2024 (8) TMI 686

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....ng Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relevant to the Assessment Year (AY) 2010-11. Facts of the case: 2. The Assessee is a Co-operative Bank stated to be in liquidation. The Reserve Bank of India (RBI) had issued directions u/s. 35A of the Banking Regulation Act, 1949 imposing some restrictions. According to these restrictions, the Bank, without prior approval in writing from the RBI, was not allowed to grant or renew loans and advances, make any investments, incurred any liability including borrowing of funds, acceptance of fresh deposits, etc. The RBI vide its order no. UBD.CO.NSB/LC-74/12.03.995/ 2004-05 dated 02/06/2005, cancelled the license granted to the bank....

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.... u/s 271(10(c) for furnishing inaccurate particulars and concealment of income. 2.3. The assessee filed an appeal before the Ld.CIT(A) against the order passed u/s. 143(3) of the Act, who confirmed the disallowance of set off against the brought forward losses. The assessee filed an appeal before the Tribunal. The Tribunal dismissed the appeal due to non-prosecution. 2.4. The AO issued show-cause notice u/s. 274 r.w.s. 271(1)(c) of the Act on 17-12-2018. In reply thereto, the assessee submitted that - "It may be noted that there was no failure on the part of the appellant to disclose truly and fully all material facts. The crucial fact that the banking license of the petitioner has been cancelled by the Reserve Bank of India ....

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....n the AO on the plea that the IT returns for same subsequent assessment years are not fled and hence there is no continuity to ascertain the status of loss for A.Y. 2003-04 finding of AO is that appellant has not filed ITR for A.Y. 2004-05 to 2008-09 could not be compiled with us the bank in under liquidation and al records are misplaced to prove ITR filed by the appellant. In its absence also Loss of A. Y. 2003-04 ought to have been set off as claimed by appellant. It is therefore requested that there is no concealment of income and there is no concealment of furnishing the information along with the return. The disallowance being a technical disallowance of a liability of unabsorbed losses and depreciation only and therefore the ....

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.... Assessing office has wrongly levied penalty u/s. 271(1)(c). A.O. has not considered that due to technical reasons set off of losses claimed were not granted which no way leads to conclusion that particulars of income were concealed. Your appellant request leave to add or amend to substitute all or any of the ground of appeal at or before the hearing of appeal. 3.1. The assessee submitted following revised grounds of appeal before us: "1. Merely because the assessee has made certain claims, which were not accepted or were not acceptable to the revenue, that itself does not attract the penalty u/s 271(1)(c). 2. No penalty under section 271(1)(c) can be levied when all necessary facts were disclosed and th....

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.... From the notice u/s 274 r.w.s 271(1)(c) dated 19/03/2013, is not identifiable as to why the penalty is initiated, whether it is for furnishing inaccurate particulars of income or for concealment of income as the AO has issued printed form of notice without striking off irrelevant portion of the notice. The amount of interest income net off expenses Rs. 1,21,94,779/- is not an income of the assessee as the assessee being a bank under liquidation transfers its entire receipts from interest amount net off expenses to DICCI as a repayment of payment made by the DICCI on behalf of the assessee to the depositors. Therefore, the same cannot be made subject matter of tax in the hands of the assessee, as the said income is not chargeab....

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.... authorities. 6. We have heard the rival contentions, perused the material available on records and noted that there was no failure to disclose material facts, as the cancellation of the banking license by the RBI was disclosed in the original return. We also note that the banking business was under liquidation, the cooperative status was intact, and the bank continued to earn interest on deposits placed out of funds realised form the borrowers and claimed the set-off of brought forward losses. We also note that the quantum appeal before the Tribunal against the order of the Ld.CIT(A) was dismissed for non-prosecution and the assessee had no opportunity to argue on the merits. We further note that the penalty is based on a technical disa....