Section 271(1)(c) of the Income Tax Act, 1961 — Penalty — Concealment penalty — Penalty rightly levied by AO as it is not a case where the assessee has claimed deductions under any head which had been disallowed by the revenue but is a case where the assessee had concealed its total taxable income and furnished inaccurate details in its return. [2019] 49 ITCD 91 (ALL)
Facts: The assessee is a cooperative bank registered under the Cooperative Societies Act, 1965 and is carrying on banking business in Mahoba and Hamirpur Districts with its Head Office at Mahoba (U.P.). The assessee is governed by the Banking Regulations Act, 1949. The assessee filed its return under the Act for the assessment year 2007-08 on 31st of October, 2007 showing its gross total income to be
 Rs. 20,16,000/-. The return was processed under Section 143(1) and was selected for scrutiny. Notices were issued to the assessee who submitted the details required in the assessment proceedings. During the assessment proceedings, it was noticed by the Assessing Officer that the assessee had claimed a tax credit in respect of advance tax of Rs. 12.24 lacs which had been included in the expenses of the assessee and were reflected under the account head 'other expenditure' and further that an amount of Rs. 52,24,042.46/- had been debited in the profit and loss account as loss from sale of or dealing with nonbanking business. The assessee was also asked to explain as to why the said amounts should not be disallowed. The assessee submitted its reply but the A.O. disallowed the claim of Rs. 52,24,042.46/- and computed the total income of the assessee for tax as Rs. 84,64,040/- and vide his order dated 16.11.2009 held that the assessee had furnished inaccurate particulars of its income and therefore penalty proceedings under Section 271(1)(c) were initiated against the assessee. Consequently, a show cause notice was issued to the assessee on 03.05.2010 to which the assessee submitted its reply on 25.05.2010. In its reply, the assessee pleaded its ignorance of the provisions of the Act and stated that their profit was calculated as per the provisions of the Cooperative Societies Act and their bye-laws after taking into account necessary reserves/provisions and denied that they had concealed the particulars of their income or furnished inaccurate particulars of the same. However, the Deputy Commissioner of Income Tax-VI, Kanpur vide his order dated 28th of May, 2010 held that the assessee had concealed its income by filing inaccurate particulars and, therefore, the case was covered by Section 272(1)(c) and directed the assessee to pay a penalty of Rs. 21,70,500/-. The order dated 28th of May, 2010 was challenged by the assessee before the Commissioner of Income Tax (Appeals) II, Kanpur who vide order dated 23.12.2011 rejected the challenge and confirmed the order passed by the Assessing Officer. Subsequently, the assessee filed Second Appeal before Tribunal which was also dismissed by the Tribunal vide its judgment and order dated 06.09.2012. Before the CIT(A) as well as the Tribunal, the assessee had pleaded that in the assessment year previous to 2007-08, the income of the assessee was exempted under Section 80-P but the Act was amended vide Finance Act, 2006 w.e.f. 01.04.2007 and the assessee-cooperative bank was excluded from the purview of Section 80-P resulting in a taxable income for the assessment year 2007-08. It was pleaded by the assessee that its accounts were audited by the cooperative sector auditors who had issued an audit report under Section 44-AB and the staff of the assessee-bank or its auditors were not professionals or chartered accountants well versed with the provisions and the return was accordingly filed on the basis of profit and loss account as in the past and there was no concealment or furnishing of inaccurate particulars of income and in any case there was no personal benefit involved in the discrepancy in filing the return which was unintentional and was a bona fide mistake, therefore, no case for levy of penalty under Section 271(1)(c) was made out against the assessee. The aforesaid plea of the assessee-bank was not accepted by the appellate courts who vide their orders dated 23.12.2011 and 06.09.2012 dismissed the appeals filed by the assessee. Being aggrieved, assessee went on appeal before High Court.
Held, that it is an admitted case of the assessee that Rs. 12.24 lacs and Rs. 52.24 lacs which were shown in the profit and loss account and under the head of other expenditures and which were included by the A.O. in computing the business income of the assessee were liable to be assessed for tax. It is also apparent that the assessee had paid an advance tax of Rs. 12.24 lacs and had debited the 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 the said amount was not an expense but an appropriation of profit. It is also evident that even after notice was issued to the assessee under Section 143(2), the assessee did not file any revised return to correct the omissions. The contention of the assesee in the courts below and before this Court was that the error in its return was because the assessee was excluded from the purview of Section 80-P w.e.f. 01.04.2007 and the assessee had been claiming benefit of Section 80-P in the previous assessment years. The said explanation cannot be accepted in view of the particulars given in the return filed by the assessee. A perusal of the return filed by the assessee, which according to the judgment of the Supreme Court in Reliance Petroproducts (supra) is the only document where the assessee could have furnished the particulars of his income, shows that in Schedule F (statement of total income) at Serial No. 6, the assessee had disclosed his gross total income as Rs. 20,16,002.20/- and did not claim any deductions under Chapter VI-A. It is pertinent to note that Section 80-P is a part of Chapter VI-A . It is also pertinent to note that under Section 80-B(5), the gross total income means the total income computed in accordance with the provisions of the Act before making any deductions under Chapter VI-A. Evidently, the assessee had furnished inaccurate particulars of his income and had also concealed the particulars of his income which were deliberate and intentional. The Tribunal or the appellate authority committed no error or illegality in not accepting the plea of the assessee that the mistake in filing its return was bona fide and because of the amendment in the Finance Act, 2006 excluding the assessee from the purview of Section 80-P. The next contention of the assessee that the mistake in filing the return occurred because the assessee lacked the services of professional chartered accountants can also not be accepted in as much as under Section 44-AB , the assessee was required to get its account audited by an accountant as defined in Section 288(2)-Explanation, i.e. chartered accountant within the meaning of Chartered Accountants Act, 1949. It is not a case where the assessee has claimed deductions under any head which had been disallowed by the revenue but is a case where the assessee had concealed its total taxable income and furnished inaccurate details in its return. The assessee was not able to establish his bonafides regarding the inaccurate particulars furnished in his return. For the aforesaid reasons, the proceedings under Section 271(1)(c) were rightly initiated against the assessee and the penalty was also rightly imposed on him. There is no error in the impugned order dated 6.9.2012 passed by the Income Tax Appellate Tribunal. The questions of law are answered accordingly and the appeal stands dismissed.