DCIT, Chandigarh V. Chandigarh Housing Board, Chandigarh

ITA 102/CHANDI/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6824 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-06-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA CIT DR
• Assessee Lawyers: A K JINDAL; RATTAN KAUR
• Keywords: Revision of order; Depreciation; Bonafide belief; Retrospective amendment; Question of law; Wrong claim; Competent authority; Set aside
• Section: 271(1)(c); 143(3); 251; 13; 27; 263; 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A, CHANDIGARH BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI R.L. NEGI, JUDICIAL MEMBER . / ITA NO.102/CHD/2019 / ASSESSMENT YEAR : 2012-13 THE D.C.I.T. , CENTRAL CIRCLE-1(1), CHANDIGARH. M/S CHANDIGARH HOUSING BOARD, 8, JAN MARG, SECTOR 9, CHANDIGARH. ./ PAN NO: AAALC0132H /APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI A.K. JINDAL, CA & MS.RATTAN KAUR, CA # ! / REVENUE BY : SMT.C. CHANDRAKANTA, CIT DR ! & /DATE OF HEARING : 30.06.2021 ! & /DATE OF PRONOUNCEMENT: 23.07. 2021 (HEARING THROUGH WEBEX) /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : THE ABOVE APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHANDIGARH DATED 22.11.2018 RELATING T O ASSESSMENT YEAR 2012-13, DELETING THE PENALTY LEVIE D U/S 271(1)(C) OF THE OF THE INCOME TAX ACT, 1961 (HEREI NAFTER REFERRED TO AS ACT). 2. THE FACTS RELATING TO THE CASE ARE THAT IN THE ASSESSMENT FRAMED ON THE ASSESSEE U/S 143(3) OF THE ACT, AN AD DITION OF ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 2 OF 18 RS.14,87,66,159/- HAD BEEN MADE ON ACCOUNT OF INTER EST INCOME EARNED ON FDRS MADE OUT OF FUNDS RECEIVED BY THE ASSESSEE FOR TWO PROJECTS I.E. RAJIV GANDHI CHANDIG ARH TECHNOLOGY PARK (RGCTP) PROJECT FUNDS AND JAWAHAR L AL NEHRU NATIONAL URBAN RURAL MISSION( JNNURM) FUNDS A S UNDER: 1) RS.13,46,51,890/- ON ACCOUNT OF INTEREST INCOME FROM RGCTP PROJECT FUNDS AND JNNURM FUNDS KEPT IN FDRS IN BANK. 2) RS.1,41,14,269/- INTEREST EARNED ON RGCTP PROJECT KEPT IN FDRS IN ESCROW ACCOUNT. 3. THE SAID ADDITION WAS UPHELD BY THE LD.CIT(A). THEREAFTER PENALTY PROCEEDINGS WERE INITIATED AND A FTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND CONS IDERING THE REPLIES FILED BY IT, THE AO HELD THAT IT WAS A CLEAR CASE OF CONCEALMENT OF PARTICULARS OF INCOME AND ACCORDINGL Y, PROCEEDED TO LEVY PENALTY ON THE SAME @ 100% OF TAX SOUGHT TO BE EVADED AMOUNTING TO RS.4,59,68,743/-. THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A) W HERE HE PLEADED THAT NON-DISCLOSURE OF THE SAID INTEREST IN COME WAS UNDER THE BONAFIDE BELIEF THAT THE SAID INTEREST IN COME WAS NOT THE INCOME OF THE ASSESSEE AT ALL AS THE FUNDS ON WHICH IT ACCRUED, WAS BELIEVED TO BE KEPT BY IT IN THE CAPAC ITY OF BEING NODAL AGENT OF THE GOVERNMENT FOR CARRYING OUT THE SPECIFIC ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 3 OF 18 PROJECTS FOR WHICH THE FUNDS HAVE BEEN GIVEN. THAT IT WAS ONLY LATER THAT THIS ISSUE, OF THE CAPACITY IN WHICH FUNDS WERE BEING KEPT BY IT, WAS AMICABLY SETTLED WITH THE DEP ARTMENT ON THE DIRECTIONS OF THE HIGH COURT IN A DISPUTE BEFOR E IT, AND IT WAS AGREED TO TREAT THE INTEREST AS INCOME OF THE ASSESSEE AND FURTHER AGREED THAT NO PENALTY BEING LEVIED FO R NON DISCLOSURE OF THE SAME. THE LD.CIT(A) WAS CONVINCE D WITH THE EXPLANATION OF THE ASSESSEE AND HE ALSO TOOK NOTE O F THE FACT THAT IDENTICAL PENALTY LEVIED IN THE PRECEDING YEAR HAD BEEN DELETED BY THE ITAT. ACCORDINGLY, HE DELETED THE PE NALTY LEVIED FOR THE IMPUGNED YEAR ALSO FOLLOWING THE SAME. 4. AGGRIEVED BY THE SAME THE REVENUE HAS COME UP IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSE SSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE C1T(A) IS PER VERSE AS IT HAS RELIED UPON THE 'RECORD OF DISCUSSIO NS' HELD AND FINALIZED ON 14.03.2013 WITHOUT CONSIDERING THAT T HE ASSESSEE HAD AMPLE TIME TO REVISE HIS RETURN F OR THE INCUMBENT ASSESSMENT YEAR I.E. 2012-13? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN SETTING AS IDE THE PENALTY ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENDITURE BY RELYING UPON THE 'RECORD OF DISCUSSI ONS' WHICH WERE SPECIFIC TO THE ASSESSMENT YEAR 2007-08? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN SETTING AS IDE THE PENALTY ORDER PASSED BY THE AO, BY RELYING UPON ORD ER ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 4 OF 18 DATED 30.04.2014 OF THE HON'BLE SUPREME COURT WHICH WAS SPECIFIC ONLY TO ASSESSMENT YEAR 2007-08? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE 'RECORD OF DISCUSSION' WHICH T OOK PLACE ON 14.03.2013 AND THE ORDER PASSED BY THE HON'BLE SUPREME COURT ON 30.04.2014 AND THE HON'BLE HIGH COURT ON 05.12.2014 CAN BE HELD TO BE A RELIE F IN PERPETUITY AGAINST ALL WRONG CLAIMS MADE BY THE ASS ESSEE UNDER THE INCOME TAX ACT? 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, A WRONG CLAIM MADE BY AN ASSESSEE AND ACCEPTED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) ABSOLVE THE ASSESS EE FROM THE RIGOURS OF PENALTY UNDER SECTION 271(L)(C) WHICH IS AGAINST THE HON'BLE SUPREME COURT JUDGMENT IN MAK DATA PRIVATE LIMITED VERSUS CIT (2013] 358 ITR 593? 7. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 8. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. 5. DURING THE COURSE OF HEARING BEFORE US, THE LD. DR STATED THAT HER SOLITARY ARGUMENT AGAINST THE ORDER OF TH E LD.CIT(A) PERTAINED TO GROUND NO.5 RAISED. SHE CONTENDED THAT THE DISPUTE AMICABLY SETTLED BETWEEN THE ASSESSEE AND T HE DEPARTMENT IN 2013 WAS YEAR SPECIFIC I.E. IT RELATE D TO THE YEAR I.E. ASSESSMENT YEAR 2007-08, WHICH WAS THERE BEFOR E THE HIGH COURT, AND THE AGREEMENT BETWEEN THE TWO PARTIES OF NO PENALTY BEING LEVIED MENTIONED IN THE RECORD OF DIS CUSSION DID NOT APPLY TO OTHER YEARS. THE ASSESSEE, THEREFORE, IT WAS CONTENDED, WAS NOT ENTITLED TO ANY BENEFIT ON ACCOU NT OF SUCH ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 5 OF 18 AGREEMENT BETWEEN THE TWO PARTIES NOTED IN THE RECO RD OF DISCUSSION. 6. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HA ND, RELIED UPON THE ORDER OF THE LD.CIT(A). HE FURTHER DREW OUR ATTENTION TO THE ORDER OF THE ITAT SETTING ASIDE T HE ORDER OF THE LD.CIT PASSED IN REVISIONARY PROCEEDINGS U/S 26 3 OF THE ACT RELATING TO ASSESSMENT YEAR 2011-12 ON IDENTICA L ISSUE OF LEVY OF PENALTY FOR SUCH YEAR, WHICH THE AO HAD NOT LEVIED ,ON ACCOUNT OF WHICH THE LD.CIT HAD HELD THE ORDER TO B E ERRONEOUS CAUSING PREJUDICE TO THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE, REFERRING TO THE SAID ORDER ,STAT ED THAT FOR THE SAID YEAR THE ITAT HAD GIVEN A FINDING ON MERI TS THAT NON-DISCLOSURE OF INTEREST INCOME EARNED ON THE IMP UGNED FUNDS PARKED IN FDRS WAS UNDER THE BONAFIDE BELIEF THAT THE FUNDS DID NOT BELONG TO THE ASSESSEE AND IT WAS ONL Y WHEN THE SETTLEMENT WAS REACHED BETWEEN THE ASSESSEE AND THE DEPARTMENT THAT THE ISSUE WAS AMICABLY SETTLED AND THE ASSESSEE HAD AGREED TO RETURN THE SAID INCOME AS IT S OWN INCOME AND THAT IT HAD ALSO BEEN AGREED THAT NO PEN ALTY BE LEVIED ON THE SAME. HE FURTHER POINTED OUT THAT THE ITAT HAD HELD THE SETTLEMENT TO BE ISSUE SPECIFIC AND NOT YE AR SPECIFIC . HE ACCORDINGLY SUPPORTED THE ORDER OF THE LD.CIT(A) ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 6 OF 18 7. WE HAVE CONSIDERED THE CONTENTIONS OF BOTH THE P ARTIES. WE HAVE ALSO GONE THROUGH THE FINDINGS OF THE LD.CI T(A) AT PARA 5.2 TO 5.5 OF THE ORDER AS UNDER: 5.2. HELD: I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE GETTING INTO THE FACTUAL MATRIX OF THE CASE, IT IS IMPORTANT TO DELVE INTO THE LEGAL PROVISIONS OF SEC TION 271(1)(C) AND THE INTERPRETATION THEREOF GIVEN BY THE VARIOUS COURTS. THE RELEVANT PORTION OF SECTION 271 S REPRODUCED BELOW: '271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (A PPEALS) OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER IN THE C OURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON (B) HAS FAILED TO COMPLY WITH A NOTICE [UNDER SUB- SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 1 15 WE OR] UNDER SUB-SECTION (1) OF SECTIONAL42 OR SUB-SECTION (2) OF SECTION 143 [OR FAILS TO COMPLY WITH A DIRECTION IS SUED UNDER SUB-SECTION (2A) OF SECTION 142], OR (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME O R FURNISHED INACCURATE PARTICULARS OF [ SUCH INCOME, OR] [(D) HAS CONCEALED THE PARTICULARS OF THE FRINGE B ENEFITS OR FURNISHED INACCURATE PARTICULARS OF SUCH FRINGE BEN EFITS. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (II) IN THE CASES REFERRED TO IN CLAUSE (B), IN AD DITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM OF TEN THOUSAND RUPEES] FOR EACH SUCH FAILURE; (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED [THREE TIMES] , THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS. [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER( APPEALS) OR THE PRINCIPAL COMMISSIONE R OR ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 7 OF 18 COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT A BLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCL OSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUT ING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 5.2.1. FOR THE INTERPRETATION OF THIS SECTION THE FOLL OWING CASE LAWS ARE RELEVANT: 1. B.A. BALASUBRAMANIAM& BROS. CO VS CIT (116 TAXMAN 842. 236 ITR 977. 157 CTR 556] WITH THE INCORPORATION OF THE EXPLANATION TO SECTION 271, THE VIEW WHICH HAD BEEN TAKEN EARLIER IN CIT V. ANWAR ALI [1970] 76 ITR 696 (SC) NO LONGER HELD THE FIELD AND IT WAS FOR THE ASSESSEE T O DISCHARGE THE ONUS AS CONTEMPLATED IN THE SAID EXPLANATION. I N VIEW OF THE FACT THAT IN THE INSTANT CASE THE ONUS HAD NOT BEEN DISCHARGED, THE HIGH COURT JUDGMENT CALLED FOR NO INTERFERENCE. THE APPEALS WERE, ACCORDINGLY DISMISS ED. 2. UNION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS [(2007) 295 ITR 244] WHERE HON'BLE SUPREME COURT HELD THAT PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIA BILITY FOR WHICH WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING THE CIVIL LIABILITY AS IS THE CASE IN THE MATTER OF PROCEEDINGS UNDER SECTION 276C. 3. CIT VS ZOOM COMMUNICATION (P.) LTD. [191 TAXMAN 179 (DELHI)/[2010J 327 ITR 510 (DELHI)/[2010] 233 CTR 465] WHERE HON'BLE DELHI HIGH COURT HELD THAT IF ASSESSE E MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW, BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONA FIDE, EXPLANATION 1 TO SECTION 271{1)(C) WOULD COME INTO PLAY AND ASSESSEE WILL BE LIABLE TO PENALTY 4. CIT VS MOSER BAER INDIA LTD. (184 TAXMAN 8 (SC)/[2009] 315 ITR 460 (SC)/(2009) 222 CTR 213) WHERE HON'BLE SUPREME COURT CONFIRMED PENALTY UNDER SECTION 271(1)(C) FOR WRONG ADJUSTMENT OF UNABSORBE D DEPRECIATION. ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 8 OF 18 5. CIT VS GOLD COIN HEALTH FOOD (P.) LTD (172 TAXMA N 386 (SC)/[2008] 304 ITR 308 (SC)/[2008] 218 CTR 359)WHERE HON'BLE DELHI SUPREME COURT HELD THAT AMENDMENT MADE IN EXPLANATION 4 TO SECTION 271(1)(C )(III) WITH EFFECT FROM 1-4-2003 IS CLARIFICATORY AND, THE REFORE, WILL HAVE RETROSPECTIVE EFFECT 6. MAK DATA P. LTD VS. CIT [38 TAXMANN.COM 448 (SC)/[2013] 358 ITR 593 (SC)/[2013] 263 CTR 1]WHERE HON'BLE SUPREME COURT HELD THAT UNDER EXPLANATION 1 TO S. 271(1)(C), VOLUNTARY DISCLOSURE OF CONCEALED INCOME DOES NOT ABSOLVE ASSESSEE OF S. 271(1)(C) PENALTY IF THE ASS ESSEE FAILS TO OFFER AN EXPLANATION WHICH IS BONA FIDE AND PROV ES THAT ALL THE MATERIAL FACTS HAVE BEEN DISCLOSED. THE HON'BLE SUPREME COURT HAS LAID DOWN THE FOLLOWING PRINCIPLE S. THE ASSESSING OFFICER, SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE VOLUNTARY DISCLOSURE', ' BUY PEACE , 'AVOID LITIGATION', 'AMICABLE SETTLEMENT', ETC. T O EXPLAIN AWAY ITS CONDUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOM E OR FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLAN ATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE ASSESSING OFFIC ER, BETWEEN REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTIT UTED THE INCOME AND NOT OTHERWISE. 7. CIT VS GATES FOAM & RUBBER CO [91 ITR 467] CLT VS INDIA SEAFOOD [105 ITR 708] WHERE HON'BLE KERALA HIGH COURT HELD THAT CLAIMING EXCESSIVE DEDUCTION ALSO A MOUNTS TO CONCEALMENT OF INCOME. 8. STEEL INGOTS LTD VS. CIT [296 ITR 228] WHERE HON'BLE MADHYA PRADESH HIGH COURT HELD THAT IN CASE OF CONC EALMENT OF TRUE INCOME CHARGEABLE TO TAX BY MAKING BOGUS C LAIM, LEVY OF PENALTY U/S 271(1)(C) READ WITH EXPLANATION 1 IS JUSTIFIED. 9. CIT VS ESCORTS FINANCE LTD [183 TAXMAN 453 (DELHI)/[2010] 328 ITR 44 (DELHI)/[2009] 226 CTR ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 9 OF 18 105]WHERE HON'BLE DELHI HIGH COURT HELD THAT IF CLA IM MADE IN RETURN OF INCOME APPEARS TO BE EX FACIE BOGUS, I T WOULD BE TREATED AS A CASE OF CONCEALMENT OR FURNISHING OF I NACCURATE PARTICULARS AND PENALTY PROCEEDING WOULD BE JUSTIFI ED 10. CIT VS R.M.P. PLASTO (P.) LTD [184 TAXMAN 372 (SC)/ [2009] 313 ITR 397 (SC)/[2009] 227 CTR 635] WHERE HON'BLE SUPREME COURT HELD THAT CONFIRMED PENALTY UPON A SSESSES FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) B ECAUSE POSITIVE INCOME OF ASSESSEE WAS REDUCED TO NIL AFTE R ALLOWING SET-OFF OF CARRIED FORWARD LOSSES OF EARLIER YEARS. 11.K.P. MADHUSUDHANAN VS CIT [[2001L 118 TAXMAN 324 (SC)/[2001] 251 ITR 99 (SC}/[2001] 169 CTR 489 (SC)]WHERE HON'BLE SUPREME COURT HELD THAT WHERE ASSESSEE WAS UNABLE TO FURNISH EVIDENCE FOR LOANS AND IT OFFERED AMOUNT OF TRANSACTION AS ADDITIONAL INCOME, ASSESSING OFFICER WAS JUSTIFIED IN IMPOSING PENALTY U/S271(1)(C) AFTER FI NDING THE EXPLANATION TO BE UNACCEPTABLE AND APPLYING EXPLANA TION 1(8) OF THE SECTION. 5.2.2. FROM THE ABOVE DECISIONS, IT IS CLEAR THAT THE DETERMINATION WHETHER THE PENALTY IS LEVIABLE O R NOT DEPENDS ON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND CANNOT BE BROUGHT IN TO ANY STRAIGHT JACKET FORMULA . 5.3. BRIEF FACTS IN THE PRESENT CASE ARE THAT THE CHANDIGARH HOUSING BOARD (CHB) WAS DESIGNATED AS NO DAL AGENCY BY THE CHANDIGARH ADMINISTRATION FOR CONSTRU CTION OF 25728 ONE ROOM TENEMENTS FOR THE SLUM DWELLERS AT V ARIOUS LOCATIONS IN CHANDIGARH UNDER JAWAHARLAL NEHRU NATI ONAL URBAN RENEWAL MISSION (JNNURM) AND DEVELOPMENT OF RESIDEN TIAL, COMMERCIAL & OTHER RELATED INFRASTRUCTURE FACILITIE S AS AN INTEGRATED PROJECT AT RAJIV GANDHI CHANDIGARH TECHN OLOGICAL PARK ON THE LAND MEASURING APPROXIMATELY 123.79 ACR E. UNDER THE SCHEME THE CENTRAL GOVERNMENT AND THE CHANDIGAR H ADMINISTRATION HAS PROVIDED THE FUNDS TO THE CHANDI GARH HOUSING BOARD FOR IMPLEMENTATION. THE LAND FOR THE CONSTRUCTION OF THESE HOUSES HAS BEEN MADE AVAILABLE BY THE CHANDIG ARH ADMINISTRATION, THE DEVELOPMENT AGREEMENT WAS SIGNE D BETWEEN THE CHANDIGARH ADMINISTRATION & THE PARSVNATH DEVEL OPERS LIMITED MENTIONING THE STATUS OF CHANDIGARH HOUSING BOARD AS NODAL AGENCY AND THE PHYSICAL POSSESSION WAS HAN DED OVER FOR THE DEVELOPMENT WORK FOR RGTCP PROJECT. AS PER THE GUIDELINES ISSUED BY THE GOVERNMENT OF INDIA, THE F UNDS MAY BE KEPT IN SUCH A WAY THAT THESE ARE AVAILABLE FOR CON STRUCTION OF HOUSES AS AND WHEN REQUIRED AND SIMULTANEOUSLY THES E DO NOT REMAIN IDLE. FUNDS WERE KEPT IN THE NATIONALIZED BA NKS AND ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 10 OF 18 EARNED INTEREST ON THE SAME. THE APPELLANT DURING T HE YEAR HAS EARNED THE INTEREST INCOME ON FDR'S. THE AO HAS MAD E ADDITIONS OF RS.13,46,51,890/- ON ACCOUNT OF INTEREST INCOME FROM THE RGCTP PROJECT FUNDS AND JNNRUM FUNDS KEPT IN FDRS I N BANKS DURING THE RELEVANT ASSESSMENT YEAR. THE ADDITION O F INTEREST INCOME OF RS. 1.41.14.269/- IS RELATED WITH RGCTP P ROJECT (RAJIV GANDHI CHANDIGARH TECHNOLOGY PARK) AT CHANDIGARH ON THE FUNDS KEPT IN FDRS IN ESCROW ACCOUNT. THE AO INITIATED PE NALTY PROCEEDINGS U/S 271(1)(C) FOR ADDITION MADE DURING THE ASSESSMENT. THE LD. CIT (APPEALS) VIDE ORDER DATED 28.01.2016 IN APPEAL NO. 02/14-15 UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER. 5,3.1. AFTER SETTLEMENT OF INCOME TAX MATTER BY THE SECRETARY FINANCE, MOF, GOI ON 14.03.2013 AS PER DI RECTIONS OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT, CHANDIGA RH DATED 21.02.2013 AND ON THE BASIS OF RECOMMENDATION GIVEN BY THE DEPARTMENT OF EXPENDITURE THAT 'AS AN AMICABLE VIEW, IT MAY BE APPROPRIATE THAT PENALTY IS NOT LEVIED ON CHANDIGARH HOUSING BOARD IN RESPECT OF THE INCOME T AX DUES. IN VIEW OF THE ABOVE, YOUR GOOD SELF IS REQUE STED THAT PENALTY IN THIS REGARD MAY NOT BE IMPOSED ON THIS ACCOUNT. 11 THE HON'BLE SUPREME COURT IN AN ORDER DATED30.04.2014ALSO REITERATED THE IMPLEMENTATION O F ABOVE SAID SETTLEMENT IN AN SLP FILED BY THE INCOME TAX D EPARTMENT AND IN THE PROCESS OF COMPLIANCE OF THE ABOVE SAID SETTLEMENT THROUGH LEGAL PROCESS, THE HON'BLE ITAT, CHANDIGARH HAS DELETED THE PENALTY IMPOSED FOR THE AY 2007-08, AY 2008-09 AND AY 2009-10 VIDE ORDER DATED 12.01.2015 BY HOLDING AS U NDER: '14. THE READING OF THE ABOVE ORDER PARTICULARLY AL ONG WITH ORDER PASSED BY HON'BLE SUPREME COURT CLEARLY SHOWS THAT PARTIES HAS ULTIMATELY REACHED TO AN AMICABLE SETTL EMENT WITH REGARD TO THE TAXABILITY OF THE PROCEEDS RECEI VED ON AUCTION OF THE PLOTS. THE HON'BLE SUPREME COURT HAS CLEARLY OBSERVED THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED. IN OUR OPINION IN VIEW OF THE AMICABLE S ETTLEMENT REACHED AND THE ASSURANCE GIVEN BEFORE THE HON'BLE SUPREME COURT AS WELL AS HIGH COURT, NO PENALTY COU LD BE LEVIED. WE FEEL THAT THIS IS NOT A FIT CASE OF LEVY OF PENALTY AND ACCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A ) AND DELETE THE PENALTY.' 5.3.2. EVEN THE A.O. HAS DROPPED PENALTY PROCEEDING S INITIATED IN A.Y.2010-11 & A.Y.2011-12 ON THE IDENTICAL ADDIT IONS MADE IN THE ASSESSMENT ORDERS. ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 11 OF 18 5.4. IT IS UNDISPUTED FACT THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT ASKED BOTH THE PARTIES TO REACH AT AMICA BLE SETTLEMENT ON 21.2.2013 BY PASSING AN INTERIM ORDER WHEREIN IT WAS HELD THAT 'AT THE SAME TIME, WE ARE OF THE OPIN ION THAT THERE IS A POSSIBILITY OF AMICABLE SOLUTION OF THE DISPUTE H AVING REGARD TO ITS NATURE. IN THESE CIRCUMSTANCES, WE FEEL THAT THE SECRETARY, FINANCE MAY SUMMON BOTH THE PARTIES AND DISCUSS THE MATTER WITH THEM TO FIND OUT THE POSSIBLE SOLUTION, IF ANY .' THEREAFTER, A MEETING WAS CALLED ON 14.3.2013 WHICH WAS ATTENDED BY MEMBER (L&C) CBDT, CIT-I CHANDIGARH, CHAIRMAN CHB, CONTROL LER GENERAL OF ACCOUNTS, JOINT SECRETARY (BUDGET), DCIT (I)(I) CHANDIGARH, DIT (SYSTEMS) - V, SPECIAL SECRETARY (F INANCE) CHANDIGARH, CF&AO, CHB, DIRECTOR (BUDGET); WHEREIN IT WAS DECIDED THAT 'AS AN AMICABLE VIEW, IT MAY BE APPROP RIATE THAT PENALTY IS NOT LEVIED ON CHANDIGARH HOUSING BOARD I N RESPECT OF THE INCOME TAX DUES. A DECISION IN THIS REGARD CAN HOWEVER BE TAKEN ONLY BY THE COMPETENT INCOME TAX AUTHORITY OR IN ANY APPELLATE PROCEEDINGS. HON'BLE HIGH COURT MAY CONSI DER PASSING APPROPRIATE ORDERS IN THIS REGARD.' AGAINST THE INTERIM ORDER PASSED BY THE HON'BLE HIGH COURT OF PUNJAB & HARYANA, THE REVENUE FILED AN SLP BEFORE THE HON'BLE SUPREME COURT. THE HON'BLE SUPREME COURT PASSED ORDER IN SLP NO. IA NO.2 IN SLP(C) NO. 5346/13 IN CIT VS CHANDIGARH HOUSING BOA RD ORDER DATED 30.4.2014 AS UNDER: THIS SPECIAL LEAVE PETITION IS FILED AGAINST AN IN TERIM ORDER DATED 07.05.2012 PASSED BY THE HIGH COURT IN ITA NO . 41/12. SINCE THE MATTER IS BETWEEN THE INCOME TAX DEPARTMENT AND THE CHANDIGARH HOUSING BOARD, WHICH IS A STATUTORY BOARD UNDER THE PROVISIONS OF CHANDIGARH ADMINISTRATIVE, THERE WAS SOME DISCUSSION OF AN AMI CABLE SETTLEMENT OF THE DISPUTE BETWEEN THE PARTIES. THE 'RECORD OF DISCUSSION' HELD ON 14.05.2013 IS PLACED ON RECO RD IN IA. NO. 2 OF 2014, A PERUSAL THEREOF WOULD DEMONSTR ATE THAT A SUM OF RS. 278 CRORES, WHICH WAS DEPOSITED BY THE CHANDIGARH HOUSING BOARD IN THE GOVERNMENT TREASURY , IS AGREED TO BE ADJUSTED IN INCOME TAX HEAD AND IT IS TREATED AS FINAL IN SO FAR AS LIABILITY OF INCOME TAX IS CO NCERNED. HAVING REGARD TO THE SETTLEMENT REACHED BETWEEN THE PARTIES, IT IS CLEAR THAT THE DISPUTE REGARDING PAY MENT OF TAX BY THE CHANDIGARH HOUSING BOARD TO THE INCOME TAX DEPARTMENT STANDS RESOLVED. IT IS FURTHER AGREED TH AT NO PENALTY PROCEEDING WOULD BE INITIATED AGAINST THE CHANDIGARH HOUSING BOARD. HOWEVER, IT IS ALSO STATE D THAT THE DECISION IN THIS REGARD CAN FURTHER BE TAKEN ON LY BY THE COMPETENT INCOME TAX AUTHORITY. NEEDLESS TO MENTION THAT THE COMPETENT AUTHORITY SHALL KEEP IN MIND THE SPIR IT OF THE AGREEMENT ARRIVED AT IN 'RECORD OF DISCUSSIONS'. TH E PARTIES ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 12 OF 18 SHALL ALSO APPROACH THE HIGH COURT FOR DISPOSAL OF THE PENDING ITA. 5.4.1 BY CONSIDERING THE OBSERVATIONS OF THE HON'BL E SUPREME COURT THE ASSESSEE FILED AN APPLICATION WIT H CHIEF COMMISSIONER OF INCOME TAX, NWR, CHANDIGARH REGARDI NG WAIVER OF PENALTY. THE COMMISSIONER IN ORDER U/S 27 3A OF THE ACT DECLINED THE REQUEST BY MAINLY OBSERVING THAT N O SETTLEMENT HAS BEEN REACHED BETWEEN THE ASSESSEE AN D DEPARTMENT. AGAINST THE ABOVE ORDER THE ASSESSEE FI LED A WRIT PETITION BEFORE THE HON'BLE JURISDICTIONAL HIGH COU RT. THE HON'BLE HIGH COURT ULTIMATELY PASSED THE FOLLOWING ORDER:- 'MR. G.C. SRIVASTAVA APPEARING FOR THE REVENUE STAT ES, ON INSTRUCTIONS, THAT A COMPROMISE EFFECTED BEFORE THE SECRETARY, FINANCE, UNION OF INDIA, WAS REDUCED INT O WRITING AND IS TITLED AS 'RECORD OF DISCUSSION'. MR. SRIVAS TAVA FURTHER STATES, ON INSTRUCTIONS, THAT OBSERVATION BY THE HO N'BLE SUPREME COURT IN ORDER DATED 30.04.2014 PASSED IN I A NO. 2 IN SPECIAL LEAVE TO APPEAL (CIVIL) NO. 5346 OF 20 13 (COMMISSIONER OF INCOME TAX, CHANDIGARH VS. CHANDIG ARH HOUSING BOARD) RECORDING THAT DISPUTE REGARDING PAY MENT OF TAX BY THE CHANDIGARH HOUSING BOARD STANDS RESOLVED , IS CORRECT. MR. SRIVASTAVA ALSO STATES THAT IT IS CORRECT THAT IT WAS AGREED BEFORE THE HON'BLE SUPREME COURT THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED AGAI NST THE CHANDIGARH HOUSING BOARD AND DECISION IN THIS REGARD WOULD BE TAKEN BY THE COMPETENT AUTHORITY. M R. SRIVASTAVA FURTHER STATES THAT HE HAS INSTRUCTIONS TO MAKE A POSITIVE STATEMENT THAT THE REVENUE SHALL NO T OPPOSE THE ASSESSEE'S PRAYER FOR QUASHING OF PENALT Y IN THE APPEAL PENDING BEFORE THE INCOME TAX APPELLATE TRIBUNAL. LIBERTY IS GRANTED TO COUNSEL FOR THE ASSESSEE TO FILE AN APPLICATION BEFORE THE TRIBUNAL FOR PREOPENING T HE APPEAL. IN CASE, SUCH AN APPLICATION IS FILED, WE HOPE AND EXPECT THAT THE APPELLATE AUTHORITY TAKES UP THE APPEAL FO R HEARING BEFORE THE END OF THE YEAR.' 5.4.2. IT IS REITERATED THAT IN THESE FACTS AND CIR CUMSTANCES OF THE CASE THE HON'BLE ITAT CHANDIGARH BENCH HAS DECI DED TO DELETE THE PENALTY ON SIMILAR GROUNDS FOR AY 2007-0 8, AY 2008-09 AND AY 2009-10 BY HOLDING THAT THE READING OF THE A BOVE ORDER PARTICULARLY ALONG WITH ORDER PASSED BY HON'BLE SUP REME COURT CLEARLY SHOWS THAT PARTIES HAVE ULTIMATELY REACHED TO AN AMICABLE SETTLEMENT WITH REGARD TO THE TAXABILITY O F THE PROCEEDS RECEIVED ON AUCTION OF THE PLOTS. THE HON'BLE SUPRE ME COURT IN ITS ORDER DATED 30.04.2014 HAS CLEARLY OBSERVED THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED. ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 13 OF 18 5.5. THE MAJOR ISSUE ON WHICH ADDITION HAS BEEN MAD E IN THE AY 2012-13 IS 'DISALLOWANCE OF INTEREST AT RS.14,87 ,66,159/-'. AFTER DISCUSSING THE ENTIRE GAMUT OF FACTS IN THE P RECEEDINGS PARAS, I AM OF THE CONSIDERED OPINION THAT AO WAS N OT RIGHT IN LEVYING PENALTY. IT IS THE SAME ISSUE ON WHICH 'R ECORD OF DISCUSSIONS' WAS MADE AFTER DIRECTIONS OF THE HON'B LE HIGH COURT AND SUBSEQUENTLY THE SAME WERE UPHELD BY THE HON'BL E SUPREME COURT VIDE ITS ORDER DATED30.04.2014.KEEPING IN MIN D THE SPIRIT OF THE AGREEMENT ARRIVED AT IN 'RECORD OF DISCUSSIO NS' PENALTY LEVIED BY THE AO IS CANCELLED. THE GROUNDS OF APPEA L NO.1 IS ALLOWED. 8. ON GOING THROUGH THE ORDER OF THE LD.CIT(A) WE D O NOT FIND ANY INFIRMITY IN THE SAME. THE FACTS RELATING TO THE ISSUE, AS STAND RECORDED IN THE ORDER OF THE LD.CIT(A), AN D NOT DISPUTED, ARE THAT THE TAXABILITY OF THE INTEREST I NCOME EARNED ON THE FUNDS RECEIVED BY THE ASSESSEE FROM THE CHAN DIGARH ADMINISTRATION AND THE CENTRAL GOVERNMENT FOR SPECI FIC PROJECTS. I.E. RGCTP & JNNRUM, ON WHICH PENALTY HAS BEEN LEVIED FOR NON DISCLOSURE IN THE PRESENT CASE, WAS ALWAYS DISPUTED BY THE ASSESSEE RIGHT FROM A.Y 2007-08 WHE N IT FIRST ACCRUED, CLAIMING THE FUNDS TO BE IN ITS POSSESS ION ONLY AS A NODAL AGENT OF THE GOVERNMENT FOR EXECUTION OF THE PROJECTS. THAT THE DISPUTE TRAVELLED TO THE HONBLE HIGH COUR T OF PUNJAB AND HARYANA WHO ASKED THE PARTIES TO SETTLE IT AMIC ABLY, WHICH WAS ACCORDINGLY RESOLVED ON 21-02-2013,NOTED IN RECORD OF DISCUSSION, WHEN THE ASSESSEE AGREED TO PAY TAXES ON THE SAME TREATING IT AS ITS INCOME. THAT IT WAS ALSO AGREED BETWEEN THE PARTIES TO BE APPROPRIATE THAT NO PENAL TY BE LEVIED ON THE ASSESSEE ,THOUGH A FINAL DECISION IN THIS RE GARD WAS LEFT ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 14 OF 18 WITH THE COMPETENT AUTHORITY. THAT THE MATTER WENT UP TO THE HONBLE SUPREME COURT IN AN SLP AGAINST THE INTERIM ORDER OF THE HIGH COURT, WHO TOOK NOTE OF THE ENTIRE FACTS O F THE CASE AND ADDED THAT THE COMPETENT AUTHORITY SHOULD TAKE NOTE OF THE SPIRIT OF AGREEMENT BETWEEN THE TWO PARTIES. TH AT SUBSEQUENTLY AN APPLICATION FILED BY THE ASSESSEE FOR WAIVER OF PENALTY WAS REJECTED BY THE COMPETENT AUTHORITY AGAINST WHICH THE ASSESSEE WENT IN APPEAL TO THE HIGH COURT WHERE THE COUNSEL APPEARING FOR THE REVENUE CONCEDED THAT IT WAS AGREED BY THE REVENUE BEFORE THE HONBLE SUPREME CO URT THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED AGAINST T HE ASSESSEE AND THAT HE HAD INSTRUCTIONS TO MAKE A POSITIVE STA TEMENT THAT THE REVENUE WOULD NOT OPPOSE THE ASSESSES PRAY ER FOR QUASHING PENALTY IN APPEAL PENDING BEFORE THE ITAT. THAT CONSIDERING THE AFORESTATED FACTS REGARDING AG REEMENT BETWEEN THE PARTIES FOR NO LEVY OF PENALTY ON SETT LEMENT OF THE DISPUTE,WHICH WAS APPROVED BY THE HONBE APEX COURT , THE ITAT DELETED PENALTY LEVIED U/S 271(1) OF THE ACT , FOR NON DISCLOSURE OF THE SAID INTEREST INCOME IN A.Y 2007- 08, 2008-09 AND 2009-10. 9. FURTHER IN A.Y 2010-11 AND 2011-12, WE FIND, THE ORDER OF THE LD.PR.CIT DIRECTING LEVY OF PENALTY ON IDENT ICAL INTEREST INCOME EARNED DURING THE YEAR ,PASSED IN EXERCISE O F HIS ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 15 OF 18 REVISIONARY POWERS U/S 263 OF THE ACT, WAS SET ASID E BY THE ITAT CONSIDERING THE AFORESTATED FACTS AND FURTHER HOLDING THAT THE AGREEMENT FOR NO LEVY OF PENALTY WAS NOT Y EAR SPECIFIC BUT WAS ISSUE RELATED AND APPLIED TO ALL YEARS AFF ECTED BY IT, I.E. TILL THE RESOLUTION OF THE DISPUTE NOTED IN T HE RECORD OF SETTLEMENT DATED 14-03-2013. THAT IN ANY CASE THE N ON DISCLOSURE OF THE INTEREST INCOME, TILL THE SETTLEM ENT OF THE DISPUTE, WAS UNDER A BONAFIDE BELIEF OF THE SAME NO T BELONGING TO THE ASSESSEE AND HENCE NOT TAXABLE. THE RELEVANT FINDINGS OF THE ITAT AT PARA 24-27 OF THE ORDER ARE AS UNDER : 24. IT IS NOT DISPUTED THAT IN THE IMPUGNED YEAR ALSO PENALTY PROCEEDINGS WERE INITIATED ON THE SAME ADDITION MADE OF INTEREST ON FDRS, IN THE SAME FACTS AS CIRCUMSTANCES, AS IN A.Y 2007-08 TO A.Y 2009-10 AND A.Y 2012-13 AND A.Y 2013-14 AS MENTIONED ABOVE. IN VIEW OF THE FACT THAT IN ALL TH OSE YEARS PENALTY LEVIED WAS DELETED BY THE ITAT/CIT(A), CONSIDERING THE BACKDROP OF THE CASE A S STATED ABOVE, WE HAVE NO HESITATION IN HOLDING THAT THE A.OS VIEW THAT NO PENALTY WAS LEVIABLE FOR THE IMPUGNED YEAR I.E. A.Y 2011-12, WAS A PLAUSIBLE VIEW AND NOT OUT-RIGHTLY INCORRECT AS CANVASSED BY THE REVENUE/PR.CIT. THAT THE DEPARTMENT HAS CONTESTED THE DELETION OF PENALTY BY THE I.T.A.T. I N ASSESSMENT YEARS 2008-09 AND 2009-10 IS, WE HOLD, WHOLLY IRRELEVANT FOR THE CONCLUSION THAT THE VIEW OF THE A.O. WAS A PLAUSIBLE VIEW. THE DEPARTMENT IS WELL WITHIN ITS RIGHTS TO CONTEST ANY ORDER AS LEGA LLY PERMISSIBLE, BUT MERELY BY SO CONTESTING IT DOES N OT MAKE THE ORDERS CHALLENGED AS BEING WHOLLY UNTENABLE IN LAW. 25. EVEN OTHERWISE, ON CONSIDERING THE ENTIRE FACTS OF THE CASE, WE HOLD THAT THE INTERPRETATION OF FAC T BY THE A.O. THAT THE ISSUE WAS IDENTICAL TO A.Y 200 7- 08, WAS CORRECT. IN A.Y 2007-08 THE PENALTY HAD BEEN DELETED ON THE BASIS OF AGREEMENT BETWEEN THE ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 16 OF 18 ASSESSEE AND THE DEPARTMENT, AS RECORDED IN THE ROD, TO NOT LEVY PENALTY. THIS AGREEMENT, WE HOLD, WAS APPLICABLE TO THE IMPUGNED YEAR ALSO. THE REASON BEING, THE AGREEMENT WAS REGARDING THE ISSUE WHETHER THE ASSESSEE WAS A NODAL AGENCY OF CHANDIGARH ADMINISTRATION OR NOT. THIS IS EVIDENT FROM THE ORDER OF THE HON'BLE HIGH COURT WHERE THE QUESTION OF LAW FRAMED WAS VIS A VIS THIS ISSUE/ASPECT ONLY AND IT WAS THIS ASPECT WHICH WAS DIRECTED BY THE HONBLE HIGH COURT TO BE AMICABLY SETTLED BY AGREEMENT. THE AGREEMENT THEREFORE FOR LEVY OF NO PENALTY WAS TO BE READ IN RELATION TO T HAT ISSUE. MEANING THEREBY THAT THE PARTIES HAD AGREED TO NO PENALTY BEING LEVIED ON ACCOUNT OF ANY DEFAUL T COMMITTED BY THE ASSESSEE BY TREATING ITSELF AS A NODAL AGENCY HITHERTOFORE. THUS ALL INCOMES NOT RETURNED TO TAX BY THE ASSESSEE BEFORE THE DATE OF AGREEMENT, ON ACCOUNT OF TREATING ITSELF THE NODAL AGENCY OF CHANDIGARH ADMINISTRATION WAS AGREED NOT TO BE PENALIZED. THE AGREEMENT WE HOLD WAS NOT YEAR SPECIFIC, AS HELD BY THE LD.PR.CIT, BUT WAS ISSUE SPECIFIC AND APPLIED TO ALL YEARS EFFECTED BY THE ISSUE. THE RETURN FOR THE IMPUGNED YEAR, NOT DISCLOSING INTEREST INCOME FROM FDRS CLAIMING ITSE LF AS NODAL AGENCY OF CHANDIGARH ADMINISTRATION, WAS FILED WELL BEFORE THE DATE OF AGREEMENT, BEING FILE D ON 29-09-10 WHILE THE AGREEMENT WAS RECORDED IN THE ROD ON 14-03-13.THUS THE AGREEMENT FOR NO PENALTY APPLIED TO THE IMPUGNED YEAR ALSO AND THE AO WE HOLD HAD THEREFORE RIGHTLY HELD THAT THE FACT S OF THE IMPUGNED YEAR WERE IDENTICAL TO THAT IN A.Y 2007-08,WHILE DROPPING THE PENALTY PROCEEDINGS INITIATED. 26. EVEN OTHERWISE, WE HOLD, THAT THE CLAIM OF THE ASSESSEE THAT THE INTEREST INCOME WAS NOT TAXABLE I N ITS HANDS, WAS BASED ON A BONAFIDE BELIEF THAT THE FUNDS INVESTED IN FDRS DID NOT BELONG TO IT AND WERE COLLECTED BY IT AS A NODAL AGENCY OF THE CHANDIGARH ADMINISTRATION. THIS STAND WAS CONSISTENTLY TAKEN BY THE ASSESSEE AND WAS CONCEDED ONLY BY AMICABLE SETTLEMENT WITH THE DEPARTMENT ON TAKING A PRIMA FACIE VIEW OF THE MATTER. IT IS NOT THAT THE CLAIM WAS FOUND OUTRIGHT LY UNTENABLE BY ANY AUTHORITY. THEREFORE TILL THE DATE OF SETTLEMENT OF THE DISPUTE THE CLAIM OF THE ASSESSEE WAS UNDOUBTEDLY UNDER A BONAFIDE BELIEF. IN VIEW OF THE SAME THEREFORE THE ASSESSEE COULD NOT BE ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 17 OF 18 CHARGED WITH HAVING CONCEALED OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME SO AS TO LEVY PENALTY U/S 271(1) OF THE ACT. 27. WE THEREFORE HOLD THAT THE ORDER PASSED BY THE AO DROPPING PENALTY PROCEEDINGS INITIATED U/S 271(1) OF THE ACT WAS NOT ERRONEOUS AND THE ORDER PASSED BY THE LD.PR.CIT U/S 263 OF THE ACT IS THEREFORE SET ASIDE. THE FACTS OF THE PRESENT CASE ,WE FIND ,ARE IDENTI CAL ,WITH THAT OF A.Y 2007-08 TO 2011-12, PENALTY HAVING BEEN LE VIED ON IDENTICAL INCOME OF INTEREST EARNED ON FDRS MADE F ROM THE SAME SPECIFIC PURPOSE FUNDS ,I.E RGCTP AND JNNRUM, AND RELATES TO A.Y 2012-13, WHICH IS PRIOR TO THE SET TLEMENT OF THE DISPUTE ON 14-03-2013. THE DECISION RENDERED BY THE ITAT IN THE PRECEDING YEARS THEREFORE, DELETING THE PENA LTY LEVIED BY HOLDING THAT THE AGREEMENT TO LEVY NO PENALTY WOULD APPLY ,THAT THE NON DISCLOSURE OF THE INTEREST INCOME WAS UNDER A BONAFIDE BELIEF THAT IT WAS NON TAXABLE,WOULD SQUAR ELY APPLY IN THE PRESENT CASE ALSO. THE ARGUMENT OF THE LD.DR THAT THE SETTLEMENT OF THE DISPUTE WAS YEAR SPECIFIC MERITS NO CONSIDERATION AS WE FIND THAT THE ITAT HAD CATEGORI CALLY HELD IN ITS ORDER PASSED FOR A.Y 2010-11 & 2011-12 THAT THE SETTLEMENT WAS ISSUE SPECIFIC AND NOT YEAR SPECIFI C AND APPLIED TO ALL INTEREST INCOMES NOT RETURNED UPTO T HE DATE OF SETTLEMENT. ITA NO.102/CHD/2019 A.Y. 2012-13 PAGE 18 OF 18 10. IN VIEW OF THE SAME, WE SEE NO REASON TO INTERF ERE IN THE ORDER OF THE LD.CIT(A) AND THE APPEAL FILED BY THE REVENUE IS, THEREFORE, DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON 23 RD JULY, 2021. SD/- SD/- (R.L. NEGI) (ANNAPURNA GUPTA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED: 23 RD JULY, 2021 * * (+! ,-.- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ( )/ THE CIT(A) 5. -01 2 , &2 , 34516 / DR, ITAT, CHANDIGARH 6. 157% / GUARD FILE (+ $ / BY ORDER,