Income Tax Appeal v. Ghuge, Jj.dated: February 06, 2014

1 IN THE HIGH COURT OF JUDICATURE OF BOMBAYBENCH AT AURANGABAD INCOME TAX APPEAL NO. 8 OF 2012 THE COMMISSIONER OF INCOME TAX I NASHIKVERSUSSHRI AGRASEN SAHAKARI PATSANSTHA MARYADIT DHULE...Advocate for Appellant : Shri D.V.Soman ...CORAM : S.C.DHARMADHIKARI & RAVINDRA V. GHUGE, JJ.Dated: February 06, 2014 ... PER COURT :- 1.Heard Shri Soman, learned Advocate for the appellant. 2.This is a Revenue's Appeal, questioning the judgment and order dated 3.6.2011 of the Income Tax Appellate Tribunal, Pune Bench, Pune. The assessment year is 1999-2000. 3.The argument is that the respondent assessee is a Credit Cooperative Society under the Maharashtra Cooperative societies Act, 1960 and engaged in the business of collecting deposits by paying interest and providing loans to the members on charging yearly interest. A survey was conducted under Section 133A of the Income Tax Act, 1961 ("for brevity, hereinafter "IT Act") by the Department, in which, it was noticed, on going through the two Registers of the Society that the fixed deposits recorded therein were fictitious. Notice under Section 148 of the IT Act was issued for reassessment. The details of deposits were not given and hence while finalising the reassessment, additions were made of deposit under Section 68 of the IT Act amounting to Rs.2,01,60,000/-. 4.The assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Nasik, who deleted the entire addition, relying upon the decision of the Income Tax Appellate Tribunal, Pune in the case of Shri Mahavir Nagari Sahakari Pat Sanstha, Kolhapur. 5.The argument is that the Commissioner of Income Tax's order was not accepted by the Department and it approached the Income Tax Appellate Tribunal, Pune. The appellate Tribunal has also not interfered therewith and therefore, this appeal. 6.According to Shri Soman, there are substantial questions of law. Substantial questions of law are that the penalty proceedings were initiated in relation to the income referred above, the Commissioner and the Income Tax Appellate Tribunal ought not to have interfered therewith only on the ground that there is a explanation given and which explanation deserves acceptance. In the submission of Shri Soman, when the deposits were fictitious, then the penalty proceedings were rightly initiated. 7.We are unable to accept this contention because enabling the department to levy penalty, necessary ingredients have to be satisfied. Both the Commissioner of Income Tax (Appeals) and the appellate Tribunal have found that alleged fictitious deposits were of the Directors at the relevant time and their families and friends. Those persons have been identified and 3 such an approach was taken in the case of even Shree Mahavir Nagari Sahakari Pat Sanstha. Both the Commissioner of Income Tax (Appeals) and the appellate Tribunal found that the present case is similar to that of the earlier decision and the case of Shri Mahavir and the matter was, therefore, rightly decided in favour of assessee. 8.The concurrent findings do not give rise to substantial questions of law. The penalty proceeding, therefore, could not have been, in the given facts and circumstances, sustained. 9.Present appeal is devoid of any merits and is dismissed. ( RAVINDRA V. GHUGE, J. ) ( S.C.DHARMADHIKARI, J. )... akl