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TMI Blog2015 (6) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... o we find the Pune Bench of the Tribunal in the case of Agricultural Produce Market Committee (2015 (6) TMI 347 - ITAT PUNE while deciding an identical issue had cancelled the penalty levied by the AO u/s.271(1)(c) holding the Explanation 3 below Sec. 271(1)(c) which is deeming provision, is applicable to the assessee as period mentioned u/s. 153(1) has expired and then only the assessee filed the returns of income but at the same time the assessee can still avail the Explanation 1 to establish the bonafide for not filing the returns of income within the time allowed u/s. 139 of the Act. In the present case, we are of the opinion that the explanation of the assessee is bonafide for not filing the returns of income for both these assessment years within the meaning of Explanation 1 below Sec. 271(1)(c) of the Act and in our opinion no penalty can be levied on the assessee on the charge of concealing the particulars of income for both the assessment years. - Decided in favour of assessee. - ITA No. 2238/PN/2013 - - - Dated:- 20-5-2015 - Ms. Sushma Chowla, JM And R. K. Panda, AM,JJ. For the Appellant : Shri Sunil Ganoo For the Respondent : Shri Mazar Akram ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of any income nor furnished inaccurate particulars of such income. The ingredient required for initiation and levy of penalty u/s.271(1)(c) is not fulfilled. It was submitted that the assessee has made full disclosure of all relevant facts in the return of income. The return was filed late due to reasonable cause and sufficient reasons. It was submitted that in the penalty notice, nothing was mentioned regarding the applicability of either main clause of section 271(1)(c) or Explanation 3 to section 271(1)(c). The assessee relied upon various case laws in support of its contention. 5. However, the AO was not satisfied with the explanation given by the assessee. He observed that as regard to the first contention it can be seen from the records that assessee ought to have offered for taxation the capital gain by adopting stamp duty valuation of the property for which the assessee has failed. With regard to second contention, he observed that it is an admitted fact that the assessee was a non filer of return of income and it had filed return only after issuance of notice u/s148 by the department. Had the department not issued notice u/s.148, the entire income of the assessee wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income and came to know that it required to make the payment of self assessment tax of about ₹ 59.82 lakhs. Sufficient funds were not available with the assessee for making the payment of Self-Assessment tax and it was told to the assessee that unless payment of Self-Assessment tax was paid return of income cannot be accepted by the department. The assessee brought to the notice of Ld.CIT(A) the copy of cash balances available as per the cash books during the period of 30-10-2008 to 31-03-2011 to substantiate that there was literally very less cash balances. It was accordingly submitted that the assessee could not file the return of income in time. It was stated that the assessee had paid the Self-Assessment tax in installments as under and then filed the return of income : Date of S.A. payment Amount (Rs.) 28-02-2011 5,00,000 25-03-2011 5,00,000 25-03-2011 5,00,000 25-03-2011 5,00,000 31-03-2011 5,00,000 31-03-2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eshwari Das Satpal Barnala reported in (2008) 14 Taxmann 507 (P H) 3. Gem Granites Vs. DY.CIT reported in (2009) 120 TTJ 992 (Chennai) 4. CIT Vs. Khoday Eswarsa Sons reported in (1972) CTR 295 (SC) It was accordingly submitted that no penalty u/s.271(1)(c) of the I.T. Act is leviable. 13. However, the Ld.CIT(A) was also not satisfied with the arguments advanced by the assessee and upheld the penalty so levied by the AO. While doing so he observed that assessee had concealed its taxable income by not filing its return of income and had furnished inaccurate particulars of income by not declaring the correct taxable capital gains arising out of the sale of its above mentioned properties. The assessee had worked out capital gains from sale of the said properties without considering the provisions of section 50C of the I.T. Act. Eventhough the assessee was fully aware that in assessee's case section 50C of the I.T Act was/is attracted, the assessee had deliberately made a wrong claim. Only when enquiries were conducted by the Department, the wrong claim was discovered. Distinguishing the various decisions cited before him, the Ld.CIT(A) held that it is not a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He submitted that although the AO and the CIT(A) have not given reasons as to under which section the penalty has been levied, however, it appears that the same has been levied by following the provisions of Explanation 3 to section 271(1)(c) of the I.T.Act. He submitted that the notice u/s.148 in the instant case was issued within a period of 2 years from the end of the relevant assessment year. Since the assessment year involved in the instant case is A.Y. 2008-09 the two year period expires on 31-03-2011 and the AO has issued the notice u/s.148 on 24-12-2010. Referring to the decision of the Hon'ble Gujarat High Court in the case of Chhaganlal Suteriya Vs. ITO and Others reported in 337 ITR 350 he submitted that the Hon'ble High Court in the said decision has held that a mere failure to furnish a return of income does not amount to concealment u/s.271(1)(c) of the I.T. Act. The introduction of Explanation 3 to section 271(1)(c) w.e.f. 01-04-1976 has changed the law on the points in certain cases for the purpose of falling within the purview of Explanation 3, i.e. (a) Person should not have been previously assessed (b) he should have failed without reasonable cause to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income from A.Y. 2009-10 onwards. Provisions of section 26AAB was introduced by the Finance Act, 2008 w.e.f., 01-04-2009 according to which any income of an Agricultural Product Market Committee or Board constituted in law for the time being in force for the purpose of regulating the market of agricultural produce were exempt from tax. He submitted that the assessee in the instant case did not have the money and was under the process of liquidation. After the sale of the property the sale proceeds were utilized for payment of self assessment tax. 19. Referring to the decision of the Pune Bench of the Tribunal in the case of Agricultural Produce Market Committee, Jalgaon vide ITA Nos. 2019 to 2025/PN/2013 order dated 21- 10-2014 for A.Y. 2007-08 and 2008-09 he submitted that under identical facts and circumstances the Tribunal cancelled the penalty levied by the AO u/s.271(1)(c) of the I.T. Act and upheld by the CIT(A). He submitted that in view of the decision of the Hon'ble Gujarat High Court and the decision of the Pune Bench of the Tribunal cited (Supra) penalty u/s.271(1)(c) of the I.T. Act is not leviable in the instant case. 20. The Ld. Departmental Represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the returned income of ₹ 2,02,69,504/-. Under these circumstances, now we have to decide the leviability of penalty u/s.271(1)(c) of the I.T. Act which has been levied by the AO at ₹ 58,35,106/- and upheld by the CIT(A). 22. It is the submission of the Ld. Counsel for the assessee that where the notice u/s.148 of the I.T Act has been issued before the completion of 2 years from the end of the relevant assessment year, penalty u/s. 271(1)(c) of the I.T. Act is not leviable in view of the decision of the Hon'ble Gujarat High Court in the case of Chhaganlal Suteriya (Supra). It is also the alternate argument of the Ld. Counsel for the assessee that in the instant case the assessee Agricultural Produce Market Committee was under the process of liquidation and did not have enough money to file its return of income. Only after sale of the property by public auction it could gather the requisite amount for payment of self assessment tax and accordingly filed the return of income. Therefore, in view of the decision of the Pune Bench of the Tribunal in the case of Agricultural Produce Market Committee, Jalgaon (Supra) penalty u/s.271(1)(c) of the Act is not leviable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned officer is satisfied that in respect of such assessment year, such person had taxable income. In such cases, Expln. 3 provides that such person shall be deemed to have concealed the particulars of his income within the meaning of cl. (c) of s. 271(1) of the Act for such assessment year. In such an eventuality, even if the person concerned files a return after the expiry of the said period of two years in pursuance of a notice under s. 148 of the Act, the deeming provision of Expln. 3 shall still have application. 13. Though it has been contended on behalf of the respondents that in the present case Expln. 3 has not been applied; as noticed earlier mere non-furnishing of a return per se is not tantamount to concealment within the meaning of s. 271(1)(c) of the Act. The only eventuality under which nonfurnishing of return of income amounts to concealment is as provided under Expln. 3 to sub-s. (1) of s. 271 of the Act. Hence, unless Expln. 3 of s. 271(1) of the Act is attracted, there can be no concealment as envisaged under s. 271(1)(c) of the Act. In the circumstances, it is required to be examined as to whether the provisions of Expln. 3 to s. 271(1) could have been invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10(20) of the Income-tax Act up to the A.Y. 2002-03. Subsequently, there was an amendment to section 10(2) of the Income-tax Act and the APMC was removed from the definition of the local authority. It is pertinent to note that the Finance Act, 2008 has introduced Sub-sec. (26AAB) to Sec. 10 and again the income of the APMC has been exempted from tax. There is no dispute about the fact that APMC is constituted for Marketing of the Agricultural Produce helping the Agriculturists to get the better price in the open market and to avoid the brokers and agents. It appears that the collective efforts were made by the different APMCs in India after the amendment to Sec. 10(20) for getting exemption. Moreover, as per the facts on record the Govt. audit of the assessee for period ending on 30-09-2007 and 31-03- 2008 was completed on 14-07-2009 and hence, there was a delay in finalizing tax audit report. It is also seen that in both the assessment years the returns filed by the assessee were accepted without making any addition. 6. We find that the Explanation 3 below Sec. 271(1)(c) which is deeming provision, is applicable to the assessee as period mentioned u/s. 153(1) has expired and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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