MANJU GUPTA, MUMBAI V. ASST. COMMISSIONER OF INCOME TAX CEN. CIR. -30, MUMBAI

ITA 5580/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9450 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Wrong claim

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I.T .A. NO . 5580 /MUM/20 1 3 ( / ASSESSMENT YEAR : 200 7 - 08 ) SMT.MANJU GUPTA, RAJA BAHADUR BUILDING, 28, B S MARG, FORT, MUMBAI - 400023 / VS. ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 30 , MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AASPG0264C / : APPELLANT BY: SHRI J P BAIRAGRA / RE SPONDENT BY : SHRI PREMAN AN D J / DATE OF HEARING : 20 . 3 .2015 / DATE OF PRONOUNCEMENT : 20.3 . 2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER : THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY OF RS.12.00 LAKHS LEVIED BY THE AO U/S 271(1)(C) OF TH E ACT FOR AY 2007 - 08. 2. THE FACTS WE NOTICE ARE THAT THE ASSESSEE IS A BUILDER AND HAD CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF ITS PROJECTS. A SEARCH WAS CONDUCTED IN THE HANDS OF THE ASSESSEE ON 30 - 11 - 2007, WHEREIN IT WAS NOTICED THAT T HE BUILT UP ARE OF TWO FLATS BEARING NO. B - 103 AND B - 903 HAD EXCEEDED THE STIPULATED LIMIT OF 1000 SQ. FT. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE BUILT UP AREA OF THE ABOVE SAID TWO FLATS WAS LESS THAN THE STIPULATED LIMIT, BUT IT WAS CONSTRAINED T O ADD 225 SQ. FT. OF THE AREA FROM THE ADJACENT FLATS IN ORDER TO SELL THESE TWO FLATS AND THE ITA NO. 5580 / M/ 1 3 2 SAME HAS RESULTED IN A BUILT UP AREA OF 1077 SQ. FT AND 1065 SQ. FT. RESPECTIVELY. THE SAID EXPLANATION WAS NOT ACCEPTABLE TO THE AO AND HENCE HE DISALLOWED THE ENTIRE CLAIM OF DEDUCTION MADE U/S 80IB(10). HOWEVER, THE LD CIT(A) CONFIRMED THE DISALLOWANCE ONLY TO THE EXTENT OF PROFIT PERTAINING TO THE ABOVE SAID TWO FLATS AND THUS ALLOWED THE DEDUCTION U/S 80IB(10) PROPORTIONATELY. THE ITAT ALSO CONFIRMED THE O RDER OF LD CIT(A) ON THIS ISSUE. 3. THEREAFTER, THE AO LEVIED PENALTY OF RS.12.00 LAKHS ON THE DISALLOWED PORTION OF THE DEDUCTION ON THE REASONING THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. THE LD CIT(A) ALSO CONFIRMED THE PENALTY ON TH E REASONING THAT THE ASSESSEE HAS VIOLATED THE MANDATORY CONDITION PRESCRIBED IN THE ACT. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. THE LD A.R PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. NALIN P SHAH (2013)(40 TAXMANN.COM 86) TO SUBMIT THAT THE WRONG CLAIM MADE UNDER THE ACT, IF OTHERWISE ALL THE DETAILS WERE FURNISHED IN THE RETURN OF INCOME, WOULD NOT AMOUNT FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD A.R SUB MITTED THAT THE HONBLE BOMBAY HIGH COURT, IN THE ABOVE SAID CASE, HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT VS.RELIANCE PETROPRODUCTS LTD (2010)(322 ITR 158)(SC). THE LD A.R SUBMITTED THAT THE CLAIM MADE BY T HE ASSESSEE U/S 80IB(10) OF THE ACT HAS ONLY BEEN SCALED DOWN IN THE APPELLATE PROCEEDINGS AND HENCE THE ASSESSEE COULD NOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THE ASSESSEE HAS ATTACHED THE TWO ROOMS TO THE TWO FLATS M ENTIONED ABOVE, ONLY AFTER COMPLETION OF CONSTRUCTION AND ALSO AFTER OBTAINING OCCUPATION CERTIFICATE. HE SUBMITTED THAT THE ASSESSEE HAS ALSO NOT SOUGHT FOR MODIFICATION OF THE APPROVED PLAN IN THIS REGARD AND HENCE AS PER THE APPROVED PLAN, THE BUILT UP AREA ITA NO. 5580 / M/ 1 3 3 OF ALL THE FLATS WERE LESS THAN THE STIPULATED LIMIT. HE FURTHER SUBMITTED THAT THE REVENUE CHALLENGED THE ORDER OF THE TRIBUNAL BY FILING APPEAL BEFORE THE HONBLE HIGH COURT OF BOMBAY, BUT THE SAME WAS DISMISSED. THE HONBLE HIGH COURT OBSERVED TH AT THE CRUCIAL OR RELEVANT DATE TO BE CONSIDERED FOR THE PURPOSES OF SEC. 80IB(10) IS THE DATE ON WHICH CONSTRUCTION HAS BEEN COMPLETED. IN THIS REGARD, THE HONBLE HIGH COURT RELIED UPON ITS DECISION RENDERED IN THE CASES OF CIT VS. HAPPY HOME ENTERPRISE S AND CIT VS. KANAKIA SPACES (P) LTD IN ITA NO.308OF 2012 DATED 19 - 09 - 2014. THE LD COUNSEL SUBMITTED THAT THE ASSESSEE HAS NOT VIOLATED ANY OF THE CONDITIONS PRESCRIBED U/S 80IB(10) OF THE ACT AS ON THE DATE OF COMPLETION OF CONSTRUCTION. ONLY SUBSEQUENT LY, THE ASSESSEE WAS CONSTRAINED TO MAKE THE ALTERATIONS IN ORDER TO SELL THE FLATS. ACCORDINGLY HE SUBMITTED THAT THERE WAS TWO POSSIBLE VIEWS WITH REGARD TO THE CLAIM MADE BY THE ASSESSEE AND FURTHER THE ASSESSEE HAS ALSO FURNISHED ALL THE DETAILS AND E XPLANATIONS, WHICH WERE NOT FOUND TO BE FALSE. ACCORDINGLY HE PRAYED THAT THE IMPUGNED PENALTY SHOULD BE DELETED. 6 . THE LD D.R, ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE HAS VIOLATED THE MANDATORY CONDITIONS PRESCRIBED IN SEC. 80IB(10) OF THE AC T IN RESPECT OF TWO FLATS AND THE SAID FACT CAME TO THE KNOWLEDGE OF THE DEPARTMENT DUE TO THE SEARCH OPERATIONS CONDUCTED IN THE HANDS OF THE ASSESSEE ON 30.11.2007. HE FURTHER SUBMITTED THAT THE DEDUCTION U/S 80IB(10) ITSELF IS CLAIMED AS PER LAW AND HE NCE THE SAME HAS TO BE CLAIMED STRICTLY IN ACCORDANCE WITH THE LAW. HE SUBMITTED THAT THE ASSESSEE HAS MADE THE ABOVE SAID CLAIM WITH THE FULL KNOWLEDGE THAT THE TWO FLATS DID NOT COMPLY WITH THE MANDATORY CONDITIONS PRESCRIBED IN SEC. 80IB(10) OF THE ACT AND THE SAME WAS NOT DISCLOSED IN THE RETURN OF INCOME. ACCORDINGLY HE CONTENDED THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. ITA NO. 5580 / M/ 1 3 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE ORDER PASSED BY THE TRIBUNAL MAKING PROPORTIONATE DISALLOWANCE FROM THE CLAIM FOR DEDUCTION U/S 80IB(10) RELATING TO THE TWO FLATS HAS SINCE BEEN CONFIRMED BY THE HONBLE HIGH COURT OF BOMBAY, VIDE ITS ORDER DATED 24.12.2014 PASSED IN INCOM E TAX APPEAL NO.173 OF 2013. IN THE SAID ORDER, THE HONBLE HIGH COURT HAS EXPRESSED THE VIEW THAT THE CRUCIAL OR RELEVANT DATE WAS THE DATE ON WHICH THE CONSTRUCTION WAS COMPLETED. IT IS THE SUBMISSION OF THE ASSESSEE THAT THE PLAN APPROVED BY THE COMPE TENT AUTHORITY FULLY COMPLIED WITH ALL THE CONDITIONS PRESCRIBED U/S 80IB(10) OF THE ACT. IT IS ALSO THE SUBMISSION OF THE ASSESSEE THE CONSTRUCTION WAS COMPLETED AS PER THE APPROVED PLAN. SUBSEQUENTLY, WHEN THE ASSESSEE COULD NOT SELL TWO FLATS, THEY WE RE MODIFIED AS PER THE DEMAND OF THE CUSTOMERS AND THE SAME HAS RESULTED IN A BUILT UP AREA OF 1077 SQ. FT. AND 1065 SQ.FT. SINCE THE CONSTRUCTION WAS COMPLETED IN ACCORDANCE WITH THE APPROVED PLAN, IT HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT ON ENTI RE PROFIT. NOW THE DECISION RENDERED BY THE HONBLE BOMBAY HIGH COURT IN THE ASSESSEES OWN CASE AS WELL IN THE CASES OF CIT VS. HAPPY HOME ENTERPRISES AND CIT VS. KANAKIA SPACES (P) LTD (SUPRA), IN FACT, SUPPORT THE VIEW TAKEN BY THE ASSESSEE, EVEN THOUG H THE ASSESSEE HAS ACCEPTED THE PROPORTIONATE DISALLOWANCE CONFIRMED BY THE TRIBUNAL. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE IMPUGNED ADDITION HAS BEEN MADE IN VIEW OF THE DEBATABLE NATURE OF THE ISSUE. OTHERWISE ALSO, WE NOTICE THAT THE A SSESSEE HAS OFFERED EXPLANATIONS AS TO WHY IT WAS CONSTRAINED TO MODIFY THE TWO FLATS, EVEN THOUGH THEY WERE CONSTRUCTED IN ACCORDANCE WITH THE APPROVED PLAN. THERE IS NO DENIAL OF THE FACT THAT THE CONSTRUCTION WAS COMPLETED IN ACCORDANCE WITH THE APPROV ED PLAN AND THE SAME COMPLIED WITH THE CONDITIONS PRESCRIBED U/S 80IB(10) OF THE ACT. UNDER THESE SET OF FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS NOT EXIGIBLE ON THE PROPORTIONATE DISALLOWANCE MADE OUT OF DEDUCTIO N U/S 80IB(10) OF THE ACT. ACCORDINGLY, WE SET ASIDE ITA NO. 5580 / M/ 1 3 5 THE ORDER OF LD CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED PENALTY. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPE N COURT ON 20 TH MAR , 2015 . 20 TH MAR , 201 5 SD SD ( . . / I.P. BANSAL ) ( . . , / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 20 TH MARCH , 201 5 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI