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TMI Blog2017 (8) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... yed by the verdict of the Apex Court in the matter of Surat Art Silk Cloth Manufacturers Association (1979 (11) TMI 1 - SUPREME Court) appears to be a lame excuse in order to avoid the tax liability and depriving the Revenue its due share in the taxable income earned by the assessee/Trust Despite past orders of several authorities that the income earned by the assessee/Trust is liable for tax at the hands of the Revenue, even in the assessment year 198384 return of income came to be filed by the assessee/Trust without paying self assessed tax but by making note in the statement of computation of income that the income is exempt under Section 11 of the I.T.Act, 1961. The assessee/Trust had given complete go bye to earlier decisions of the learned ITAT and other authorities in its own case which were available to the assessee/Trust from the assessment year 1962-63 onwards. The petitioner cannot interpret the finding of Apex Court erroneously and say it bonafidely believed that its income is exempted. As such, by no stretch of imagination it can be said that the assessee/Trust was acting bonafidely having belief that it is earning an exempt income, and therefore, the assessee/Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it is exempt from the liability of payment of income tax. From Assessment Year 1941-42 till Assessment Year 1961-62 the income of the assessee/Trust was exempted under Section 4(3)(i) of the Income Tax Act, 1922, (hereinafter I.T.Act) as publishing of newspapers falls under the definition of General Public Utility. Subsequently, in the I.T.Act, 1961, the term Charitable Purpose came to be defined in Section 2(15) which included relief of poor, education, medical relief and the advancement of any other object of general public utility not involving carrying on of activity of profit. (b) By following decision of the Hon'ble Supreme Court in the matter of Sole Trustee, Loka Shikshana Trust vs. CIT [1975] 101 ITR 234 (SC) and Indian Chamber of Commerce vs. CIT [1975] 101 ITR 796 (SC) the ITAT vide its order passed in the month of November 1976 denied exemption to the assessee / Trust under Section 11 of the I.T.Act, 1961, by holding that the assessee/Trust had earned profit from the activity of distribution of newspaper, and therefore, it is not liable for exemption under Section 11 of the I.T.Act, 1961. (c) The Hon'ble Supreme Court in the matter of Additional Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicals as taxable income. (f) Feeling aggrieved by the action of imposition of penalty under Section 273(2)(a) and under Section 140A(3) of the I.T.Act by the Assessing Officer, the assessee/Trust filed two separate appeals before the Commissioner of Income Tax (Appeals) (hereinafter CIT (Appeals)) challenging these orders. Both those appeals came to be allowed by the CIT (Appeals) and penalty levied by the Assessing Officer under Section 273(2)(a) and under Section 140A(3) came to be cancelled. (g) The learned CIT (Appeals) was pleased to hold that there was no liability for payment of self assessment tax on the basis of the return of income filed by the assessee/Trust. It is further held that no penalty had been imposed in the past years under Section 140A(3) of the I.T.Act and the return of income filed for earlier years had not been decided by the Tribunal till June 1985. As such, there was no case for holding that the assessee/Trust should have declared the income in its return of income and should have filed the self assessment tax under Section 140A(1) of the I.T.Act. So far as penalty under Section 273(2)(a) is concerned, the learned CIT (Appeals) was pleased to hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax, in view of the fact that for forty years it was being held liable for payment of the tax as the assessee/Trust was not falling in the category of the Charitable Trust in order to claim exempt income. It is further held that merely because the appeal has been filed before the Tribunal, the assessee/Trust cannot be said to hold a reasonable belief that its income is not chargeable to tax, and therefore, it is not liable to declare it in an estimate of the advance tax. (j) The assessee/Trust, thereafter, preferred an application under Section 256 of the I.T.Act for referring the two questions of law, as stated in foregoing paragraph of decision of this court. That reference application came to be allowed by the learned ITAT vide order dated 29th November 1999. 3 Before adverting to the arguments advanced by the learned advocates appearing for the parties, it would be apposite to quote the relevant provisions of law for better understanding the controversy. Section 140A of the I.T.Act, 1961, reads thus : 140A. (1) Where any tax is payable on the basis of any return required to be furnished under section 139 or section 148 after taking into account the amount of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 17th February 2017 in Income Tax Appeal No.1498 of 2014 in the matter of Commissioner of Income Tax 21 vs. M/s.Advanta Estate Development Pvt. Ltd., iii) Order of this court dated 2nd December 2015 in Income Tax Appeal No.851 of 2014, in the matter of Commissioner of Income Tax 8 vs. M/s.Aditya Birla Power Co. Ltd., iv) Order of Hon'ble Delhi High Court dated 5th October 2010 in Income Tax Appeal No.240 of 2009, Commissioner of Income Tax vs. Liquid Investment Trading Co., v) Judgment dated 11 th January 2017 of Hon'ble Madhya Pradesh High Court in Income Tax Appeal No.89 of 2016, Pr.Commissioner of Income Tax vs. R.K.Gupta Contractors Engineers Pvt. Ltd. with connected matters, vi) the judgment dated 10 th May 2017 of Hon'ble Rajasthan High Court in the matter of Pr.Commissioner of Income Tax vs. M/s.Modern Denim Ltd., vii) the judgment reported in [2017] 79 taxmann.com 344 of Karnataka High Court, in the matter of Commissioner of Income Tax vs. Ankita Electronic (P.) Ltd. 5 It is argued that when the levy of penalty was debatable in the light of the fact that previously no penalty was imposed on the assessee/Trust, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned advocate for the Revenue relied on order dated 21st August 2012 passed by the Division Bench of this court in Income Tax Appeal No.2753 of 2010 in the matter of The Commissioner of Income Tax 10, Mumbai vs. M/s.Wander Pvt. Ltd. and the order passed by the ITAT, New Delhi, in Income Tax Appeal No.1395/DeL/2009 in the matter of Assistant Commissioner of Income Tax vs. M/s.Khanna Annadhanam decided on 22nd July 2011 in order to buttress his contention that the entire exercise by the assessee / Trust in not paying the self assessment tax and in submitting NIL estimate of the advance tax is an attempt to evade the tax liability. 8 We have carefully considered the rival submissions and also gone through the record made available as well as written submissions placed on record by both parties. We have also gone through the case laws relied by both parties. 9 At the outset, it needs to be noted that the facts involved in the instant reference are not in dispute. Undisputedly, the assessee/Trust came to be formed in the year 1941 and it is involved in activities of publishing newspaper and periodicals. It is undisputed that the assessee/Trust was earning income from its a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee knew or had reason to believe that the estimate of advance tax submitted by the assessee is untrue. Similarly, Section 140A(1) enjoins a assessee to submit the returns of income after assessing the tax and after paying the tax prior to furnishing the return of income. The return of income of the assessee is required to be accompanied by proof of payment of self assessed tax. If the assessee fails to pay such self assessed tax, then after hearing the assessee, the Income Tax Officer can direct him to pay penalty as prescribed by subsection (3) of Section 140A(1) of the I.T.Act, 1961. In the case in hand, undisputedly, the assessee/Trust has not submitted any estimate of advance tax by declaring estimated taxable income and by paying advance tax as per estimate of the income offered for the tax for the assessment year 1983-84. Ultimately, in the original assessment it was found that the assessee/Trust had earned income of ₹ 84,65,270/which came to be revised under orders of the CIT (Appeals) under Section 264 of the Income Tax Act, 1961, to ₹ 62,65,203/. The assessee/Trust claimed that income earned by it by the activity of publishing newspaper and periodicals is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the verdict of the learned ITAT in respect of assessment years 1962-63 onwards, then it would not have acted in such a manner of declaring NIL estimate of the advance tax and nonpayment of the self assessment tax while returning its income for the assessment year 1983-84. The excuse sought to be given by the assessee/Trust that it was swayed by the verdict of the Apex Court in the matter of Surat Art Silk Cloth Manufacturers Association (supra) appears to be a lame excuse in order to avoid the tax liability and depriving the Revenue its due share in the taxable income earned by the assessee/Trust. The verdict in the said matter was pronounced long back on 19 th November 1979. Till the Assessment Year 1983-84 the assessee/Trust could not demonstrate before the authorities of the Income Tax Department that in view of the ratio and judgment of the Apex Court in the matter of Surat Art Silk Cloth Manufacturers Association (supra), it is earning exempt income and therefore not liable to pay the advance tax or the self assessment tax. The ITAT while deciding appeals of earlier period has never held that the assessee/Trust earns exempt income, it being a charitable Trust, and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from its past experience that its income was liable for tax, despite filing the return under Section 139 of the I.T.Act, 1961, the same was not accompanied by proof of payment of the tax. Rather, no tax was paid prior to filing of the return of self assessment and only exempt came to be claimed. In view of the fact that the assessee/Trust was earning income and it was made subjected to payment of tax by the Revenue, the act of the assessee/Trust cannot be said to be genuine or bonafide act. Till the assessment year 198384, the claim of the assessee/Trust that in the light of verdict of the Apex Court in the matter of Surat Art Silk Cloth Manufacturers Association (supra), income earned by it is exempted from the liability of payment of the tax was never upheld by the authorities under the I.T.Act, 1961. The petitioner cannot interpret the finding of Apex Court erroneously and say it bonafidely believed that its income is exempted. As such, by no stretch of imagination it can be said that the assessee/Trust was acting bonafidely having belief that it is earning an exempt income, and therefore, the assessee/Trust is not liable either to pay advance tax or the self assessment tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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