The Asstt. Commissioner of Income Tax (Exemptions), Circle-1, Ahmedabad V. Gujarat Industrial Development Corporation, Gandhinagar

ITA 31/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5104 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 03-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Keywords: Charitable institution
• Section: 143(3); 12A; 12; 11

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 31/AHD/2017 / ASSESSMENT YEAR: 2010-11 ACIT (EXEMPTION) CIR.1, AHMEDABAD-1. VS GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION SECOND FLOOR, BLOCK NO.3, 4 AND 5 UDYOG BHAVAN GANDHINAGAR. PAN : AABCG 8033 D / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI SURENDRAKUMAR, CIT-DR ASSESSEE BY : SHRI S.N.SOPARKAR, SR.ADVOCATE / DATE OF HEARING : 31/07/2018 /DATE OF PRONOUNCEMENT : 01 /08/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A), GANDHINAGAR, AHMEDABAD DATED 25.10.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS.199,58,53,200/- IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 13.10.2010 SHOWING DEFICIT OF RS.396,77,2 1,645/-. AN ITA NO.31/AHD/2017 - 2 - ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT ON 28.3.2013 WHEREIN THE LD.AO HAS DETERMINED TOTAL INCOME OF THE ASSESSEE AT RS.1198,32,68,260/-. HE INITIATED PENA LTY PROCEEDINGS UNDER SECTION 271(1)(C) AND IMPOSED PENALTY. ON APPEAL, THE LD.CIT(A) HAS DELETED THE PENALTY. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ISSUE IN DISPUTE IS COVERED BY THE DECISION OF HONBLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORP ORATION, 83 TAXMANN.COM 366 (GUJARAT). THE LD.COUNSEL FOR THE A SSESSEE POINTED OUT THAT THE ASSESSEE-CORPORATION WAS CONSTITUTED UNDER THE PROVISIONS OF GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962 FOR THE PU RPOSE OF SECURING AND ASSISTING RAPID AND ORDERLY ESTABLISHMENT AND ORGAN IZATION OF INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN THE STATE OF GUJARA T. THE ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12A OF THE INCOM E TAX ACT AND IT WAS RECOGNISED AS A CHARITABLE INSTITUTION. THE LD.AO TOOK COGNIZANCE OF THE PROVISO APPENDED TO SECTION 2(15) OF THE ACT WHEREI N DEFINITION OF CHARITABLE PURPOSE HAS BEEN PROVIDED. HE HELD TH AT ACTIVITIES OF THE ASSESSEE WERE OUT OF THE PURVIEW OF SECTION 2(15), AS THE ASSESSEE WAS CARRYING OUT ADVANCEMENT OF ANY OTHER OBJECTS OF GE NERAL PUBLIC UTILITY, WHICH ARE NOT CHARITABLE IN NATURE. ACCORDINGLY, T HE LD.AO DID NOT GRANT EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. SIN CE BENEFIT OF SECTION 11 WAS DENIED TO THE ASSESSEE, THEREFORE, ITS INCOM E HAS INCREASED WHICH WAS CONSIDERED BY THE AO FOR VISITING THE ASSESSEE WITH PENALTY. 5. DISSATISFIED WITH THE TREATMENT GIVEN BY THE AO IN THE QUANTUM PROCEEDINGS, THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE TRIBUNAL. THE TRIBUNAL HAS ACCEPTED THE CONTENTIONS OF THE AS SESSEE AND HELD THAT IT ITA NO.31/AHD/2017 - 3 - IS A CHARITABLE INSTITUTION. IT IS ENTITLED FOR TH E BENEFIT UNDER SECTION 11 AND 12. DISSATISFIED WITH THE ORDER OF THE TRIBUNAL, R EVENUE WENT IN APPEAL BEFORE THE HONBLE HIGH COURT. BUT HONBLE HIGH CO URT HAS UPHELD VIEW OF THE TRIBUNAL AND HELD THAT THE ASSESSEE IS A CHA RITABLE INSTITUTION AND ENTITLED FOR BENEFIT UNDER SECTIONS 11 AND 12. ON THE STRENGTH OF THIS ORDER THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ADDITIONS HAVE BEEN DELETED BY THE HONBLE HIGH COURT BY GIVING BENEFIT S OF SECTIONS 11 AND 12 TO THE ASSESSEE, THUS NO PENALTY IS IMPOSABLE UP ON THE ASSESSEE. THE LD.DR, ON THE OTHER HAND, WAS UNABLE TO CONTROVERT CONTENTIONS OF THE ASSESSEE. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD CAREFULLY. FACTUAL POSITION OF THE PRESENT CASE UP TO THE STAGE OF HONBLE GUJARAT HIGH COURT HAS NOT BEEN DISPUTED BY THE REV ENUE WHEREIN ASSESSEE-CORPORATION HELD TO BE A CHARITABLE INSTIT UTION AND ENTITLED FOR BENEFITS UNDER SECTION 11 AND 12, CONSEQUENTLY ADDI TION ON WHICH IMPUGNED PENALTY WAS IMPOSED STANDS ELIMINATED. WE FIND THAT SUB- CLAUSE (III) OF SECTION 271(1)(C) PROVIDES MECHANIS M FOR QUANTIFICATION OF PENALTY. IT CONTEMPLATES THAT THE ASSESSEE WOULD B E DIRECTED TO PAY A SUM IN ADDITION TO TAXES, IF ANY, PAYABLE BY HIM, WHICH SHALL NOT BE LESS THAN THE ADDITION BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIFICATION OF THE PENALTY IS DEPENDED UPON THE ADDITION MADE TO THE I NCOME OF THE ASSESSEE. IN THE INSTANT CASE ADDITION STANDS DELETED BY ORDE R OF THE HONBLE GUJARAT HIGH COURT CITED SUPRA, THEREFORE LD.CIT(A) HAS RIG HTLY DELETED THE PENALTY UNDER SECTION 271(1)(C). IN VIEW OF THIS, WE CONFI RM THE ORDER OF THE ITA NO.31/AHD/2017 - 4 - LD.CIT(A) IN CANCELING THE IMPUGNED PENALTY AND REJ ECT GROUNDS OF APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST, 2018. SD/- (WASEEM AHMED) ACCOUNTANT MEMBER SD/- (RAJPAL YADAV) JUDICIAL MEMBER