TaxTMI 
TaxTMI 
TaxTMI 
2009 (7) TMI 893
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....x to the tune of Rs.1,04,61,330/-. The minimum penalty imposable for the same being the quantum of tax evaded, the Assessing Officer imposed the penalty of Rs.1,04,61,330/-. The aforesaid determination at the hands of the Assessing Officer was affirmed by the Commissioner of Income Tax (Appeals) vide his order dated 2.9.2006. 3. The instant appeal has been preferred against the order passed by the Income Tax Appellate Tribunal dated 4.10.2007 by which the orders passed by the Assessing Officer, and the Commissioner of Income Tax (Appeals) dated 30.3.2006 and 2.9.2006 respectively, imposing a penalty on the respondent-assessee under section 271(1)(c) of the Act, has been set aside. 4. Before proceeding to determine the merits of the claim raised by the revenue in the instant appeal, it would be essential to narrate the background on the basis of which proceedings under section 271(1)((c) of the Act, were initiated against the respondent-assessee. In this behalf, it would be pertinent to mention, that the respondent-assessee had been claiming exemption of its entire income under section 10(29) of the Act. Section 10(29) of the Act, is being extracted hereunder:- "10. Incomes not i....
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.... dismissed. No costs". It is,therefore, apparent that the Supreme Court did not find any justification to interfere with the order passed by the Allahabd High Court in the judgment referred to hereinabove. 6. It would also be pertinent to mention that on the same issue, the opinion expressed by a Division Bench of the Madhya Pradesh High Court in M.P.Warehousing Corporation (1982) CIT, 133 ITR 158, was at variance with the one rendered by the Allahabad High Court. In the aforecited judgment, the Madhya Pradesh High Court had concluded, that only such income, as was earned by the Warehousing Corporation by letting out godowns and warehouses for storage, processing or fecilitating marketing of commodities was exempt from income tax. Income derived by the Warehousing Corporation by letting of godowns or warehouses for any other purpose, was not emanable to such exemption. In the instant judgment, the Madhya Pradesh High Court expressly arrived at the conclusion, that income derived from commission earned from handling agricultural commodities, as well as, income derived on account of interest earned on fixed deposits with banks, were not exempt from income tax under secti....
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....nabove, the entire income of the respondent-assessee, was accepted by the revenue as exempt from the liability of tax, upto the assessment year 1991-92. However, based on the judgments rendered by different High Courts (other than Allahabad High Court), referred to in the foregoing paragraphs, the revenue concluded, that income drawn by the respondentassessee from all heads other than rental income earned by it from letting out godowns and warehouses, was taxable. The aforesaid determination by the revenue against the respondent-assessee, was assailed by the respondent-assessee in respect of the assessment years 1992-93 and 1993-94 before the Supreme Court, wherein, the Apex Court admitted the petitions for Special Leave to Appeal, preferred by the respondent-assessee i.e., the Haryana Warehousing Corporation. 11. In view of the above, the respondent-assessee i.e., the Haryana Warehousing Corporation filed a nil income tax return for the assessment 1993-94 on 31.12.1993 claiming that its entire income was exempt from the liability of tax under section 10(29) of the Act. Along with the aforesaid return, a computation chart depicting the total income of the respondentassessee was al....
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....assessee was found to have earned income of Rs.80,831/- on account of forfeiture of earnest money from contractors who had been given contracts for constructing godowns. The Haryana Warehousing Corporation was additionally found to have earned incomes of Rs.14,510/- (for receipt of tender fee) Rs.10,652/- (on account of stitching charges), Rs.7,29,360/- (by way of sale of covers), and lastly, a sum of Rs.12,22,035/- (described as supervision charges, which were earned by way of handling charges, from persons who had availed of storage facilities). Eventually, the total income of the respondent-assessee after allowing permissible deductions was assessed at Rs.2,99,14,358/-. 13. The respondent-assessee preferred an appeal against the aforesaid assessment order. The assessee's appeal insofar as, the relief claimed by it under section 10(29) of the Act, was dismissed by the Income Tax Appellate Tribunal vide an order dated 18.5.2004. However, certain claims raised by the respondent-assessee before the Income Tax Appellate Tribunal were accepted, as a consequence whereof, the matter was remanded to the Assessing Officer. Thereupon, the Assessing Officer, worked out the taxable income o....
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....te Tribunal, inter alia, took into consideration the following issues canvassed on behalf of the respondentassessee:-Firstly, that the respondent-assessee had relied on the judgment rendered by the Allahabad High Court in CIT v. U.P. Warehousing Corporation 195 ITR 273, as against which a petition for Special Leave to Appeal preferred by the revenue has been dismissed by the Supreme Court. Relying on the aforesaid judgment the respondentassessee had also incorporated a note in its reply to the notice under section 148 of the Act, issued to the respondent-assessee. Secondly, at the time of filing of the return by the respondentassessee a petition for Special Leave to Appeal was pending before the Supreme Court against the order passed by the Rajasthan High Court in CIT v. Rajasthan Warehousing Corporation 210 ITR 906, wherein, the Rajasthan Warehousing Corporation had raised the same claims under section 10(29) of the Act, as was being canvassed by the respondent-assessee. Thirdly, petitions for Special Leave to Appeal, filed by the respondent-assessee i.e., the Haryana Warehousing Corporation, before the Supreme Court, where the respondent-assessee had raised the same plea a....
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.... following order on 11.2.2009:- " The issue under consideration in the present appeal is, whether the respondent-assessee is guilty of having furnished inaccurate particulars. In this behalf, it would be pertinent to mention, that the respondent-assessee in its return claimed exemption under section 10(29) of the Income Tax Act, 1961. It is the vehement contention of the learned counsel for the appellant, that the respondent-assessee was not entitled to exemption under section 10(29) of the Income Tax Act, 1961, as the activity in question in furtherance whereof, the respondent-assessee was deriving income, was not in respect of letting out godown but on account of trading activity. Learned counsel for the appellant seeks an adjournment, so as to enable him to obtain instructions whether or not the respondent- assessee had disclosed the income earned by it in respect whereof, penalty proceedings under section 271(c) of the Income Tax Act, 1961 were initiated against him. Adjourned to 25.2.2009." Despite various adjournments the appellant-revenue could not controvert the factual position depicted in the impugned order passed by the Income Tax Appellate Tribunal. ....
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....expressed his helplessness, he was professionally duty bound to canvass the appeal on behalf of the revenue. We granted him the liberty to raise submissions without any interference during the course of hearing, so as to enable him to discharge his professional responsibility. The few submissions raised by him have individually been dealt with in the succeeding paragraphs. 22. The first submission advanced by the learned counsel for the appellant-revenue was, that when the respondent-assessee i.e., the Haryana Warehousing Corporation filed its return of income , it was clear to it that it was not entitled to exemption of its entire income. It was submitted, that the respondent-assessee was aware that income earned under heads other than rental income earned by it by letting godowns and warehouses for storage, processing or fecilitating the marketing of commodities, was taxable. It was pointed out to us, that exemption under section 10(29) of the Act could be availed of only for purposes of income relating to its warehousing activity, and for no other income. It was therefore submitted, that the claim made by the respondent-assessee, even as per its note (extracted in paragraph 11 ....
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....able to penal action in case the revenue finds that the claim raised by the assessee is not acceptable. Such a determination would place curbs on the rights of an assessee, to raise claims it believes to be genuine, under the law. We are satisfied, that no such fetters can be placed on the rights of the assessee to raise genuine claims in its return. In the facts and circumstances disclosed hereinabove, we are satisfied, that the deduction claimed by the respondent-assessee was legitimate and bona fide, in terms of the conflicting determination of law on the proposition in question at the said juncture. We, therefore, find no merit in the first submission advanced by the learned counsel for the appellant-revenue. 24. The second contention advanced by the learned counsel for the appellant-revenue was, that the impugned order passed by the Income Tax Appellate Tribunal deleting the penalty imposed on the respondent-assessee under section 271(1)(c) of the Act, was not sustainable in law because of the clear judgment rendered by the Supreme Court in Union of India v. Dharamendra Textile Processors and others, 306 ITR 277. According to the learned counsel for the appellant-revenu....
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....ating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. Explanation- 2 to 5-A xx xx". The essential pre-requisites section 271(1)(c) of the Act before a penalty can be imposed are; the assessee should have either "concealed the particulars of his income", or alternatively the assessee should have "furnished inaccurate particulars" of his income. Therefore, before determining the liability of the respondent-assessee in the present case, it would first have to be ascertained, whether or not, the respondent-assessee had "concealed the particulars of his income", or had furnished "inaccurate particulars of his income". The clear and categoric finding at the hands of the Income Tax Appellate Tribunal in the impugned order dated 4.10.2007,was that the respondent-assessee had disclosed the entire facts without having concealed any income. There is no allegation against the respondent-assessee that it h....
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....o the facts and circumstances of this case. Accordingly, we find no merit even in the second contention advanced by the learned counsel for the appellant-revenue. 27. The third contention advanced on behalf of the appellant-revenue was, that the finding recorded by the Income Tax Appellate Tribunal, that since the Assessing Officer vide his assessment order dated 15.12.1993 had accepted the claim of the respondent-assessee under section 10(29) of the Act, whereby, the revenue accepted the claim of the respondent-assessee that its entire income (including income from heads other than rental income from its warehousing activity) was exempt from tax, was not sustainable in law for two reasons. Firstly, because the order dated 15.12.1993 was revised by the Commissioner of Income Tax, Rohtak, under section 263 of the Act (vide order dated 7.2.1996), and specially because, the respondent-assessee did not assail the same in appeal. According to the learned counsel for the respondent-assessee, the decision at the hands of the assessee to accept the said assessment order, also demonstrates, that the respondent-assessee intentionally made a false claim. Secondly, it is submitted, tha....
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....the respondent-assessee had been acceded to. For the aforesaid reason, we find no merit even second plea advanced by the learned counsel for the appellant-revenue. 28. No other submission, besides those noticed above, was raised on behalf of the respondent-assessee, during the course of hearing of the instant appeal. 29. In fact, to our mind all the five issues taken into consideration by the Income Tax Appellate Tribunal, while passing the impugned order dated 4.10.2007, were individually sufficient to accept the claim of the respondent-assessee. We are satisfied, that the instant appeal was not filed after due application of mind. Even after the passing of the order dated 11.2.2009 (extracted in paragraph 18 above), the appellant failed to examine the controversy in its correct perspective. Without any justification whatsoever, the appellant has pressed the instant appeal. As noticed hereinabove, we were convinced that the instant appeal was frivolous and ought not to have been filed. We had also made our intention clear that we would impose costs on the appellant if a reasonable cause was not shown. Pressing the instant appeal despite the expression of our verbal opinion....