ASST CIT CEN CIR 45, MUMBAI V. THAKUR MHATRE UNITY JOINT VENTURE, MUMBAI

ITA 256/MUM/2014

• Counselvise Citation: 25619914 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: PALLAVI GUDKA
• Keywords: Bonafide belief; Retrospective amendment
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.256/M/2014 ASSESSMENT YEAR: 2009-10 ASSTT. CIT, CENT. CIR.-45, 6 TH FLOOR, ROOM NO.658, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. THAKUR MHATRE UNITY JOINT VENTURE, 1252, PUSHPANJALI APARTMENT, OLD PRABHADEVI ROAD, PRABHADEVI, MUMBAI 400 025 PAN: AAAAT4554F (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. PALLAVI GUDKA, A.R. REVENUE BY : SHRI NEIL PHILIP, D.R. DATE OF HEARING : 16.06.2015 DATE OF PRONOUNCEMENT : 16.06.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 09.10.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] AGITATING THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY WHICH WAS LEVIED BY THE ASSESSING OFFICER ( HEREINAFTER REFERRED TO AS THE AO) UNDER SECTION 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT IN THE ASSESSME NT PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, THE AO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IA(4) OF THE ACT BY HOLDIN G THAT THE ASSESSEE BEING A WORK CONTRACTOR WAS NOT ELIGIBLE FOR DEDUCTION UNDE R SECTION 80IA(4) OF THE ACT IN VIEW OF THE EXPLANATION TO THE SAID SECTION. THE ASSESSEE CONCEDED TO THE DISALLOWANCE OF DEDUCTION MADE BY THE AO AND DI D NOT PREFER ANY APPEAL. ITA NO.256/M/2014 M/S. THAKUR MHATRE UNITY JOINT VENTURE 2 THE AO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND SUBSEQUENTLY LEVIED PENALTY OF RS.19,71,820/-. 3. THE LD. CIT(A), HOWEVER, DELETED THE PENALTY FOL LOWING THE ORDER OF HIS PREDECESSOR ON THE IDENTICAL ISSUE OF LEVY OF PENAL TY FOR A.Y. 2002-03 TO 2006- 07 AND 2008-09. THE RELEVANT PART OF THE SAID ORDE R FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: 'I HAVE CAREFULLY EXAMINED THE FACTS OF THE CASE, T HE REASONS STATED IN THE ASSESSMENT ORDERS FOR DISALLOWING THE CLAIM MADE UN DER SECTION 801A OF THE I. T. ACT, THE REASONS STATED BY THE APPELLANT FOR ACC EPTING THE DECISION OF THE ASSESSING OFFICER WITH REGARD TO THE DISALLOWANCE O F THE CLAIMS U/S 80 IA OF THE I.T. ACT, THE STAND TAKEN BY THE A.O IN THE PENALTY AND VARIOUS CONTENTIONS RAISED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE APPELLANT IN THE WRITTEN SUBMISSIONS FILED DURING THE APPEAL HEARING PROCEEDINGS. IT . IS AN ADMITTED FACT THAT THE APPELLANT COMPANY HAS BEEN ENGAGED IN BUSINESS ACTI VITIES RELATING TO THE DEVELOPMENT OF INFRASTRUCTURE AS A CONTRACTOR. IT I S ALSO A FACT THAT THE APPELLANT COMPANY HAS BEEN MAKING CLAIMS FOR DEDUCTION U/S 80 IA OF THE I T ACT FOR THE LAST SEVERAL YEARS, ON THE GROUND THAT THE BUSINESS ACTIVITIES UNDERTAKEN ENTITLE IT TO SUCH A DEDUCTION. THE IMPORTANT POINT S TO BE CONSIDERED WHETHER OR NOT THERE EXISTED ANY REASONABLE BASIS FOR SUCH A CLAIM, HOW MUCH EVER CONTENTIOUS IT MAY BE. IT IS SEEN FROM THE FACTS OF THE CASE THAT THE NATURE OF THE CLAIM IS DEBATABLE AS EXAMINED IN THE HONORABLE ITA T DECISIONS SUCH AS M/S. OM METAL INFRAPROJECTS LTD. VS. CIT AND B.T. PATIL & SONS CONSTRUCTIONS, FURTHER THE RETROSPECTIVE AMENDMENTS MADE TO THE SUBSECTION 4 OF THE SECTION 80 IA INCOME TAX ACT, ALSO INDICATE THA T THERE WAS A NEED FOR SUCH CLARIFICATORY AMENDMENTS TO REMOVE ANY MISCONCEPTIO NS IN CLAIMING AND ARRIVING AT THE DEDUCTIONS ELIGIBLE U/S 80 IA OF THE INCOME TAX ACT. HAVING REGARD TO THESE FACTUAL AND LEGAL ASPECTS OF THE CASE, I CONSIDER T HAT THERE IS A MERIT IN THE GROUNDS OF APPEAL RAISED BY THE APPELLANT. THE DETAILED WRI TTEN SUBMISSIONS MADE IN SUPPORT OF THE GROUNDS OF APPEAL HAVE FURTHER SUPPO RTED THE GROUNDS OF APPEAL AND THE STAND OF THE APPELLANT THAT THE CLAI MS OF DEDUCTION MADE U/S 80 IA OF THE I T ACT DO NOT AMOUNT TO CONCEALMENT OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS INTENDED UNDER SECTION 271 (L)(C) OF THE I T ACT. THE DECISION OF THE HONORABLE SUPREME COURT CIT, AHMEDA BAD V/S RELIANCE PETROPRODUCTS PVT. LTD., (189) TAXMAN (322) IS APPL ICABLE TO THE FACTS OF THE CASE. AS HELD BY THE HONORABLE SUPREME COURT, DISALLOWANC E OF CERTAIN CLAIMS OF EXPENDITURE MADE IN THE RETURNS OF INCOME, DO NO T CONSTITUTE CONCEALMENT FOR PURPOSE OF LEVY OF PENALTY. IN THE CASE OF THE APPELLANT THE CLAIMS FOR DEDUCTION MADE IN SECTION 80 IA OF T HE INCOME TAX ACT ARE FOUND TO BE DEBATABLE. THE FACTS AS BROUGHT OUT IN THE ASSES SMENT ORDERS AS WELL AS IN THE PENALTY ORDERS IN RESPECT OF THE APPELLANT DO NOT E STABLISH ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS WHIC H HAS TO FORM THE BASIS FOR LEVY OF PENALTY U/S 271 (I) (C) OF THE INCOME TAX A CT. IN VIEW OF THE FORGOING I HEREBY ITA NO.256/M/2014 M/S. THAKUR MHATRE UNITY JOINT VENTURE 3 CANCEL THE PENALTIES LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF ALL THE ASSESSMENT YEARS.' 4. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT TO OUR NOTICE THAT THE REVENUE HAD CONTESTED THE SAID DELETION OF PENALTY BY THE L D. CIT(A) FOR EARLIER ASSESSMENT YEARS BY WAY OF APPEAL BEFORE THE TRIBUN AL. THE TRIBUNAL, VIDE ORDER DATED 30.04.13 PASSED IN ITA NO.325 TO 330/M/ 2011 VIDE THE CONSOLIDATED ORDER, HAS DELETED THE PENALTY WHILE R ELYING UPON THE ANOTHER DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEES GROUP CASE VIZ. DCIT VS. UNITY CHOPRA (JOINT VENTURE) IN ITA NO.322 TO 324/ M/2011 VIDE ORDER DATED 03.04.2013 OBSERVED AS UNDER: 5. WE HAVE CAREFULLY CONSIDERED THE FINDINGS OF TH E COMMISSIONER (APPEALS) AS WELL AS THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER AND THE DECISION OF THE TRIBUNAL IN ASSESSEE'S GROUP CASE CITED SUPRA RELIED UPON BY THE LEARNED COUNSEL. 6. AFTER GOING THROUGH THE DECISION OF THE TRIBUNAL , AS RELIED UPON BY THE BY THE LEARNED COUNSEL, WE FIND THAT IDENTIC AL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL WHEREIN THE SUBMISSIONS OF THE LEARNED COUNSEL HAS BEEN INCORPORATED BY THE TRIBUNAL IN THE FOLLOW ING MANNER:- 'AT THE OUTSET, ON MERITS, IT NEEDS MENTION THAT TH E APPELLANT'S CLAIM OF DEDUCTION U/S 80-IA OF THE ACT HAS BEEN REJECTED BY ASSESSING OFFICER BY RELYING SOLELY ON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF B. T. PATIL AND SONS. IN THIS REGARD, WE WOULD LIKE TO SUBMIT THAT AFTER THE DECISION OF THE SPECIAL BENCH THE DECISION OF THE B OMBAY HIGH COURT IN THE CASE OF ABVG HEAVY INDUSTRIES LTD. (32 2 ITR 323) HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80-IA ON SIM ILAR FACTS. AFTER THE SAID JUDGMENT, THE VARIOUS BENCHES OF THE HON'BLE TRIBUNAL HAVE ALLOWED THE CLAIM OF DEDUCTIO N U/S 80- IA OF THE ACT. FOR YOUR HONOURS READY REFERENCE, A FEW OF THE DECISIONS ARE MENTIONED BELOW: 1. PRATIBHA INDUSTRIES VS. ACIT FOR AYS. 2000-2001 TO 2005- 2006 IN ITA NOS. 2197 TO 2202/MUM/2008 DATED 19.4.2 012. 2. OM METALS INFRAPROJECTS LTD. VS. ADDL. CIT FOR AY. 2007-2008 IN ITA NO. 911/JP/2010 DATED 5.8.2011. 3. GVPR ENGINEERING VS. ACIT FOR AYS. 2004-2005 TO 200 8-2009 IN ITA NOS. 1482 TO 1485/HYD/2011 DATED 29.2.2012. ITA NO.256/M/2014 M/S. THAKUR MHATRE UNITY JOINT VENTURE 4 4. LAXMI CIVIL ENGG. P. LTD. VS. ADDL. CIT FOR AYS. 20 03-04 TO 2006- 2007 IN ITA NOS. 766 & 254/PN/08, 431 & 435/P N/07 DATED 8.6.2011. IN FACT ON STRENGTH OF ABOVE DECISION CLAIM OF APPE LLANT, EVEN ON MERIT (IN QUANTUM PROCEEDINGS) IS VALID AND SUST AINABLE. B) IN THE PRESENT CASE, THE AO HAS LEVIED PENALTY U S 271(1)(C) OF THE ACT. IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT THE ASSESSEE COMPANY WAS UNDER A BONAFIDE BELIEF THAT IT IS ELIG IBLE FOR DEDUCTION U/S 80-IA OF THE ACT. MOREOVER, FROM THE DECISIONS CITED ABOVE, IT IS CLEARLY EVIDENT THAT THE SAID IS SUE IS A HIGHLY DEBATABLE ONE. IT IS WELL SETTLED LAW THAT NO PENAL TY U/S 271(1)(C) CAN BE LEVIED WHEN THE ISSUE IS A DEBATABLE ONE. YO UR HONOURS, KIND ATTENTION IS INVITED TO THE DECISION OF THE HO N'BLE SUPREME COURT IN THECAE OF CIT VS. RELIANCE PETROPR ODUCTS (322 ITR 158) IN WHICH IT WAS HELD AS UNDER (HEAD N OTE): 'A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE I N LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING ACCURATE PARTICULARS REGARDING THE INCOME OF ASSESSEE. SUCH A CLAIM IN THE RETURN CANNOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS.' THE ABOVE DECISION OF THE APEX COURT HAS CONSIDERED THE DECISION OF UNION OF INDIA VS. DHARMENDRA TEXTILE P ROCESSORS (306 ITR 227). IN THE PRESENT CASE, ON INTERPRETATI ON OF SECTION 80-IA THE ASSESSEE TOOK A VIEW THAT HE IS A DEVELOP ER AND CLAIMED DEDUCTION U/S 80-IA OF THE ACT. FROM THE AB OVE DECISION, IT IS SETTLED LAW THAT IF THE APPELLANT M AKES A CLAIM UNDER A BONA-FIDE BELIEF THEN IT WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. IT NEEDS SPECIFIC MENTION T HAT THE APPELLANT HAS TAKEN A LEGAL VIEW AND NO PARTICULARS HAVE BEEN CONCEALED BY THE APPELLANT. FURTHER, THE CLAIM OF THE APPELLANT IS ALLOWABLE EVEN ON MERITS ON THE BASIS OF A THE ABOVE DECISIONS. IT CAN BE CONCLUDED THAT THE ISSUE IS A HIGHLY DEBATABLE ISSUE AND THE ASSESSEE HAS NEITHER FURNIS HED INACCURATE PARTICULARS NOR CONCEALED ANY INCOME AND HENCE, NO PENALTY CAN BE LEVIED U/S 271(1) OF THE ACT.' 7. THE TRIBUNAL, BASED ON THE AFORESAID SUBMISSIONS SO MADE BY THE LEARNED COUNSEL, DELETED THE PENALTY AFTER OBSERVIN G AND HOLDING AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORD ERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISIONS RELIED UPON BY THE LD REPRESENTATIVES OF BOTH THE PARTIES. IT IS A N UNDISPUTED FACT ITA NO.256/M/2014 M/S. THAKUR MHATRE UNITY JOINT VENTURE 5 THAT THE ASSESSEE COMPANY IS UNDER A BONA FIDE BELI EF THAT IT IS ELIGIBLE FOR DEDUCTION U/S 80-IA OF THE ACT AND THE SAME IS EVIDENT FROM THE CONDUCT OF THE ASSESSEE, WHO HAS N OT FILED APPEAL BEFORE THE CIT(A) AGAINST QUANTUM ADDITIONS. FROM THE ABOVE WRITE UP GIVEN BY THE ASSESSEE, IT IS EVIDENT THAT THE ASSESSEE WOULD HAVE WON THE APPEAL ON QUANTUM ADDIT IONS IF WERE TO FILE. THEREFORE, THE ATTAINING FINALITY ON THE Q UANTUM ADDITIONS AGAINST THE ASSESSEE IS NO ISSUE FOR CONFIRMING THE PENALTIES. AS SUCH THERE EXISTS DISPUTE ON THE DEBATABLE NATURE O F THE SAID PROVISIONS. AS PER THE JUDGMENT OF THE HON'BLE SUPR EME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD . (322 ITR 158), IT IS A SETTLED LAW THAT NO PENALTY SHOULD BE LEVIE D WHEN THE ISSUE IS A DEBATABLE ONE AND WHEN THE CLAIM IS WRONGLY MADE IN THE RETURN OF INCOME. CONSIDERING THE SETTLED NATURE OF THE ISSUE, CIT (A) HAS RIGHTLY DELETED THE PENALTY MADE BY THE AO U/S 271(1)(C) OF THE ACT AND IT DOES NOT CALL FOR ANY INTERFERENC E. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED.' 8. IN VIEW OF THE AFORESAID FINDINGS, WHICH ARE APP LICABLE MUTATIS MUTANDIS TO THE FACTS OF THE PRESENT CASE A LSO, WE UPHOLD THE ORDERS PASSED BY THE COMMISSIONER (APPEALS) DELETIN G THE PENALTY LEVIED UNDER SECTION 271(1)(C) FOR THE YEAR UNDER APPEAL A ND DISMISS THE GROUND RAISED BY THE REVENUE. 5. SINCE THE ISSUE INVOLVED IN THE PRESENT APPEAL I S IDENTICAL IN NATURE AND IS THEREFORE SQUARELY COVERED BY THE ABOVE FINDINGS OF THE TRIBUNAL GIVEN IN THE OWN CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEA RS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEARS, WE UPHOL D THE ORDERS OF THE LD. CIT(A) DELETING THE PENALTY LEVIED UNDER SECTION 27 1(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS THER EFORE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.06.2015. SD/- SD/- (R.C. SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.06.2015. * KISHORE, SR. P.S. ITA NO.256/M/2014 M/S. THAKUR MHATRE UNITY JOINT VENTURE 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.