Chandigarh Housing Board, Chandigarh V. Pr. CIT-1, Chandigarh

ITA 736/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9991 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-04-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ASHISH GUPTA
• Assessee Lawyers: A K JINDAL
• Keywords: Recovery proceedings; Bonafide belief; Question of law; Competent authority; Assessment record; TDS; Set aside
• Section: 271(1)(c); 143(3); 27; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , ! '# $ % & '# , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS.736/CHD/2018 / ASSESSMENT YEAR : 2010-11 & ./ ITA NOS.737/CHD/2018 / ASSESSMENT YEAR : 2011-12 CHANDIGARH HOUSING BOARD, SECTOR 9, CHANDIGARH. THE PR.CIT-I, CHANDIGARH. ./ PAN NO. AAALC0132H / APPELLANT / RESPONDENT ! /ASSESSEE BY : SHRI A.K.JINDAL, CA ' ! / REVENUE BY : DR.ASHISH GUPTA, CIT DR # $ % /DATE OF HEARING : 29.04.2019 &'() % /DATE OF PRONOUNCEMENT: 22.05.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: BOTH THE APPEALS HAVE BEEN FILED BY THE SAME ASSESS EE AGAINST SEPARATE ORDERS, EACH DATED 30.3.2018 , PASSED BY THE PR. COMMISSIONER OF INCOME TAX-1, CHANDIGARH (I N SHORT PR.CIT) U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 2 REFERRED TO AS ACT), PERTAINING TO ASSESSMENT YEARS 2010- 11 AND 2011-12. IT WAS COMMON GROUND THAT THE ISSUE IN BOTH THE APPEALS WAS IDENTICAL. THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER. FO R THE SAKE OF CONVENIENCE, WE SHALL BE DEALING WITH THE F ACTS IN ITA NO.736/CHD/2018 PERTAINING TO ASSESSMENT YEAR 2010-11 AND OUR DECISION RENDERED THEREIN WILL APPLY MUTATIS MUNDIS TO THE OTHER APPEAL ALSO. 2. BRIEFLY STATED, THE LD. PR.CIT, ON PERUSAL OF TH E RECORDS, FOUND THAT THE ORDER PASSED BY THE AO DROPPING PENALTY PROCEEDINGS INITIATED U/S 271(1) FOR THE I MPUGNED YEAR, WAS BASED ON INCORRECT APPRECIATION OF FACTS .THE LD.PR.CIT NOTED THAT THE ADDITION MADE IN THE ASSES SMENT ORDER PASSED FOR THE IMPUGNED YEAR, ON ACCOUNT OF I NTEREST EARNED ON FDRS OF RS.16,84,86,188/-, HAD BEEN CONFI RMED BOTH BY THE LD.CIT(A) AND THE I.T.A.T. THE LD. PR.C IT FURTHER NOTED THAT THE A.O. HAD DROPPED THE PENALTY PROCEE DINGS FINDING THE ISSUE IN THE IMPUGNED YEAR IDENTICAL T O THAT IN A.Y 2007-08, WHEREIN PENALTY LEVIED U/S 271(1)(C) O F THE ACT HAD BEEN DELETED BY THE ITAT, AND THE DEPARTMENT HA D NOT CONTESTED THE ORDER OF THE ITAT. LD. PR.CIT FURTHER NOTED ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 3 THAT THE AO HAD ALSO CONSIDERED THE FACT OF DELETIO N OF PENALTY IN A.Y 2008-09 AND 2009-10 BY THE ITAT, WHI LE DROPPING PENALTY PROCEEDINGS INITIATED FOR THE IMP UGNED YEAR. 3. THE LD.PR.CIT CONSIDERED THE ENTIRE FACTS REL ATING TO A.Y 2007-08,AS RECORDED BY THE AO IN HIS ORDER, AND FOUND THAT THE SAME WERE NOT IDENTICAL TO THE IMPUGNED YE AR. SHE NOTED THAT THE ITAT HAD DELETED PENALTY LEVIED U/S 271 OF THE ACT IN A.Y 2007-08 ,SINCE THE DISPUTED ADDITION , FOR THE YEAR HAD BEEN RESOLVED BY AMICABLE SETTLEMENT, ON THE DIRECTION OF THE HIGH COURT, WITH BOTH THE ASSESSEE AND THE DEPARTMENT AGREEING TO THE NON TAX REVENUE ALREADY PAID BY THE ASSESSEE AS BEING TREATED AS FULL AND FINAL PAY MENT TOWARDS INCOME TAX ,SUBJECT TO NO PENALTY BEING LEV IED ON THE ASSESSEE AND FURTHER THAT THE AGREEMENT HAD AT TAINED LEGAL SANCTITY BY THE ORDER OF THE SUPREME COURT. A S PER THE LD. PR.CIT, THE AGREEMENT BETWEEN THE PARTIES WAS S PECIFIC TO A.Y 2007-08 AND THEREFORE THE PENALTY HAD BEEN R IGHTLY DELETED BY THE ITAT IN THE SAID YEAR, BUT SINCE THE AGREEMENT DID NOT APPLY TO THE IMPUGNED YEAR, THERE WAS NO PARITY OF FACTS BETWEEN A.Y 2007-08 AND THE IMPUGNE D YEAR. THE LD. PR.CIT THEREFORE FOUND THAT THE AO HAD DROP PED THE ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 4 PENALTY PROCEEDINGS BY WRONGLY APPRECIATING THE FAC TS. SHE FURTHER NOTED THAT THE PENALTY DELETED BY THE ITAT FOR A.Y 2008-09 & 2009-10 HAD NOT BEEN ACCEPTED BY THE DEPARTMENT HAVING FILED APPEAL AGAINST THE SAME TO THE HIGH COURT. SHE WAS THEREFORE OF THE VIEW THAT THE ORDER OF THE AO DROPPING PENALTY PROCEEDINGS FOR THE IMPUGNED YEAR WAS ERRONEOUS SO AS TO CAUSE PREJUDICE TO THE REVENUE. ACCORDINGLY A SHOW CAUSE NOTICE WAS ISSUED TO THE A SSESSEE AS UNDER: 9. IN VIEW OF THE ABOVE FACTS, A SHOW CAUSE NOTICE VIDE THIS OFFICE LETTER DATED 2874 DATED 19.9.2016 WAS ISSUED TO THE ASSESSEE WHICH IS REPRODUCED AS UNDER : 'SUB: PROCEEDINGS U/S 263 OF THE INCOME TAX AC T, 1961 FOR THE A.Y. 2010-11 -REGARDING- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT YOU HAVE NOT OFFERED FOR TAXATION THE INTEREST INCOME FROM SOME FDRS ON RGCTP & JNNURM PROJECTS AMOUNTING TO RS. 16,84,86,188/-. AFTER CONSIDERING YOUR REPLY, THE A.O. ADDED BACK A SUM OF RS. 16,84,86,18 8/-. PENALTY PROCEEDINGS U/S 271(L)(C) WERE ALSO INITIAT ED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND A S HOW CAUSE NOTICE U/S 274 R.W.S. 271 WAS ISSUED ON 28.02.2013. 2. THE ADDITION MADE BY THE ASSESSING OFFICER WERE CONFIRMED BY THE CIT(A) VIDE ORDER DATED 22.08.201 4 IN APPEAL NO.135/13-14. THE HON'BLE I.T.A.T. CONFIRMED THE ORDER OF THE LD.CIT(A) VIDE ORDER DAT ED 03.08.2015. SUBSEQUENT TO THE ORDER OF THE HON'BLE ITAT IN THIS CASE, THE ASSESSING OFFICER DROPPED THE PEN ALTY ON THE ABOVE MENTIONED ISSUE VIDE ORDER DATED 29.02.2016. 3. PENALTY U/S 271(L)(C) OF THE IT. ACT WAS IMPOSED IN ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 5 YOUR CASE ON THE SAME ISSUE IN THE A.Y. 2008-09 & 2009-10. THOUGH THE APPEAL FILED BY YOU AGAINST THE IMPOSITION OF PENALTY HAS BEEN ALLOWED BY THE HON'B LE ITAT, HOWEVER, THE DECISION HAS NOT BEEN ACCEPTED B Y THE REVENUE AND FURTHER APPEALS FILED ARE PENDING BEFORE THE HON'BLE HIGH COURT FOR ADJUDICATION. THE PENALTY PROCEEDINGS INITIATED U/S 27L(L)(C) OF THE, I.T. ACT WERE WRONGLY DROPPED BY THE AO BY RELYING ON THE DECISION OF THE HON'BLE ITAT IN YOUR CASE FOR T HE A.Y. 2007-08 WHEREIN THE DECISION OF THE HON'BLE ITAT IN A.Y.2007- 08 WAS NOT CONTESTED ON THE BASIS OF RECORD OF DISCUSSION AND ORDER DATED 30.04.2014 OF THE HON'BL E SUPREME COURT. 5. THE ORDER PASSED BY THE AO DROPPING PENALTY INITIAT ED U/S 271(L)(C) OF THE I.T. ACT IN THE A.Y. 2010-11 I S THEREFORE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVEN UE. YOU ARE THEREFORE REQUESTED TO SHOW CAUSE AS TO WHY THE AFORESAID ORDER DROPPING THE PENALTY PROCEEDINGS U/ S 271(L)(C) OF THE I.T. ACT MAY NOT BE REVIEWED UNDER THE PROVISIONS OF SECTION 263 OF THE I.T. ACT. 6. YOUR CASE STANDS FIXED FOR HEARING ON 27.09.2016 AT 11:30 AM. IN CASE OF FAILURE ON YOUR PART TO COMPLY WITH THI S NOTICE, IT WOULD BE PRESUMED THAT YOU HAVE NOTHING TO SAY IN THIS REGARD AND ORDER U/S 263 WOULD BE PASSED ON ME RITS ON THE BASIS OF THE FACTS AS ARE PRESENTLY AVAILABLE O N RECORD.' 4. THE ASSESSEE SUBMITTED ITS REPLY TO THE NOTICE, STA TING THAT THE A.O. HAD TAKEN A PLAUSIBLE VIEW DROPPING T HE PENALTY AFTER CONSIDERING ALL THE FACTS OF THE CASE INCLUDING THE DIRECTIONS OF THE HON'BLE HIGH COURT FOR AN AMI CABLE SETTLEMENT, THE RECORD OF DISCUSSION(ROD) WHICH WAS THE MINUTES OF THE MEETING BETWEEN THE TWO PARTIES RECO RDING THE TERMS OF AGREEMENT, THE SANCTITY GRANTED TO IT BY THE HON'BLE SUPREME COURT AND THE OBSERVATIONS OF THE H ON'BLE SUPREME COURT THAT THE ROD MENTIONED THAT THE PARTI ES ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 6 HAD AGREED THAT NO PENALTY WOULD BE LEVIED ON THE A SSESSEE AND FURTHER CONSIDERING THE FACT THAT THE I.T.A.T. HAD DELETED THE PENALTY FOR ASSESSMENT YEARS 2007-08, 2 008-09 AND 2009-10. 5. THE LD. PR.CIT DISMISSED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ROD WAS SPECIFIC TO ASSE SSMENT YEAR 2007-08 ONLY AND DID NOT PROVIDE BLANKET IMMUN ITY TO THE ASSESSEE IN PERPETUITY. THAT FOR ASSESSMENT YEA RS 2008- 09 AND 2009-10 THE ORDERS OF THE I.T.A.T. DELETING THE PENALTY HAD BEEN CONTESTED BY THE DEPARTMENT BEFORE THE HON'BLE HIGH COURT. THAT THE A.O. HAD FAILED TO CHE CK THE ASSESSMENT RECORDS OF THE ASSESSEE TO ASCERTAIN THE CORRECT POSITION OF THE CASE AND DID NOT EXERCISE DUE DILIG ENCE IN EXAMINING THE RECORDS OF THE CASE AND ISSUES IN THE CURRENT YEARS. THE LD. PR.CIT THEREAFTER DEALT WITH THE ISS UE OF LEVY OF PENALTY ON MERITS AND HELD THAT SINCE THE ASSESS EE HAD NOT DECLARED INTEREST INCOME IN ITS PROFIT & LOSS A CCOUNT AND MERELY DECLARED IT IN ITS BALANCE SHEET WITHOUT ROUTING THE SAME THROUGH THE PROFIT & LOSS ACCOUNT, IT AMOU NTED TO CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD. PR.CIT HELD THAT IT WAS NOT A CASE OF MISTAKE OR OMISSION ON THE PART OF THE ASSE SSEE, RATHER IT WAS A WILLFUL MISREPRESENTATION OF FACTS BY THE ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 7 ASSESSEE AND THAT NOWHERE THERE WAS ANY INDICATION THAT THERE WAS A BONAFIDE BELIEF THAT THE PARTICULARS FU RNISHED WERE ACCURATE. SHE ACCORDINGLY, HELD THAT EVEN ON T HE MERITS OF THE CASE IT WAS CLEAR THAT THE PENALTY ER RONEOUSLY WAS NOT LEVIED, MAKING THE ORDER OF THE A.O. PREJUD ICIAL TO THE INTEREST OF THE REVENUE. THE LD. PR.CIT RECAPIT ULATED THE CASE OF THE ASSESSEE AT PARA 21 OF HER ORDER AS UNDER: 21. BASED ON THE ABOVE DISCUSSION, THE CASE OF THE ASSESSEE IS RECAPITULATED AS UNDER: JI) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD NOT OFFERED FOR TAXATION THE INTEREST INCOME FROM SOME FDRS ON RGCT P & JNNURM PROJECTS AMOUNTING TO RS. 16,84.86,188/- ON WHICH INCOME THE TDS HAD HOWEVER, BEEN CLAIMED. THU S, A CONTRARY POSITION OF DISOWNING 'INCOME BUT CLAIMI NG DEDUCTION FROM TAX OF TDS ON THE SAME INCOMES WHICH STOOD CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE WAS NOTICED. WHEN THE ASSESSING OFFICER QUESTIONED THE ASSESSEE ON THIS ISSUE, THE ASSESSEE EXPLAINED THAT SINCE THE FUNDS OF THESE FDRS BELONGED TO CHANDIGAR H ADMINISTRATION, THUS THE INTEREST INCOME ALSO BELON GED TO THEM AND ACCORDINGLY THE SAME WAS NOT DISCLOSED. AFTER DULY CONSIDERING THE REPLY OF THE ASSESSEE, T HE A.O. ADDED BACK A SUM OF RS. 16,84,86,188/-. PENALTY PROCEEDINGS U/S 271(L)(C) WERE ALSO INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. (II) FURTHER, AS STATED ABOVE, THIS ADDITION WAS CO NFIRMED BY THE CIT(APPEALS) AS WELL AS THE HON'BLE ITAT IN THE FAVOUR OF THE DEPARTMENT. HOWEVER, THE PENALTY PROCEEDINGS INITIATED U/S 271(L)(C) ON THIS ISSUE WERE SUBSEQUENTLY ERRON EOUSLY DROPPED BY THE ASSESSING OFFICER, BASED ON WRONG AP PRECIATION OF FACTS, (III) THE DEPARTMENT'S APPEALS BY THIS VERY OFFICE ARE PENDING BEFORE THE HON'BLE HIGH COURT ON THE IDENTI CAL ISSUE FOR A.Y. 2008-09 & A.Y. 2009-10. THESE FACTS WERE V ERIFIABLE ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 8 FROM THE ASSESSMENT RECORDS WHICH WERE IN POSSESSIO N OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHOULD HAV E CHECKED THE ASSESSMENT RECORDS TO ASCERTAIN THE COR RECT FACTUAL POSITION. THUS THE RELIANCE OF THE ASSESSIN G OFFICER ON AY 2007-08 (BY RELYING ON THE RECORD OF DISCUSSION WHI CH PERTAINED TO AY 2007-08 ONLY) WHILE DELETING THE PENALTY FOR THE YEAR UNDER CONSIDERATION IS MISPLACED AND THE PENALTY OR DER DATED 29.02.2016 PASSED BY THE ASSESSING OFFICER IS ERRONEOUS. (IV) MOREOVER, IN VIEW OF THE DETAILED DISCUSSION O N THE MERITS OF THE ISSUE INVOLVED, IT IS CLEAR THAT THE FACTS, ON WHICH THE PENALTY WAS ERRONEOUSLY NOT LEVIED, MAKE THE ORDER OF THE ASSESSING OFFICER PREJUDICIAL TO THE INTERES T OF REVENUE. FURTHER, THE CASE OF THE ASSESSEE IS COVERED UNDER EXPLANATION 1(A) OF 271(1) (C) OF THE IT ACT AS WELL AS VARIOUS JUDGMENTS OF HIGHER COURTS IN FAVOUR OF IMPOSING PENALTY AND THE ORDER OF THE ASSESSING OFFICER DROPPING THE PENALTY PROCEEDI NGS IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 6. IN VIEW OF THE SAME, THE LD. PR.CIT HELD THAT TH E A.O. HAD FAILED TO EXAMINE THE COMPLETE DIMENSION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO FAILED TO AP PLY THE CORRECT PROPOSITION OF LAW AND, THEREFORE, THE ORDE R OF THE A.O. DROPPING THE PENALTY U/S 271(1)(C) OF THE ACT FOR THE IMPUGNED YEAR WAS ERRONEOUS IN SO FAR AS IT WAS PRE JUDICIAL TO THE INTEREST OF THE REVENUE. SHE ACCORDINGLY CAN CELLED THE ORDER AND DIRECTED THE A.O. TO PASS A FRESH ORD ER IN ACCORDANCE WITH LAW. 7. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW & FACTS OF THE CASE IN INVOKING THE POWERS U/S 263 IN RESPECT OF ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 9 PENALTY ORDER DROPPING THE PENALTY U/S 271(L)(C) WH ICH IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERES T OF REVENUE. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW & FACTS OF THE CASE IN INVOKING THE POWERS U/S 263 AND PASSING THE ORDER DIRECTING THE ASSESSING OFFICER TO PASS THE PENALTY ORDER AFRESH WHICH IS BAD IN LAW AND UNCALLED FOR. 3. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, AMEN D OR MODIFY ANY GROUND OF APPEAL ON OR BEFORE THE DISPOS AL OF THE SAME. 8. BEFORE US THE LD. COUNSEL FOR ASSESSEE, REITERAT ING THE CONTENTION MADE BEFORE THE LD. PR.CIT ,STATED THAT THE VIEW AND THE OPINION OF THE A.O. WAS A PLAUSIBLE VIEW WH ICH IS EVIDENT FROM THE FACT THAT EVEN THE I.T.A.T. BASED ON THE SAME FACTS AND CIRCUMSTANCES HAD DELETED THE PENALT Y LEVIED IN ASSESSMENT YEARS 2008-09 AND 2009-10. THE LD. COUNSEL FOR ASSESSEE FURTHER POINTED OUT THAT IN SU BSEQUENT YEARS ALSO I.E. ASSESSMENT YEARS 2012-13 AND 2013-1 4, IDENTICAL PENALTY U/S 271(1)(C) OF THE ACT HAD BEEN LEVIED FOR CONCEALING THE PARTICULARS OF INCOME RELATING T O INTEREST EARNED ON FDRS WHICH HAD BEEN DELETED IN FIRST APPE AL BY THE LD.CIT(A) FOLLOWING THE SAME REASONING AS THAT OF THE A.O. IN DELETING THE PENALTY IN THE IMPUGNED YEAR. COPIES OF THE ORDERS WERE PLACED BEFORE US. LD.COUNSEL FOR THE ASSESSEE STATED THAT EVIDENTLY THE VIEW OF THE AO T HAT NO ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 10 PENALTY WAS LEVIABLE WAS A PLAUSIBLE VIEW AND THERE FORE THE ORDER PASSED BY HIM WAS NOT ERRONEOUS. 9. THE LD. DR, ON THE OTHER HAND HEAVILY RELIED UPO N THE ORDER OF THE LD. PR.CIT AND STATED THAT THE A.O. HA D ERRONEOUSLY APPRECIATED THE FACTS OF THE CASE WHILE HOLDING THAT THE ISSUE INVOLVED IN THE IMPUGNED YEAR WAS ID ENTICAL TO THAT IN ASSESSMENT YEAR 2007-08 AND THUS DROPPED THE PENALTY INITIATED. THE LD. DR STATED THAT THE FACTS OF ASSESSMENT YEAR 2007-08 WERE PECULIAR TO THAT YEAR ALONE AND AGREEMENT BETWEEN THE ASSESSEE AND THE REVENUE, NOTED IN ROD, FOR NOT LEVYING PENALTY WAS SPECIFIC TO THAT YEAR ALONE. LD.DR THEREFORE STATED THAT THE AO HAD WRONGLY APPRECIATED THE FACTS OF THE CASE FINDING IDENTITY WITH A.Y 2007-08 AND THUS ERRONEOUSLY DROPPED PENALTY PROCE EDINGS INITIATED. THE LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD.PR.CIT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY GONE THROUGH THE ORDER OF THE LD. PR.CIT. THE ISSUE BEFO RE US IS WHETHER THE ORDER PASSED BY THE A.O. DROPPING THE P ENALTY PROCEEDINGS INITIATED U/S 271(1)(C) OF THE ACT WAS ERRONEOUS ,FOR THE PURPOSES OF ASSUMING JURISDICTION BY THE L D.PR.CIT U/S 263 OF THE ACT TO REVISE THE SAME. ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 11 11. WE FIND THAT THE BASIS WITH THE LD. PR.CIT FOR HOLDING THE ORDER ERRONEOUS WAS THAT SHE FOUND THAT THE ASSUMPTION OF FACT BY THE AO THAT THE ISSUE IN THE IMPUGNED YEAR WAS IDENTICAL TO THAT IN A.Y 2007-08, BASED ON WHICH THE AO HAD DROPPED PENALTY PROCEEDINGS ON FINDING THAT ITAT HAD DELETED PENALTY FOR THE SAID YEAR, WAS PALPABLY INCORRECT. 12. THE LD.COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HAS CONTENDED THAT THE VIEW /OPINION FORMED BY THE AO T HAT NO PENALTY WAS LEVIABLE WAS A PLAUSIBLE VIEW BASED ON THE FACTS OF THE CASE. 13. THUS, WHILE AS PER THE LD.PR.CIT, BASED ON THE FACTS OF THE CASE, THE VIEW /OPINION OF THE AO WAS WHOLLY AN D PALPABLY INCORRECT, AS PER THE LD.COUNSEL FOR THE A SSESSEE THE VIEW WAS PLAUSIBLE. 14. TO ADJUDICATE THE ISSUE THEREFORE IT IS IMPERAT IVE TO FIRST CLEARLY BRING OUT THE UNDISPUTED FACTS OF THE CASE BASED ON WHICH THE OPINION /VIEW OF THE AO IS B ASED. THE SAME AS DERIVED FROM THE ORDER OF VARIOUS AUTHORITIES/COURTS/TRIBUNALS PLACED BEFORE US IS A S UNDER: 15. THE ASSESSEE, I.E. CHANDIGARH HOUSING BOARD (CH B) ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 12 WAS DESIGNATED BY THE CHANDIGARH ADMINISTRATION FOR CONSTRUCTION OF 25728 ONE ROOM TENEMENTS FOR THE SL UM DWELLERS AT VARIOUS LOCATIONS IN CHANDIGARH UNDER JAWAHARLAL NEHRU NATIONAL URBAN RENEWAL MISSION (JNNURM). IN ORDER TO RAISE FUNDS FOR THE SAID SCHE ME IT WAS DECIDED TO DEVELOP RAJIV GANDHI CHANDIGARH TECHNOL OGICAL PARK(RGCTP) ON PUBLIC PRIVATE PARTNERSHIP BASIS AND TO GENERATE FUNDS THROUGH AUCTION OF PLOTS IN THIS PAR K.TO FACILITATE THE DEVELOPMENT OF RGCTP THE ASSESSEE PU RCHASED CERTAIN LANDS FROM CHANDIGARH ADMINISTRATION AND AF TER NECESSARY FORMALITIES, SOME OF THE PLOTS WERE AUCTI ONED THROUGH PUBLIC AUCTION. IN THE BIDDING M/S PARSVANA TH DEVELOPERS LTD. WAS SOLD A PLOT AS A DEVELOPER OF R GCTP AND SOME FUNDS WERE RECEIVED FROM THEM IN A.Y 2007-08 . AS PER THE GUIDELINES ISSUED BY THE GOVERNMENT OF INDIA, T HE FUNDS WERE TO BE KEPT IN SUCH A WAY THAT THESE WERE AVAIL ABLE FOR CONSTRUCTION OF HOUSES AS AND WHEN REQUIRED AND SIMULTANEOUSLY THEY DID NOT REMAIN IDLE. THE FUNDS WERE KEPT IN THE NATIONALIZED BANKS AS FDRS AND EARNED INTEREST ON THE SAME. THE ASSESSEE NEITHER RETURNED INCOME F ROM THE SALE OF DEVELOPMENT RIGHTS NOR INTEREST EARNED ON F DRS TO TAX, TREATING ITSELF AS NODAL AGENCY OF CHANDIGARH ADMINISTRATION. ASSESSMENT U/S 143(3) OF THE ACT WA S ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 13 MADE FOR A.Y 2007-08 MAKING ADDITION OF RS.800,89,75,168/- BEING TAXABLE SURPLUS ON SALE OF DEVELOPMENT RIGHTS OF LAND TRANSFERRED TO THE ASSES SEE UNDER A CONVEYANCE DEED BY THE CHANDIGARH UT ADMINISTRATION, TO M/S PARSVNATH DEVELOPERS, BEING THE DEVELOPER IN RAJIV GANDHI CHANDIGARH TECHNOLOGY PAR K (RGCTP) ACCOUNT AND RS.9,01,57,799/- BEING INTERE ST INCOME ON FDRS. AGGRIEVED BY THE SAID ADDITIONS, TH E ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS ORDER DATED 09.07.2010 CONFIRMED THE SAME. THE ASSE SSEE FILED AN APPEAL BEFORE THE ITAT, CHANDIGARH WHO VID E THEIR ORDER DATED 14.03.2012 UPHELD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). AFTER THE REC EIPT OF THE ITAT'S ORDER, THE AO. IMPOSED PENALTY OF RS. 274,12,49,610/- U/S 271(1)(C) OF THE ACT PER ORDER DATED 30.03.2012. 16. FOR AY 2008-09, ASSESSMENT WAS MADE U/S 143(3) MAKING ADDITION AMOUNTING TO RS.38,04,06,051/- ON A CCOUNT OF INTEREST INCOME ON FDRS .THE ADDITION WAS CONF IRMED BOTH BY THE CIT(A) AND THE ITAT. HEARING IN THE APPEALS AGAINST QUANTUM ADDITIONS I N A.Y. 2007-2008 (ITA NO. 41/2012) AND A.Y. 2008-09 ( ITA NO. ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 14 284/2012) AND WRIT PETITION FILED BY ASSESSEE AGAIN ST RECOVERY PROCEEDINGS (CWP NO. 13364/2012) WERE FIXE D BEFORE THE HON'BLE PUNJAB & HARYANA HIGH ON 18.12.2 012. THE HON. COURT ADMITTED THESE APPEALS ON TWO SUBSTA NTIAL QUESTIONS OF LAW ,WHETHER THE ASSESSEE WAS AN AGENT /NODAL AGENCY OF CHANDIGARH ADMINISTRATION AS UNDER: '(I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FINDING RECORDED THAT NO PRINCIPAL-AGENT RELATIONSH IP EXISTED BETWEEN THE APPELLANT BOARD AND THE CHANDIGARH ADMINISTRATION IS NOT IN ACCORDANCE WIT H PRINCIPLES OF THE LAW OF AGENCY.? (II) WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE , THE FINDING RECORDED IN INTERPRETING THE PHRASE 'NODAL AGENCY' BETWEEN THE APPELLANT BOARD AND CHANDIGARH ADMINISTRATION IS NOT CORRECT AND THAT THE APPELLAN T IS AN AGENT OF CHANDIGARH ADMINISTRATION?' 17. WHILE ADMITTING THESE APPEALS, THE HON'BLE COUR T STAYED THE RECOVERY PROCEEDINGS IN THE CASE. CONSEQ UENT UPON THE STAY, THE DEPARTMENT FILED AN SLP(C) NO. 5 346/13 BEFORE THE HON'BLE SUPREME COURT. DURING THE PENDEN CY OF THE SLP, THE PROCEEDINGS BEFORE THE HON'BLE P & H H IGH COURT TRANSPIRED IN THE FORM OF ORDERS DATED 18.12. 2012 AND 21.02.2013 .THE HON'BLE HIGH COURT PASSED AN INTERI M ORDER DATED 18.12.2012 AND OBSERVED THAT THE MATTER COUL D BE RESOLVED BY MEDIATION BETWEEN THE ASSESSEE AND THE REVENUE, AS UNDER: ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 15 'AFTER HEARING LEARNED COUNSEL FOR THE PARTIES FOR SOME TIME, WE HAVE PUT ACROSS THE COUNSEL FOR BOTH PARTIES AS TO WHETHER THEY WOULD AGREE FOR REFERRING THE MATTER FOR MEDIATION, WHICH MAY PREFERABLY BE CONDUCTED BY EX-CHAIRMAN OF THE CENTRAL BOARD OF DIRECT TAXES ALONGWITH AN EXPERT MEDIATOR. COUNSEL OF PARTIES SAY THAT ONE MONTH TIME BE GIVEN THEM TO HAVE INSTRUCTIONS IN THE MATTER. WE, ACCORDINGLY, ADJOURN THE MATTER TO 31.01.2013' 18. IN THE ORDER DATED 21.02.2013 THE HON'BLE COURT OBSERVED THAT BOTH THE PARTIES BE SUMMONED FOR WORK ING OUT AN AMICABLE SETTLEMENT OF THE DISPUTE, AS UNDER: 'MR. RAMASWAMY, LEARNED SENIOR COUNSEL APPEARING FOR THE RESPONDENTS STATES THAT SINCE THERE IS NO PROVISION FOR MEDIATION UNDER THE INCOME TAX ACT, THAT COURSE OF ACTION, AS SUGGESTED IN OUR ORDERS DATED 18.12.2012, MAY NOT BE ACCEPTABLE TO THE RESPONDENTS. AT THE SAME TIME, WE ARE OF THE OPINION THAT THERE IS A POSSIBILITY OF AMICABLE SOLUTION OF THE DISPUTE HAVING REGARD TO ITS NATURE. IN THESE CIRCUMSTANCES, WE FEEL THAT THE SECRETARY, FINANCE MAY SUMMON BOTH THE PARTIES AND DISCUSS THE MATTER WITH THEM TO FIND OUT THE POSSIBLE SOLUTION, IF ANY. 19. CONSEQUENTLY, THE WORTHY FINANCE SECRETARY, GOV T. OF INDIA HELD A MEETING ON 12.03.2013 WITH THE MEMBER (L&C), CBDT, NEW DELHI, THE COMMISSIONER OF INCOME TAX-I, CHANDIGARH AND THE CHAIRMAN, CHANDIGARH HOUSING BOA RD ALONGWITH OTHER OFFICERS OF GOVT. OF INDIA. IN THE 'RECORD OF DISCUSSION' ISSUED BY THE FINANCE SECRETARY, IT WA S AGREED ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 16 THAT PRIMA FACIE IT APPEARED THAT TAX WAS PAYABLE O N THE TRANSACTION AND THE AMOUNT DEPOSITED AS NON TAX RE VENUE BE ADJUSTED IN INCOME TAX HEAD AND BE TREATED AS FINAL. IT WAS FURTHER AGREED THAT NO PENALTY BE LEVIED ON THE TAX DUES ,THOUGH THE FINAL DECISION WAS LEFT TO THE COMPETEN T AUTHORITY OR COURT. THE RELEVANT PORTION OF RECORD OF DISCUSSION IS REPRODUCED AS UNDER:- 'AFTER DETAILED DISCUSSIONS, IT WAS NOTED THAT SO F AR AS GOVERNMENT OF INDIA IS CONCERNED, IT IS REVENUE NEUTRAL, WHETH ER THE AMOUNT IS DEPOSITED AS NON-TAX REVENUE BY THE CHANDIGARH HOUS ING BOARD (AS ALREADY DIRECTED BY MHA TO THE UT ADMINISTRATIO N, CHANDIGARH), OR WHETHER THE AMOUNT IS DEPOSITED AS INCOME TAX REVENUE. HOWEVER, WHILE THE DEPOSIT AS TAX MAY NOT BE PREFERABLE, THE ISSUE IS THAT INCOME TAX IS LEGALLY LEVIABLE ON THE TRANSACTION, THEN NO WAIVER CAN BE CONSIDERED IN RESPECT OF THE PRINCIPAL TAX DUE, SINCE THAT WOULD HAVE LEGAL COMPLICATIONS. PRI MA-FACIE, SINCE THE LAND WAS TRANSFERRED THROUGH A CONVEYANCE DEED, IT WOULD APPEAR THAT INCOME TAX IS PAYABLE. ACCORDINGLY, THE ADJUSTMENT OF THE AMOUNT OF RS. 278 CRORES IN INCOME TAX HEAD MAY BE TREATED AS FINAL. AS AN AMICABLE VIEW, IT MAY BE APPROPRIATE T HAT PENALTY IS NOT LEVIED ON CHANDIGARH HOUSING BOARD IN RESPEC T OF THE INCOME TAX DUES. A DECISION IN THIS REGARD CAN HOWE VER BE TAKEN ONLY BY THE COMPETENT INCOME TAX AUTHORITY OR IN ANY APPELLATE PROCEEDINGS. HON'BLE HIGH COURT MAY CONSI DER PASSING APPROPRIATE ORDERS IN THIS REGARD. 20. IN THE MEANWHILE THE HON'BLE SUPREME COURT DECIDED THE SLP ON 30.04.2014 GIVING LEGAL SANCTITY TO THE RECORD OF DISCUSSION. THE DECISION OF THE HON'BLE SUPREME COURT IS AS UNDER:- 'HAVING REGARD TO THE SETTLEMENT REACHED BETWEEN TH E PARTIES, IT IS CLEAR THAT THE DISPUTE REGARDING PAY MENT OF ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 17 TAX BY THE CHANDIGARH HOUSING BOARD TO THE INCOME T AX DEPARTMENT STANDS RESOLVED. IT IS FURTHER AGREED TH AT NO PENALTY PROCEEDING WOULD BE INITIATED AGAINST THE ASSESSEE. HOWEVER, IT IS A/SO STATED THAT THE DECIS ION IN THIS REGARD CAN FURTHER BE TAKEN ONLY BY THE COMPET ENT INCOME TAX AUTHORITY.' 21. CONSIDERING THE OBSERVATIONS OF THE HON'BLE SUP REME COURT THE ASSESSEE FILED AN APPLICATION WITH CHIEF COMMISSIONER OF INCOME TAX, NWR, CHANDIGARH REGARDI NG WAIVER OF PENALTY. THE COMMISSIONER IN ORDER U/S 27 3A OF THE ACT DECLINED THE REQUEST BY MAINLY OBSERVING TH AT NO SETTLEMENT HAS BEEN REACHED BETWEEN THE ASSESSEE AN D DEPARTMENT. AGAINST THE ABOVE ORDER THE ASSESSEE FI LED A WRIT PETITION BEFORE THE HON'BLE JURISDICTIONAL HIG H COURT. THE HON'BLE HIGH COURT ULTIMATELY PASSED THE FOLLO WING ORDER NOTING THEREIN THE STATEMENT OF THE COUNSEL A PPEARING FOR THE REVENUE THAT THE ASSESSES PRAYER FOR QUASHI NG PENALTY WOULD NOT BE OPPOSED BY THE REVENUE IN APPE LLATE PROCEEDINGS BEFORE THE ITAT. : - 'MR. G.C. SRIVASTAVA APPEARING FOR THE REVENUE STAT ES, ON INSTRUCTIONS, THAT A COMPROMISE EFFECTED BEFORE THE SECRETARY, FINANCE, UNION OF INDIA, WAS REDUCED INTO WRITING A ND IS TITLED AS 'RECORD OF DISCUSSION'. MR. SRIVASTAVA FURTHER S TATES, ON INSTRUCTIONS, THAT OBSERVATION BY THE HON'BLE SUPRE ME COURT IN ORDER DATED 30.04.2014 PASSED IN IA NO. 2 IN SPECIA L LEAVE TO APPEAL (CIVIL) NO. 5346 OF 2013 (COMMISSIONER OF IN COME TAX, CHANDIGARH VS. CHANDIGARH HOUSING BOARD) RECORDING THAT DISPUTE REGARDING PAYMENT OF TAX BY THE CHANDIGARH HOUSING BOARD STANDS RESOLVED, IS CORRECT . MR. SRIVASTAVA ALSO STATES THAT IT IS CORRECT THAT IT WAS AGREED BEFORE THE HON'BLE SUPREME ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 18 COURT THAT NO PENALTY PROCEEDINGS WOULD BE INITIATE D AGAINST THE CHANDIGARH HOUSING BOARD AND DECISION IN THIS REGAR D WOULD BE TAKEN BY THE COMPETENT AUTHORITY. MR. SRIVASTAVA FU RTHER STATES THAT HE HAS INSTRUCTIONS TO MAKE A POSITIVE STATEMENT TH AT THE REVENUE SHALL NOT OPPOSE THE ASSESSEE'S PRAYER FOR QUASHING OF PENALTY IN THE APPEAL PENDING BEFORE THE INCOME TAX APPELLATE TRIBUNAL. LIBERTY IS GRANTED TO COUNSEL FOR THE ASSESSEE TO F ILE AN APPLICATION BEFORE THE TRIBUNAL FOR PREOPENING THE APPEAL. IN CASE, SUCH AN APPLICATION IS FILED, WE HOPE AND EXPECT TH AT THE APPELLATE AUTHORITY TAKES UP THE APPEAL FOR HEARING BEFORE THE END OF THE YEAR.' 22. IN BACKDROP OF THESE FACTS AND CIRCUMSTANCES T HE ITAT CHANDIGARH BENCH DELETED THE PENALTY ON SIMILAR GRO UNDS FOR AY 2007-08, AY 2008-09 AND AY 2009-10 BY HOLDIN G THAT THE READING OF THE ABOVE ORDER PARTICULARLY ALONG W ITH ORDER PASSED BY HON'BLE SUPREME COURT CLEARLY SHOWED THAT PARTIES HAD ULTIMATELY REACHED TO AN AMICABLE SETTL EMENT WITH REGARD TO THE TAXABILITY OF THE PROCEEDS RECEI VED ON AUCTION OF THE PLOTS. AND THAT THE HON'BLE SUPREME COURT IN ITS ORDER DATED 30.04.2014 HAS CLEARLY OBSERVED THA T NO PENALTY PROCEEDINGS WOULD BE INITIATED. THE FINDING S OF THE ITAT ARE AS UNDER: 14. THE READING OF THE ABOVE ORDER PARTICULARLY AL ONG WITH ORDER PASSED BY HON'BLE SUPREME COURT CLEARLY SHOWS THAT PARTIES HAS ULTIMATELY REACHED TO AN AMI CABLE SETTLEMENT WITH REGARD TO THE TAXABILITY OF THE PRO CEEDS RECEIVED ON AUCTION OF THE PLOTS. THE HON'BLE SUPRE ME COURT HAS CLEARLY OBSERVED THAT NO PENALTY PROCEEDI NGS WOULD BE INITIATED. IN OUR OPINION IN VIEW OF THE A MICABLE SETTLEMENT REACHED AND THE ASSURANCE GIVEN BEFORE T HE HON'BLE SUPREME COURT AS WELL AS HIGH COURT, NO PEN ALTY COULD BE LEVIED. WE FEEL THAT THIS IS NOT A FIT CAS E OF LEVY OF ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 19 PENALTY AND ACCORDINGLY WE SET ASIDE THE ORDER OF L D. CIT(A) AND DELETE THE PENALTY. 15. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . 23. MOREOVER EVEN THE LD.CIT(A) ALSO FORMED THE SA ME VIEW, DELETING THE PENALTY LEVIED FOR ASSESSMENT YE ARS 2012- 13 AND 2013-14 HOLDING AS UNDER: 5.5 THE MAJOR ISSUE ON WHICH ADDITION HAS BEEN MAD E IN THE AY 2012-13 IS 'DISALLOWANCE OF INTEREST AT RS.14 ,87 ,66,159/-'. AFTER DISCUSSING THE ENTIRE GAMUT OF FA CTS IN THE PROCEEDINGS PARAS, I AM OF THE CONSIDERED OPINION THAT AO WAS NOT RIGHT IN LEVYING PENALTY. IT IS THE SAME ISSUE ON WHICH 'RECORD OF DISCUSSIONS' WAS MADE AFTER DIRECTIONS OF THE HON'BLE HIGH COURT AND SUBSEQUENTLY THE SAME WERE UPHELD BY THE HON'BLE SUPREME COURT VIDE ITS ORDER DATED 30.04.2014. KEEPING IN MIND THE SPIRIT OF THE AGREE MENT ARRIVED AT IN 'RECORD OF DISCUSSIONS' PENALTY LEVIE D BY THE AO IS CANCELLED. THE GROUNDS OF APPEAL NO.1 IS ALLOWED . 24. IT IS NOT DISPUTED THAT IN THE IMPUGNED YEAR AL SO PENALTY PROCEEDINGS WERE INITIATED ON THE SAME ADDI TION MADE OF INTEREST ON FDRS, IN THE SAME FACTS AS CIRCUMSTANCES, AS IN A.Y 2007-08 TO A.Y 2009-10 AND A.Y 2012-13 AND A.Y 2013-14 AS MENTIONED ABOVE. IN VIEW OF THE FACT THAT IN ALL THOSE YEARS PENALTY LEVIED WAS DELETED BY THE ITAT/CIT(A), CONSIDERING THE BACKDROP OF THE CASE AS STATED ABOVE, WE HAVE NO HESITATION IN HOLDING THAT THE A.OS VIEW THAT NO PENALTY WAS LEVIABLE FOR THE IMP UGNED YEAR I.E. A.Y 2011-12, WAS A PLAUSIBLE VIEW AND NOT OUT- RIGHTLY INCORRECT AS CANVASSED BY THE REVENUE/PR.CI T. THAT ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 20 THE DEPARTMENT HAS CONTESTED THE DELETION OF PENALT Y BY THE I.T.A.T. IN ASSESSMENT YEARS 2008-09 AND 2009-10 IS , WE HOLD, WHOLLY IRRELEVANT FOR THE CONCLUSION THAT THE VIEW OF THE A.O. WAS A PLAUSIBLE VIEW. THE DEPARTMENT IS WE LL WITHIN ITS RIGHTS TO CONTEST ANY ORDER AS LEGALLY P ERMISSIBLE, BUT MERELY BY SO CONTESTING IT DOES NOT MAKE THE O RDERS CHALLENGED AS BEING WHOLLY UNTENABLE IN LAW. 25. EVEN OTHERWISE, ON CONSIDERING THE ENTIRE FACTS OF THE CASE, WE HOLD THAT THE INTERPRETATION OF FACT BY TH E A.O. THAT THE ISSUE WAS IDENTICAL TO A.Y 2007-08, WAS CO RRECT. IN A.Y 2007-08 THE PENALTY HAD BEEN DELETED ON THE BAS IS OF AGREEMENT BETWEEN THE ASSESSEE AND THE DEPARTMENT, AS RECORDED IN THE ROD, TO NOT LEVY PENALTY. THIS AGRE EMENT, WE HOLD, WAS APPLICABLE TO THE IMPUGNED YEAR ALSO. THE REASON BEING, THE AGREEMENT WAS REGARDING THE ISSUE WHETHER THE ASSESSEE WAS A NODAL AGENCY OF CHANDIGA RH ADMINISTRATION OR NOT. THIS IS EVIDENT FROM THE ORD ER OF THE HON'BLE HIGH COURT WHERE THE QUESTION OF LAW FRAMED WAS VIS A VIS THIS ISSUE/ASPECT ONLY AND IT WAS THIS AS PECT WHICH WAS DIRECTED BY THE HONBLE HIGH COURT TO BE AMICABLY SETTLED BY AGREEMENT. THE AGREEMENT THEREF ORE FOR LEVY OF NO PENALTY WAS TO BE READ IN RELATION TO T HAT ISSUE. ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 21 MEANING THEREBY THAT THE PARTIES HAD AGREED TO NO P ENALTY BEING LEVIED ON ACCOUNT OF ANY DEFAULT COMMITTED BY THE ASSESSEE BY TREATING ITSELF AS A NODAL AGENCY HIT HERTOFORE. THUS ALL INCOMES NOT RETURNED TO TAX BY THE ASSESSE E BEFORE THE DATE OF AGREEMENT, ON ACCOUNT OF TREATING ITSEL F THE NODAL AGENCY OF CHANDIGARH ADMINISTRATION WAS AGREE D NOT TO BE PENALIZED. THE AGREEMENT WE HOLD WAS NOT YEAR SPECIFIC, AS HELD BY THE LD.PR.CIT, BUT WAS ISSUE S PECIFIC AND APPLIED TO ALL YEARS EFFECTED BY THE ISSUE. THE RETURN FOR THE IMPUGNED YEAR, NOT DISCLOSING INTEREST INCO ME FROM FDRS CLAIMING ITSELF AS NODAL AGENCY OF CHANDIGARH ADMINISTRATION, WAS FILED WELL BEFORE THE DATE OF A GREEMENT, BEING FILED ON 29-09-10 WHILE THE AGREEMENT WAS REC ORDED IN THE ROD ON 14-03-13.THUS THE AGREEMENT FOR NO PE NALTY APPLIED TO THE IMPUGNED YEAR ALSO AND THE AO WE HOL D HAD THEREFORE RIGHTLY HELD THAT THE FACTS OF THE IMPUGN ED YEAR WERE IDENTICAL TO THAT IN A.Y 2007-08,WHILE DROPPIN G THE PENALTY PROCEEDINGS INITIATED. 26. EVEN OTHERWISE, WE HOLD, THAT THE CLAIM OF THE ASSESSEE THAT THE INTEREST INCOME WAS NOT TAXABLE I N ITS HANDS, WAS BASED ON A BONAFIDE BELIEF THAT THE FUN DS INVESTED IN FDRS DID NOT BELONG TO IT AND WERE CO LLECTED ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 22 BY IT AS A NODAL AGENCY OF THE CHANDIGARH ADMINISTR ATION. THIS STAND WAS CONSISTENTLY TAKEN BY THE ASSESSEE A ND WAS CONCEDED ONLY BY AMICABLE SETTLEMENT WITH THE DEPAR TMENT ON TAKING A PRIMA FACIE VIEW OF THE MATTER. IT IS N OT THAT THE CLAIM WAS FOUND OUTRIGHTLY UNTENABLE BY ANY AUTHORI TY. THEREFORE TILL THE DATE OF SETTLEMENT OF THE DISPUT E THE CLAIM OF THE ASSESSEE WAS UNDOUBTEDLY UNDER A BONAFIDE BE LIEF. IN VIEW OF THE SAME THEREFORE THE ASSESSEE COULD NOT BE CHARGED WITH HAVING CONCEALED OR FURNISHED ANY INAC CURATE PARTICULARS OF INCOME SO AS TO LEVY PENALTY U/S 271 (1) OF THE ACT. 27. WE THEREFORE HOLD THAT THE ORDER PASSED BY THE AO DROPPING PENALTY PROCEEDINGS INITIATED U/S 271(1) OF THE ACT WAS NOT ERRONEOUS AND THE ORDER PASSED BY THE LD.PR.CIT U/S 263 OF THE ACT IS THEREFORE SET ASIDE . THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED. ITA NO.737/CHD/2018: 28. SINCE THE FACTS IN ITA NO.737/CHD/2018, IT WAS COMMON GROUND, WAS IDENTICAL TO THAT IN ITA NO.736/CHD/18 DECIDED ABOVE BY US, OUR DECISION REN DERED THEREIN WILL APPLY TO THE SAID APPEAL ALSO FOLLOWIN G WHICH ITA NOS.736 & 737/CHD/2018 A.Y.2010-11 23 WE SET ASIDE THE ORDER PASSED BY THE LD.PR.CIT U/S 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 29. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- $ % & '# (SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER () / ACCOUNTANT MEMBER +$ /DATED: 22 ND MAY, 2019 * # * '* +,-, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # . / CIT 4. # . ( )/ THE CIT(A) 5. ,/0 1 , %1 , 23405 / DR, ITAT, CHANDIGARH 6. 046$ / GUARD FILE '* # / BY ORDER, / ASSISTANT REGISTRAR