Shri Prafulchandra J.Agarwal, Ahmedabad V. The Dy.CIT.,(OSD)Circle-9, Ahmedabad

ITA 2910/AHD/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9824 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 19-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice; Reason to believe
• Section: 80IB

Judgement Text

I.T.A. NO . 2910 /AHD/201 1 A SSESSMENT Y EAR: 20 06 - 07 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 2910 /AHD/ 20 1 1 ASSESSMENT Y EAR : 200 6 - 07 PRAFUL CHANDRA J. AGARWAL .... . ...... . ... . APPELLANT PROP. AGARWAL ENTERPRISES, 4 TH FLOOR, KADAM , N EAR RAJVANSH TOWER, BODAKDEV, AHMEDABAD - 380 054. [ PAN: A A BPA 3656 P ] VS. DEPUTY COMMISSIONER OF INCOME TAX (OSD) , CIRCLE 9 , AHMEDABAD. ... ............ . RESPONDENT APPEARANCES BY: S.N. DIVATIA , FOR THE APPE LLANT MADHUSUDAN , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 1 9 . 1 2 .2016 DATE OF PRONOUNCING THE ORDER : 20 .12 .2016 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 30 TH AUGUST, 2011 UPHOLDING PENALTY OF RS.3,07,603/ - IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME T A X ACT, 1961, FOR THE ASSESSMENT YEAR 2006 - 07. 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS : - 1.1 THE ORDER PASSED U/S.250 ON 30 - 8 - 20 11 BY CIT(A) - XV A'BAD PARTLY CONFIRMING THE PENALTY TO THE EXTENT OF RS.3,07,603 LEVIED U/S 271(1 )(C) ON 23.6.2010 FOR A.Y.2007 - 08 BY AC I T (OSD), CIR - 9, ABAD IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. I.T.A. NO . 2910 /AHD/201 1 A SSESSMENT Y EAR: 20 06 - 07 PAGE 2 OF 5 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD. C I T(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THAT THE APPELLANT HAD DEFAUL TED U/S.271( 1 )(C) IN FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED INCOME. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT NOT TO HAVE HELD THAT THE APPELLANT HAD COMMITTED DEFAULT U/S.271(L)(C). 2.3 THE ID. CIT(A) HAS FAILED TO APPRECIATE THAT THE CLAIM OF DEDUCTION U/S.80 - LB(10) IN THE ORIGINAL RETURN OF INCOME CANNOT BE SAID TO BE INCORRECT BECAUSE THE CONDITION OF COMPLETION OF THE PROJECT WAS YET TO BE FULFILLED AND THE APPELLANT HAD NO REASON TO BELIEVE THE SAME WOULD NOT BE FULFILLED. THE ID. CIT (A) OUGHT NOT TO HAVE REJECTED. THE EXPLANATION OF THE APPELLANT WITHOUT GIVING COGENT REASONING. IT IS THEREFORE PRAYED THAT THE PENALTY OF RS.3,07,603 CONFIRMED BY THE CIT(A) MAY BE CANCELLED. 3. TO ADJUDIC ATE ON THIS APPEAL, ONLY A FEW MATERIAL F ACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE IS ENGAGED IN THE BUSINESS AS DEVELOPER AND BUILDER. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE CLAIMED DEDUCTION UN D ER SECTION 80IB(10) IN RESPECT OF KANAK DHARA P ROJECT. ON 22 ND MAY 2008, I.E. MUCH AFTER THE SAID CLAIM W A S MADE VIDE RETURN OF INCOME FILED ON 27.12.2006 , A SURVEY WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE WHEREIN THE ASSESSEE ADMITTED THAT PROJECT WAS NOT COMPLETED WITHIN PERMITTED TIME AND THAT THE AREA OF UNITS WAS MUCH IN EXCESS OF MAXIMUM PERMISSIBLE AREA ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). ACCORDINGLY, DEDUCTION UNDER SECTION 80IB(10) WAS DECLARED. THE ASSESSEE WAS ALSO LEVIED A PENALTY @150% OF TAX SOUGHT TO BE AVOIDED IN RESPE CT OF THIS INCORRECT CLAIM. AGGRIEVED, ASSESSEE CARRIED THE MA T TER I N APPEAL BEFORE THE LEANED C I T ( A ) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN SECOND APPEAL BEFORE ME. 4. I 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 I.T.A. NO . 2910 /AHD/201 1 A SSESSMENT Y EAR: 20 06 - 07 PAGE 3 OF 5 5. I HAVE NOTED THAT, AS REGARDS THE CONSTRUCTED AREA BEING IN EXCESS OF 150 0 SQ . F T . , DEFENCE OF THE ASSESSEE IS THAT EACH UNIT WAS IN TWO PARTS, I.E. A & B, AND T HE INDIVIDUAL SIZE OF THESE TWO PARTS WAS LESS THAN 1,500 SQ FT. IT IS ALSO POINTED OUT THAT AT THE RELEVANT POINT OF TIME, THERE WAS NO BAR ON ALLOTMENT OF MORE THAN ONE UNIT TO A BUYER, AND AS SUCH THE ASSESSEE WAS JUSTIFIED IN SELLING TWO ADJACENT UNI TS TO A BUYER WHICH LEAD TO TOTAL AREA OF UNIT BEING IN EXCESS OF 1,500/ - SQ. FT. IT IS THUS CONTENDED THAT CLAIM OF THE ASSESSEE FOR DEDUCTION U/S . 80IB(10) WAS NOT MALAFI D E OR INCORRECT. THE ASSESSEE, HOWEVER, DID NOT PURSUE THE MATTER FURTHER FOR THE SAKE OF P E ACE OF MIND. AS FAR NON - COMPLETION OF PROJECT IN TIME, THE STAND OF THE ASSESSEE IS THAT AS AT THE TIME OF MAKING THE CLAIM, THE ASSESSEE DID HAVE TIME TO COMPLETE TH E PROJECT, AND, IT COULD NOT THEREFORE, BE SAID THAT CLAIM WAS INCORRECT AT THE POINT OF TIME WHEN IT WAS MADE. IT WAS ONLY DUE TO A TURN OF SUBSEQUENT EVENTS THAT THE CLAIM W A S RENDERED UNSUSTAINABLE IN LAW. IT IS THUS URGED THAT IT WAS NOT A FIT CASE FOR PENALTY. 6. I, HOWEVER, FIND THAT SO FAR AS DEDUCTION UNDER SECTION 80IB(1 0 ) IS CONCERNED, IT IS ONE OF THE CONDITION PRECEDENT THAT THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AREA OF ONE THOUSAND FIVE HUNDRED SQUARE FEET IN THIS CASE. THE LAYOUT MAP WHICH IS FILED BEFORE US SHOWS EACH UNIT DIVIDED INTO TWO PARTS BUT THAT D OES NOT MATTER SINCE WHAT IS RELEVANT IN TH E SIZE OF EACH UNIT. THERE IS NOTHING ON THE RECORD TO EVIDENCE THAT WHAT WAS SOLD TO THE BUYER WERE TWO SEPARATE UNITS ON STANDALONE BASIS, THAT THE AREA OF EACH SUCH UNIT WAS LESS THAN 1,500 SQ. F T. A ND IT W AS ONLY AT THE INITIATIVE OF THE BUYER THAT THOSE TWO SEPARATE PARTS WERE MERGED INTO ONE LARGER UNIT. QUITE TO THE CONTRARY, UNDISPUTED FACTS OF THE CASE SHOW OTHERWISE. DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE HAS UNAMBIGUOUSLY ADMITTED UN IT SIZE TO BE IN EXCESS OF 1,500 SQ. F T. A ND THAT HAS REMAINED UNCONTROVERTED POSITION ALL ALONG EXCEPT FOR THIS INNOVATIVE ARGUMENT TAKEN, FOR THE FIRST TIME, BEFORE US. THE RELEVANT QUESTION AND ANSWER IN THE STATEMENT RECORDED DURING SURVEY IS AS FOL LOWS : I.T.A. NO . 2910 /AHD/201 1 A SSESSMENT Y EAR: 20 06 - 07 PAGE 4 OF 5 Q.11 PLEASE STATE WHAT IS THE BUILT UP AREA OF THE BUNGALOWS OF KANAKDHARA SCHEME. A.11 THE APPROXIMATE BUILT UP AREA OF KANAKDHARA BUNGALOWS ARE AS UNDER : TYPE NO. OF BUNGALOWS AREA BUILT - UP (APPROX.) A 5 2819 SQ. FT. B 17 2291 SQ. FT. C 22 2108 SQ. FT. 7. CLEARLY, THEREFORE, THE ASSESSEE KNEW ALL ALONG THAT ACTUAL SIZE OF THE UNIT IS MORE THAN 1,500 SQ. F T. A ND THAT IS THE ADMITTED POSITION IN ALL THE PROCEEDINGS BEFORE THE AUTHORITIES BELOW. THE EXPLANATION NOW BEING GIVEN BY THE ASSESSEE IS , ACCORDINGLY, UNACCEPTABLE , FOR T HIS SHORT REASON OF BUILT UP AREA BEING IN EXCESS OF 1,500 SQ. F T. I N EACH UNIT AND THE ASSESSEE, ALL ALONG, AWARE ABOUT IT IN NO UNCERTAIN TERMS. THE CLAIM OF DEDUCTION UNDER SECTION 80IB WAS THUS INCORREC T AND IS INDEFENSIBLE. THE OTHER ISSUE I.E. PROJECT NOT BEING COMPLETED, W A S THUS NOT REALLY DECISIVE, INASMUCH AS EVEN WITHOUT THIS REASON, THE CLAIM OF DEDUCTION W A S CLEARLY INCORRECT AND INADMISSIBLE. 8. IN VIEW OF THE ABOVE DISCUSSIONS, IN MY CONSIDER ED VIEW, THE EXPLANATION OF THE ASSESSEE FOR MAKING CLAIM OF DEDUCTION UNDER SECTION 80IB(10) CANNOT BE ACCEPTED . THE LEARNED C IT(A) WAS, THEREFORE, QUITE JUSTIFIED IN CONFIRMING THE PENALTY. I UPHOLD THIS ACTION AND DECLINE TO INTERFERE IN THE MATTER. 9. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF DECEMBER , 201 6 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 20 TH DAY OF DECEMBER , 2016. PBN/* I.T.A. NO . 2910 /AHD/201 1 A SSESSMENT Y EAR: 20 06 - 07 PAGE 5 OF 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD