VILAS MADANLAL KOTHARI, PANVEL V. ASST CIT CEN CIR 1, THANE

ITA 1712/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3516 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 24-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A DYANI
• Assessee Lawyers: MUKUND M VAISHAMPAYAN
• Keywords: Wrong claim; Revised return
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 1712 /MUM/201 4 : (A.Y : 200 9 - 1 0) VILAS MADANLAL KOTHARI PLOT NO. 85, NEELAY, M.C.C.H. SOCIETY, PANVEL 410 206. PAN : ACHPK9935F VS. ACIT CENTRAL CIRCLE-1, MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MUKUND M. VAISHAMPAYAN DEPARTMENT BY : SHRI R.A. DYANI DATE OF HEARING : 11.05.2016 DATE OF PRONOUNCEMENT : 25.05.2016 O R D E R PER SANDEEP GOSAIN, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, MUMBAI DT. 18.10.2013 FOR A.Y 20 09-10 IN APPEAL NO. 86/12-13 ON THE FOLLOWING GROUNDS OF APPEAL : 1. THE LEARNED AO ERRED IN HOLDING THE ADDITION OF RS.27,99,653/- BY SCALING DOWN CLAIM OF DEDUCTION U/S. 80IB(10) TO BE AMOUNTING TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2. THE LEARNED AO FAILED TO APPRECIATE THAT RELEVAN T PARTICULARS IN RESPECT OF WORKING OF DEDUCTION U/S 80 IB (10) CARRIED THE S UFFICIENT OPENNESS AS PER I.T. RETURN FILED AND RELEVANT DETAILS FURNISHED WHE N CALLED UPON. 2 VILAS MADANLAL KOTHARI ITA NO. 1712/MUM/2014 3. THE LEARNED AO FAILED TO TAKE INTO ACCOUNT DECIS ION OF APEX COURT IN THE CASE OF CIT V/S RELIANCE PETROPRODUCTS PVT LTD REPORTED AT - (2010) 322 ITR 158 (SC) WHEREIN THE DISALLOWANCE OF CLAIM FOR DEDUCTION IS HELD BE NOT AMOUNTING TO FURNISHING INACCURATE PARTICULARS OF I NCOME. 4. THE LEARNED AO ERRED TO EQUATE THE RESULTANT ADD ITION AS BASED ON FACTS AND THE DISALLOWANCE TO BE NOT LEGAL DISALLOW ANCE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND O R OMIT ANY OF THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN SHOWING INCOME OF RS.55,16,220/- WAS FILED ON 29.9.2009. THE APPELLA NT WAS PROPRIETOR OF TWO CONCERNS, I.E., M/S. MITTAL GAS AGENCY, ENGA GED IN THE BUSINESS OF GAS AGENCY DISTRIBUTION AND M/S. NEEL BUILDERS & DEVELOPERS, ENGAGED IN THE BUSINESS OF BUILDING DEVELOPMENT AND CONSTRUCTION. THE ASSESSEE CLAIMED DEDUCTION U/S. 80IB(10) AMOUNT ING TO RS.1,02,38,668/- WHICH WAS RESTRICTED TO RS.76,46,2 98/- BY ASSESSING OFFICER BY DISALLOWING THE EXCESS CLAIM OF RS.30,37 ,440/-. PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE INC OME TAX ACT, 1961 (IN SHORT THE ACT) AND AFTER SEEKING REPLY FROM T HE ASSESSEE, PENALTY ORDER U/S 271(1)(C) OF THE ACT WAS PASSED BY THE AC IT ON 13.6.2012 THEREBY LEVYING PENALTY UPON THE ASSESSEE FOR FURNI SHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF T HE ACIT, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND LD. C IT(A), AFTER CONSIDERING THE CASE OF BOTH THE PARTIES DISMISSED THE APPEAL VIDE ORDER DT. 18.10.2013. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREINABOVE. 3 VILAS MADANLAL KOTHARI ITA NO. 1712/MUM/2014 3. GROUND NOS. 1 TO 4 ARE INTERCONNECTED AND RELATE TO CHALLENGING THE PENALTY LEVIED BY ACIT AND CONFIRMED BY THE LD. CIT(A). 4. THE LD. AR APPEARING ON BEHALF OF ASSESSEE SUBMI TTED THAT IN THE COURSE OF BUSINESS AS BUILDER DEVELOPER, THE AS SESSEE CONTINUED DEVELOPMENT OF PROJECT NEEL SPLENDOUR AND THE PRO FIT FROM THE SAID PROJECT WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10). I T WAS FURTHER SUBMITTED BY THE LD. AR THAT ALTHOUGH IN THIS PARTI CULAR YEAR UNDER CONSIDERATION, I.E., A.Y 2009-10 IT WAS THE ONLY PR OJECT FROM WHICH HE DERIVED THE PROFIT, IN THE IMMEDIATE PAST YEARS, TH E PROFITS WERE DERIVED FROM SEVERAL PROJECTS, I.E., ELIGIBLE PROJE CTS AND OTHER PROJECTS. THEREFORE, IN ORDER TO KNOW THE PROJECT PROFIT, ASS ESSEE CONSISTENTLY FOLLOWED METHOD OF MAINTAINING PROJECT-WISE ACCOUNT S. ON THE BASIS OF THESE PROJECT-WISE ACCOUNTS MAINTAINED, THE PROFIT IN RESPECT OF ELIGIBLE PROFIT WAS REPORTED AND CLAIMED AS DEDUCTION U/S 80 IB(10). IT WAS FURTHER ARGUED BY THE LD. AR THAT THE ACCEPTANCE OF ADDITION OR NOT DISPUTING THE SAME OR DISCUSSION IN THE ASSESSMENT PROCEEDINGS NO WAY LEADS TO THE CONCLUSION THAT IT IS ADMISSION OF CONCEALMENT ON THE PART OF THE ASSESSEE. THE LD. AR RELIED UPON THE U NREPORTED JUDGMENT OF ITAT A BENCH, MUMBAI IN THE CASE OF M/S. AASSI A MANAGEMENT AND CONSULTANCY PVT. LTD. VS. ACIT IN ITA NO. 1916/MUM/ 2010 DT. 13.4.2011. IN ADDITION, THE LD. AR ALSO RELIED UPO N THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 (SC) . LASTLY, THE LD. AR SUBMITTED THAT THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER AND C ONFIRMED BY THE LD. CIT(A) MAY BE SET ASIDE. 4 VILAS MADANLAL KOTHARI ITA NO. 1712/MUM/2014 5. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE RELIED UPON THE ORDER PASSED BY THE ASSESSI NG OFFICER AS WELL AS THE LD. CIT(A). IT WAS SUBMITTED THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION OF RS. 76,46,298/- AGAINST W HICH THE ASSESSEE HAD MADE A CLAIM OF DEDUCTION OF RS.1,06,8 3,738/-. IT WAS ARGUED BY THE LD. DR THAT THE ALLOWABILITY OF D EDUCTION U/S 80IB(10) IS NOT THE ISSUE UNDER CONSIDERATION AND T HE ISSUE UNDER CONSIDERATION IS EXCESS CLAIM OF DEDUCTION MADE BY THE ASSESSEE IN THE RETURN OF INCOME WHICH AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS ALSO ARGUED THAT HAD IT NOT BEEN FOR THE SCRUTINY ASSESSMENT, THE EXCESS CLAIM OF DEDUCT ION OF RS.30,37,440/- WOULD HAVE GONE UNDETECTED THEREBY C AUSING LOSS OF REVENUE TO THE EXCHEQUER. THE LD. DR ALSO RELIE D UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETROPRODUCTS PVT. LTD. ( SUPRA) AND SUBMITTED THAT ALTHOUGH THE CASE LAW OF HON'BLE SUPREME COURT IS NOT SQUARELY APPLIC ABLE IN THE ASSESSEES CASE, HOWEVER, THE OBSERVATIONS OF THE H ON'BLE SUPREME COURT THEREIN ARE SQUARELY APPLICABLE IN THE ASSESS EES CASE. 6. WE HEARD THE COUNSELS FOR BOTH THE PARTIES, PERU SED THE MATERIALS PLACED ON RECORD AS WELL AS THE ORDERS PA SSED BY THE LOWER AUTHORITIES. THE LD. CIT(A) HAS DEALT WITH THIS IS SUE IN OPERATIVE PARAGRAPH 10 TO 15 OF HIS ORDER WHICH IS REPRODUCED HEREUNDER : 10. I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUB MISSIONS, THE AO'S OBSERVATIONS IN THE ASSESSMENT ORDER AND THE P ENALTY ORDER, THE FACTS OF THE CASE AND VARIOUS JUDGMENTS RELIED UPON BY THE APPELLANT. IT IS SEEN THAT THE APPELLANT HAD CLAIMED DEDUCTION U/S. 80IB(10) ON 5 VILAS MADANLAL KOTHARI ITA NO. 1712/MUM/2014 PROFIT ON SALE OF PLOT OF LAND AND RENTAL INCOME. D EDUCTION U/S. 80IB(10) IS AVAILABLE ON THE PROFITS OF THE UNDERTA KING ENGAGED IN THE BUSINESS OF BUILDING AND DEVELOPING HOUSING PROJECT S. THE APPELLANT KNEW FULLY WELL THAT PROFIT ON SALE OF PLOT AND REN TAL INCOME WERE IN NO WAY RELATED TO DEVELOPING AND BUILDING HOUSING P ROJECT AND THEREFORE, DEDUCTION U/S 80IB(10) WAS NOT AVAILABLE IN RESPECT OF THESE AMOUNTS, STILL HE KNOWINGLY INCLUDED THESE AM OUNTS IN THE CLAIM OF DEDUCTION. THE CONTENTION OF THE APPELLANT THAT HE HAD ACCEPTED THE ADDITION DURING THE COURSE OF ASSESSME NT PROCEEDINGS TO CO-OPERATE WITH THE DEPARTMENT IS NOT BORNE OUT FROM THE ASSESSMENT ORDER. NOWHERE IN THE ASSESSMENT ORDER H AS THE A.O. MENTIONED ANY SUCH FACT. 11. THE CASE LAWS RELIED UPON BY THE APPELLANT ARE NOT APPLICABLE IN HIS CASE AS THE FACTS OF THESE CASES ARE DIFFERENT FROM FACTS OF THE APPELLANT'S CASE. IN THE CASE OF CIT VS JAKSON LTD. (SUPRA) THERE WAS NO QUESTION ABOUT THE ALLOWABILITY OF THE DEDUCTION U/S. 80IB, ONLY THE AMOUNT OF DEDUCTION HAD BEEN REDUCED. IN THE AP PELLANT'S CASE, IT IS CLEAR THAT DEDUCTION U/S 80IB(10) WAS NOT ALLO WABLE AT ALL ON PROFITS ON SALE OF PLOT AND ON RENTAL INCOME AS THE SE AMOUNTS HAVE NOTHING TO DO WITH THE BUILDING AND DEVELOPMENT OF HOUSING PROJECT. 12. IN THE CASE OF PARIKH INVESTMENT & DEVELOPMENT (P ) LTD. (SUPRA) DEDUCTION U/S 80IB(10) HAD BEEN CLAIMED ON M ISCELLANEOUS INCOME WHICH WAS DISALLOWED. PENALTY U/S 271(1)(C) WAS DELETED BECAUSE THE ISSUE INVOLVED WAS DEBATABLE. IN THE APP ELLANT'S CASE THERE IS NO DEBATE AT ALL ABOUT THE DEDUCTION U/S. 80IB(10) NOT BEING AVAILABLE ON PROFIT ON SALE OF PLOT AND ON RENTAL I NCOME. 13. IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD., IT WAS HELD THAT MERE CLAIM, WHICH WAS NOT SUSTAINABLE IN LAW, DID N OT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. IN THE APPELLANT'S CASE, THE DEDUCTION U/S. 80IB(10) IS NO T ALLOWABLE TO THE APPELLANT ON THE FACTS OF THE CASE ITSELF AND IT IS NOT A LEGAL DISALLOWANCE. 14. IN VIEW OF THE DETAILED DISCUSSION MADE AS ABOVE , IT IS HELD THAT PENALTY HAS RIGHTLY BEEN IMPOSED BY THE A.O. FOR FU RNISHING OF INACCURATE PARTICULARS OF INCOME BY CLAIMING DEDUCT ION U/S. 80IB(10) IN RESPECT OF SUMS WHICH WAS NOT AVAILABLE AT ALL O N THE FACTS OF THE 6 VILAS MADANLAL KOTHARI ITA NO. 1712/MUM/2014 CASE ITSELF. PENALTY U/S. 271(1)(C) AMOUNTING TO RS . 10,32,424/- IS THEREFORE, CONFIRMED. 15. IN RESULT, THE APPEAL OF THE APPELLANT IS DISMIS SED. AFTER HEARING THE COUNSELS FOR BOTH THE PARTIES AND PERUSING THE ORDER PASSED BY THE LD. CIT(A) WE ARE OF THE CONSIDERED V IEW THAT THE LD. CIT(A) HAS CONSIDERED THE ISSUE IN DETAIL AND PASSE D A WELL-REASONED AND SPEAKING ORDER. THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THAT DEDUCTION U/S 80IB IS AVAILABLE ON THE PROFITS OF T HE UNDERTAKING ENGAGED IN BUSINESS OF BUILDING AND DEVELOPING HOUS ING PROJECTS. THE ASSESSEE KNEW FULLY WELL THAT PROFIT ON SALE OF PLO T AND RENTAL INCOME WERE IN NO WAY RELATED TO DEVELOPING AND BUILDING HOUSING PROJECTS AND, THEREFORE, DEDUCTION U/S 80IB(10) WAS NOT AVAI LABLE IN RESPECT OF THESE AMOUNTS, BUT EVEN THEN, THE ASSESSEE INCLUDED THESE AMOUNTS IN THE CLAIM OF DEDUCTION. THE LD. CIT(A) HAS ALSO TA KEN INTO CONSIDERATION THE CONTENTION OF THE ASSESSEE THAT H E HAD ACCEPTED THE ADDITION DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS TO CO- OPERATE WITH THE DEPARTMENT IS NOT BORNE OUT FROM T HE ASSESSMENT ORDER. FROM THE CO-JOINT READING OF THE ORDERS PAS SED BY THE REVENUE AUTHORITIES AS WELL AS HEARING THE COUNSELS FOR THE PARTIES, WE ARE ALSO OF THE VIEW THAT THE ASSESSEE HAS ACTED IN CONSCIOU S DISREGARD OF ITS OBLIGATION AND THE ASSESSEE FULLY KNEW THAT PROFIT ON SALE OF PLOT AND RENTAL INCOME WERE IN NO WAY RELATED TO DEVELOPING AND BUILDING HOUSING PROJECT AND, THEREFORE, DEDUCTION U/S 80IB WAS NOT AVAILABLE IN RESPECT OF THESE INCOMES, BUT EVEN THEN KNOWINGLY T HE ASSESSEE HAS INCLUDED THESE AMOUNTS IN THE CLAIM OF DEDUCTION AN D MADE A WRONG CLAIM, SO MUCH SO, THE ASSESSEE HAS NOT EVEN FILED ANY REVISED RETURN. THEREFORE, ALL THESE FACTS LEAD TO THE CONCLUSION T HAT THE PENALTY HAS BEEN RIGHTLY IMPOSED BY THE ASSESSING OFFICER AND U PHELD BY THE LD. 7 VILAS MADANLAL KOTHARI ITA NO. 1712/MUM/2014 CIT(A) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR CLAIMING DEDUCTION U/S 80IB IN RESPECT OF SUMS WHICH WERE NO T AT ALL AVAILABLE ON THE FACTS OF THE CASE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2016. SD/- SD/- S S S S S S S S S S S S S S S S S S S D/ - SD/ - ( JASON P. BOAZ ) ACCOUNTANT MEMBER ( SANDEEP GOSAIN ) JUDICIAL MEMBER MUMBAI, DATE : 25 TH MAY, 2016 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, F BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI