A.F.R. RESERVED ON 04.10.2018 DELIVERED ON 21.02.2019 Court No. - 35 Case :- INCOME TAX APPEAL No. - 820 of 2012 Appellant :- Hamirpur District Cooperative Bank Limited Respondent :- Commissioner Income Tax And Another Counsel for Appellant :- Rakesh Ranjan Agarwal,Suyash Agarwal Counsel for Respondent :- C.S.C. I.T.,Praveen Kumar Hon'ble Bharati Sapru,J. Hon'ble Salil Kumar Rai,J. (Delivered by Hon'ble Salil Kumar Rai,J.) Heard counsel for appellant and counsel for revenue. present appeal has been filed by appellant-assessee under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as, 'Act') against judgment and order dated 6.9.2012 passed by Income Tax Appellate Tribunal, Lucknow Bench 'A: Lucknow in I.T.A. No. 114/Lkw/2012. I.T.A. No. 114/Lkw/2012 was filed by assessee against order dated 23.12.2011 passed by Commissioner of Income-tax (Appeals) II, Kanpur [hereinafter referred to as, 'CIT(A)'] under Section 250 of Act. assessment year involved in present appeal is 2007- 08. following questions of law have been framed in memorandum of appeal for decision by this Court:- (2) i. Whether on facts and circumstances of ITAT was correct to confirm penalty of Rs.21,17,500/- under Section 271(1)(c) of Act for A.Y. 2007-08? ii. Whether ITAT right in law holding that appellant made incorrect claim which tantamount to furnishing inaccurate particulars of income so as to attract penalty under section 271(1) (c) of Act applying decision of CIT vs. Zoom Communication Pvt. Ltd. (2010) 327 ITR 510 (Del) contrary to decision of CIT vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC) and CIT vs. Rubber Udyog Vikas Pvt. Ltd. (2011) 335 ITR 588? iii. Whether ITAT while confirming penalty rightly did not consider that while preparing income tax return in not adding income tax paid amount to Rs.12,24,000/- and statutory provisions amounting to Rs.52,24,042/- made as required under U.P. Cooperative Samiti Limited, where not added back in advertently being intentional bonafide and clerical mistake due to ignorance of insertion of sub section (4) of section 80P of Act by Finance Act, 2006? iv. Whether appellant bank having claim amounts of Rs.12,24,000/- and Rs.52,24,042/- as transactions having disclosed in return, on basis of accountants prepared by bank staff in format prescribed for cooperative banks, under control of RBI / NABARD without any professional advice, penalty under Section 271(1) (c) of Act was sustainable? (3) v. Whether ITAT was legally correct in recording perverse finding of fact pertaining to deliberate and intentional omission on part of assesses in giving inaccurate particulars contrary to finding recorded by A.D. & CIT (A)? appellant-assessee is cooperative bank registered under Cooperative Societies Act, 1965 (hereinafter referred to as, 'Act, 1965) and is carrying on banking business in Mahoba and Hamirpur Districts with its Head Office at Mahoba (U.P.). assessee is governed by Banking Regulations Act, 1949. assessee filed its return under Act for assessment year 2007-08 on 31st of October, 2007 showing its gross total income to be Rs.20,16,000/-. return was processed under Section 143(1) of Act and was selected for scrutiny. Notices were issued to assessee who submitted details required in assessment proceedings. During assessment proceedings, it was noticed by Assessing Officer (hereinafter referred to as, 'A.O.') that assessee had claimed tax credit in respect of advance tax of Rs.12.24 lacs which had been included in expenses of assessee and were reflected under account head 'other expenditure' and further that amount of Rs.52,24,042.46/- had been debited in profit and loss account as loss from sale of or dealing with non- banking business. assessee was also asked to (4) explain as to why said amounts should not be disallowed. assessee submitted its reply but A.O. disallowed claim of Rs.52,24,042.46/- and computed total income of assessee for tax as Rs.84,64,040/- and vide his order dated 16.11.2009 held that assessee had furnished inaccurate particulars of its income and therefore penalty proceedings under Section 271(1)(c) of Act were initiated against assessee. Consequently, show cause notice was issued to assessee on 03.05.2010 to which assessee submitted its reply on 25.05.2010. In its reply, assessee pleaded its ignorance of provisions of Act and stated that their profit was calculated as per provisions of Cooperative Societies Act and their bye-laws after taking into account necessary reserves/provisions and denied that they had concealed particulars of their income or furnished inaccurate particulars of same. However, Deputy Commissioner of Income Tax-VI, Kanpur vide his order dated 28th of May, 2010 held that assessee-appellant had concealed its income by filing inaccurate particulars and, therefore, case was covered by Section 272(1)(c) of Act and directed assessee to pay penalty of Rs.21,70,500/-. order dated 28th of May, 2010 was challenged by assessee before Commissioner of Income Tax (5) (Appeals) II, Kanpur who vide order dated 23.12.2011 rejected challenge and confirmed order passed by Assessing Officer. Subsequently, assessee filed Second Appeal No. I.T.A. No. 114 before Income Tax Appellate Tribunal which was also dismissed by Tribunal vide its judgment and order dated 06.09.2012. Before CIT(A) as well as Tribunal, assessee had pleaded that in assessment year previous to 2007-08, income of assessee was exempted under Section 80-P of Act but Act was amended vide Finance Act, 2006 w.e.f. 01.04.2007 and assessee-cooperative bank was excluded from purview of Section 80-P of Act resulting in taxable income for assessment year 2007-08. It was pleaded by assessee that its accounts were audited by cooperative sector auditors who had issued audit report under Section 44-AB of Act and staff of assessee-bank or its auditors were not professionals or chartered accountants well versed with provisions of Act and return was accordingly filed on basis of profit and loss account as in past and there was no concealment or furnishing of inaccurate particulars of income and in any case there was no personal benefit involved in discrepancy in filing return which was unintentional and was bona fide mistake, therefore, no case for levy of penalty under Section (6) 271(1)(c) of Act was made out against assessee. aforesaid plea of assessee-bank was not accepted by appellate courts who vide their orders dated 23.12.2011 and 06.09.2012 dismissed appeals filed by assessee. Thus, present appeal under Section 260-A of Act. counsel for appellant-assessee has argued that while passing impugned order, Tribunal has not considered that discrepancy in return filed by assessee was bona fide mistake and there was no intention of appellant to furnish inaccurate particulars of its income or to conceal its income and aforesaid discrepancy was because income of assessee-bank in preceding years was exempted under Section 80-P of Act and assessee- appellant was excluded from benefit of Section 80-P of Act only w.e.f. 01.04.2007 resulting in taxable income for assessment year 2007-08. It was argued that as there was no personal benefit to any official or director of bank, therefore, case did not come within purview of Section 271(1)(c) of Act. It was further argued that accounts of assessee- appellant were audited as per Act, 1965 and assessee-appellant had no professional advice while accounts of assessee were prepared by its staff regularly in format prescribed for cooperative banks (7) which are controlled by RBI/NABARD. It was argued that assessee had successfully discharged onus that no case for levy of penalty under Section 271(1)(c) of Act was made out against assessee. In support of his submission, counsel for assessee has relied on Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Private Limited 2010 (11) SCC 762 and Dilip N. Shroff vs. Joint Commissioner of Income Tax, Mumbai & Another 2007 (6) SCC 329. Rebutting arguments of counsel for assessee, counsel for revenue argued that penalty levied on appellant was for statutory offence and concealment made by assessee came to light only when its details were divulged by assessee-appellant on being specifically inquired into by A.O. It was argued that assessee was bank and is adequately assisted by qualified staff. counsel for revenue argued that it was clear case of intentional claim of impugned expenses and thus of concealment of particulars of income and it was not case of bona fide mistake on part of assessee in supplying particulars of its income. It was argued by counsel for revenue that assessee had not been able to successfully discharge its burden that it was not case for levy of penalty under (8) Section 271(1)(c) of Act. We have considered rival submissions of counsel for appellant-assessee and counsel for revenue. relevant portion of Section 271(1)(c) of Act reads as follows: S. 271. (1) If [Assessing Officer] or Commissioner (Appeals)] [or Commissioner] in course of any proceedings under this Act, is satisfied that any person- .. (c) has concealed particulars of his income or furnished inaccurate particulars of [such income, or] .. Explanation 1. - Where in respect of any facts material to computation of total income of any person under this Act, (A) such person fails to offer explanation or offers explanation which is found by [Assessing Officer] or Commissioner (Appeals)] [or Commissioner] to be false, or (B) such person offers explanation which he is [not able to substantiate and fails to prove that such explanation is bona fide and that all facts relating to same and material to computation of his total income have been disclosed by him,] then, amount added or disallowed in computing total income of such person (9) as result thereof shall, for purposes of clause (c) of this sub-section, be deemed to represent income in respect of which particulars have been concealed: In Dilip N. Shroff (supra), Supreme Court held that before penalty could be imposed under Section 271(1)(c) of Act, entirety of circumstances must reasonably point to conclusion that disputed amount represented income and that assessee had consciously concealed particulars of its income or had furnished inaccurate particulars thereof. In its aofresaid judgment, Supreme Court further held that Section 271(1)(c) of Act was penal statute and concealment and furnishing of inaccurate particulars referred to deliberate act on part of assessee. mere omission or negligence would not constitute deliberate act of concealment or furnishing of inaccurate particulars. However, Supreme Court in Union of India & Others vs. Dharamendra Textile Processors and Others 2008 (13) SCC 369 held that explanations appended to Section 271(1)(c) of Act indicate element of strict liability on assessee for concealment or for giving inaccurate particulars while filing return. It was held that Section 271(1)(c) of Act had been enacted to provide remedy for loss of revenue and penalty under said provision was civil liability. Supreme Court further held that willful (10) concealment was not essential ingredient for attracting civil liability as was case in matter of prosecutions under Section 276-C of Act. In Dharamendra Textile (supra), Supreme Court held that Dilip N. Shroff's case had not been correctly decided. Subsequently, in Reliance Petroproducts (supra), Supreme Court held that Dharamendra Textile (supra) had overruled Dilip N. Shroff only to extent that Dilip N. Shroff held that mens rea on part of assessee was essential ingredient for imposing penalty under Section 271(1)(c) of Act but Supreme Court in Dharamendra Textile (supra) found no fault with reasoning in Dilip N. Shroff (supra) regarding meaning of terms 'conceal' and 'inaccurate'. It is relevant to notice that in Reliance Petroproducts (supra), assessee had neither concealed its income or furnished inaccurate particulars of its income in return and all details given in return filed by assessee were found to be correct. dispute between assessee and revenue was regarding certain amounts for which assessee claimed deductions under Section 14-A of Act which was not allowed by revenue. observations of Supreme Court made in Paragraph nos. 10 and 18 of said judgment are relevant for purposes and are reproduced below: (11) 10. Section 271(1)(c) is as under:- "271. Failure to furnish returns, comply with notices, concealment of income, etc. - (1) If Assessing Officer or Commissioner (Appeals) in course of any proceedings under this Act, is satisfied that any person- (c) has concealed particulars of his income or furnished inaccurate particulars of such income." glance at this provision would suggest that in order to be covered, there has to be concealment of particulars of income of assessee. Secondly, assessee must have furnished inaccurate particulars of his income. Present is not case of concealment of income. That is not case of Revenue either. However, learned counsel for Revenue suggested that by making incorrect claim for expenditure on interest, assessee has furnished inaccurate particulars of income. As per Law Lexicon, meaning of word "particular" is detail or details (in plural sense); details of claim, or separate items of account. Therefore, word "particulars" used in Section 271(1)(c) would embrace meaning of details of claim made. It is admitted position in present case that no information given in return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, assessee cannot be held (12) guilty of furnishing inaccurate particulars. 18. We must hasten to add here that in this case, there is no finding that any details supplied by assessee in its return were found to be incorrect or erroneous or false. Such not being case, there would be no question of inviting penalty under Section 271 (1) (c) of Act. mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of assessee. Such claim made in return cannot amount to inaccurate particulars. (emphasis added) reading of judgment of Supreme Court in Reliance Petroproducts (supra) shows that particulars furnished in return filed by assessee would be relevant to decide whether assessee could be subjected to penalty under Section 271(1)(c) of Act and if particulars furnished in return are found to be inaccurate liability to pay penalty under Section 271(1)(c) would arise. relevant observations of Supreme Court in Paragraph no. 12 of aforesaid judgment are reproduced below: 12. Therefore, it is obvious that it must be shown that conditions under Section 271(1)(c) must exist before penalty is imposed. There can be no dispute that everything would depend upon return filed because that is (13) only document, where assessee can furnish particulars of his income. When such particulars are found to be inaccurate, liability would arise. (emphasis added) dispute in present case shall be considered in light of law laid down by Supreme Court in its aforesaid judgments. It is admitted case of assessee that Rs.12.24 lacs and Rs.52.24 lacs which were shown in profit and loss account and under head of other expenditures and which were included by A.O. in computing business income of assesse were liable to be assessed for tax. It is also apparent that assessee had paid advance tax of Rs.12.24 lacs and had debited said amount under 'other expenditure'. Rs.52.24 lacs was debited in profit and loss account as loss from sale of or dealing with non-banking business even though said amount was not expense but appropriation of profit. It is also evident that even after notice was issued to assessee under Section 143(2) of Act, assessee did not file any revised return to correct omissions. contention of assesee in courts below and before this Court was that error in its return was because assessee was excluded from purview of Section 80-P of Act w.e.f. 01.04.2007 and assessee had been claiming benefit of Section 80-P of Act in previous (14) assessment years. said explanation cannot be accepted in view of particulars given in return filed by assessee. perusal of return filed by assessee, which according to judgment of Supreme Court in Reliance Petroproducts (supra) is only document where assessee could have furnished particulars of his income, shows that in Schedule F (statement of total income) at Serial No. 6, assessee had disclosed his gross total income as Rs.20,16,002.20/- and did not claim any deductions under Chapter VI-A of Act. It is pertinent to note that Section 80-P of Act is part of Chapter VI-A of Act. It is also pertinent to note that under Section 80-B(5) of Act, gross total income means total income computed in accordance with provisions of Act before making any deductions under Chapter VI-A of Act. Evidently, assessee had furnished inaccurate particulars of his income and had also concealed particulars of his income which were deliberate and intentional. Tribunal or appellate authority committed no error or illegality in not accepting plea of assessee that mistake in filing its return was bona fide and because of amendment in Finance Act, 2006 excluding assessee from purview of Section 80-P of Act. next contention of assessee that (15) mistake in filing return occurred because assessee lacked services of professional chartered accountants can also not be accepted in as much as under Section 44-AB of Act, assessee was required to get its account audited by accountant as defined in Section 288(2)-Explanation, i.e. chartered accountant within meaning of Chartered Accountants Act, 1949. It is not case where assessee has claimed deductions under any head which had been disallowed by revenue but is case where assessee had concealed its total taxable income and furnished inaccurate details in its return. appellant/assessee was not able to establish his bona- fides regarding inaccurate particulars furnished in his return. For aforesaid reasons, proceedings under Section 271(1)(c) of Act were rightly initiated against assessee and penalty was also rightly imposed on him. There is no error in impugned order dated 6.9.2012 passed by Income Tax Appellate Tribunal. questions of law are answered accordingly and appeal stands dismissed. Order Date :- 21.2.2019 Satyam Hamirpur District Cooperative Bank Limited v. Commissioner Income-tax and Another