANTEE OF THE SIMILAR AMOUNT GIVEN BY ACASH TO G OVT. OF BIHAR AND A LIEN WAS ATTACHED TO THIS BY OUR BANKER S SYNDICATE BANK IP ESTATE NEW DELHI. DISTRIBUTED AS ADVANCE TO OUR MEMBER AGENCIES TO WH OM ORDERS WERE PLACED RS. 11.69 CRORES OUT OF RS. 40. 00 CRORES RECEIVED FROM THE GOVT. OF BIHAR AND WAS SHOWN UNDE R ADVANCES RECOVERABLE IN CASH OR IN KIND. THIS AM OUNT WAS RELEASED TO THEM AGAINST BANK GUARANTEES OF SIMILAR AMOUNT I.E. RS. 11.69 CRORES AND THESE BANK GUARANTEES WER E ASSIGNED IN FAVOUR OF OUR BANKERS SYNDICATE BANK I.P. ESTATE NEW DELHI AS THEY HAD A LIEN OVER RS. 40.0 0 CRORES ADVANCE RECEIVED FROM THE GOVT. BIHAR. THE REST OF THE AMOUNT OF RS. 28.5 CRORES WAS MADE INTO A FIXED DEPOSIT AND A LIEN WAS MARKED BY OUR BANKERS ON THE SAME AS A SECURITY TOWARDS THEIR BANK GIVEN BY IT F AVOURING BIHAR GOVT. ON OUR BEHALF. SUPPLIES WORTH RS. 37.85 CRORES MADE BY THE MEMBER AGENCIES OF ACASH TILL JULY 1997 AND WAS SHOWN IN T HE NAME OF VARIOUS DISTRICTS OF BIHAR UNDER THE HEAD SUNDR Y DEBTORS FOR STS. CORRESPONDING CREDIT WAS GIVEN TO OUR MEM BER AGENCIES BY THEIR RESPECTIVE NAMES UNDER THE HEAD SUNDRY CREDITORS FOR STS (THIS FIGURE WAS SHOWN NET OF TH E PAYMENT MADE TO THEM). RS. 7.96 CRORES ONLY WAS RECEIVED AGAINST THE TOTAL SUPPLIES OF RS. 37.85 CRORESE FROM THE GOVT. OF BIHAR. TILL THE TIME THE BANK GUARANTEE WAS ACTUALLY ENCA SHED I.E. 16.12.2000. ACASH HAD TO PAY BANK GUARANTEE COMMISS ION @ RS. 40 LACS PER ANNUM TO ITS BANKERS APART FROM A HUGE LEGAL FEE THAT IT HAD TO INCUR ON GETTING A STAY ON THE ENCASHMENT OF THE BANK GUARANTEE. ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 7 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 APART FROM APPROACHING THE HONBLE HIGH COURT OF DE LHI AGAINST THE INVOCATION OF THE BANK GUARANTEE OF RS. 40.00 CRORES ACASH ALSO FILED A PETITION BEFORE THE SECR ETARY (TEXTILES) THE SOLE ARBITRATOR FOR THE CASE BETWEE N ACASH AND GOVT. OF BIHAR IN SEPTEMBER 1997. THIS CASE IS ST ILL GOING ON AND THE MATTER IS BEING HEARD. THE GOVT. OF BIHAR H AS FILED A COUNTER CLAIM FOR RS. 71.00 CRORES BEFORE THE SECRE TARY (TEXTILES) WHEREIN RS. 35.00 CRORES IS CLAIMED FOR INTEREST ON RS. 40.00 CRORES ADVANCED BY THEM TO US. AS THE MA TTER IS SUBJUDICE IT WOULD NOT BE PRUDENT TO COMMENT ON TH E OUTCOME OF THE CASE. IF IT GOES AGAINST ASSESSEE WE WOULD BE ASKED TO PAY INTEREST ON THE FIXED DEPOSITS OF RS. 40.00 CRO RES WITH SYNDICATE BANK GIVEN BY THE GOVT. OF BIHAR. AND IN KEEPING IN VIEW OF THE ABOVE ASSESSEE HAD DISCLOSED THE INTERE ST EARNED IN THE AUDITED BALANCE SHEET AS INTEREST ON FIXED DEPOSITS UNDER LIEN AGAINST BANK GUARANTEE ON THE FIXED DEP OSITS UNDER THE HEAD LOANS & ADVANCES VIDE SCHEDULE 8 . 5.3. ON THE BASIS OF THE ABOVE FACTS IT WAS SUBMITT ED THAT MERELY BECAUSE THE CIT(A) HAS CONFIRMED THE ACTION OF THE A.O. IN THE QUANTUM PROCEEDINGS THE PENAL ACTION WAS NOT WARRANTED. PE NAL ACTION WAS ASSAILED ON THE GROUNDS OF LACK OF JURISDICTION OF THE A.O. IN AS MUCH AS SATISFACTION HAD NOT BEEN RECORDED IN THE ASSESSMEN T ORDER FOR LEVY OF PENALTY U/S 271(1)(C) OF THE I.T.ACT 1961. IN SUP PORT OF THE ACTION TAKEN RELIANCE WAS PLACED UPON THE JUDGEMENT OF THE APEX COURT IN THE CASE OF EDSASSOON VS CIT (CITED SUPRA); JURISDICTIONAL HIG H COURTS DECISION IN PARAGAON CONSTRUCTION VS CIT 142 TAXMAN 215 DELHI. IN THE FACTS OF THE SAID CASE IT WAS SUBMITTED THAT THE HIGH COURT HAD HELD THAT INCOME COULD NOT HAVE OCCURRED TO THE ASSESSEE ON THE INTE REST EARNED ON THE AMOUNTS KEPT IN F.D. AS THE ASSESSEE WAS TO WITHDR AW THE SAME ONLY AGAINST A BANK GUARANTEE AS SUCH IT WAS HELD THAT T HE DATE OF PAYMENT ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 8 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 WAS DEFERRED AND IN THE FACTS OF THE PRESENT CASE I T WAS CONTENDED THE ENTIRE RIGHT TO RECEIVE WAS IN QUESTION. 5.4. CONSIDERING THE SUBMISSIONS ON FACTS AND LAW T HE CIT(A) REJECTED GROUND NO.1 OF THE ASSESSEE AND ON MERITS CAME TO THE FOLLOWING CONCLUSION. AS REGARDS GROUND NOS. 2 3 4 AND 5 THE MAIN CON TENTIONS OF THE APPELLANT ARE THAT : I) THE ASSESSING OFFICER IN THE PENALTY ORDER HAS NO T MADE OUT ANY CASE FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME EXCEPT STATING THAT THE ADDIT IONS MADE HAVE BEEN CONFIRMED BY THE CIT(A). II) IT IS THE APPELLANT WHO HAS COMPLETELY DISCLOSE D IN THE AUDITED ACCOUNTS THE TREATMENT GIVEN TO THE INTEREST ON FDR S WHICH WAS SUBJECT MATTER OF DISPUTE. STAND TAKEN BY THE APPEL LANT IS DULY SUPPORTED BY VARIOUS COURT DECISIONS. MERELY REJECT ING THE CLAIM WILL NOT RESULT IN ANY ADDITION LEAVE ALONE PENAL ACTION. III) THE ASSESSING OFFICER HAS TO DEMONSTRATE AND E STABLISH THAT THE APPELLANT HAS CONCEALED PARTICULARS OF ITS INCO ME OR HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. EXP LANATION (1) TO SECTION 271(1)(C) CONTEMPLATES THAT THE PENALTY CAN BE LEVIED IF THE PERSON FAILS TO OFFER ANY EXPLANATION OR EXPLAN ATION OFFERED IS FOUND TO BE FALSE BY THE ASSESSING OFFICER. THE APP ELLANT HAS OFFERED COMPLETE EXPLANATION. IN THE BALANCE SHEET AND THE NOTES TO THE ACCOUNTS THE TREATMENT GIVEN TO INTEREST INC OME WAS DISCLOSED. THIS EXPLANATION HAS BEEN SUBSTANTIATED BY GIVING COMPLETE EXPLANATION BEFORE THE ASSESSING OFFICER A S TO WHY SUCH A TREATMENT HAS BEEN GIVEN - BY REFERRING TO THE DI SPUTE BETWEEN THE APPELLANT AND STATE GOVT. OF BIHAR- A MATTER WH ICH IS SUBJUDICE IT IS NOTICED THAT THE APPELLANT IS A SOCIETY CONST ITUTED BY THE DEVELOPMENT COMMISSIONER HANDLOOMS MINISTRY OF TEX TILES GOVT. OF INDIA. THE MAIN OBJECTS OF THE SOCIETY ARE TO COORDINATE AND DEFUSE USEFUL KNOWLEDGE TO THE MEMBER UNITS TOW ARDS MARKETING OF HANDLOOM PRODUCTS. THE SOCIETY IS REGISTERED UNDER THE SOCIETIES REGIS TRATION ACT 1860 & IS ALSO REGISTERED UNDER SECTION 12A(A) OF T HE INCOME TAX ACT 1961 AND QUALIFIES FOR EXEMPTION U/S 11 & 12 O F THE INCOME ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 9 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 TAX ACT 1961. THUS IT IS NON PROFIT ORGANIZATION MA NAGED AND CONTROLLED BY THE GOVERNMENT OF INDIA AND ITS OBJEC TS ARE CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF T HE INCOME TAX ACT 1961. IT IS ALSO NOTICED FROM THE DETAILS ON RECORD THAT THE DISPUTE WHICH AROSE BETWEEN THE APPELLANT. SOCIETY AND THE GOVT. OF BIHAR WAS REFERRED TO THE SOLE ARBITRATOR SECRETARY TEXTILES ON 26-09-1997 AND IS STILL SUBJUDICE. THE SEQUENCE OF EVENTS LEAD ING TO THIS REFERENCE HAVE BEEN EXPLAINED BY THE APPELLANT SOCI ETY IN THE COURSE OF ASSESSMENT PROCEEDINGS CONSEQUENT APPELL ATE PROCEEDINGS PENALTY PROCEEDINGS AND ALSO IN THE CO URSE OF PRESENT APPELLATE PROCEEDINGS VIDE THEIR WRITTEN SU BMISSIONS REPRODUCED IN THE PRECEDING PARAS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES THE APPELLANT SOCIETY DID NOT SHOW TH E INTEREST ACCRUED ON FDRS AS ITS INCOME AS IT DID NOT HAVE 'R IGHT TO RECEIVE THE INTEREST' RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF E.D.SASOON & O THERS VS CIT 26 ITR 27 (SC). HOWEVER A NOTE (NOTE NO.6) TO THIS EFFECT WAS GIVEN IN THE NOTES TO ACCOUNT SCH.16 WHILE FILING T HE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02. THE NOTE C LEARLY MENTIONS THAT A SUM OF RS. 9 80 81 363/- EARNED AS INTEREST ON FIXED DEPOSITS UPTO 16-12-2000 IS SHOWN UNDER THE H EAD 'LOANS AND ADVANCES AND NOT TAKEN AS INCOME IN THE INCOM E & EXPENDITURE ACCOUNT IN THE BALANCE SHEET ALSO THIS INTEREST HAS BEEN SHOWN SEPARATELY UNDER THE HEAD 'LOANS & ADVAN CES' AS INTEREST ON FDRS UNDER LIEN AGAINST BIHAR GOVERNMEN T. FURTHER IN THE COURSE OF ASSESSMENT PROCEEDINGS APPELLATE PRO CEEDINGS AND PENALTY PROCEEDINGS THE CIRCUMSTANCES UNDER WHICH T HIS TREATMENT TO THE INTEREST HAS BEEN GIVEN IN THE ACC OUNTS WERE FULLY EXPLAINED AND ALL RELEVANT DETAILS WERE FILED . IN VIEW OF THE FACTUAL POSITION AS DISCUSSED ABOVE IT IS EVIDENT THAT THOUGH THE CLAIM OF THE ASSESSEE MIGHT HAVE BE EN REJECTED BY THE ASSESSING OFFICER AND THE CIT(A) IT CANNOT B E HELD GUILTY OF CONCEALING PARTICULARS OF ITS INCOME OR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME AS ALL RELEVANT DETAILS H AD BEEN DISCLOSED/EXPLAINED IN THE RETURN AND DURING THE AS SESSMENT PROCEEDINGS. THE APPELLANT FILED AN EXPLANATION WHI CH HAS NOT BEEN FOUND TO BE FALSE BY THE ASSESSING OFFICER. THE APPELLANT IS A NONPROFIT ORGANIZATION CONSTITUT ED UNDER THE MINISTRY OF TEXTILES GOVT. OF INDIA. IT DISCLOSED THE RELEVANT FACTS REGARDING TREATMENT GIVEN BY IT TO THE INTEREST ON FDRS IN THE RETURN OF INCOME IN THE NOTES TO ACCOUNTS AND THE B ALANCE SHEET AND EXPLAINED COMPLETE DETAILS AND THEIR STAND BEFO RE THE ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 10 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 ASSESSING OFFICER/CIT(A). THUS THIS IS NOT A CASE W HERE ANY INCOME COULD BE SAID TO HAVE BEEN CONCEALED OR ANY INACCURATE PARTICULARS OF INCOME COULD BE SAID TO HAVE BEEN FU RNISHED. IN THIS VIEW OF THE MATTER THE ASSESSING OFFICER'S FIN DING REGARDING LEVY OF PENALTY IN THIS CASE IS NOT FOUND TO BE JUS TIFIED. ACCORDINGLY PENALTY LEVIED IS HEREBY CANCELLED. 6. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. 6.1. LD.CIT DR PLACES HEAVY RELIANCE UPON THE QUAN TUM ORDER ON THE BASIS OF WHICH IT WAS SUBMITTED THAT THE A.O. WAS J USTIFIED IN LEVYING PENALTY AS EVIDENTLY UPTO THE STAGE OF THE CIT(A) THE CLAIM OF ASSESSEE WAS NOT CORRECT. IT WAS HER VEHEMENT SUBMISSION TH AT THE AMOUNTS RECEIVED DO CONSTITUTE INCOME OF THE ASSESSEE AND T HEY HAVE NOT BEEN SHOWN TO BE ASSESSEES INCOME. IN FACT THE ASSESSE E IS TAKING DIFFERENT STANDS AT DIFFERENT FORUMS. IT WAS ALSO ARGUED THA T THE RELIANCE PLACED UPON VARIOUS CASE LAWS SO AS TO CONTEND THAT THE A MOUNTS DO NOT BELONG TO THE ASSESSEE HAS BEEN FOUND TO BE NOT APPLICABL E AND THE AMOUNTS HAVE BEEN HELD TO BE TAXABLE. ACCORDINGLY IN THE FACTS AS THEY STAND IT WAS ARGUED THAT THE EXPLANATION OF THE ASSESSEE THA T THE AMOUNT IS NOT TAXABLE AND THE RECEIPT OF AMOUNT WAS IN JEOPARDY I S NOT CORRECT. IT WAS REITERATED THAT THE ASSESSEE HAS BEEN TAKING TWO D IFFERENT STANDS AS BEFORE THE SECRETARY TEXTILES THE ASSESSEE IS CLAI MING THAT THE AMOUNTS BELONG TO IT AND IN THE INCOME TAX PROCEEDINGS IT I S BEING CONTESTED THAT IT IS NOT BELONGING TO THE ASSESSEE. AS SUCH THE I MPUGNED ORDER DESERVES TO BE REVERSED AND THE PENALTY ORDER BE UPHELD. ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 11 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 6.2. LD.A.R. ON THE OTHER HAND PLACES RELIANCE UPO N THE JUDGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. RELIANCE PET ROPRODUCTS LTD. 322 ITR 158 (S.C.). THE EXPLANATION OFFERED BEFORE TH E CIT(A) WAS REITERATED. IT WAS HIS ARGUMENT THAT THE ASSESSEE HAS DISCLOSED ALL FACTS QUA THE CLAIM AND IT IS ENTIRELY BECAUSE OF THE DISCLOSUR ES MADE BY ASSESSEE IN ITS AUDITED BALANCE SHEET THAT THIS FACT CAME TO TH E NOTICE OF THE DEPARTMENT. IT WAS ALSO HIS CONTENTION THAT THE EX PLANATION OFFERED BY ASSESSEE HAS NOT BEEN FOUND TO BE INCORRECT AND EVE N IF IT HAS NOT BEEN ACCEPTED BY THE CIT(A) IN QUANTUM PROCEEDINGS THE C LAIM OF THE ASSESSEE WAS MADE RELYING UPON LEGAL POSITION AND THE CLAIM IS BONAFIDE AS SUCH THE PENAL ACTION IN THE YEAR UNDER CONSIDERATION HA S RIGHTLY BEEN QUASHED. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS IS EVIDENT PENALTY HAS BEE N IMPOSED ON ACCOUNT OF THE FACT THAT THE ADDITION MADE IN QUANTUM WAS UPHELD BY THE CIT(A).IT ;IS WELL SETTLED THAT ASSESSMENT PROCEEDI NGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AS HELD BY TH E HONBLE APEX COURT IN THE CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS . CIT 123 ITR 457 (S.C.); THE FINDING IN THE QUANTUM PROCEEDINGS CANN OT BE REGARDED AS CONCLUSIVE FOR THE PURPOSE OF THE PENALTY PROCEEDIN GS. IT IS THEREFORE NECESSARY TO REAPPRECIATE SO AS TO FIND OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROCEEDINGS ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 27 1(1)(C ) OF THE ACT AND ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 12 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY I NVOKING THE SAID PROVISIONS. IT IS ALSO WELL SETTLED THAT THE CRITE RION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S 271(1)(C ) OF THE ACT ARE DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITION S. ON A CAREFUL CONSIDERATION OF THE SAME WE ARE OF THE VIEW THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE THE DEPARTMENT HAS F AILED TO MAKE OUT A CASE OF CONCEALMENT/OF FILING OF INACCURATE PARTICU LARS. IT IS SEEN THAT FULL FACTS QUA THE ISSUE INVOLVED HAVE BEEN DISCLOS ED BY THE ASSESSEE AND THE FACTS HAVE NOT BEEN SHOWN TO BE EITHER INACCUR ATE NOR INCOMPLETE. IT IS SEEN THAT THE ASSESSEE HAD FURNISHED ALL THE DET AILS AND THESE DETAILS IN THE DISCLOSURE MADE IN THE BALANCE SHEET AND INC OME AND EXPENDITURE A/C READ WITH NOTES THEREON (ESPECIALL Y NOTE NO.6) IN ALL THE YEARS. MERELY BECAUSE ASSESSEE HAD MADE A CLAIM WHI CH WAS NOT ACCEPTED OR COULD NOT BE ACCEPTED BY ITSELF WOULD N OT ATTRACT THE PENALTY U/S 271(1)(C ). A READING OF PROVISION OF S. 271( 1)(C ) OF THE ACT WOULD SUGGEST THAT IN ORDER TO BE COVERED THERE HAS TO B E CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . IN THE FACTS OF THE PRESENT CASE CONCEALMENT HAS NOT BEEN ESTABLISHED N OR CAN IT BE SAID TO BE A CASE WHERE INACCURATE PARTICULARS OF INCOME HA VE BEEN FILED AS ALL NECESSARY DETAILS QUA THE AMOUNT HAVE BEEN DISCLOS ED IN THE DISCLOSURE MADE IN THE BALANCE SHEET AND INCOME AND EXPENDITUR E A/C READ WITH NOTES APPENDED THERETO. THE VIEW TAKEN BY THE CIT( A) IS SUPPORTED BY ITA NOS. 125 9 1260 & 1261/DEL/2008 AND PAGE 13 OF 13 ITA 1127/DEL/2006 ASSN. OF CORPN. & APEX SOCIETIES OF HANDLOOMS A.Y. 1998-99 TO 2001-02 THE JUDGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCT CITED SUPRA. BEING SATISFIED WITH THE REASONING AND THE CONCLUSION OF THE FIRST APPELLATE AUTHORITY IN ALL THE DEPARTMENTAL GROUND IS DISMISSED. 7. IN THE RESULT ITA 1127/DEL/2006 FILED BY THE REVENUE IS DISMISSED. 8. IN ITA NOS. 1259/1260 & 1261/DEL/2008 THE IDENTI CAL REASONS FOR IMPOSING AND QUASHING PENALTY HAVE PREVAILED WITH THE A.O. AND THE CIT(A) RESPECTIVELY. THE ARGUMENTS ON FACTS AND LAW REMAIN THE SAME ON BEHALF OF THE PARTIES BEFORE THE BENCH. FOR THE RE ASONS GIVEN IN ITA 1127/DEL/06 THE DEPARTMENTAL GROUNDS IN THE REMAINI NG 3 YEARS ARE DISMISSED. 9. IN THE RESULT ITA NOS. 1259/1260 & 1261/DEL/2008 OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16.02.2012. SD/- SD/- (B.K. HALDAR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH FEB. 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CI T(A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR