The ACIT, 1(1), Bhopal V. M/s. Deep Mohini, Bhopal

ITA 703/IND/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99042 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA; ASHISH GOEL
• Keywords: Question of law; Wrong claim
• Section: 142(1); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO. 703/IND/2013 A.Y. : 2006-07 ACIT, M/S.DEEP MOHINI, 1(1) VS 100-B,INDRAPURI, BHOPAL BHOPAL APPELLANT RESPONDENT P.A.N. NO A AA EFD2569B APPELLANT BY SHRI R.A. VERMA, SR.DR RESPONDENT BY SHRI ASHISH GOEL AND SHRI N. D. PATWA, ADVOCATES DATE OF HEARING : 16 .0 9 .2015 DATE OF PRONOUNCEMENT : 05 . 10 .2015 ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 2 2 O R D E R PER GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 23.09.2013 FOR THE ASSES SMENT YEAR 2006-07. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILDERS & LAND DEVELOPM ENT. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2006-0 7 ON 24.10.2006 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80IB(10) OF RS. 25,73,325/-. THE AO HAD ISSUED NOTICES U/S 143(2) AND 142(1) AND THEREAFTER COMPLETED THE ASSESSMENT DETERMINING TAXABLE INCOME AT RS. 25,73,325/-. IN THE ASSESSMENT ORDER THE AO DISALLOWED THE ASSESSEES C LAIM OF DEDUCTION U/S 80IB(10) OF RS. 25,73,325/- AND ADDED THE SAME INTO THE RETURNED INCOME. THE AO HAD ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S 80IB(L0) OF RS.25,73,325/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE FURN ISHED ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 3 3 APPEAL BEFORE CIT(A) AGAINST THE ASSESSMENT ORDER. THE LD. CIT (A) CONFIRMED THE DISALLOWANCE OF DEDUCTION U/S 80IB(10) MADE BY THE AO. FURTHER, THE DISALLOWANCE WAS ALSO CONFI RMED BY THE HON'BLE ITAT. THEREAFTER, THE AO AFTER ISSUING SHOW CAUSE NOTICE LEVIED PENALTY U/S 271(1)(C) OF RS. 8,00,000/- OBSERVING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICUL ARS REGARDING DEDUCTION U/S 80IB(10) OF RS.25,73,325/-. AGAINST THIS ORDER OF PENALTY U/S 271(L)(C), THE ASSESSEE FURNIS HED THIS APPEAL. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DELETED THE PENALTY BY OBSERVING AS UNDER :- 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF TH E APPELLANT AND FACTS OF THE CASE. IN THIS CASE, THE APPELLANT HAD CLAIMED DEDUCTION U/S 80IB(10) OF RS.25,73,325/- ON THE PROFITS DERIVED FROM THE HOUSING PROJECT NAMED AS 'DEEP MOHINI' WHICH WAS APPROVED O N 16.03.2004. THE CLAIM OF THE APPELLANT WAS REJECTED BY THE AO MAINLY ON THE GROUND THAT THE APPELLANT HAD ACTED MERELY AS A CONTRACTOR TO THE CUSTOMERS AND W AS ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 4 4 NOT A DEVELOPERS OF THE SAID HOUSING PROJECT AND TH AT THE CONSTRUCTION OF THE HOUSING PROJECT WAS NOT COMPLETED BY THE APPELLANT BEFORE THE SPECIFIED DAT E U/S 80IB(10)(A) I.E. ON OR BEFORE 31.03.2008. THE LD. C IT (A) THOUGH OBSERVED THAT THE APPELLANT HAD ACTED AS DEVELOPER OF THE HOUSING PROJECT AND NOT AS A CONTR ACTOR BUT DISALLOWED THE CLAIM OF THE APPELLANT FOR DEDUC TION ON THE GROUND OF NON-FULFILLMENT OF CONDITION LAID DOWN UNDER CLAUSE (A) OF SECTION 80IB(10) AS THE CONSTRU CTION OF THE HOUSING PROJECT WAS NOT COMPLETED ON OR BEFO RE 31.03.2008. THE HON'BLE ITAT ALSO CONFIRMED THE DECISION OF THE LD. CIT (A). THE AO LEVIED PENALTY U/S 271 (1)( C) ON THE GROUND THAT THE APPELLANT MADE A WRONG CLAIM OF DEDUCTION U/S 80IB(10) OF WHICH THE APPELLANT WAS NOT ELIGIBLE AND, HENCE, FURNISHED INACCURATE PARTICULARS OF INCOME. HERE IT MAY BE PERTINENT TO NOTE THAT APPELLANT HAD ALSO MADE CLAI M OF DEDUCTION U/S 801B(10) IN IMMEDIATE PRECEDING A. Y. 2005-06 AND THE CLAIM WAS UPHELD BY THE LD. CIT(A) IN APPEAL NO.CIT(A)-I,IBPL/IT- 446/07-08 FOR A.Y. 2005-06 ORDER DATED 02.07.2008. DURING THE YEAR UNDER CONSIDERATION ALSO THE APPELLANT HAD MADE CLAIM OF ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 5 5 DEDUCTION U/S 80IB(10) BASED ON AUDITORS REPORT IN FORM NO.10CCB UNDER RULE 18BBB WHICH WAS FURNISHED ALONGWITH THE RETURN. THE APPELLANT HAD FURNISHED ALL THE PARTICULARS RELATING TO THE CLAIM OF DEDUCTION U/S 80IB(10). SINCE, THE APPELLANT WAS ALLOWED DEDUCTION U/S 80IB(L0) IN THE IMMEDIATE PRECEDING A.Y. 2005-06 ON THE SAME PROJECT BY THE C IT (A), IT CANNOT BE SAID THAT THE APPELLANT HAD NOT M ADE A BONA FIDE CLAIM DURING YEAR UNDER CONSIDERATION. IT MAY ALSO BE NOTED THAT NO INFORMATION FURNISHED IN THE RETURN OF INCOME WAS FOUND TO BE INCORRECT OR INACCURATE A ND, THEREFORE, IT CANNOT BE SAID THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCE ALED PARTICULARS OF INCOME. IT MAY BE NOTED THAT BY ANY STRETCH OF IMAGINATION MAKING A BONA FIDE CLAIM IN LAW OF A DEDUCTION, EVEN IF IT WAS NOT ALL OWED, CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME. (I) THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HARSHVARDHAN & MINERALS LTD. 259 ITR 212 (RAJ.), ACCEPTED TRIBUNAL'S FINDING DELETING THE PENALTY HO LDING 'WHERE AN ARGUABLE, CONTROVERSIAL OR DEBATABLE ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 6 6 DEDUCTION IS CLAIMED, THE CLAIM COULD NOT BE SAID T O BE FALSE, OTHERWISE IT WOULD BE IMPOSSIBLE FOR ANY ASSESSEE TO RAISE ANY CLAIMS OR DEDUCTIONS WHICH MI GHT BE DEBATABLE, AND IT WAS NOT THE INTENTION OF THE LEGISLATURE TO MAKE PUNISHABLE SUCH CLAIMS, IF THEY WERE NOT ACCEPTED'. THE HIGH COURT AFFIRMED THE DECISION OF ITA T AND HELD THAT NO PENALTY WAS LEVI ABLE. (II) THE RAJASTHAN HIGH COURT IN THE CASE OF CHANDERPAL BAGGA VS. ITAT 261 ITR 67 (RAJ.), ALSO HELD THAT IF THE APPELLANT CLAIMED ANY EXEMPTION AFTER DISCLOSING RELEVANT BASIC FACTS AND UNDER IGNORANCE OF THE PROVISIONS OF THE ACT HAD NOT OFFERED AMOUNT OF TAX , PENALTY SHOULD NOT BE IMPOSED. (III) THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. RAJIV UDYOG 227 ITR 209 (MP) HELD THAT WHERE THE ASSESSEE CLAIMED THE DEDUCTION UNDER CHAP TER VIA AND THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER, IT CANNOT BE SAID TO BE CONCEALMENT OF INC OME AS PER EXPLANATION 1 TO SECTION 271 (1)( C) OF THE ACT . (IV) THE HON'BLE SUPREME COURT IN THE CASE OF REL IANCE PETRO PRODUCTS PVT.LTD. REPORTED IN 322 ITR 158 (S. C.) ALSO HELD, THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 7 7 SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE APPELLANT. IF THIS CONTENTION IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY THE AO FOR ANY REASON, THE APPELLANT WILL INVITE PE NALTY U/S 271 (1)( C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. IN ORDER TO EXPOSE THE APPELLANT TO TH E PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLA IM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS.' IN THE LIGHT OF RATIONALE LAID DOWN IN THE ABOVE JU DGEMENT BY THE HON'BLE SUPREME COURT, THE APPELLANT CANNOT BE HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF IN COME AS THE RELEVANT FACTS FOR THE CLAIM WERE DISCLOSED BY THE APPELLANT IN ITS RETURN & THE MERE MAKING OF CLAIM BY THE APPELLANT WHICH IS NOT SUSTAINABLE IN LAW WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME. HENCE, THE APPELLANT IS NOT LIABLE TO PENALTY U/S 2 71(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. CONSIDERING THE ABOVE DISCUSSED FACTUAL AND LEGAL ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 8 8 POSITION, IT IS HELD THAT THERE WAS NO CASE OF FURN ISHING OF INACCURATE PARTICULARS OF INCOME BY THE APPELLANT. THE PENALTY OF RS.8,00,000/-LEVIED U/S 271(1)(C) OF THE ACT FOR A.Y. 2006-07 IS, THEREFORE, CANCELLED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THIS CASE THE ASSESSEE WAS GRANTED 80IB DEDUCTION ON THE FACT THAT CERTIFICATE FROM LOCAL A UTHORITY WAS NOT OBTAINED AND PROJECT WAS NOT COMPLETED BEFORE 3 1 ST MARCH, 2008. THE QUANTUM APPEAL HAS BEEN ADMITTED BY THE H ON'BLE HIGH COURT OF MADHYA PRADESH, PRINCIPAL SEAT AT JAB ALPUR, AND SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED, WHICH READS AS UNDER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE TRIBUNAL WAS JUSTIFIED IN DISALLOWING THE CLAIM UNDER SECTION 80(IB) OF INCOME TAX BY SOLELY RELYING ON FACT THAT CERTIFICATE FROM LOCAL AUTHORI TY THAT PROJECT WAS COMPLETED BY 31.03.2008 WAS NOT ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 9 9 FILED WHEREAS THE ARCHITECTURE REPORT AND ACCOUNTS SHOWED THAT PROJECT WAS COMPLETED BEFORE 31.3.2008 6. SINCE THE QUANTUM APPEAL HAS BEEN ADMITTED BY THE HON'BLE HIGH COURT OF MADHYA PRADESH, PRINCIPAL SEA T AT JABALPUR, AND SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED, THE PENALTY IN THIS CASE CANNOT BE LEVIED AS THE IS SUE IS OF DEBATABLE NATURE, AND MERELY THE CLAIM WAS NOT ACCE PTED BY DEPARTMENT, SAME CANNOT BE A BASIS FOR LEVY OF PENA LTY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 5 TH OCTOBER, 2015. CPU ACIT VS. DEEP MOHINI, BHOPAL, I.T.A.NO. 703/IND/201 3- A.Y. 2006-07 10 10 510