DCIT CIR. - 3(1), MUMBAI v. M/s. EXPORT IMPORT BANK OF INDIA, MUMBAI

ITA 972/MUM/2008 | 2002-2003
Pronouncement Date: 09-07-2010 | Result: Dismissed

Appeal Details

RSA Number 97219914 RSA 2008
Assessee PAN AACCE2769D
Bench Mumbai
Appeal Number ITA 972/MUM/2008
Duration Of Justice 2 year(s) 5 month(s)
Appellant DCIT CIR. - 3(1), MUMBAI
Respondent M/s. EXPORT IMPORT BANK OF INDIA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 09-07-2010
Date Of Final Hearing 04-05-2010
Next Hearing Date 04-05-2010
Assessment Year 2002-2003
Appeal Filed On 08-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.V. EASWAR PRESIDENT & SHRI R.K.PANDA AM I.T.A. NO. 972/MUM/2008 (ASSESSMENT YEAR 2002-03) DY. CIT CIR. 3(1) ROOM NO. 607 AAYAKAR BHAVAN MUMBAI 400 020 VS. M/S. EXPORT IMPORT BANK OF INDIA CENTRE ONE BLDG. FLOOR 21 WORLD TRADE CENTRE COMPLEX MUMBAI-400 005 PAN: AACCE2769D APPELLANT RESPONDENT I.T.A. NO. 1380/MUM/2008 (ASSESSMENT YEAR 2002-03) M/S. EXPORT IMPORT BANK OF INDIA CENTRE ONE BLDG. FLOOR 21 WORLD TRADE CENTRE COMPLEX MUMBAI-400 005 PAN: AACCE2769D VS. DY. CIT CIR. 3(1) ROOM NO. 607 AAYAKAR BHAVAN MUMBAI 400 020 APPELLANT RESPONDENT REVENUE BY : MR. K.R. DAS ASSESSEE BY : MR. DINESH VYAS ORDER DATE OF HEARING: 05.05.2010 DATE OF ORDER: 09.07.2010 PER R.K.PANDA AM THESE ARE CROSS APPEALS THE FIRST ONE FILED BY TH E REVENUE AND THE SECOND ONE FILED BY THE ASSESSEE AND ARE DIRECTED A GAINST THE ORDER DATED 26.11.2007 OF THE CIT(A)-XXVIII MUMBAI RELATING TO ASSESSMENT YEAR 2002-03. FOR THE SAKE OF CONVENIENCE THESE WERE HE ARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE ASSESSEE IS A PUBLIC FINANCIAL INSTITUTION AND FILED ITS RETURN OF INCOME DECLARING TAXABLE INCOME AT RS.151 17 24 941 . THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE INCOME-TAX ACT 19 61 (THE ACT) ON A ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 2 TOTAL INCOME OF RS.190 08 19 452 BY MAKING THE FOLL OWING DISALLOWANCES FOR THE REASON THAT IN RESPECT OF THOSE INCOMES THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM MADE IN THE COMPUTATION OF I NCOME: (I) FOR ALLOWING DEDUCTION U/S. 10(23G) THE ASSESS ING OFFICER DEDUCTED THE INTEREST PAID/PAYABLE BY THE BANK ON THOSE FUNDS WHICH WERE DEPLOYED BY THE BANK FOR EARNING THAT INTEREST. THE ASSESSEE HAD N OT CONSIDERED THE SAME TO THE CORRECT EXTENT. THUS AGAINST CLAIM OF RS.24 24 29 434/- MADE BY THE ASSESSEE THE ASSESSING OFFICER ALLOWED DEDUCTION OF RS.13 69 29 639/- U/S. 10(23G). (II) SIMILARLY FOR ALLOWING DEDUCTION U/S.10(33) TH E ASSESSING OFFICER DEDUCTED INTEREST PAID/PAYABLE BY THE BANK ON THOSE FUNDS WHICH WERE DEPLOYED BY THE BANK FOR MAKING INVESTMENT IN THOSE SHARES/ SECURITIES FROM WHICH DIVIDENDS RECEIVED/RECEIVABLE WERE CLAIMED EXEMPT. THUS AGAINST CLAIM OF RS.18 86 40 224/- MADE BY THE ASSESSEE THE AO ALLOWED DEDUCTION OF RS.1 97 47 126/- U/S.10(33). (III) THE ASSESSEE BANK HAD CLAIMED THE INTEREST AN D PENAL INTEREST RECEIVED FROM THOSE NPA ACCOUNTS WHICH HAD BECOME NPA DURING THE PERIOD WHEN THE INCOME OF THE BANK WAS NOT TAXABLE. THE SAID RECEI PT OF INCOME HAD BEEN CLAIMED BY THE ASSESSEE AS NOT TAXABLE. THE AO DISALLOWED THIS CLAIM OF THE ASSESSEE AND ADDED A SUM OF RS.20 58 26 107/- ON THIS ACCOUNT TO THE DECLARED INCOME. (IV) THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE F IXED ASSETS ACQUIRED UP TO 31.3.1999 BY CONSIDERING THE ORIGINAL COST OF THOSE ASSETS AS WDV AS ON 31.3.199 9. THE AO WORKED OUT THEIR WDV WITH REFERENCE TO ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 3 THOSE ASSETS UP TO 31.3.1999 AND ACCORDINGLY WORKED OUT THE CORRECT WDV OF THOSE ASSETS AS ON 31.3.1999 AND ACCORDINGLY ALLOWED DEPRECIATION. THUS AGAINST THE CLAIM DEPRECIATION OF RS.9 64 09 880/- THE AO ALLOWED DEPRECIATION AT RS.7 69 70 459/-. 3. IN APPEAL THE CIT(A) UPHELD THE ORDER OF THE ASSES SING OFFICER ON ALL COUNTS EXCEPT THE DISALLOWANCE OF DEPRECIATION WHERE THE HE GAVE PART RELIEF TO THE EXTENT OF RS.1 26 72 365. THE ASSESS ING OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. THE SUBMISSION OF THE ASSESSEE THAT THERE WAS NO CONCEALMENT OF PARTI CULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THAT THE DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF MI SREPRESENTATION OF LAW APPLICABLE TO THE FACTS OF THE CASE WAS NOT ACC EPTED BY THE ASSESSING OFFICER WHO HELD THAT THE ASSESSEE HAD CONCEALED TH E PARTICULARS OF ITS INCOME AS ENVISAGED BY SECTION 271(1)(C) OF THE ACT . HE ACCORDINGLY LEVIED THE PENALTY OF RS.13 55 27 595 BEING THE MIN IMUM PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. 4. IN APPEAL THE CIT(A) CONFIRMED THE LEVY OF PENALTY ON ACCOUNT OF THE ADDITIONS MADE BY THE ASSESSING OFFICER REPRESE NTING INTEREST INCOME OF RS.20 58 26 107 RECEIVED DURING THE YEAR ENDED 3 1 ST MARCH 2002 ON NON-PERFORMING ASSETS AND PENAL INTEREST PERTAINING TO THE YEAR ENDED UP TO 31 ST MARCH 1999 BEING THE FINANCIAL YEAR UP TO WHICH T HE INCOME OF THE ASSESSEE WAS NOT CHARGEABLE TO INCOME-TAX BY VIRTUE OF SECTION 37 OF THE EXPORT IMPORT BANK OF INDIA ACT 1981. HE HOWEVER DELETED THE PENALTY LEVIED ON THE OTHER ITEMS. AGGRIEVED WITH SUCH PAR T RELIEF GIVEN BY THE CIT(A) BOTH THE ASSESSEE AND THE REVENUE ARE IN AP PEAL BEFORE US WITH THE FOLLOWING GROUNDS OF APPEAL. 5. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED U/S. 271(1)( C) OF THE ACT ON THE ADDITION MADE IN ASSESSING THE INCOME U/S. 143(3) OF THE ACT OF RS.20 58 26 107/- ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 4 REPRESENTING INTEREST INCOME RECEIVED DURING THE YE AR ENDED 31 ST MARCH 2002 ON NON-PERFORMING ASSETS AND PENAL INTEREST PERTAINING TO THE YEARS ENDED UP TO 31 ST MARCH 1999 BEING THE FINANCIAL YEAR(S) UP TO WHIC H THE INCOME OF THE PETITIONER WAS NOT CHARGEABLE TO INCOME TAX BY VIRTUE OF THE SECTION 37 OF THE EXPOR T IMPORT BANK OF INDIA ACT 1981. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT NO PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE ACT ON THE ADDITION MADE IN ASSESS ING THE INCOME U/S. 143(3) OF THE ACT OF RS.20 58 26 10 7/- REPRESENTING THE AMOUNT OF INTEREST INCOME RECEIVED DURING THE EAR ENDED 31 ST MARCH 2002 ON NON- PERFORMING ASSETS AND PENAL INTEREST PERTAINING TO THE YEARS ENDED UP TO 31 ST MARCH 1999 BEING THE FINANCIAL YEAR(S) UP TO WHICH INCOME OF THE PETITIO NER WAS NOT CHARGEABLE TO INCOME-TAX BY VIRTUE OF SECTI ON 37 OF THE EXPORT IMPORT BANK OF INDIA ACT 1981 AND ACCORDINGLY OUGHT TO HAVE DIRECTED FOR DELETION OF THE PENALTY LEVIED THEREON U/S. 271(1)(C) OF THE ACT. 3. IT IS HUMBLY PRAYED THAT THE RELIEFS AS PRAYED F OR HEREINABOVE AND/OR SUCH OTHER RELIEFS AS MAY BE JUSTIFIED BY THE FACTS AND CIRCUMSTANCES OF THE CAS E AND AS MAY MEET THE ENDS OF JUSTICE SHOULD BE GRANT ED. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PENALT Y LEVIED U/S. 271(1)(C) ON THE DISALLOWANCE OF RS.10 54 99 795/- U/S. 10(23G) AND RS.16.88 93 098/ - U/S. 10(33) OF THE I.T. ACT. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. I.T.A. NO. 1380/MUM/2008 (BY THE ASSESSEE) : 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS RELATING TO TH E INTEREST INCOME ON NPA AND PENAL INTEREST BEFORE THE ASSESSING OFFICER AND ITS DISCLOSURE WAS TOTAL. HE SUBMITTED THAT PENALTY PROCEEDINGS WERE NOT INITIATED AT ALL DURING THE FIRST THREE YEARS PRIOR TO A.Y. 2002-03. SIMILARLY IN SUBSEQUENT THREE YEARS PENALTY PROCEEDINGS WERE INITIATED AND DROPPED THEREAFTER. ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 5 THIS IS ONLY DURING THE A.Y. 2002-03 THAT THE ASSES SING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS WHICH HAS BEEN UP HELD BY THE CIT(A). HE SUBMITTED THAT THE ASSESSEE EXPORT IMPORT BANK OF INDIA IS A STATUTORY CORPORATION IS GOVERNED BY EXPORT IMPORT BANK OF I NDIA ACT 1981 AND THE BOARD OF DIRECTORS OF THE ASSESSEE COMPANY CONS ISTS OF EMINENT GOVERNMENT OFFICERS AT ALL TIME. HE SUBMITTED THAT THE CONTROVERSY IN THE IMPUGNED APPEAL OF THE ASSESSEE IS ON ACCOUNT OF SE CTION 37 OF EXPORT IMPORT BANK OF INDIA ACT WHICH WAS OMITTED BY THE F INANCE ACT 1998 (21 OF 1998 W.E.F. 1.4.1999). THEREFORE AFTER 1.4.19 99 THE ASSESSEE DOES NOT ENJOY THE BENEFIT OF EXEMPTION. REFERRING TO PAPER BOOK PAGES 17 TO 29 (WHICH IS ANNEXURE 1 TO THE AUDITED ACCOUNTS AND CO NTAINS THE NOTE FORMING PART OF COMPUTATION OF TOTAL INCOME) THE LE ARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO PARA 6 .2 OF THE NOTE WHICH READS AS UNDER: 6.2 KEEPING IN VIEW THE ABOVE REFERRED ASPECT INTE REST ON NPA AND PENAL INTEREST RECEIVED DURING THE YEAR FO R THE YEARS UP TO 31 ST MARCH 1999 IS NOT INCLUDED IN THE TOTAL INCOME A S IT RELATES TO YEARS WHEN INCOME WAS NOT CHARGEABLE TO INCOME TAX AND WAS EXEMPT FROM INCOME TAX AND HENCE CHARGE ABILITY T HEREOF STAND EXHAUSTED IN THE SAID YEARS. 7. HE SUBMITTED THAT SINCE COD APPROVAL HAS NOT BEEN O BTAINED FOR THIS SPECIFIC ADDITION FOR THIS YEAR NO APPEAL HAS BEEN FILED BY THE ASSESSEE IN QUANTUM APPEAL. HOWEVER THE IDBI ON SIMILAR IS SUE HAS OBTAINED COD APPROVAL. HE SUBMITTED THAT THE DISCLOSURE MADE BY THE ASSESSEE WAS TOTAL NONE OF THE DISCLOSURES FILED BY THE ASSESSE E WAS FOUND TO BE INCORRECT OR FALSE NOTHING HAS BEEN CONCEALED UNDE R THE MAIN PROVISIONS OR UNDER THE EXPLANATION TO SECTION 271(1)(C) OF TH E ACT AND THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INC OME. REFERRING TO THE COPY OF THE ASSESSMENT ORDER DATED 23 RD MARCH 2005 PASSED U/S. 143(3) OF THE ACT FOR THE A.Y. 2002-03 (A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 30-49) HE SUBMITTED THAT THE ASSESSING OFFICE R HAS NOT DISCUSSED ANYTHING ON THIS ISSUE IN HIS ORDER. REFERRING TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT HE SUBMITTED THAT THE ASSESSE E HAS NEITHER CONCEALED THE PARTICULARS OF ITS INCOME NOR FURNISHED ANY INA CCURATE PARTICULARS. ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 6 THEREFORE THE PROVISIONS OF SECTION 271(1)(C) OF T HE ACT ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 8. REFERRING TO THE EXPLANATION TO SECTION 271(1)(C) O F THE ACT HE SUBMITTED THAT WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT S UCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FO UND BY THE ASSESSING OFFICER TO BE FALSE OR THE EXPLANATION OFFERED BY S UCH PERSON COULD NOT BE SUBSTANTIATED BY HIM AND SUCH PERSON FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE THEN IN THAT CASE THE AMOUNT ADDED OR D ISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON SHALL FOR THE PURPOSE OF CLAUSE (C) OF SECTION 271(1) BE DEEMED TO REPRESENT THE IN COME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. REFERRING T O THE COPY OF THE ASSESSMENT ORDER HE SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE IS COMPLETELY MISLED AND IT HAS NOTHING TO DO WITH THE FACTS. THE ASSESSING OFFICER HAS MADE ONLY A BALD STATEMENT AN D NO FINDING HAS BEEN GIVEN ON THIS ISSUE. HE SUBMITTED THAT THE ASSESSE ES CASE COMES UNDER THE PROVISIONS OF SECTION 43D(A) OF THE ACT SINCE I T IS A PUBLIC FINANCIAL INSTITUTION IN VIEW OF EXPLANATION (B) TO SECTION 4 3D. 9. REFERRING TO THE DECISION IN THE CASE OF CIT VS. SR . ACCOUNTS OFFICER MP ELECTRICITY BOARD REPORTED IN 276 ITR 84 AND TH E DECISION OF THE TRIBUNAL IN THE CASE OF DENA BANK VS. IAC REPORTED IN 25 ITD 109 HE SUBMITTED THAT THERE CANNOT BE DELIBERATE ATTEMPT T O CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS OF INCOME WHERE T HE ASSESSEE IS AN ORGANISATION UNDER AND RUN BY THE GOVERNMENT OF IND IA AND THEREFORE PENALTY U/S. 271(1)(C) CANNOT BE LEVIED. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS PVT. LTD. (322 ITR 158) AND IN VIEW OF OTHER DECISIONS COPIES OF WHICH ARE FILED IN THE PAPER BOOK HE SUBMITTED THAT PENALTY IS NOT AUTOMATIC ON ADDITIONS MADE TO INCOME AND ACCORDINGLY NO PENALTY CAN BE LE VIED ON ADDITIONS MADE TO THE INCOME ON ACCOUNT OF DIFFERENCE OF OPIN ION. REFERRING TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 7 ENGINEERING CO. VS. CIT REPORTED IN 282 ITR 642 H E SUBMITTED THAT IN ABSENCE OF SPECIFIC CHARGES NO PENALTY CAN BE LEVIE D. HE ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) ON THIS ISSUE BE CANCELLED. 10. THE LEARNED DR ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) ON THIS ISSUE SUBMITTED THAT PROVISIONS OF SECTION 43D CAME INTO EFFECT WHEN THE INCOME HAS ACTUALLY ARISEN. R EFERRING TO PARA 3 AT PAGE 19 OF THE CIT(A) ORDER HE SUBMITTED THAT THE C IT(A) HAS GIVEN A FINDING THAT THERE ARE NEITHER DEBATABLE ISSUES NOR DIFFERENCE OF OPINION AVAILABLE AS FAR AS TAXABILITY OF INTEREST ON NPA I S CONCERNED. THEREFORE THE ACCOUNTS OF THE ASSESSEE CANNOT BE TREATED AS B ONAFIDE. HE ACCORDINGLY RELI8ED ON THE ORDER OF THE CIT(A) ON T HIS ISSUE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A PUBLIC FINANCIAL INSTITUTION AND WHILE FILING ITS RETURN OF INCOME HAS CLAIMED INTEREST AND PENAL INTEREST AMOUNTING TO RS .20 58 26 107 AS NOT TAXABLE WHICH WAS RECEIVED FROM THOSE NPA ACCOUNTS WHICH HAD BECOME NPA DURING THE PERIOD WHEN THE INCOME OF THE BANK W AS NOT TAXABLE. ACCORDING TO THE ASSESSING OFFICER SINCE THE PROVIS IONS OF SECTION 37 OF THE EXPORT IMPORT BANK OF INDIA ACT WAS OMITTED BY FINA NCE ACT 1998 THEREFORE AFTER 1.4.1999 THE ASSESSEE DOES NOT ENJ OY THE BENEFIT OF EXEMPTION ON SUCH INTEREST AND PENAL INTEREST. WE FIND FOR WANT OF COD APPROVAL THE ASSESSEE DID NOT FILE ANY APPEAL BEFOR E THE TRIBUNAL WHEN THE ABOVE DISALLOWANCE MADE BY THE ASSESSING OFFICE R WAS CONFIRMED BY THE CIT(A). WE FIND THE ASSESSEE DURING THE PENALT Y PROCEEDINGS BEFORE THE ASSESSING OFFICER HAS SUBMITTED THAT THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS THEREOF WHICH WAS REJECTED BY THE ASSESSING OFFICER WHO LEV IED PENALTY U/S.271(1)(C) OF THE ACT ON THIS ADDITION WHICH HAS SUBSEQUENTLY BEEN ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 8 CONFIRMED BY THE CIT(A). IT IS THE SUBMISSION OF T HE LEARNED COUNSEL FOR THE ASSESSEE THAT SINCE THE ASSESSEE IS A PUBLIC FI NANCIAL INSTITUTION AND ITS BOARD OF DIRECTORS ALWAYS CONSIST OF EMINENT PERSON ALITIES AND SENIOR BUREAUCRATS OF THE GOVERNMENT OF INDIA THEREFORE THERE CANNOT BE ANY DELIBERATE ATTEMPT TO CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS OF INCOME. FURTHER UNDER IDENTICAL FACTS AND CIRCU MSTANCES NO PENALTY PROCEEDINGS WERE INITIATED DURING THE FIRST THREE Y EARS PRIOR TO A.Y. 2002- 03 AND PENALTY PROCEEDINGS INITIATED WERE DROPPED I N SUBSEQUENT THREE ASSESSMENT YEARS AFTER A.Y. 2002-03. 12. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LEARNE D COUNSEL FOR THE ASSESSEE. WE FIND FROM THE COPIES OF THE ASSES SMENT ORDERS FOR A.YS. 1999-2000 TO 2001-02 COPIES OF WHICH ARE PLACED AT PAPER BOOK PAGES 134 TO 184 THAT ADDITIONS MADE TO THE TOTAL INCOME FOR THE SAID YEARS ARE SIMILAR TO THE ADDITIONS MADE FOR THE YEAR UNDER AP PEAL AND NO PENALTY PROCEEDINGS WERE INITIATED U/S. 271(1)(C) OF THE AC T. SIMILARLY WE FIND THAT DURING THE A.YS. 2003-04 TO 2005-06 THE ASSESS ING OFFICER HAD INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCES OF INTEREST AND PENAL INTEREST FROM T HOSE NPA ACCOUNTS WHICH HAD BECOME NPA DURING THE PERIOD WHEN THE INC OME OF THE BANK WAS NOT TAXABLE. WE FIND FROM PAPER BOOK PAGES 280 -282 THAT THE ASSESSING OFFICER IN HIS IDENTICAL ORDERS PASSED U/ S. 271(1)(C) OF THE ACT FOR THE ABOVE THREE YEARS HAS DROPPED SUCH PENALTY PROCEEDINGS BY MENTIONING AS UNDER: THE PENALTY PROCEEDINGS U/S. 271(1)(C) ARE HEREBY DROPPED. 13. THEREFORE IN OUR OPINION WHEN NO PENALTY PROCEEDI NGS WERE INITIATED UNDER IDENTICAL DISALLOWANCES IN THE PREC EDING THREE YEARS AND PENALTY PROCEEDINGS WERE SUBSEQUENTLY DROPPED IN TH E SUCCEEDING THREE YEARS THEREFORE FOLLOWING THE RULE OF CONSISTENCY NO PENALTY U/S. 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF INTEREST FOR THE IMPUGNED ASSESSMENT YEAR IS LEVIABLE. ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 9 14. FURTHER WE FIND THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 322 I TR 158 HAS HELD AS UNDER: (SHORT NOTES) A GLANCE AT THIS PROVISION OF SECTION 271(1)(C) OF THE INCOME- TAX ACT 1961 SUGGEST THAT IN ORDER TO BE COVERED B Y IT THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INC OME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISH ED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING O F THE WORD 'PARTICULAR' USED IN SECTION 271(1)(C) WOULD E MBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATIO N GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY THE LEARNE D COUNSEL ARGUED THAT UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAI M TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. T HERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPL IED IN THE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCUR5ATE PARTICULARS. 15. IN THE INSTANT CASE FULL PARTICULARS INCLUDING NOTE S ON ACCOUNTS IN THE AUDIT REPORT AS TO WHY THE INTEREST AND PENAL I NTEREST IS NOT INCLUDED IN THE TOTAL INCOME ARE SUPPLIED TO THE ASSESSING O FFICER. THEREFORE A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISH INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE AND SUCH CLAIM MADE IN THE RETURN CANNOT A MOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME IN VIEW OF THE DECISION CITED ABOVE. ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 10 16. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE FOLLOWING THE RULE OF CONSISTENCY AND IN VIEW OF THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD. (SUPRA) WE ARE OF THE CONSIDERED OPINION THAT PENALTY U/S. 271(1)(C) OF T HE ACT IS NOT LEVIABLE ON ACCOUNT OF DISALLOWANCE OF INTEREST OF RS.20 58 26 107. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THIS AMOUNT IS DELETED. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. I.T.A. NO. 972/MUM/2008 (BY REVENUE): 17. THE REVENUE IN THE IMPUGNED APPEAL ADMITTEDLY HAS N OT OBTAINED THE COD APPROVAL FOR FILING APPEAL BEFORE THE TRIBU NAL AGAINST THE ORDER OF THE CIT(A) ALTHOUGH THE ASSESSEE IS A PUBLIC FINANC IAL INSTITUTION. IN VIEW OF THE DECISIONS OF THE HONBLE SUPREME COURT IN TH E CASE OF ONGC & COLLECTOR OF CUSTOMS REPORTED IN 6 SCC 437 AND IN T HE CASE OF MTNL VS. CHAIRMAN CBDT REPORTED IN 267 ITR 647 THE REVENUE OR THE ASSESSEE AS THE CASE MAY BE HAS TO OBTAIN THE COD APPROVAL FOR FILING OF APPEAL BEFORE THE TRIBUNAL. SINCE THE REVENUE IN THE INSTANT CAS E HAS NOT OBTAINED THE COD APPROVAL FOR AGITATING THE MATTER BEFORE THE TR IBUNAL AGAINST THE ORDER OF THE CIT(A) THEREFORE THE APPEAL OF THE R EVENUE HAS TO BE DISMISSED AS UNADMITTED. HOWEVER THE REVENUE I F SO ADVISED IS AT LIBERTY TO MOVE APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR RESTORATION OF THE APPEAL AFTER THE COD APPROVAL IS OBTAINED. THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED AS UN ADMITTED. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 9 TH JULY 2010 SD/- (R.V. EASWAR) PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI DATED 9 TH JULY 2010 ITA NOS. 972 & 1380/MUM/2008 M/S. EXPORT IMPORT BANK OF INDIA ======================== 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XXVIII MUMBAI 4. THE CIT-3 MUMBAI 5. THE DR E BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI TPRAO