9911796707
TMI Blog2025 (1) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of penalty has been altered or modified by Tribunal the AO initiating penalty proceedings has no jurisdiction, not sustainable since the very order passed by Tribuna in which it was held that the assessee is governed by the principles of mutuality has been set-aside as being non-est by the Gujarat High Court. Accordingly, looking into the instant facts, we of the considered view that the Assessing Officer has correctly levied penalty for furnishing inaccurate particulars of income When the order on the basis of which relief has been granted by Ld. CIT(A) itself has been set-aside as non-est, the order passed by Ld. CIT(A) giving relief to the assessee is not liable to be sustained. The claim of exemption u/s 11 12 was also found to be fallacious and the alternate claim of mutuality has also been rejected by Tribunal in assessee s own case. Appeal of the Department is allowed. - Dr. Brr Kumar, Vice President And Shri Siddhartha Nautiyal, Judicial Member For the Appellant : Shri Waghe Prasad Rao, Sr. DR For the Respondent : Shri S. N. Soparkar, Sr. Advocate ORDER PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the penalty order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuality and accordingly, directed the Assessing Officer to re-compute the taxable income of the assessee with respect to income of the assessee from non-members, who were not given the benefit of mutuality. Ld. CIT(A) noted that while the penalty under Section 271(1)(c) was levied on the basis of additions which were made to the income of the assessee on account of denial of exemption under Sections 11 12 of the Act, however, subsequently, the Ahmedabad Tribunal allowed the applicability of principle of mutuality in respect of income from members. Therefore, Ld. CIT(A) was of the view that the very basis of levy of penalty viz. denial of exemption under Sections 11 12 of the Act on account non-registration under Section 12AA of the Act is no longer sustainable, and the basis of determination of income was altogether changed by the Tribunal, which was not the basis of levy of penalty by the Assessing Officer under Section 271(1)(c) of the Act. Accordingly, penalty was deleted by Ld. CIT(A) in the hands of the assessee. Ld. CIT(A) made the following observations: 4.4 There is a categorical finding by Hon'ble ITAT that the principle of mutuality would be applicable to the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that the assessee is governed by the principles of mutuality is to be accepted, even then income earned by the assessee from non-members should have been offered for taxation and therefore, since the assessee has furnished inaccurate particulars of income and has not offered tax on income earned from non-members, penalty to that extent is liable to be sustained in the hands of the assessee. 9. In response, the Counsel for the assessee placed reliance on the case of CIT vs. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC) on the propostion that merely if the claim of the assessee is not accepted, it would not amount to automatic levy of penalty under Section 271(1)(c) of the Act. Further, the Counsel for the assessee placed reliance on the case of Greenwoods Govt. Officers Welfare Society vs. DCIT 160 taxmann.com 237 (Delhi Tribunal) wherein it was held that since the fact has been duly disclosed by the assessee in it s accounts and it s original return with full details, no penalty can be levied on the assessee. Therefore, this is case where there is no concealment of income or furnishing any inaccurate particulars of income so as to attract levy of penalty under Section 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplications and recalling its earlier order of rejection of appeals. The impugned order dated 29.07.2016 is therefore set aside. Consequently, the order passed by the Tribunal of allowing all the tax appeals of the assessee by order dated 25.11.2016 would therefore automatically be rendered non-est. Resultantly, the Tribunal's original order dated 29.09.2015 would be restored. Needles to state that the assessee feeling aggrieved by the said order, it will always be open for the assessee to file tax appeals. The intervening facts and circumstances would certainly be relevant in the context of technical delay if any that may arise in the process of filing such tax appeals. 12. We would also like to reproduce for ready the contents of the order of ITAT Ahmedabad dated 29.09.2015, wherein the alternate claim of mutuality was rejected by the Tribunal: 5. We come to assessment year 2006-07 to 2011-12. The assessee carried out GIHED Fiestas, property shows and cricket tourneys. Its members and non members made contributions to the tune of Rs. 37,08,050 and Rs. 16,27,100/-; respectively in A.Y. 2006-07. The latter category of non members' income reads a figure of Rs. 3,65,777/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in support of this mutuality argument. The same shall be discussed hereunder. The assessee accordingly prays for acceptance of its appeal. 10. We come to the second feature of the mutuality concept as to whether action of the participators and contributors is in furtherance to mandate of the association or not. Their lordships observe that the same can be determined from the memorandum of articles of associations, rules of membership and rules of the organization etc. The assessee s objects stand reproduced hereinabove. Clause J thereof stipulates that the assessee may collect and accept contributions from members as and when required as determined by the association and to make and create therefrom a fund for office maintenance, salary to employees, provide essential services to members and raise a sinking fund for emergency and or other contingencies. There is no mechanism provided in the above stated objects for raising receipts from non members. And also in carrying out any activities of fiestas, property shows and cricket tournaments. The assessee's explanation does not prove any live nexus between objects and impugned activities. These activities carried out are more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon ble High Court of Gujarat, it is only order dated 29.09.2015 which is applicable for the impugned assessment year under consideration, in which it was held that the assessee is not governed by the principles of mutuality. Notably, while admitting the SLP, Hon ble Supreme Court has not granted any stay on the operation of the aforesaid order passed by Hon ble ITAT, Ahmedabad dated 29.09.2015. Therefore, we are of the considered view that the order of the Ld. CIT(A) wherein relief has been granted to the assessee on the reasoning that when the original basis of initiation of penalty has been altered or modified by Tribunal the Assessing Officer initiating penalty proceedings has no jurisdiction, not sustainable since the very order passed by Tribunal dated 25.11.2016 in which it was held that the assessee is governed by the principles of mutuality has been set-aside as being non-est by the Gujarat High Court. Accordingly, looking into the instant facts, we of the considered view that the Assessing Officer has correctly levied penalty for furnishing inaccurate particulars of income. We also note that initially, the assessee had claimed exemption under Sections 11 12 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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