TaxTMI 
TaxTMI 
2019 (8) TMI 343
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....l was dismissed for default vide order dated 24th October 2016. However, the assessee moved a miscellaneous application for recalling of the exparte order which is allowed. Appeal was, therefore, fixed for hearing on merits. 2. The facts of the case are that the Assessing Officer made addition on two grounds in the assessment order under section 143(3) of the I.T. Act, as under : (i) "Disallowance of carry forward and set-off of brought forward losses by holding that there is no provision under the Income Tax Act as per which the loss at the time of splitting the society can be carried forward to the newly formed society. (ii) Disallowance of excess depreciation, since full depreciation on the applicable rates had been claimed in case ....
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....ate particulars. Merely because the assessee had claimed the set-off of losses, which claim was not accepted or was not acceptable to the Revenue, that by itself, should not attract penalty under section 271(1)(c)of the Income Tax Act. The assessee relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs Reliance Petro Products Private Limited [2010] 322 ITR 158 (SC). It was further submitted that Section 72A and Section 72AA deals with carry forward and set-off of losses in case of merger and demerger i.e., reorganisation of the corporate legal entities. On believing that the Cooperative-Society is also an incorporated organisation, having separate legal entity, just like a Company, the provisions of Section 72A and Sect....
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....ral decisions in support of the contention that penalty is not available. 5. The Ld. CIT(A), however, did not accept the contention of the assessee-society and noted that as per Income Tax Act, such carry forward and set-off of losses in case of amalgamation, demerger are applicable only in case of Companies and not in case of other entities. The assessee is a Cooperative-Society which is different from the Company, therefore, Cooperative-Society cannot make a claim of carry forward and set-off of the losses. It was also noted that penalty was imposed because it claimed depreciation in case of assets acquired and put to use for the purpose of business or profession for a period of less than 180 days. The Appeal of assessee-society was acco....
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....ed any information or fact from the authorities below. It is not in dispute that there was brought forward losses of the parent cooperative-society. It is well settled Law that both the assessment and penalty proceedings are independent proceedings. Since, it was a mistake/bonafide error on the part of the Counsel for Assessee, penalty need not be imposed. Learned Counsel for the Assessee relied upon Judgments of the Hon'ble Supreme Court in the case of Price Water Coopers Pvt. Ltd., vs. CIT 348 ITR 306 (SC) and in the case of CIT vs., Reliance Petro Products Pvt. Ltd., 322 ITR 158 (SC). 7. On the other hand, Ld. D.R. relied upon the orders of the authorities below and submitted that in case the return would not have been selected for scru....
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....horities below. The assesseesociety, thus, has disclosed all material facts to the Income Tax Authorities and have also disclosed the same facts in the return of income. There was thus no attempt on the part of the assessee-society to withhold or conceal any fact or information. According to explanation of Learned Counsel for the Assessee, the assessee-society is having its Members who were mostly Farmers and Milk Sellers and that assessee-society bonafidely believed that it can claim the set-off of brought forward losses as are entitled in the case of Corporate entities because assessee-society is also a separate legal entity. It is also well settled Law that both assessment and penalty proceedings are distinct and independent proceedings.....
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....r 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 furnishing inaccurate particulars." 8.1. The Ld. CIT(A) while confirming the levy of penalty observed in the impugned order that cooperative society is a different entity as compared to the company, therefore, such carry forward and set-off of the losses could not be granted to the Co-operative Society. Similarly, for claim of depreciation, it was found that the assets acquired have been put to use for a period of less than 180 days for busines....