Pr. Commissioner Of Income Tax-I, Chandigarh v. M/S Punjab State Federation Of Coop. Sugar Mills Limited, Chandigarh

ITA No. 59 of 2016 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 59 of 2016 (O&M) Date of Decision: 5.5.2016 Pr. Commissioner of Income Tax-I, Chandigarh ....Appellant. Versus M/s Punjab State Federation of Coop. Sugar Mills Limited, Chandigarh ...Respondent. 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE SHEKHER DHAWAN. PRESENT: Ms. Urvashi Dhugga, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) against theorder dated 26.10.2015 (Annexure A-4) passed by the Income TaxAppellate Tribunal, Chandigarh Benches, Chandigarh (hereinafterreferred to as “the Tribunal”) in ITA No. 838/CHD/2014, for theassessment year 2010-11, claiming the following substantial questions of law:- i)Whether on the facts and in the circumstancesof the case, the ITAT was right in law in deletingthe penalty when the assessee had claimed ITA No. 59 of 2016 expenses in express violations of Section 40(a)(ii) of the I.T. Act, 1961 especially in view ofdecision of Hon'ble Delhi High Court in CIT v.Zoom Communication Service Pvt. Ltd.? ii)Whether on the facts and in the circumstancesof the case, the Hon'ble ITAT was right in law indeleting the penalty holding that there was nointention to conceal income whereas mens reawas not held as essential ingredient by theApex Court in Dharmendra Textiles Processorsfor levy of penalty u/s 271(1)(c)?of the case, the Hon'ble ITAT was right in law indeleting the penalty holding that there was nointention to conceal income whereas mens reawas not held as essential ingredient by theApex Court in Dharmendra Textiles Processorsfor levy of penalty u/s 271(1)(c)? 2.Briefly stated, the facts necessary for adjudication of theinstant appeal as narrated therein may be noticed. The assessee is aCooperative Society and is engaged in providing assistance to thevarious member sugar mills in the State of Punjab and is receiving cesson the production of sugar. It e-filed its return of income for theassessment year 2010-11 on 28.9.2010 declaring total income at` 9,77,46,340/-. The said return was processed under Section 143(1) ofthe Act on 7.5.2011. The case was taken up for scrutiny and noticeunder Section 143(2) of the Act was issued on 1.9.2011. Subsequently,questionnaire along with notice under Section 142(1) of the Act wasissued on 19.4.2012. During the course of assessment proceedings, theassessee claimed expenses for capital gain tax of ` 2,65,03,000/- andproperty tax amounting to ` 9588/- in the profit and loss account and hadnot added them back in the computation of total income. Accordingly,the Assessing Officer vide order dated 28.1.2013 (Annexure A-1) framedthe assessment at a total income of ` 12,42,58,928/- by making additions of ` 2,65,03,000/- on account of capital gain tax and ` 9588/-on account of property tax. On both the additions, penalty proceedingsunder Section 271(1)(c) of the Act were also initiated for furnishinginaccurate particulars of income. The Assessing Officer vide orderdated 19.7.2013 (Annexure A-2) levied penalty amounting to `61,13,801/- under Section 271(1)(c) of the Act. Feeling aggrieved by theorder, Annexure A-2, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. TheCIT(A) vide order dated 16.7.2014 (Annexure A-3) allowed the appealand deleted the penalty under Section 271(1)(c) of the Act levied by theAssessing Officer. Against the order, Annexure A-3, the revenue filed anappeal before the Tribunal. The Tribunal vide order dated 26.10.2015(Annexure A-4) upheld the order of the CIT(A) and dismissed the appeal.Hence, the present appeal by the revenue. 3.We have heard learned counsel for the revenue. 4.The primary issue that arises for consideration in this appealis whether the CIT(A) had rightly deleted the penalty under Section 271(1)(c) of the Act which has been upheld by the Tribunal. The penalty hadbeen levied for furnishing inaccurate particulars of income. 5.It would be apposite to refer to the findings recorded by theCIT(A) while cancelling the penalty under Section 271(1)(c) of the Actwhich are as under:- “5.2. The Ld. Counsel has explained that the incometax return of the appellant was filed by the Advocate,who had not added back the advance tax paid oncapital gains and property tax, in the statement ofincome. From the documents filed by the Ld. Counsel, it is evident that the Counsel had filed theincome tax return and had not added back theimpugned amounts debited to the profit & lossaccount, which were inadmissible deductions. Thus,the mistake of not adding back the impugned amountsin the statement of income was of the then Counseland moreover, it cannot be said that anyone hadbenefitted by not adding back the impugned amounts,since the appellant cooperative society is anundertaking of Government of Punjab. Theexplanation furnished by the appellant is bonafide andso the impugned penalty levied is cancelled.” 6.On appeal by the revenue, the Tribunal had affirmed thesaid findings of the CIT(A) by holding that the assessee had submittedrevised computation during the course of assessment proceedings andthere was no intention to conceal the income. Further, the Tribunal heldthat the assessee had duly paid tax on the amounts of capital gains taxand property tax suo motu and due to inadvertent mistake on the part ofthe counsel of the assessee, the amount of capital gains tax andproperty tax paid were not added back resulting into refund. The Tribunalhad observed that by not adding back the amount, no one had beenbenefitted as the assessee is an undertaking of Government of Punjab.The relevant findings recorded by the Tribunal read thus:- “4.We have heard Shri Vivek Mongia Ld. DR andhave also perused the materials available on record.However, none appeared on behalf of the assessee.It is observed that the assessee is a Cooperative “4.We have heard Shri Vivek Mongia Ld. DR andhave also perused the materials available on record.However, none appeared on behalf of the assessee.It is observed that the assessee is a Cooperative Society and an undertaking to Government of Punjab.It is claimed that the assessee had engaged aprofessional for preparing and filing of the income taxreturn. It is stated that assessee has submittedrevised computation during the course of assessmentproceedings and there was no intention to conceal theincome. Furthermore, the assessee had duly paid taxon the impugned amounts of capital gains tax andproperty tax suo motu, but due to inadvertent mistakeon the part of the counsel, this amount of capital gainstax and property tax paid were not added backresulting into refund. In our view, the Ld. CIT(A) hascorrectly observed that the mistake of not adding backthe impugned amounts in the statement of incomewas of the then counsel and moreover it cannot besaid that anyone had been benefited by not addingback the impugned amount, since the assessee is anundertaking of Government of Punjab. In our opinion,the order of CIT(A) is based on appreciation of factsand, therefore, we decline to interfere with the order ofCIT(A). Consequently, the appeal of the Revenue isdismissed.” 7.No illegality or perversity could be demonstrated by learnedcounsel for the revenue that the findings of the CIT(A) and the Tribunalwere erroneous or perverse in any manner. 8.In view of the above, no scope for interference by this Courtis made out so as to take a different view expressed by the CIT(A) and ITA No. 59 of 2016 -6- affirmed by the Tribunal. Thus, no substantial question of law arises. The appeal stands dismissed. (AJAY KUMAR MITTAL)JUDGE May 5, 2016gbs (SHEKHER DHAWAN)JUDGE