The DCIT, Circle-4, Baroda V. Shri Shailesh D. Patel, Baroda

ITA 2502/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94817 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RK GUPTA
• Assessee Lawyers: BHAVIN MARFATIA
• Section: 80IB

Judgement Text

I .T.A. NO.: 2502/AHD/11 ASSESSMENT YEAR: 2005 - 06 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM] I.T.A. NO. : 2502/AHD/11 ASSESSMENT YEAR : 2005 - 06 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4 , BARODA .APPELLANT VS. SHAILESH D PATEL . RESPONDENT SHARDA CONSTRUCTION 271, GIDC MAKARPURA BARODA [PAN: ACQPP7076D] APPEARANCES BY: R K GUPTA FOR THE APPELLANT BHAVIN MARFATIA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : OCTOBER 26 , 2015 DATE OF PRONOUNCING THE O RDER : DECEMBER 17 , 201 5 O R D E R PER PRAMOD KUMAR AM : 1. IN THIS DEPARTMENTAL APPEAL, THE CORRECTNESS OF LEARNED CIT(A) S ORDER DATED 5 TH JULY 2011 , IN THE MATTER OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, FOR THE ASS ESSMENT YEAR 2009 - 10, HAS BEEN CHALLENGED ON THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE PENALTY OF RS 12,91,665 LEVIED UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT CONSIDERIN G THE FACT THAT THE ASSESSEE HAD NOT FULFILLED ALL THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, THEREBY CLAIMING THE DEDUCTION WHICH WAS OTHERWISE NOT ALLOWABLE, RESULTING INTO FURNISHING OF INACCURATE PARTICULARS. I .T.A. NO.: 2502/AHD/11 ASSESSMENT YEAR: 2005 - 06 PAGE 2 OF 5 2. T O ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSE SSING OFFICER DECLINED THE ASSESSEE S CLAIM OF DEDUCTION OF RS 43,92,218 MADE UNDER SECTION 80IB OF THE AC T. WHILE DOING SO, HE SIMPLY FOLLOWED THE STAND TAKEN BY HIM, WITH RESPECT TO DEDUCTION UNDER SECTION 80IB, IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. BEYOND THAT, THERE WAS NO MENTION OF ANY INDEPENDENT REASONS FOR THE DISALLOWANCE. THE RELATED PORT ION OF THE ASSESSMENT ORDER READS AS FOLLOWS: IT IS SEEN THAT IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR ALSO, THE ASSESSEE S CLAIM FOR DEDUCTION UNDER SECTION 80IB HAS BEEN DISALLOWED. DURING THE COURSE OF THE PRESENT PROCEEDINGS ALSO, THE ASSESSEE HAS R EITERATED THE SAME ARGUMENTS AS PUT FORTH IN THE COURSE OF ASSESSMENMT PROCEEDINGS FOR THE ASSESSMENT YEAR 2004 - 05. IN VIEW OF THE DETAILED DISCUSSIONS MADE IN THE ASSESSMENT YEAR 2004 - 05, THE DEDUCTION CLAIMED UNDER SECTION 80IB, AMOUNTING TO RS 43,92,218 , IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, ARE SEPARATELY INITIATED . 3. SO FAR AS THE REASONS FOR WHICH THIS DISALLOWANCE WAS MADE FOR THE ASSESSMENT YEAR 2 004 - 05, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY A COORDINATE BENCH OF THIS TRIBUNAL. HOWEVER, THE DISALLOWANCE FOR THE ASSESSMENT YEAR 2005 - 06, I.E. THE ASSESSMENT YEAR BEFORE US, WAS UPHELD BY THIS TRIBUNAL ON THE GROUND THAT THE COMMERCIAL CO NSTRUCTION WAS IN EXCESS OF 5% OF TOTAL BUILT UP AREA, AND IN THE LIGHT OF THE A MENDMENT IN SECTION 80IB W.E.F. 1 ST APRIL 2005, THIS COMMERCIAL CONSTRUCTION IN EXCESS OF THE STATUTORY LIMIT RESULTS IN SECTION 80IB(10) DEDUCTION BEING DECLINED ALTOGETHER. IN EFFECT, THUS, IT WAS DECIDED AGAINST THE ASSESSEE ON A GROUND WHICH THE ASSESSING OFFICER HAD NOT EVEN TAKEN UP WHEN THE PENALTY WAS INITIATED. HON BLE JURISDICTIONAL HIGH COURT HAS ADMITTED THE APPEAL AGAINST THIS ORDER, AND FRAMED A SUBSTANTIAL QUEST ION OF LAW, AND THE MATTER IS PENDING BEFORE HON BLE HIGH COURT AS ON NOW. BE THAT AS IT MAY, UPON THE TRIBUNAL SO CONFIRMING THE DISALLOWANCE, THE PENALTY PROCEEDINGS WERE RESUMED BY THE ASSESSING OFFICER. WHEN IT WAS POINTED OUT I .T.A. NO.: 2502/AHD/11 ASSESSMENT YEAR: 2005 - 06 PAGE 3 OF 5 TO HIM THAT THE ASSESSM ENT ORDER FOR THE ASSESSMENT YEAR 2004 - 05, WHICH WAS BASIS OF THE DISALLOWANCE IN QUESTION, HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF THE SPECIAL BENCH DECISION IN THE CASE OF BRAHMA ASSOCIATES VS JCIT [ (2009) 119 ITD 255 (PUNE SB)], THE ASSESSING OFFICER STATED THAT AS THE MATTER IS SUB JUDICE BEFORE THE AO, THE FACTS OF THE ASSESSMENT YEAR 2004 - 05 CAN, IN NO WAY, BE MADE BASIS FOR DECIDING PENALTY UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 2005 - 06 . HE NOTED THAT IN ORDER TO CLAIM A DEDUCTION, THE ASSESSEE HAS TO FULFIL ALL THE CONDITIONS AND WHEN THESE CONDITIONS ARE NOT SATISFIED, AS IN THIS CASE, THE ASSESSEE IS NOT ENTITLED TO SUCH A DEDUCTION. CLAIMING A DEDUCTION, WHICH IS NOT OTHERWISE ALLO WABLE, AMOUNTS TO FURNISHING THE INACCURATE PARTICULARS. HE THUS HELD THAT THE PENALTY UNDER SECTION 271(1)(C) IS IMPOSABLE ON THE FACTS OF THIS CASE. ACCORDINGLY, THE ASSESSING OFFICER PROCEEDED TO IMPOSE A PENALTY OF RS 12,91,665 WHICH WAS EQUIVALENT T O THE TAX SOUGHT TO BE EVADED BY MAKING INCORRECT CLAIM OF DEDUCTION UNDER SECTION 80IB(10). AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE SAID PENALTY MAINLY ON THE GROUND THAT THE REASONS FOR WHICH RELATED DISALLOWANC E WAS MADE WAS ALTOGETHER DIFFERENT FROM THE REASONS FOR WHICH THE RELATED DISALLOWANCE WAS CONFIRMED IN APPEAL. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT THE VERY BASIS FOR WHICH THE DEDUCTION UNDER SECTION 80IB WAS DECLINED BY THE ASSESSING OFFICER WAS NOT GOOD IN LA W, EVEN THOUGH THE DISALLOWANCE HAS BEEN CONFIRMED IN APPEAL FOR DIFFERENT REASONS. THE LEGAL ISSUE, ON THE BASIS OF WHICH DEDUCTION WAS DECLINED IN THE ASSESSMENT YEAR 2004 - 05 AND WHICH IS THE FOUNDATION OF THIS DISALLOWANCE - AS PER THE OBSERVATIONS OF TH E ASSESSING OFFICER EXTRACTED EARLIER IN THIS ORDER, IS RESOLVED IN FAVOUR OF THE I .T.A. NO.: 2502/AHD/11 ASSESSMENT YEAR: 2005 - 06 PAGE 4 OF 5 ASSESSEE BY A SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) AND THE RELIEF SO GRANTED HAS ATTAINED FINALITY AS REVENUE S APPEAL, AGAINST HON BLE BOM BAY HIGH COURT S UPHOLDING, AND IN FACT ENHANCING, THE RELIEF GRANTED BY THE TRIBUNAL, HAS BEEN DISMISSED VIDE JUDGMENT DATED 30 TH APRIL 2015 IN THE CASES OF CIT PUNE VS VEENA DEVELOPERS & OTHERS. THE QUESTION OF COMMERCIAL CONSTRUCTION BEING IN EXCESS OF LIMITS SPECIFIED WITH EFFECT FROM THE ASSESSMENT YEAR 2005 - 06 WAS TAKEN UP FOR THE FIRST TIME BY THE CIT(A) WHICH WAS MUCH AFTER THE PRESENT PENALTY PROCEEDINGS WERE INITIATED. ALL THE ISSUES RAISED AGAINST THE ADMISSIBILITY OF CLAIM OF DEDUCTION UNDER SECTION 80IB(10), AS RAISED TILL THE POINT OF TIME WHEN THE PENALTY PROCEEDINGS WERE INITIATED, HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE MATTER HAS REACHED FINALITY IN THAT RESPECT. IN OUR CONSIDERED VIEW, IN SUCH A SITUATION, IT CANNOT BE OPE N TO THE ASSESSING OFFICER TO IMPOSE PENALTY UNDER SECTION 271(1)(C). IN THE PRESENT CASE, THERE IS NOTHING MORE THAN THE FACT OF THE RELATED DISALLOWANCE HAVING BEEN CONFIRMED BY THIS TRIBUNAL WHICH SEEKS TO JUSTIFY THE IMPUGNED PENALTY, BUT THEN, AS IS ELEMENTARY, A MERE DISALLOWANCE PER SE CANNOT JUSTIFY THE CONCEALMENT PENALTY. 6. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTE R. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON 17 TH DAY OF DECEMBER, 2015. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCO UNTANT MEMBER) DATED: THE 17 TH DAY OF DECEMBER , 201 5 . I .T.A. NO.: 2502/AHD/11 ASSESSMENT YEAR: 2005 - 06 PAGE 5 OF 5 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD