Pharande Developers, Pune V. Income -tax Officer,

ITA 1891/PUN/2013

• Counselvise Citation: 189124514 RSA 2013
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 21-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: S C BHATIA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1891/PN/2013 (ASSESSMENT YEAR : 2005-06) PHARANDE DEVELOPERS, 98/2, GURUVIHAR, PUNE NASHIK HIGHWAY, BHOSARI, PUNE 411 039. PAN : AAFFP3023R . APPELLANT VS. INCOME TAX OFFICER, WARD 8(3), PUNE. . RESPONDENT ITA NO.1970/PN/2013 (ASSESSMENT YEAR : 2005-06) DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE. . APPELLANT VS. PHARANDE DEVELOPERS, 98/2, GURUVIHAR, PUNE NASHIK ROAD, BHOSARI, PUNE 411 039. PAN : AAFFP3023R . RESPONDENT ASSESSEE BY : MR. SUNIL GANOO & MR. S. C. BHATIA DEPARTMENT BY : MR. B. C. MALAKAR DATE OF HEARING : 16-10-2014 DATE OF PRONOUNCEMENT : 20-10-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED CROSS-APPEALS BY ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 30.08.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 03.03.2011 PASSED BY THE ASSESSING OFFICER IMPOSING PENALTY U/S 271(1 )(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2 005-06. ITA NO.1891/PN/2013 ITA NO.1970/PN/2013 A.Y. 2005-06 2. BOTH THE APPEALS HAVE ARISEN ON ACCOUNT OF PENAL TY LEVIED BY THE ASSESSING OFFICER AMOUNTING TO RS.20,00,000/- U/S 2 71(1)(C) OF THE ACT WITH RESPECT TO DENIAL OF ASSESSEES CLAIM FOR DEDUCTION U/S 80-IB(10) OF THE ACT AMOUNTING TO RS.65,26,760/- DURING THE ASSESSMENT P ROCEEDINGS. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE F IRM IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND, CONSTRUCTION OF BU ILDING AND SALE THEREOF. FOR THE ASSESSMENT YEAR 2005-06, IT FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.6,60,500/- WHICH WAS SUBJECT TO A SCRU TINY ASSESSMENT WHEREIN THE TOTAL INCOME WAS ASSESSED AT RS.71,87,260/- IN AN ORDER PASSED U/S 143(3) OF THE ACT DATED 20.12.2007. THE DIFFERENCE BETWEEN ASSESSED AND THE REPORTED INCOME I.E. RS.65,26,760/- WAS ON ACCO UNT OF DENIAL OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80-IB(10) OF THE ACT IN RELATION TO THE PROFITS DERIVED BY THE ASSESSEE FROM DEVELOPMENT AND CONSTR UCTION OF TWO HOUSING PROJECTS, NAMELY, (I) LAKSHDWEEP AND (II) SAMART H NAGARI. SUBSEQUENTLY, THE ASSESSING OFFICER HELD THE ASSESSEE GUILTY OF C ONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEAN ING OF SECTION 271(1)(C) OF THE ACT QUA THE AFORESAID DISALLOWANCE. ACCORDINGL Y, IN AN ORDER PASSED U/S 271(1)(C) OF THE ACT DATED 03.03.2011, THE ASSESSIN G OFFICER LEVIED A PENALTY OF RS.20,00,000/- IN TERMS OF SECTION 271(1)(C) OF THE ACT. 4. AT THE TIME OF PROCEEDINGS BEFORE THE CIT(A), AS SESSEE POINTED OUT THAT IN THE QUANTUM PROCEEDINGS THE ORDER OF THE ASSESSI NG OFFICER DENYING THE DEDUCTION U/S 80-IB(10) OF THE ACT IN ITS ENTIRETY HAS NOT BEEN APPROVED BY THE TRIBUNAL VIDE ITS ORDER IN ITA NOS.715/PN/2011 AND 175/PN/2011 DATED 25.06.2013. IN THIS CONTEXT, IT IS NOTICED THAT TH E TRIBUNAL VIDE ITS ORDER DATED 25.06.2013 (SUPRA) ALLOWED THE CLAIM OF ASSESSEE IN RELATION TO THE PROJECT, SAMARTH NAGARI IN FULL WHEREAS WITH RESPECT TO TH E PROJECT, LAKSHDWEEP, THE CLAIM OF THE ASSESSEE WAS DENIED ONLY TO THE EXTENT OF PROFITS IN RESPECT OF TWO OF THE UNITS THEREIN, NAMELY, BUNGALOW G-1 & G-2. FOR THE BALANCE OF THE ITA NO.1891/PN/2013 ITA NO.1970/PN/2013 A.Y. 2005-06 PROFITS OF LAKSHDWEEP PROJECT, THE CLAIM OF DEDUC TION U/S 80-IB(10) OF THE ACT WAS ALSO ALLOWED BY THE TRIBUNAL. 5. THE CIT(A) TOOK COGNIZANCE OF THE AFORESAID DECI SION OF THE TRIBUNAL AND ACCORDINGLY DELETED THE PENALTY LEVIED U/S 271( 1)(C) OF THE ACT IN RELATION TO THE AMOUNT OF DEDUCTION U/S 80-IB(10) OF THE ACT, T HAT WAS ALLOWED BY THE TRIBUNAL. THE CIT(A), HOWEVER, RETAINED THE PENALT Y U/S 271(1)(C) OF THE ACT IN RELATION TO THE PROFITS IN RESPECT OF BUNGALOW G-1 & G-2, SINCE THE TRIBUNAL HAD RETAINED THE DISALLOWANCE OF DEDUCTION UNDER SECTIO N 80IB(10) OF THE ACT WITH RESPECT TO SUCH PROFITS. 6. PRESENTLY, REVENUE IS IN APPEAL CHALLENGING THE ORDER OF THE CIT(A) IN DELETING THE PENALTY WHEREAS ASSESSEE IN ITS CROSS- APPEAL IS CHALLENGING THE PENALTY RETAINED BY THE CIT(A) IN RESPECT OF THE PR OFITS RELATING TO BUNGALOW G- 1 & G-2. IN THIS BACKGROUND, THE CROSS-APPEALS HAV E BEEN HEARD. 7. IN SO FAR AS THE GRIEVANCE OF THE REVENUE IS CON CERNED, WE FIND NO JUSTIFICATION FOR THE SAME INASMUCH AS THE DISALLOW ANCE ON THE BASIS OF WHICH THE PENALTY WAS LEVIED BY THE ASSESSING OFFICER STA NDS DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 25.06.2013 (SUPRA). MOREOVER, THERE IS NO MATERIAL TO SUGGEST THAT THE ORDER OF THE TRIBUNAL DATED 25.06. 2013 (SUPRA) HAS BEEN ALTERED BY ANY HIGHER AUTHORITY, AND ACCORDINGLY TH E SAME CONTINUES TO HOLD THE FIELD. CONSIDERING THE AFORESAID BACKGROUND, W E THEREFORE DISMISS THE APPEAL OF THE REVENUE AS THERE IS NO INFIRMITY ON T HE PART OF THE CIT(A) IN DELETING THE PENALTY IN RELATION TO THE AMOUNT OF D EDUCTION UNDER SECTION 80IB(10) ALLOWED BY THE TRIBUNAL. 8. IN SO FAR AS THE APPEAL OF THE ASSESSEE AGAINST THE PENALTY SUSTAINED BY THE CIT(A) IN RESPECT OF THE PROFITS FROM THE SALE OF BUNGALOW G-1 & G-2 IN LAKSHDWEEP PROJECT IS CONCERNED, THE BRIEF FACTS ARE AS FOLLOWS. IN THE ITA NO.1891/PN/2013 ITA NO.1970/PN/2013 A.Y. 2005-06 PROJECT LAKSHDWEEP, IT WAS FOUND THAT TWO OF THE RESIDENTIAL UNITS, NAMELY, BUNGALOW G-1 & G-2 WERE AMALGAMATED INTO ONE UNIT A ND BUILT-UP AREA OF THE COMBINED UNIT EXCEEDED THE LIMIT PRESCRIBED IN CLAU SE (C) OF SECTION 80-IB(10) OF THE ACT. ON THE SAID BASIS, THE ASSESSING OFFIC ER DENIED THE DEDUCTION U/S 80-IB(10) OF THE ACT WITH RESPECT TO THE ENTIRE PRO FITS OF THE LAKSHDWEEP PROJECT. THE TRIBUNAL AFTER CONSIDERING THE LEGAL POSITION IN THE CONTEXT OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF D.S. KULKARNI DEVELOPERS LTD. VS. ACIT, ITA NOS.1428 & 1429/PN/20 08 DATED 08.08.2012 AND ALSO THE JUDGEMENT OF THE HONBLE MADRAS HIGH C OURT IN THE CASE OF VISWAS PROMOTERS (P) LTD., (2013) 29 TXMANN.COM 19 (MADRAS) ALLOWED PROPORTIONATE RELIEF TO THE ASSESSEE. THE TRIBUNA L LIMITED THE DENIAL OF DEDUCTION TO THE EXTENT OF PROFITS DERIVED FROM THE SALE OF AMALGAMATED BUNGALOW G-1 & G-2 AND FOR THE BALANCE OF THE PROFI TS, ASSESSEES CLAIM FOR DEDUCTION U/S 80-IB(10) OF THE ACT WAS UPHELD. THE PARTIAL DENIAL OF ASSESSEES CLAIM FOR DEDUCTION U/S 80-IB(10) OF THE ACT HAS BEEN CONSTRUED BY THE REVENUE AS A CONCEALMENT OR FURNISHING OF INACC URATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF T HE ACT. 9. WITH RESPECT TO THE VIOLATION OF CLAUSE (C) OF S ECTION 80-IB(10) IN RELATION TO THE BUNGALOW G-1 & G-2, THE PLEA OF THE ASSESSEE BEFORE THE TRIBUNAL IN THE QUANTUM PROCEEDINGS WAS THAT THE TWO UNITS WERE NOT AMALGAMATED INTO ONE UNIT BY THE ASSESSEE BUT IT WAS DONE BY THE CUSTOME R. NEVERTHELESS, BEFORE THE TRIBUNAL, ASSESSEES COUNSEL HAD CONCEDED THAT THERE WAS NO EVIDENCE TO SUBSTANTIATE THE AFORESAID POSITION AND THEREFORE I T WAS AGREED BEFORE THE TRIBUNAL THAT IT MAY BE TAKEN THAT THE BUILT-UP AR EA OF THE COMBINED UNIT EXCEEDED THE LIMIT PRESCRIBED IN CLAUSE (C) OF SECT ION 80-IB(10) OF THE ACT. A REFERENCE HAS BEEN MADE TO THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 25.06.2013 (SUPRA) TO SUPPORT THE AFORESAID. BE THAT AS IT MAY, THE MAIN REASON FOR DENIAL OF DEDUCTION IS COMBINING OF THE TWO UNITS INTO A SINGLE UNIT, AND THUS BREACHING THE LIMIT OF BUILT-UP AREA PRE SCRIBED U/S 80-IB(10) OF THE ITA NO.1891/PN/2013 ITA NO.1970/PN/2013 A.Y. 2005-06 ACT. IN THIS CONTEXT, WE FIND THAT THERE IS NO CRE DIBLE MATERIAL OR EVIDENCE TO SUGGEST THAT THE TWO UNITS WERE COMBINED BY THE ASS ESSEE AND THEREAFTER SOLD AS A SINGLE UNIT. IN-FACT, IT IS A CASE WHERE THE PLEA OF THE ASSESSEE THAT IT HAS NOT COMBINED THE TWO UNITS ON ITS OWN IS UNSUBSTANT IATED, AND THE SAME RESULTED IN DENIAL OF THE PROPORTIONATE DEDUCTION I N THE QUANTUM PROCEEDINGS. QUITE CLEARLY, IT IS NOT A CASE WHERE THE CLAIM OF THE ASSESSEE THAT THE TWO UNITS WERE NOT COMBINED BY HIM HAS BEEN PROVED TO B E FACTUALLY FALSE BY THE REVENUE. THEREFORE, IT IS A CASE WHERE THE DENIAL OF DEDUCTION U/S 80-IB(10) OF THE ACT PROPORTIONATE TO THE PROFITS OF BUNGALOW G-1 & G-2, IS NOT BASED ON ANY FALSITY BUT IS MERELY ON ACCOUNT OF NON-SUBSTAN TIATION OF CLAIM BY ASSESSEE, WHICH, OSTENSIBLY DOES NOT JUSTIFY LEVY O F PENALTY U/S 271(1)(C) OF THE ACT. 10. AT THE TIME OF HEARING, THE LEARNED COUNSEL FUR THER POINTED OUT THAT THE COMPLETION CERTIFICATE OF THE UNITS ISSUED BY THE P IMPRI-CHINCHWAD MUNCIPAL CORPORATION (PCMC) SHOWS THAT THEY ARE RECOGNIZED A S SEPARATE UNITS. IT HAS ALSO BEEN POINTED OUT THAT TWO UNITS HAVE BEEN SOLD BY SEPARATE SALE-DEEDS, ALBEIT TO HUSBAND AND WIFE. BE THAT AS IT MAY, WE DO NOT FIND THERE WAS ANY LACK OF BONA-FIDE ON THE PART OF THE ASSESSEE IN CL AIMING THE DEDUCTION U/S 80- IB(10) OF THE ACT IN RELATION TO THE PROFITS OF BUN GALOW G-1 & G-2 UNITS. 11. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRC UMSTANCES OF THE CASE, WE FIND THAT THE CIT(A) ERRED IN SUSTAINING THE PENALT Y U/S 271(1)(C) OF THE ACT IN RELATION TO THE PROPORTIONATE DENIAL OF DEDUCTION U /S 80-IB(10) OF THE ACT IN RELATION TO THE PROFITS OF BUNGALOW G-1 & G-2. IN T HE RESULT, THE ORDER OF THE CIT(A) IS HEREBY SET-ASIDE AND THE ASSESSING OFFICE R IS DIRECTED TO THE DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THUS, ASSESSEE SUCCEEDS ON THIS ASPECT. ITA NO.1891/PN/2013 ITA NO.1970/PN/2013 A.Y. 2005-06 12. RESULTANTLY, WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED, THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCTOBER, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 20 TH OCTOBER, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE