ACIT 10(3), MUMBAI V. BHUMIRAJ HOMES P. LTD, NAVI MUMBAI

ITA 2869/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62556 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MOURYA; PRAVIN VARMA
• Assessee Lawyers: PRADIP N KAPASI
• Keywords: Bonafide belief; Competent authority
• Section: 143(3); 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO. 2869/M/2011 (AY: 2004-05) ITA NO.2870/M/2011 (AY: 2005-06) ACIT CIR 10(3), ROOM NO. 451, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. . APPELLANT VS. M/S. BHUMIRAJ HOMES P. LTD., D-2, BIG SPLASH SECTOR-17, VASHI, NAVI MUMBAI 400 705. PAN: AABCB6735H . RESPONDENT APPELLANT BY: SHRI PRAVIN VARMA & P.C. MOURYA RESPONDENT BY: SHRI PRADIP N KAPASI DATE OF HEARING: 17.5.2012 DATE OF ORDER:15.6.20 12 ORDER PER S.S. GODARA, JM: THESE TWO REVENUES APPEALS ARISE FROM ORDER OF LD. CIT (A) DATED 16.4.2010 DELETING PENALTY U/S 271(1)(C) OF THE ACT FOR ASSES SMENT YEARS 2004-05 AND 2005-06 RESPECTIVELY. 2. FACTS OF THE CASE IN AY 2004-05 ARE THAT IN ASSE SSMENT PROCEEDINGS WHICH WERE FINALIZED ON 31.3.2006 BY AO, DEDUCTION U/S 80-IB O F THE ACT WAS ALLOWED TO ASSESSEE OF RS. 2.23 CRORES. THEREAFTER, THE AO ISSUED REOPENING N OTICE AND REOPENED THE ASSESSMENT U/S 147 OF THE ACT. VIDE ORDER DATED 14.12.2007, AO WI THDREW THE DEDUCTION U/S 80-IB(10) 2 ITA NO. 2869/M/2011 (AY: 2004-05) ITA NO. 2870/M/2011 (AY: 2005-06) (SUPRA). THE REASON AS STATED WAS THAT ASSESSEES PROJECT IN QUESTION WAS RESIDENTIAL CUM COMMERCIAL WHICH DID NOT QUALIFY FOR DEDUCTION U/S 80-IB (10). 3. IN ASSESSEES APPEAL AGAINST THE REASSESSMENT OR DER, THE LD. CIT (A) ALSO CONFIRMED THE AOS FINDINGS VIDE ORDER DATED 23.1.2009. 4. ON THE OTHER SIDE, SINCE THE LD. CIT (A) HAD UPH ELD THE REASSESSMENT ORDER (SUPRA), PENALTY PROCEEDINGS COMMENCED AGAINST THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE, IT SUBMITTED ONLY THOSE FACTS WHICH HAD ALR EADY BEEN FILED DURING ASSESSMENT PROCEEDINGS. THE AO VIDE PENALTY ORDER DATED 29.3. 2010 HELD THAT ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OR JUSTIFICATION OF THE ALLOW ANCE IN HAND CLAIMED IN RETURN OF INCOME WHICH AMOUNTED TO FURNISHING INACCURATE PARTICULARS OF INCOME, SO, THERE WAS ENOUGH MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE HAD M ADE AN ATTEMPT TO EVADE THE TAXES BY CLAIMING WRONG DEDUCTION. FURTHER, THE AO PLACED R ELIANCE ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. DHARMENDRA PROCESSO RS 306 ITR 277 AND IMPOSED PENALTY OF RS. 80,30,820/- U/S 271(1)(C) OF THE ACT. 5. THE ASSESSEE WENT IN APPEAL AGAINST THE PENALTY ORDER. THE LD. CIT (A) HAS ACCEPTED THE SAME BY HOLDING THAT THE DISALLOWANCE IN QUESTION IN THE REASSESSMENT HAD BEEN ON THE BASIS OF MATERIAL WHICH WAS ALREADY ON RECORD AS THE ASSESSEE WAS OF BONAFIDE BELIEF THAT ITS CLAIM OF DEDUCTION U/S 80-IB WAS AL LOWABLE. THE CIT (A) HAS ALSO OBSERVED THAT AO HAD NOT BROUGHT ANY MATERIAL SO AS TO PROVE IT AS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR ANY CONTINUMOUS INTENTION OF THE ASSESSEE. THE CIT (A) WHILE DELETING THE PENALTY HAS ALSO RELIED ON THE HONBLE SUPREME COURT JUDGMENT IN CASE OF RELIANCE PETRO CHEMICALS LTD. 322 ITR 158. 3 ITA NO. 2869/M/2011 (AY: 2004-05) ITA NO. 2870/M/2011 (AY: 2005-06) 6. OPENING HIS ARGUMENTS, LD DR BEFORE US HAS SUBMI TTED THAT THE ASSESSEES CONDUCT IN CLAIMING WRONG DEDUCTION IS SQUARELY COVERED BY THE PENALTY PROVISIONS OF THE ACT. IN THIS REGARD, HE HAS PLACED RELIANCE ON PENALTY ORDER AND FINDINGS CONTAINED THEREIN AND PRAYED THAT SAME MAY BE UPHELD. 7. THE LD AR BEFORE US HAS OPPOSED THE REVENUES AR GUMENTS BY SUBMITTING THAT IN QUANTUM PROCEEDINGS, THE DISALLOWANCE IN QUESTION H AS ALREADY BEEN DELETED BY LD COORDINATE BENCH OF MUMBAI ITAT. HE HAS ALSO SUBMI TTED THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS ALSO UPHELD THE DELETION OF DISALLOW ANCE IN QUESTION VIDE ORDER DATED 29.11.2011 (COPIES OF THE ORDERS OF ITAT AND HONBL E HIGH COURT HAVE ALSO BEEN PRODUCED). IN THE LIGHT THEREOF, HE HAS PRAYED THAT THE PENALT Y IN QUESTION DOES NOT HAVE ANY LEGS TO STAND. 8. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES I N DETAIL. ADMITTEDLY, IN THE REOPENING PROCEEDINGS, THE AO MADE DISALLOWANCE OF THE CLAIM ALREADY ALLOWED U/S 80-IB OF THE ACT. IT HAS COME ON RECORD THAT IN QUANTUM PRO CEEDINGS, THE ASSESSEES APPEAL AGAINST THE DISALLOWANCE IN QUESTION HAS BEEN ACCEPTED BY C OORDINATE BENCH IN ITA NO. 2170/M/2009 DECIDED ON 25.3.2011, THE OPERATIVE PA RT READS AS UNDER. WE ARE NOT CONVINCED WITH THE SUBMISSION ADVANCED B Y THE LEARNED DEPARTMENTAL REPRESENTATIVE. ON A PERTINENT QUERY IT WAS ADMITTED BY HIM THAT THERE WAS NO EVIDENCE ABOUT THE COMMERCIAL ARE A NOT BEING ON THE GROUND FLOOR. IT, THEREFORE, DEPICTS THAT THE COMM ERCIAL AREA BEING SHOPS ETC. WERE SITUATED ON THE GROUND FLOOR OF THE BUILDING. IF THAT BE THE CASE THEN THE BUILT UP AREA FOR STAIRCASE AND PASSAGE, LIFT O R LIFT ROOM ARE TO BE CONSIDERED AS PART AND PARCEL OF RESIDENTIAL AREA B ECAUSE THESE ARE ONLY TO FACILITATE RESIDENTS FOR GOING UP AND COMING DOWN F ROM THE BUILDING. IT DOES NOT ASSIST SHOPS, IN ANY MANNER, TO FUNCTION WITH T HE HELP OF STAIRCASE, LIFT AREA, LIFT ROOM ETC. IN SUCH A SITUATION THE BUILT UP AREA COVERED UNDER 4 ITA NO. 2869/M/2011 (AY: 2004-05) ITA NO. 2870/M/2011 (AY: 2005-06) STAIRCASE, LIFT PASSAGE, LIFT ROOM ETC. HAS TO BE C ONSIDERED AS PART AND PARCEL OF RESIDENTIAL AREA AND NOT AS COMMERCIAL AREA. TH E LEARNED DEPARTMENTAL REPRESENTATIVE THEN CONTENDED ABOUT THE SIZE OF PLO T WHICH IS ADMITTEDLY MORE THAN ONE ACRE IN THIS CASE AS PER HIS CALCULAT ION. WE ARE UNABLE TO APPRECIATE THE VIEW POINT OF THE DEPARTMENT THAT TH E UN-BUILT UP AREA. IT IS OBVIOUS THAT THERE CANNOT BE 100% CONSTRUCTION ON A NY PLOT. SOME AREA HAS TO BE LEFT OPEN AS PER THE PLAN AND CONSTRUCTION CA N BE DONE ONLY AS PER THE SPECIFICATIONS APPROVED BY THE COMPETENT AUTHORITY. BY NO STRETCH OF IMAGINATION CAN AN OPEN AREA BE CONSIDERED AS PROPO RTIONATELY RELATABLE TO RESIDENTIAL AS WELL AS COMMERCIAL AREA. AS THE SIZ E OF THE PLOT IN THIS CASE IS MORE THAN ONE ACRE, CONDITION U/S 80-IB(10)(B) ALSO STANDS FULLY SATISFIED. INSOFAR AS THE RELIANCE OF THE KOLKATA BENCH ORDER IN BENGAL ABUJA HOUSING DEVELOPMENT LTD. (SUPRA) IS CONCERNED, WE ARE AGAIN UNABLE TO FIND ANY FINDING GIVEN BY THE TRIBUNAL WHICH COMES IN THE WA Y OF GRANTING DEDUCTION TO THE ASSESSEE IN CONSONANCE WITH THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. THE LEARNED DEPARTMENTAL REPRESENTATIV E HAS REFERRED TO CERTAIN SUBMISSIONS MADE BEFORE THE KOLKATA BENCH BUT WAS U NABLE TO POINT OUT THE RELEVANT PARTS OF THE TRIBUNAL ORDER WHEREIN SUCH S UBMISSIONS HAVE BEEN ACCEPTED. WE ARE FURTHER NOT CONVINCED WITH THE CO NTENTION PUT FORTH BY HIM THAT ONLY THE HOUSING PROJECTS SHOULD BE CONSIDER ED AS ELIGIBLE FOR DEDUCTION WHICH, IN HIS OPINION, EMERGES FROM THE P LAIN READING OF SUB- SECTION (10) OF SECTION 80-IB. THE REASON IS OBVIO US THAT THE HONBLE JURISDICTIONAL HIGH COURT, AFTER THOROUGH ANALYSIS OF THE PROVISION, HAS HELD THAT DEDUCTION IS ELIGIBLE TO HOUSING PROJECT APPRO VED BY THE LOCAL AUTHORITY AS SUCH OR AS RESIDENTIAL PLUS COMMERCIAL PROJECT HAV ING RESIDENTIAL AS WELL AS COMMERCIAL UNITS TO THE EXTENT PERMITTED UNDER THE DC RULES. AS THE ASSESSEE ALL THE RELEVANT CONDITIONS FOR THE GRANT OF DEDUCTION UNDER THIS SECTION, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN REFUSING TO GRANT DEDUCTION ACCORDINGL Y. SINCE, THE PRESENT PROCEEDINGS ARE EMERGING FROM NO TICE U/S 148 AND THE ASSESSMENT HAS BEEN FRAMED U/S 143(3) R.W.S. 14 7, THE ASSESSEE CAN BE ALLOWED DEDUCTION U/S 80-IB (10) ONLY TO THE EXTENT IT WAS DISALLOWED IN THE PRESENT PROCEEDINGS WHICH AMOUNTS TO RS. 2,23,85,57 1. INSOFAR AS THE 5 ITA NO. 2869/M/2011 (AY: 2004-05) ITA NO. 2870/M/2011 (AY: 2005-06) DISALLOWANCE OF DEDUCTION TO THE TUNE OF RS. 31,70, 650/- IS CONCERNED, THE SAME CANNOT BE CONFERRED ON THE ASSESSEE FOR THE RE ASON THAT IT WAS DISALLOWED IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) AND NO MATERIAL HAS BEEN BROUGHT TO OUR NOTICE TO INDICATE THAT SUCH ORDER HAS BEEN MODIFIED IN ANY MANNER. AS THE REASSESSMENT PROCEE DINGS ARE AIMED AT TAXING THE INCOME WHICH HAS ESCAPED ASSESSMENT, THE SE CANNOT BE TAKEN AS A TOOL FOR PUTTING THE ASSESSEE IN A BETTER POSITION THAN IN WHICH IT WAS BEFORE SUCH PROCEEDINGS. WE, THEREFORE, DIRECT TO ALLOW D EDUCTION U/S 80-IB (1) FOR RS. 2.23 CRORES AND ODD, WHICH HAS BEEN DISALLOWED IN THE PRESENT PROCEEDINGS. 9. WE ALSO FIND IT FROM THE PAPER BOOK THAT THE HON BLE BOMBAY HIGH COURT HAS ALSO UPHELD THE LD COORDINATE BENCH ORDER ON 29.11.2011 BY OBSERVING AS UNDER:- COUNSEL FOR THE APPELLANT STATES THAT THE QUESTION S SOUGHT TO BE RAISED IN THE APPEAL ARE COVERED AGAINST THE REVENUE BY THE DECIS ION OF THIS COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES REPORTED IN (2011) 333 IT R 289 (BOM). IN THIS VIEW OF THE MATTER, THE APPEAL IS DISMISSED WITH NO ORDER A S TO COSTS. 10. IN THE LIGHT OF OUR ABOVE DISCUSSION AND DEVELO PMENTS AS MENTIONED ABOVE, THERE EXISTS NO BASIS TO LEVY PENALTY U/S 271(1)(C) OF TH E ACT. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN CIT (A)S ORDER DELETING PENALTY. 11. THE APPEALS STAND REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.6.2012. SD/- SD/- (G.E. VEERABHADRAPPA) (S.S. GODARA) PRESIDENT J UDICIAL MEMBER DATE : 15.6.2012 AT :MUMBAI 6 ITA NO. 2869/M/2011 (AY: 2004-05) ITA NO. 2870/M/2011 (AY: 2005-06) OKK COPY TO : 1. ACIT CIR-10(3) MUMBAI. 2. M/S. BHUMIRAJ HOMES P. LTD. 3. THE CIT (A)-22, MUMBAI. 4. THE CIT CONCERNED. 5. THE DR B, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI