The ITO, Ward-2(3), Baroda V. Aakar Associates, Baroda

ITA 3516/AHD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50719 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Section: 80IB; 2

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , , , , !' !' !' !', , , , #$ #$ #$ #$ %&' ( %&' ( %&' ( %&' (, , , , ) ) ) ) & ' & ' & ' & ' BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.3516/AHD/2010 WITH CO. NO.29/AHD/2011 [ASSTT.YEAR : 2005-2006] ITO, WARD-2(3) BARODA. /VS. M/S.AAKAR ASSOCIATES 23, SAHITYA BUNGLOWS B/H. TAKSH COMPLEX, VASNA ROAD BARODA. ( (( (+, +, +, +, / APPELLANT) ( (( (-.+, -.+, -.+, -.+, / RESPONDENT) ) / 0 &/ REVENUE BY : SHRI VINOD TANWANI 23 / 0 &/ ASSESSEE BY : SHRI M.K. PATEL 45 / 36/ DATE OF HEARING : 30 TH SEPTEMBER, 2011 789 / 36/ DATE OF PRONOUNCEMENT : 30 TH SEPTEMBER, 2011 &' / O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS IS REVENUES APPEAL AND ASSESSEES CO AGAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, BARODA ARISING OUT OF THE ORDER OF THE ASSESSING OF FICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ONLY GROUND RAISED IN THE REVENUES APPEAL I S AGAINST REDUCTION IN PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. WHILE ONLY GROUND IN THE ASSESSEES CO IS AGAINST THE PART CONFIRMATION OF T HE PENALTY BY THE CIT(A). 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE FACTS OF THE CASE ARE THAT THE ASSESSEE CL AIMED DEDUCTION UNDER SECTION 80IB(10) AMOUNTING TO RS.29,78,620/- WHICH WAS DISA LLOWED BY THE AO. THE AO ALSO LEVIED PENALTY UNDER SECTION 271(1)(C) OF T HE ACT IN RESPECT OF THE DISALLOWANCE OF CLAIM UNDER SECTION 80IB(10). IN T HE QUANTUM APPEAL, THE ITA NO.3516/AHD/2010 WITH CO. NO.29/AHD/2011 -2- ITAT FOUND IN PRINCIPLE THAT THE ASSESSEE IS ENTITL ED TO DEDUCTION UNDER SECTION80IB. HOWEVER, IT ALSO FOUND THAT OUT OF VA RIOUS RESIDENTIAL UNITS, TWO RESIDENTIAL UNITS WERE HAVING BUILT-UP AREA OF MORE THAN 1500 SQUARE FEETS. THEREFORE, THEY DIRECTED THE AO TO ALLOW THE PROPOR TIONATE DEDUCTION UNDER SECTION 80IB. THE RELEVANT FINDING OF THE ITAT R EADS AS UNDER: 5.5 IN THE LIGHT OF THE VIEW TAKEN IN THE AFORESAI D DECISIONS, ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY CONT RARY DECISION, WE HAVE NO HESITATION IN ALLOWING THE CLAIM OF THE ASS ESSEE FOR DEDUCTION U/S.80IB(10) OF THE ACT ON PROPORTIONATE BASIS I.E. ON THE PROFIT DERIVED FROM CONSTRUCTION OF THE RESIDENTIAL UNITS WHICH HA VE A BUILT UP AREA OF LESS THAN 1500 SQ.FT. ACCORDINGLY, THE AO IS DIREC TED TO ALLOW THE CLAIM FOR DEDUCTION U/S.80IB(10) OF THE ACT ON THE PROFIT DERIVED FROM CONSTRUCTION OF THE RESIDENTIAL UNITS WHICH HAVE A BUILT UP AREA OF LESS THAN 1500 SQ.FT. THE UNITS WITH BUILT AREA EXCEEDI NG 1500 SQ.FT. WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE A CT. SUBJECT TO THESE DIRECTIONS, GROUND NOS.1 TO 3 IN THE APPEAL ARE ALL OWED TO THE EXTENT INDICATED HEREINBEFORE. 4. THE CIT(A) FOUND THAT OUT OF VARIOUS FLATS SOLD BY THE ASSESSEE ONLY TWO FLATS I.E. FLAT NO.54 AND 55 WERE HAVING BUILT UP A REA OF MORE THAN 1500 SQUARE FTS. THE INCOME SHOWN ON SALE OF THESE TWO UNITS W AS RS.1,00,541/-. HE THEREFORE DIRECTED THE AO TO LEVY PENALTY ONLY IN R ESPECT OF THE PROFIT FROM SALE OF THESE TWO UNITS. THE REMAINING PENALTY WAS CANC ELLED BY HIM. BOTH THE PARTIES AGGRIEVED WITH THE ORDER OF THE CIT(A) ARE IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT MERELY BECAUSE THE ASSESSEES CLAIM FOR DEDUCT ION UNDER SECTION 80IB IN RESPECT OF TWO FLATS IS DENIED, IT CANNOT BE SAI D THAT THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME. HE POINTED OUT THAT THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB WAS BASED UPON THE AUDIT REPORT FROM A CHARTERED ACCOUN TANT. FLATS CONSTRUCTED BY THE ASSESSEE WERE BELOW 1500 SQ.FTS, BUT TWO BUYERS, WHO HAD PURCHASED TWO ADJOURNING FLATS CONVERTED THEM I NTO ONE FLAT BY ITA NO.3516/AHD/2010 WITH CO. NO.29/AHD/2011 -3- REMOVING THE WALL IN BETWEEN THE TWO FLATS PURCHASE D BY THEM. THAT BUILDING PLAN APPROVAL WAS FOR THE FLATS HAVING THE AREA BELOW 1500 SQUARE FTS. HE FURTHER SUBMITTED THAT EVEN IF ANY DEDUCTION IS DISALLOWED, NO PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C). IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 IT R 158 (SC). THE LEARNED DR RELIED UPON THE PENALTY ORDER. 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SO FAR AS D EPARTMENTS APPEAL IS CONCERNED, IT HAS NO MERIT BECAUSE WHEN THE ADDITIO N ITSELF IS DELETED BY THE ITAT IN QUANTUM APPEAL, THE PENALTY BASED UPON SUCH ADDITION CANNOT SURVIVE. THEREFORE, THE LIMITED QUESTION WHICH NEE DS ADJUDICATION AT OUR END IS WHETHER THE PENALTY UNDER SECTION 271(1)(C) SHOULD BE SUSTAINED IN RESPECT OF TWO FLATS FOR WHICH DEDUCTION UNDER SECT ION 80IB HAS BEEN DENIED IN THE QUANTUM APPEAL. WE FIND THAT THE ISS UE OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS CONSIDERED BY THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. (SUPRA), WHEREIN THE HONBLE APEX COURT AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS ' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY O F FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE ITA NO.3516/AHD/2010 WITH CO. NO.29/AHD/2011 -4- PARTICULARS. (EMPHASIS ADDED) THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . (EMPHASIS ADDED) THE RATIO OF THE ABOVE DECISION WOULD BE SQUARELY A PPLICABLE IN THE CASE OF THE ASSESSEE. IN THE CASE UNDER APPEAL BEFORE U S, THE PENALTY UNDER SECTION 271(1)(C) IS LEVIED MERELY BECAUSE THE ASSE SSEES CLAIM U/S.80IB IS PARTLY DISALLOWED. THE ASSESSEE HAS BASED ITS CL AIM AS PER AUDITED REPORT OF THE CHARTERED ACCOUNTANT. THEREFORE, IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE FURNISHED ANY INACCURATE OR ERRONEOUS INFORMATION. IN VIEW OF THE ABOVE, WE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE P ETROPRODUCTS LTD. (SUPRA) CANCEL THE PENALTY WHICH WAS PARTLY SUSTAIN ED BY THE CIT(A). REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED WHILE THE ASSESSEES CO IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&' ( %&' ( %&' ( %&' ( /BHAVNESH SAINI ) ) ) ) ) /JUDICIAL MEMBER ( . .. . . .. . G.D. AGARWAL) !' !' !' !' /VICE-PRESIDENT