SATYEN DEVELOPERS P. LTD, MUMBAI V. ACIT 2(3), MUMBAI

ITA 2257/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8106 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: KIRIT S SANGHVI
• Keywords: Wrong claim; Competent authority
• Section: 271(1)(c); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F, MUMBAI BEFORE SHRI S V MEHROTRA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 2257/MUM/2010 (ASSESSMENT YEAR 2004-05) SATYEN DEVELOPERS P LTD., 22/28 APPOLLO ST. RAJA BAHADUR COMPOUND, FORT, MUMBAI-400023 PAN:AAICS1071Q . APPELLANT VS THE ACIT 2(3), AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 .RESPONDENT APPELLANT BY : SHRI KIRIT S SANGHVI RESPONDENT BY : SMT.ASHIMA GUPTA O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 8.1.2010 OF CIT(A) ARISING FROM THE P ENALTY ORDER U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 20 04-05. 2. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) IN RESPECT OF BUILDINGNO.F-7 TO F-9 OF RUSSET CO-OPERATIVE HO USING SOCIETY BEARING FLAT NO.185A, 199, 200AB AND 201. THE AO ITA NO. 2257/MUM/2010 (ASSESSMENT YEAR 2004-05) 2 DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE CONSTRUCTION WAS COMMENCED BEFORE 1998 AND THE AS SESSEE HAS ENTERED INTO CONSTRUCTION CONTRACT WITH M/S HE RMES DEVELOPERS, THEREFORE THE BASIC CONDITION OF SECTIO N 80IB(10) HAS NOT BEEN SATISFIED. THE ASSESSEE INITIALLY CH ALLENGED THE DISALLOWANCE MADE BY THE AO BEFORE THE CIT(A) BUT SUBSEQUENTLY, THE APPEAL WAS WITHDRAWN BY THE ASSES SEE. THEREAFTER THE PENALTY PROCEEDINGS WERE INITIATED AND A PENALTY OF RS.16,82,457/- WAS LEVIED VIDE ORDER DATED 31.3.2009. 3. ON APPEAL, THE CIT(A) HAS CONFIRMED THE ACTIO N OF THE AO. 4. BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB O N THE BASIS OF RECORD AND EVIDENCE PRODUCED BEFORE THE A O. THE ASSESSEE HAS NOT CONCEALED ANY MATERIAL FACTS OR INFORMATION FROM THE AO WITH RESPECT TO THE CLAIM OF THE ASSE SSEE U/S 80IB(10). THE AO HAS DENIED THE CLAIM OF THE ASSE SSEE BY DISPUTING THE DATE OF COMMENCEMENT OF THE PROJECT AND ALSO ON THE BASIS OF THE FACT THAT THE ASSESSEE HAS ENTE RED INTO AN AGREEMENT WITH M/S HERMESH DEVELOPER. THESE TWO FAC TS WERE ON RECORD AND ALSO PRODUCED BY THE ASSESSEE BEFORE THE AO. ITA NO. 2257/MUM/2010 (ASSESSMENT YEAR 2004-05) 3 THEREFORE, THERE IS NO CONCEALMENT OF INCOME OR F URNISHED IN ACCURATE PARTICULARS OF INCOME. . HE HAS FURTHER CONTENDED THAT THE ASSESSEE IS CLAIMING THE DEDUCTION ON TH E BASIS OF REVISED CERTIFICATE OF THE COMMENCEMENT WHICH IS A FTER 1.10.1998,. THEREFORE, THE CLAIM OF THE ASSESSEE IS BASED ON THE CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY. SINCE THE DIRECTOR OF THE ASSESSEE COMPANY WAS IN ILLHEALTH A ND BEING SERIOUSLY ILL WAS NOT ABLE TO PURSUE THE LITIGATION , THEREFORE, THE APPEAL BEFORE THE CIT(A) WAS WITHDRAWN. HE HAS P OINTED OUT THAT SUBSEQUENTLY THE DIRECTOR OF THE ASSESSEE COMP ANY EXPIRED DUE TO ILLNESS. THE LEARNED AR OF THE AS SESSEE SUBMITTED THAT THE SIMILAR CLAIM OF THE ASSESSEE FO R THE ASSESSMENT YEAR 2001-01 WAS ALLOWED.. HE HAS RELI ED UPON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE C ASE OF CIT V/S RELIANCE PETROPRODUCTS PVT.LTD REPORTED IN 3 22 ITR 158(SC) AND PUNE BENCH OF THIS TRIBUNAL IN THE CAS E OF NIRMITI CONSTRUCTION V/S DCIT REPORTED IN (2005) 4 SOT 383 (PUNE). 5. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) WHI CH WAS NOT ALLOWABLE TO THE ASSESSEE. THE ASSESSEE WAS AW ARE ABOUT THE NON-ALLOWABILITY OF THE CLAIM AND THEREFO RE FALSE CLAIM WAS MADE BY THE ASSESSEE WHICH AMOUNTS TO ITA NO. 2257/MUM/2010 (ASSESSMENT YEAR 2004-05) 4 CONCEALMENT OF THE INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME WITH A VIEW TO AVOID TAX LIA BILITY. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES AN D SUBMITTED THAT NO EXPLANATION WAS OFFERED BY THE ASSESSEE TO SATISFY THE AO. THEREFORE, THE PENALTY WAS LEVIED. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD. WE FIND THAT THE AO HAS DISALLOWED THE C LAIM OF THE ASSESSEE ON TWO COUNTS. THE FIRST GROUND IS THAT T HE SANCTION OF THE BUILDING AND COMMENCEMENT CERTIFICATE WAS ISSUED PRIOR TO 1.10.1998, THEREFORE, THE CONDITIONS PRESC RIBED UNDER SECTION 80IB(10) IS NOT FULFILLED. SECONDLY, BECAUS E THE ASSESSEE ENTERED INTO AN AGREEMENT ON 28.3.1995 WIT H M/S HERMESH DEVELOPER WHICH GOES TO SHOW THAT THE ASSES SEE IS NOT GOING TO DEVELOP THE PROJECT ITSELF. THEREFORE , THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IB(10 ). IT IS PERTINENT TO NOTE THAT THE AGREEMENT DATED 28.3.1 995 BETWEEN THE ASSESSEE AND MR/ HERMESH DEVELOPER WAS FILED BY THE ASSESSEE ITSELF AND NOT AS DETECTED BY THE AO SO THAT IT CAN BE CONSTRUED THAT THE ASSESSEE HAS CONCEAL ED THE MATERIAL FACTS. SECONDLY, THE CLAIM OF THE ASSESSE E WAS IN RESPECT OF BUILDING NO.7 TO 9 AND THE REVISED COMM ENCEMENT CERTIFICATES WERE ISSUED BY THE LOCAL AUTHORITY IN RESPECT OF THESE BUILDINGS ON THE DATES WHICH ARE 23.2.1996, ITA NO. 2257/MUM/2010 (ASSESSMENT YEAR 2004-05) 5 30.12.1999, 20.5.2000, 31.3.2001, 10.10.2002 AND LA TEST WAS 23.1.2006. THESE FACTS WERE RECORDED BY THE AO I N THE ASSESSMENT ORDER AS WELL AS IN THE PENALTY ORDER IN PARAGRAPHS 7 OF HIS ORDER PASSED U/S 271(1) ( C) . THUS, IT IS CLEAR THAT THE CLAIM OF THE ASSESSEE IS BASED ON TH E MATERIAL AND EVIDENCE AND NOT BASED ON BOGUS AND ABSOLUTEL Y WRONG FOUNDATION. WHEN ALL THE PRIMARY FACTS AND INFORM ATIONS WERE DISCLOSED AND PRODUCED BY THE ASSESSEE BEFORE THE A O DURING THE ASSESSMENT PROCEEDINGS THEN IT CANNOT BE SAID THAT MAKING THE CLAIM U/S 80IB(10) WHICH WAS NOT FOUND A S ALLOWABLE AMOUNTS TO CONCEALMENT OF INCOME AND SUP PRESSED THE PARTICULARS OF INCOME. THEREFORE, THE CLAIM OF THE ASSESSEE WAS BONAFIDE AND BASED ON SOUND PROOF. F ROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCT (SUPRA), IT IS CLEAR THAT WHE N THE INFORMATION AND DETAILS GIVEN BY THE ASSESSEE IS NO T FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD OF GUILTY OF FURNISHING INACCURATE PARTICULARS AND RES ULTING LEVY OF PENALTY. RESPECTFULLY FOLLOWING THE DECISION OF TH E DECISION OF THE SUPREME COURT (SUPRA), AND IN VIEW OF THE FIN DING OF THIS TRIBUNAL IN NIRMITI CONSTRUCTIONS (SUPRA), WE FIND THAT, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE PE NALTY IS NOT JUSTIFIED. ACCORDINGLY, WE DELETE THE PENALTY. ITA NO. 2257/MUM/2010 (ASSESSMENT YEAR 2004-05) 6 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28TH FEB, 2011 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI, DATED 25 TH FEB 2011 SRL:22211 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI