Per Vikas Awasthy, JM: The appeal has been filed by the assessee impugning the order of the CIT(A) -IX dated 26.03.2012. The CIT(A) vide impugned order has confirmed the penalty amounting to `9,03,51,910/- levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act,1961.
2. The brief facts of the case are that the assessee is a co- operative bank. The assessee filed its return of income for the ITA No.1230/Mds/2012 assessment year 2007-08 on 31.10.2007 declaring total income of `37,55,85,736/- and claiming refund of `4,28,56,920/-. Prior to the assessment year 2007-08 the assessee has been claiming deduction under section 80P(2)(d) available to the co-operative societies. With effect from 1.4.2007, the provisions of section 80P ceases to be applicable to co-operative banks other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Thus, the deduction granted under section 80P to the co-operative banks was withdrawn by the Finance Act, 2006 with the insertion of sub- section (4) to Section 80P. The assessee filed its original return of income in accordance with the amended provisions of section 80P.
3. However, on the advice of M/s. A.V.Narayanaswamy and N.Choodamani, Chartered Accountants the assessee filed a revised return of income on 11.8.2008 offering income of `7,01,54,758/- and claiming refund of `13,63,18,800/-. In the revised return, the assessee claimed deduction under section 80P to the tune of `30,08,91,930/- and additional ITA No.1230/Mds/2012 depreciation to the tune of `45,39,048/-. The assessee claimed deduction in respect of the following amounts:-
i) Dividend income ` 22,07,954/-; ii) Interest income from the amount invested in co-operative bank ` 2,17,10,000/-; & iii) Depreciation claimed by adopting the original cost of purchase of assets instead of deducting accumulated depreciation `70,85,711/-. The case of the assessee was selected for scrutiny and notice under section 143(2) was issued on 24.8.2009. The Assessing Officer vide assessment order dated 30.12.2009 disallowed the claim of the assessee under section 80P(2)(d) as well as additional depreciation claimed by the assessee. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act for concealing and furnishing inaccurate particulars of its income.
4. The Assistant Commissioner of Income Tax vide order dated 29.06.2010 passed under section 271(1)(c) imposed penalty of 100% of the tax sought to be evaded amounting to `9,03,51,910/-. Aggrieved against the said ITA No.1230/Mds/2012 order, the assessee preferred an appeal before the CIT(A). The CIT(A) vide order dated 26.03.2012 dismissed the appeal of the assessee. Now, the assessee has come in second appeal before the Tribunal impugning the order of the CIT(A).
5. Shri R.Vijayaraghavan appearing on behalf of the assessee submitted that the assessee is a co-operative bank and its employees are not expert in handling tax matters. Most of the employees in the co-operative banks are on deputation and are the employees of the State Government. The assessee has been claiming deduction under section 80P in the earlier assessment years. This was for the first time the assessee had filed return after insertion of sub- section (4) to Section 80P with effect from 1.3.2007. The benefit of provisions of section 80P were withdrawn from the co-operative banks with the said amendment. The returns were filed by the officials of the assessee bank as per the advice of the tax expert/Chartered Accountants. The assessee had filed original return on 30th October, 2007 along with statement disclosing its entire income. However, it was ITA No.1230/Mds/2012 on the opinion of the Chartered Accountants M/s. A.V.Narayanaswamy and N.Choodamani that revised return was filed on 11.8.2008 claiming deduction under the provisions of section 80P and additional depreciation. The counsel placed on record a copy of the original return, opinion from the Chartered Accountant and the revised return along with the computation sheet at page 1,3 and 4 respectively of the paper book. The counsel submitted that the employees of the assessee bank acted in a bonafide manner. In order to support his contention that the act of the officials of the assessee was not with an intention to suppress the taxable income of the assessee, the counsel placed on record the Agenda of the General Meeting held on 9.9.2008 wherein it was specifically mentioned that revised return has been filed in accordance with the opinion of the Chartered Accountant and the bank is expecting refund of `13,63,13,598/-.
6. The officials of the assessee bank acted in a good faith. However, when the bank received notice under section 143(2) of the Act dated 30.11.2009, the bank officials realized their mistake and immediately through AR filed reply on 9.12.2009 ITA No.1230/Mds/2012 admitting that the bank ceases to be eligible for deduction under section 80P, therefore, the bank is not claiming deduction under the provisions of section 80P(2). The assessee further admitted that the revised return filed is erroneous and, therefore be ignored. A copy of the reply to the notice under section 143(2) and 142(1) is placed on record at page 11 and 12 of the paper book. Again on 10th December, 2009, the AR of the assessee filed a letter stating that the revised return filed by the assessee is erroneous with respect to deduction claimed under section 80P and higher depreciation claim amounting to ` 70,85,711/- . A copy of the letter dated 10th December, 2009 is at page 13 and 14 of the paper book. The counsel further submitted that vide letter dated 12.01.2010 the assessee made another representation stating that the assessee had filed the return in good faith making full and true disclosure of such additions and that the revised return was filed on the specific opinion of the Chartered Accountant. In order to support his contentions, the learned counsel for the assessee relied on the decision of the ITA No.1230/Mds/2012 Honble Supreme Court of India in the case of T.Ashok Pai Vs. CIT., reported as 291 ITR 11(SC).
7. On the other hand, the DR appearing on behalf of the Revenue submitted that the assessee had deliberately filed revised return claiming deduction under section 80P and higher depreciation in order to hoodwink the Department. The original as well as revised return has been duly signed by the General Manager of the assessee bank. Therefore, it cannot be said that the return has been filed in a casual manner. The stand of the assessee that revised return has been filed on the opinion of the Chartered Accountant cannot be a ground for escaping penalty. It is only when the case of the assessee was selected for scrutiny the assessee conceded that claim under section 80P and claim of additional depreciation in the revised return is erroneous. The DR further contended that the assessee very well knew that with effect from 1.3.2007 it is not eligible for claiming deduction under section 80P despite that the assessee deliberately filed revised return claiming deduction under section 80P(2)(d) and higher rate of depreciation. From the ITA No.1230/Mds/2012 act and conduct of the assessee, no bonafide mistake is made out. The DR further submitted that filing of inaccurate particulars in the return on the advice of the Chartered Accountant or any Tax Consultant cannot be a ground for waiving penalty under section 271(1)(c). In order to support his contentions, the DR relied on the judgement of the Honble Karnataka High Court in ITA No.506 of 2006 in the case of Shri G.Soma Reddy Vs. ITO decided on 26.3.2012 reported as 2012 TIOL-487-HC-KAR-IT.
8. We have heard the submissions made by both the parties and have perused the orders of the authorities below as well as judgements referred to by both the sides. It is an admitted fact that the assessee was entitled to claim deduction under the provisions of section 80P prior to 1.3.2007. After insertion of sub-section (4) to Section 80P by the Finance Act, 2006, the benefit granted under section 80P was withdrawn from the co-operative banks other than primary agricultural credit society or a primary co-operative agricultural and rural development bank. It is not disputed that the assessee is a co-operative bank. Some of the ITA No.1230/Mds/2012 employees of the assessee bank are on deputation from State Government. It is a well-known fact that employees of such co-operative banks/societies are not experts in handling complex issues under the provisions of the Income Tax Act, 1961. For filing of returns and claiming deductions under the provisions of the Act, the employees of such banks/institutions are dependent on the experts such as Chartered Accountants/Advocates/Tax Consultants.
9. In the instant case, the employees of the assessee bank had filed original return of income without claiming deduction under section 80P(2)(d). Subsequently another firm of Chartered Accountants gave its expert opinion that the assessee can claim deduction under section 80P for the assessment year 2007-08 as well as additional depreciation. A perusal of record shows that at the time of filing of original as well as revised return the assessee had filed detailed computation sheet along with the return of income. In the computation sheet, the assessee has disclosed its income from the business giving details of net profit, provisions created and depreciation claimed. There is neither ITA No.1230/Mds/2012 concealment of income nor inaccurate particulars were furnished by the assessee in disclosing the income. It seems that the bank officials under bonafide impression that the assessee bank is eligible for claiming deduction under section 80P, filed revised return claiming deduction under section 80P as well as additional depreciation. The bank officials acted in the interest of the bank while discharging their official duty. When the case of the assessee was selected for scrutiny and notice under section 143(2) and 142(1) was served on the assessee, the officials of the assessee immediately on realizing mistake, admitted that deduction under section 80P has been wrongly claimed and the income claimed as deduction should be added back and be assessed to tax. Similarly, for the higher depreciation claimed, the assessee conceded that it has been wrongly claimed . The counsel for the assessee has stated that the revised return has been filed by the employees of the assessee in the interest of the assessee bank and there was no personal gain in claiming deduction under section 80P ITA No.1230/Mds/2012 and higher depreciation. We find force in the argument of the counsel for the assessee.
10. The Honble Supreme Court of India in the case of Price Waterhouse Coopers Pvt. Ltd. Vs. CIT reported as 348 ITR 306(SC) has held that where silly mistake has been committed by a reputed firm having great expertise, the mistake committed was bonafide and inadvertent error. The assessee while submitting its return failed to add provision for gratuity to its total income. The assessee should have been careful but the absence of due care, in a case such as the present, does not mean that the assessee was guilty of furnishing inaccurate particulars or attempting to conceal its income. On the peculiar facts of the case, the imposition of penalty on the assessee was not justified. In the present case, silly mistake of claiming deduction under section 80P in the revised return has been committed by the assessee bank on the basis of expert advice. In the original return the assessee did not claim deduction under section 80P and the depreciation was also alleged to have been correctly claimed, but it was on the expert opinion that the assessee filed ITA No.1230/Mds/2012 revised return and committed mistake of claiming deduction under section 80P and higher depreciation. It is not the case of the Revenue where the assessee has suppressed its income or has claimed excessive expenditure to reduce tax incidence. The assessee had disclosed its income accurately but has claimed deduction which is not admissible to the assessee from the particular assessment year onwards. The assessee was filing return of income for the first time after the amendment. Prior to the amendment the assessee has been claiming deduction under the provisions of section 80P of the Act.
11. The Honble Supreme Court of India in the case of Reliance Petroproducts Pvt. Ltd. reported as 322 ITR 158 (SC) has held that by no stretch of imagination making an incorrect claim tantamount to furnishing inaccurate particulars. A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing of inaccurate particulars. ITA No.1230/Mds/2012
12. For imposing penalty under section 271(1)(c) the pre- condition is that the assessee should have concealed the particulars of his income or furnished inaccurate particulars of such income. In the instant case, the assessee has disclosed its income in full and has not furnished inaccurate particulars of its income. Claiming deduction or additional depreciation does not tantamount to furnishing of inaccurate particulars or concealment of particulars of income. The assessee has claimed the deduction in a bonafide manner. In case, the assessee is not entitled to the same, the Revenue authorities can make addition to the income of the assessee by disallowing the deduction claimed by the assessee.
13. The Honble Madras High Court in the case of CIT Vs. Sri Saradha Textile Processors P.Ltd., reported as 286 ITR 499, wherein the Honble High Court while dismissing the appeal of the Revenue has held that the authorities below had concurrently held that when the mistake was pointed out, the assessee had withdrawn its claim for depreciation and investment allowance on the machinery and had filed revised return. This action of the assessee showed their bonafide. It ITA No.1230/Mds/2012 is also not the case of the Revenue that the assessee had malafide intention of furnishing inaccurate particulars with a view to falsely claiming depreciation and allowance to evade taxes. The above findings of the Tribunal was based on the facts, with which we are not inclined to interfere.
14. In another case titled CIT Vs. Ms.Sania Mirza in ITA No.526 of 2011 decided on 9.2.2012 by the Honble Andhra Pradesh High Court deleted the penalty where penalty was imposed on the assessee for furnishing of inaccurate particulars of income and concealed her income. The Tribunal had held that the assessee had not acted in a malafide manner and it could not be said that her actions were deliberate. It was in fact bonafide mistake made on her behalf by the Advocate/Chartered Accountant and there was no concealment of income by her nor was there furnishing of inaccurate particulars. The amount has been clearly mentioned in the statement and the Assessing Officer had initially accepted the return under section 143(1) of the Act. The Honble High Court held that it was not a fit case for imposition of penalty. ITA No.1230/Mds/2012
15. In the present case also as soon as the assessee came to know about its mistake in claiming deduction under section 80P, the assessee immediately conceded before the Assessing Officer that the revised return has been erroneously filed and the amount claimed as deduction under section 80P may be assessed to tax.
16. In view of the above judgements of the Honble Supreme Court of India, the judgements of the Honble High Court and the facts and circumstances of the case, we are of the considered opinion that filing of revised return by claiming deduction under section 80P on the basis of alleged expert opinion by the assessee is nothing but an inadvertent mistake. The said error has been committed by the employees of the assessee in a bonafide manner without any personal gain and in the course of discharge of their official duty. In our view this is not a case for levy of penalty under section 271(1)(c) as there is neither concealment of income nor filing of inaccurate particulars of income. We, therefore, set aside the order of the CIT(A) and allow the appeal of the assessee. ITA No.1230/Mds/2012
17. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on Wednesday , the 20th day of March, 2013 at Chennai. Sd/- Sd/- (Abraham P.George ) (Vikas Awasthy) Accountant Member Judicial Member Chennai, Dated the 20th March, 2013. somu Copy to: (1) Appellant (4) CIT(A) (2) Respondent (5) D.R. (3) CIT (6) G.F.
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