TaxTMI 
TaxTMI 
1994 (6) TMI 42
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....rpose being to develop industrial sites and provide other infrastructure for the development of an industrial estate for its members, filed a return on27th July, 1983showing a loss of Rs. 72,817. In its accounts it had shown interest income to the tune of Rs. 32,228. The other relevant fact in this case is that every member of the said co-operative society was to pay entrance fees of Rs. 100 and also to subscribe to atleast one share of the face value of Rs. 1,000. The assessee had also received from its members a sum of Rs. 62,09,279 towards cost of land, development charges, etc. The surplus funds of the assessee-society were invested in fixed deposits with the bank and which earned interest income to the tune of Rs. 1,76,551. This figure....
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....sited with banks. 6. In view of the aforesaid addition of Rs. 1,76,551 the ITO initiated penalty proceedings at the assessment stage and subsequently by means of an order dt.3rd June, 1987he imposed a penalty of Rs. 61,861 being 150 per cent of the tax sought to be evaded. He took due note of the observations of the ITO in the assessment order as also the further fact that the CIT(A) had upheld the addition. On further appeal filed against the penalty order the CIT(A) confirmed the same taking due note of the order of the Tribunal in the quantum appeal confirming the addition on account of interest. 7. The learned counsel for the appellant, at the outset, contended that this was not a case which could be said to attract the penal prov....
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....ual or a group of individuals. The learned counsel further stated that in the asst. yr. 1986-87 a similar addition had been made by the ITO, but penalty proceedings initiated under s. 271(1)(c) were subsequently dropped. As regards asst. yr. 1985-86 the learned counsel stated that penalty proceedings were initiated, but no penalty was levied. On the question of mens rea/mala fide intention, the learned counsel placed reliance on the decision of the Supreme Court in Cement Marketing Co. of India Ltd. vs. Asstt. CST (1980) 124 ITR 15 (SC) and that of the Allahabad High Court in the case of CIT vs. University Printers (1991) 188 ITR 206 (All). In concluding his arguments the learned counsel urged that the penalty be cancelled. 8. The learne....
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....CIT(A) and the Tribunal that it was under the bona fide belief that the interest earned on the amount deposited with the bank belonged to the members and required to be adjusted from the future dues towards the society. In our opinion, the aforesaid stand does not appear to be a far-fetched one although the order of the Tribunal confirming the addition has become final as there is nothing on record to show that a reference application had been filed by the assessee. We are, however, in the realm of penalty under s. 271(1)(c) and although the findings recorded in the quantum matters are to be considered, these by themselves cannot be the sole basis for levy of penalty and that also under s. 271(1)(c). The learned counsel has also raised an a....
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....o verify the actual payment of advance tax under s. 210 stated at a figure of Rs. 16,720 by the assessee and re-calculate the penalty "as per law." 12. We have heard both the parties at some length in respect of the appeal pertaining to levy of penalty under s. 273/274. The learned counsel argued that the assessee did not have any positive income at the assessment stage as the returned figure was a negative one. It was stated that the addition on account of interest was not contemplated at the point of time when necessary compliance was to be made vis-a-vis the provisions pertaining to advance tax. The further submissions on the part of the learned counsel were on the same lines as raised in the earlier appeal pertaining to penalty under....