TaxTMI 
TaxTMI 
2017 (1) TMI 1094
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....ing that it was a concealment, when it was proved that the assessee was not in charitable activity but in commercial / business activity and the same was upheld in appeal. Also it is stated that the learned CIT(A) erred in not accepting that the assessee is deliberately claiming exemption u/s 11, even though the judicial authorities have decided that the assessee was not doing a charitable activity. 3. The assessee filed its return of income for the A.Y. 2007-08 on 31.10.2007 declaring total loss of Rs. 1,29,54,737/-. The Assessing Officer (AO) completed the assessment on 18.12.2009 determining the loss at Rs. 39,11,377/-. The assessee also filed its return of income for the A.Y. 2008-09 on 30.09.2008 declaring Nil income. The AO completed the assessment on 02.12.2010 determining the income at Rs. 1,19,92,709/-. During the course of the impugned assessment years, the AO took into account the decision of ITAT in the case of the assessee for the A.Y. 1989-90 wherein it has been held that the activities of the assessee were not of charitable nature and it was running the business of publishing newspaper. Thus exemption u/s 11 was denied to the assessee. The AO found that the activiti....
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....had made a bonafide claim of exemption u/s 11 of the Act, which has been denied to it by the AO and the appellate authorities in the years under consideration. Therefore, it cannot be said that the assessee had concealed the particulars of its income or had furnished inaccurate particulars of such income. 4.2 The learned CIT(A) has also mentioned that the ITAT in the case of the assessee for the A.Y. 1989-90, 1992-93, 1995-96, 1996-97, 1998- 99 and 2003-04 has explicitly recorded a finding of fact and held that the objects of trust, as a whole, are for charitable purpose falling within the meaning of section 2(15) of the Act. For the A.Y. 1998-99, 2000-01, 2003-04, 2007-08 and 2008-09, the decision has been reversed by the ITAT. Once, this proposition is accepted, the issue of grant of exemption in the case of the assessee can at best be described as a debatable issue. The learned CIT(A) relied on the judgement of the Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd [2010] 189 Taxman 322 (SC), wherein it has been held that penalty cannot be levied merely because the AO and the assessee hold a divergent view on allowablity of a claim for deduction. H....
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....ect of the matter, as rightly been contended by the learned Departmental Representative, were not put to test either by the assessing office or by the Commissioner of Income Tax (Appeal). In view of this, we are inclined to restore the matter back to the file of the assessing officer with a direction to record a finding as to whether the income from the newspaper has been utilised for the objects of the trust during the relevant assessment years and if so to follow the decision of Hon'ble Supreme Court (cited supra) if the income is so utilised and otherwise to decide according to law. Thus, these appeals of the assessee are allowed for statistical purpose only''. 7.2 In the case of the assessee for the A.Y. 1996-97, 1998-99 and 2003-04 (ITA No. 291, 292 & 293/Mum/2007), the issue before the Tribunal was whether the surplus funds utilised for acquisition of assets for business purposes would amount to application of income or not for charitable purpose. The Tribunal held that the expenditure in respect of those fixed assets in respect of which depreciation has been claimed and allowed to the assessee cannot be treated as application of income. However, the balance amount spent....
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.... purchase of fixed assets was in the nature of application of income for objects of the trust and not for expansion of business as treated by the Assessing Officer. C The learned Commissioner of Income Tax (Appeals) erred in not appreciating that while considering application of income, deficits of the earlier years had to be considered and a holistic view had to be taken.'' 7.5 The Tribunal concluded that the assessee's case was wholly unmaintainable and dismissed the appeal. 7.6 Let us now go back to the background on which the AO has imposed penalty u/s 271(1)(1) of the Act. In the assessment order for the A.Y. 2007-08, the AO has made the following additions: 1. Non-payment of employees & employers Contribution of Provident fund Rs. 22,57,426/- 2. Non-payment/late payment of ESIC contribution Rs. 3,21,183/- 3. Penalty for contravention of law Rs. 5,910/- 4. Non-deduction of TDS on payments attracting Provisions of section 40(a)(ia) Rs. 21,30,302/- 5. Prior Period Expenses disallowed u/s 43B Rs. 23,92,292/- 6. Disallowance u/s 40A(2b) Rs. 2,97,527/- Total Rs. 74,04,640/- 7.7 However, the learned CIT(A), considering the facts of the case, a....
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....osition in the instant case that no information given in the return was found to be incorrect or inaccurate. It was not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. The revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such cannot be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. [Para 7] Therefore, it must be shown that the conditions under section 271(1)(c ) exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. [Para 8] ....