TMI Blog2019 (8) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... t-off of the brought forward losses and excessive depreciation because of the legal advice. Therefore, the circumstances explained clearly show that penalty need not be imposed in the facts and circumstances of the case. Further, AO in the penalty proceedings noted that notice dated 28th November, 2008 was issued to the assessee before levy of the penalty, in which the AO has mentioned as under : (iii) have concealed the particulars of your income or _______furnished inaccurate particulars of such income. AO in this notice was thus not sure or definite whether assessee has concealed the particulars of income or furnished inaccurate particulars of income. Therefore, on such issue, no penalty is leviable against the assessee-society. The show cause notice issued before levy of the penalty is invalid because it did not contain under which limb of Section 271(1)(c), penalty was to be imposed against the assessee-society. Therefore, penalty proceedings itself are vitiated. - Decided in favour of assessee. - ITA.No.437/Del./2014 - - - Dated:- 3-4-2019 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, therefore, allowed 50% depreciation as is admissible as a result of the additions made. Returned income of NIL was assessed at ₹ 25,16,460/-. 3. During the course of penalty proceedings the assessee submitted that mere making of a claim, which is not sustainable in Law, will not amount to furnishing of inaccurate particulars regarding the income of assessee. As such claim made in the return cannot amount to inaccurate 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 Section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies below. He has submitted that assessee cooperative-society has came into existence by splitting of a parent society namely Gurgaon- Rohtak Cooperative Milk Producers Union Ltd., into two societies and one of them is the assessee-society. The assessee-society consists of Farmers and Milk Sellers who are mostly illiterate. The losses of parent company were shared by two newly formed societies as the same business was carried forward by new societies and moreover Members of the newly formed societies were Members of the parent society. The assessee-society has claimed set-off of brought forward losses to the extent of ₹ 18,23,012/- pertaining to assessment year 2002-2003 of the parent cooperative-society. The assessee-society bonafidely claimed the said set-off in view of provisions of Section 72A and Section 72AA of the Income Tax Act, which are applicable to corporate legal entities. Assessee was under bonafide belief that just like a Company, it is a Corporate entity having separate legal entity and as such entitled for relief under the above provisions. Excessive depreciation was claimed inadvertently mainly on the part of the Counsel for Assessee, thus, the assessee-soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The genuineness of the claim of the assessee-society have not been doubted by the authorities 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. Though the findings in the assessment order have a probative value, but, the same alone is not a conclusive proof that assessee-society has concealed the income or furnished inaccurate particulars of income. The assessee-society still can explain that it did not conceal the income or furnish inaccurate particulars of income. It is well settled Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances explained clearly show that penalty need not be imposed in the facts and circumstances of the case. We may also add here that the Assessing Officer in the penalty proceedings noted that notice dated 28th November, 2008 was issued to the assessee before levy of the penalty, copy of which is at Page 66A of the Paper Book, in which the Assessing Officer has mentioned as under : (iii) have concealed the particulars of your income or _______furnished inaccurate particulars of such income. 8.2. The Assessing Officer in this notice was thus not sure or definite whether assessee has concealed the particulars of income or furnished inaccurate particulars of income. Therefore, on such issue, no penalty is leviable against the assessee-society. The show cause notice issued before levy of the penalty is invalid because it did not contain under which limb of Section 271(1)(c) of the Income Tax, penalty was to be imposed against the assesseesociety. Therefore, penalty proceedings itself are vitiated. We rely upon Judgment of the Hon ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows 73 taxmann.com 241. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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