M/s. Fortune Builders, Bhopal V. THE ACIT CENTRAL -II, Bhopal

ITA 84/IND/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5457 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-10-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 13-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Question of law; Wrong claim
• Section: 80IB; 27

Judgement Text

FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.82 TO 84/IND/2017 ASSESSMENT YEARS: 2004-05, 2005-06 & 2006-07 REVENUE BY S HRI P.K. MITRA, SR.DR ASSESSEE BY SHRI JAYESH DOSHI , CA DATE OF HEARING 15.10 . 2018 DATE OF PRONOUNCEMENT 18 .10 .2018 O R D E R PER MANISH BORAD, AM. THESE THREE APPEALS FILED AT THE INSTANCE OF THE AS SESSEE PERTAINING TO ASSESSMENT YEAR 2004-05, 2005-06 & 2006-07 ARE D IRECTED AGAINST THE CONSOLIDATED ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-3 (IN SHORT CIT(A)), BHOPAL DATED 8.12.2016 WHICH ARE ARISING OUT OF THE ORDER U/S 271(1)(C) OF THE I NCOME TAX ACT 1961(IN SHORT THE ACT) DATED 03.03.2016 FRAMED BY ACIT(CENTRAL)- II, BHOPAL. M/S. FORTUNE BUILDERS,157, ZONE-1, M.P. NAGAR, BHOPAL VS. A CIT (C IRCLE ) - II BHOPAL ( APPELLANT ) (RESPONDENT ) PAN NO. AAAFF9074H FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 2 2. AS THE ISSUES RAISED IN ALL THE APPEALS RELATES TO THE LEGALITY AND QUANTUM OF PENALTY LEVIED U/S 271(1)(C ) OF THE ACT, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C OMMON ORDER FOR SAKE OF CONVENIENCE. 3. COMMON GROUNDS ARE RAISED IN ALL THESE 3 APPEALS . FOR SAKE OF ADJUDICATION WE MENTION THE GROUNDS RAISED FOR ASSE SSMENT YEAR 2004-05 WHICH ALSO INCLUDES THE ADDITIONAL GROUND R AISED BY THE ASSESSEE VIDE APPLICATION DATED 14.8.2018. 1. A. ON CIT(A) ERRED IN CONFIRMING PENALTY WHEN S HOW CAUSE NOTICE I ASSESSMENT ORDER DOES NOT EXPLICITLY MENTI ONED THE LIMB 271(1)LC) OF THE ACT LE. WHETHER IT 1S FOR FURNISHI NG INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. B. IN VIEW OF THE FACTS & CIRCUMSTANCES & THE CASE, CIT(A) SHOULD NOT HAVE CONFIRMED THE PENALTY U IS 271(1)(C ) OF THE ACT. C. APPELLANT PRAYS THAT PENALTY CONFIRMED BY CIT(A) U/S 271(1)(C)OF THE ACT, 1961 BE DELETED. WITHOUT PREJUDICE TO ABOVE ADDITIONAL GROUND NO.1 2. A. CIT(A) ERRED IN CONFIRMING PENALTY U IS 271(1 HC) WHEN THE ISSUE INVOLVED IS DEBATABLE. B. IN VIEW OF THE FACTS & CIRCUMSTANCE OF THE CASE APPELLANT PRAYS THAT PENALTY CONF1RMED BY CIT(A) U/S 271(1) (C) OF THE ACT BE DELETED. APPELLANT HUMBLY REQUESTED THAT THE ABOVE GROUND OF APPEAL MAY KINDLY BE ADMITTED PER NEED JUSTICE, APPELLANT REITERATES THEIR ASSURANCE TO CO-OPERATE IN EARLY DISPOSAL OF APPEAL. FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 3 4. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE PENALTY HAS BEEN LEVIED U/S 271(1)(C) OF THE AC T ON THE DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB(10) OF T HE ACT BY THE ASSESSEE AT RS.11,00,000/-, RS.28,00,000/- AND RS.8 ,00,000/- RESPECTIVELY FOR ASSESSMENT YEAR 2004-05, 2006-07 A ND 2007-08 RESPECTIVELY. HE SUBMITTED THAT THE ALLEGED NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT IS NOT VALID AS THE LD. ASSESSING OFFICER (IN SHORT LD.A.O) HAS NOT MENTIONED THE SPECIFIC CHARGE IN THE NOTICE AGAINST THE ASSESSEE AS TO WHETHER THE IMPUGNED PEN ALTY HAS BEEN LEVIED FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. SUCH NOTICES HAV E BEEN HELD TO BE INVALID AND THE PROCEEDINGS U/S 271(1)(C) HAVE B EEN HELD TO BE VOID AB INITIO BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF PRINCIPAL COMMISSIONER OF INCOME TAX-I VS KULWANT S INGH BHATIA ITA NO.9/2018 ORDER DATED 9.5.2018. 5. AS REGARDS THE MERITS FOR LEVY OF PENALTY, RELIA NCE WAS PLACED ON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN TH E CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX V SURABHI HOME S PVT.LTD ITA NO.68-69/2016 ORDER DATED 21.03.2017 WHEREIN TH E HON'BLE FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 4 COURT CONFIRMED THE FINDING OF THE TRIBUNAL HOLDING THAT NO PENALTY SHOULD HAVE BEEN LEVIED U/S 271(1)(C) OF THE ACT AS NO INCORRECT DECLARATION HAS BEEN FILED BY THE ASSESSEE AND THE DEDUCTION U/S 80IB(10) OF THE ACT WAS CLAIMED ON THE BASIS OF A P ROJECT APPROVAL CERTIFICATE. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEM ENTLY ARGUED AND SUPPORTING THE ORDERS OF LOWER AUTHORITI ES. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. 8. IN THESE THREE APPEALS THE ISSUE RELATES TO PENA LTY LEVIED U/S 271(1)(C) OF THE ACT AT RS.11,00,000/-, RS.28,00,00 0/- AND RS.8,00,000/- FOR THE ASSESSMENT YEAR 2004-05, 2005 -06 AND 2006-07 RESPECTIVELY ON THE DISALLOWANCE OF DEDUCTI ON CLAIMED U/S 80IB(10) OF THE ACT AT RS.29,99,883/-, RS.74,42,241 /- AND RS.23,04,302/- RESPECTIVELY. 9. THOUGH THE ASSESSEE HAS TAKEN THE ADDITIONAL GRO UND CHALLENGING THE LEGALITY OF THE NOTICE ISSUED U/S 2 74 R.W.S. 271(1)(C) OF THE ACT BUT WE WOULD LIKE TO FIRST DEAL WITH THE MERITS OF THE CASE FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 5 ABOUT THE JUSTIFICATION OF LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT ON THE ALLEGED DISALLOWANCE OF DEDUCTION U/S 80IB(1 0) OF THE ACT. 10. WE FIND THAT THE ASSESSEE CLAIMED DEDUCTION U/ S 80IB(10) OF THE ACT IN RESPECT OF HOUSING PROJECT. THE MAP WAS APPROVED. AUDITED REPORT IN FORM 10CCB OF THE IT RULES WERE I SSUED BY THE CHARTERED ACCOUNTANT. PROJECT WAS APPROVED BY THE L OCAL AUTHORITY. HOWEVER THE ASSESSEE WAS DENIED DEDUCTION U/S 80IB( 10) OF THE ACT BECAUSE THE COMMERCIAL CONSTRUCTED AREA SOLD BY THE ASSESSEE EXCEEDED THE STATUTORY LIMIT PROVIDED UNDER THE PRO VISIONS OF SECTION 80IB(10) OF THE ACT WHICH SAYS THAT SUCH CO MMERCIAL CONSTRUCTED AREA SHOULD NOT EXCEED 5% OF THE AGGREG ATE BUILT UP AREA OF THE HOUSING PROJECT OR 2000 SQ.FT WHICHEVER IS LESS. IN THE CASE OF ASSESSEE THE COMMERCIAL CONSTRUCTED AREA ME ASURING 2254 SQ.FT WAS SOLD AND THE ASSESSEE AFTER CLAIMING THE BENEFIT UNDER SECTION 80IB(10) FOR THE 2000 SQ.FT AREA OFFERED FO R INCOME THE REMAINING AREA MEASURING 254 SQ.FT FOR PROFITS. IN OTHER WORDS ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT ONLY FOR 2000 SQ.FT AREA. HOWEVER, LD. A.O TOOK A VIEW THAT AS TH E ASSESSEE HAS EXCEEDED THE STATUTORY LIMIT OF AREA PROVIDED IN TH E PROVISION OF FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 6 80IB(10) IT IS NOT ELIGIBLE TO ANY DEDUCTION U/S 80 IB AS IT HAS VIOLATED ONE OF THE CONDITIONS. LD. A.O THEREFORE C ONCLUDED THE ASSESSMENT DENYING THE BENEFIT OF DEDUCTION U/S 80I B(10) OF THE ACT AND ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271( 1)(C) OF THE ACT ON THE ALLEGED DISALLOWANCE. 11. APART FROM THIS TECHNICAL ISSUE ALL THE OTHER D ETAILS OF EXPENDITURE AND REVENUE PERTAINING TO CONSTRUCTION OF THE PROJECT AS WELL AS SALE CONSIDERATION FROM THE SALE OF BUIL T UP AREA HAVE BEEN FOUND TO BE CORRECT. ALL THE DETAILS THERETO H AVE BEEN FURNISHED IN THE AUDITED FINANCIAL ACCOUNTS. IN THE BACKDROP OF THESE FACTS, 'WHETHER THE ASSESSEE CAN BE VISITED WITH THE BENEF IT OF U/S 271(1)(C) OF THE ACT IS TO BE EXAMINED'. 12. WE FIND THAT THE HON'BLE APEX COURT IN THE CA SE OF CIT V RELIANCE PETRO PRODUCTS 2010 189 TAXMANN 322 WHERE IN IT HAS BEEN HELD THAT; AS ASSESSEE HAD FURNISHED ALL DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS CONCEALMENT OF IN COME ON ITS PART IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN RE TURN OR NOT MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLA IM WAS NOT FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 7 ACCEPTED OR WAS NOT ACCEPTABLE TO APPELLANT, THAT B Y ITSELF WOULD NOT, IN OUR OPINION, ATTRACT PENALTY UNDER SECTION 271(1)(C ) OF ACT. IF COURT ACCEPTS CONTENTION OF APPELLANT THEN IN CASE OF EVE RY RETURN WHERE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY R EASON, ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C) OF ACT THA T IS CLEARLY NOT INTENDMENT OF LEGISLATURE 13. LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED O N THE DECISION OF HON'BLE HIGH COURT IN THE CASE OF PRINCIPAL COMMISS IONER OF INCOME TAX V SURABHI HOMES PVT.LTD (SUPRA) WHICH ALSO DEAL S WITH THE SIMILAR ISSUE OF PENALTY LEVIED U/S 271(1)(C) OF TH E ACT ON THE WRONG CLAIM OF THE DEDUCTION U/S80IB(10) OF THE ACT. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB( 10) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). THE ASSESSING OFFI CER REJECTED THE CLAIM OF THE ASSESSEE OF SUCH DEDUCTION UNDER SECTION 80IB(1 O) OF THE ACT, FOR THE REASON THAT-THE ASSESSEE DOES NOT SATISFY THE CONDI TIONS TO AVAIL THE BENEFIT IN THE ORDERS OF ASSESSMENT-PASSED ON 30.12 .2008 AND 17.12.2009. 'THE ASSESSING OFFICER ALSO ORDERED FOR INITIATING PENALTY PROCEEDINGS AFTER DISALLOWING THE DEDUCTION CLAIMED FOR CONCEALING INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. IN PURSUANCE TO SUCH AN ORDER, THE ASSESSING OFFICE R PASSED AN ORDER IMPOSING PENALTY OF RS32,35,858/- UNDER SECTION 27 1(1)(C) OF THE INCOME TAX ACT, 1961. SUCH ORDER OF IMPOSITION OF PENALTY WAS SET ASIDE IN APPEAL BY THE COMMISSIONER OF INCOME TAX (APPEALS), WHEREI N IT WAS HELD IN AS UNDER:- 4.10 IN THE INSTANT CASE ALSO, THERE IS NO FINDING ON RECORD THAT ANY FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 8 DETAILS SUPPLIED BY THE APPELLANT IN ITS RETURNS OF INCOME FOR THESE YEARS ARE FOUND TO BE INCORRECT OR FALSE AND THEREF ORE, THERE IS NO QUESTION OF LEVYING PENALTY U/S 271(1)(C). A MERE M AKING OF A CLAIM U/S 80LB(10) WHICH WAS NOT ALLOWED BY THE ASSESSING OFFICER, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PAR TICULARS OR CONCEALING THE INCOME. THEREFORE, CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION OF THE ISSUE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT IS NOT LIABLE FO R PENALTY U/S 271(1)(C) FOR CLAIMING DEDUCTING U/S 80IB(1O) ON TH E PROFITS DERIVED FROM A HOUSING PROJECT IN A.YS 2006-07 & 2007-08. A CCORDINGLY, PENALTY ORDERS U/S 271(1)(C) FOR THESE ASSESSMENT Y EARS IMPOSING PENALTY OF RS.58,78,458/-- & RS.32,35,858/-RESPECTI VELY ARE HEREBY, CANCELLED . IT IS THE SAID ORDER WHICH WAS NOT INTERFERED WITH BY THE TRIBUNAL IN FURTHER APPEAL. LEARNED COUNSEL FOR THE APPELLANTS PLACED RELIANCE UPON AN ORDER PASSED BY THE DELHI HIGH COURT REPORTED AS (2010) 327 ITR 510 [COMMISSIONER OF INCOME TAX VS. ZOOM COMMUNICATION (P) LIMITED], TO CONTEND THAT IF THE ISSUE IS NOT DEBATABLE THEN THE ASSESSEE IS LIABLE FOR PENALTY. WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT AND FIND THAT NO QUESTION OF LAW ARISES FOR CONSIDERATION IN THE PRESENT APPE ALS. IN THE PRESENT CASE, THE ASSESSING OFFICER FOUND TH AT THE ASSESSEE HAS PRODUCED AN A INVALID PROJECT APPROVAL CERTIFICATE . THE INVALIDITY WAS IN RESPECT OF AUTOMATIC CANCELLATION OF THE PERMISSION TO RAISE CONSTRUCTION OF BUILDING. ANOTHER GROUND FOR IMPOSITION OF PENALTY WAS THAT POSSESSION WAS GIVEN TO THE ALLOTTEES BEFORE OBTAINING THE A C OMPLETION CERTIFICATES WHICH IS SAID TO BE IN GROSS VIOLATION OF CONDITION NO.7 OF THE APPROVAL CERTIFICATE. SUCH FACTS HAVE BEEN TAKEN INTO CONSIDERATION BY TH E COMMISSIONER OF INCOME TAX (APPEALS), WHEREIN THE COMMISSIONER HAS RECORDED THE FINDING REFERRED TO ABOVE. THE FACT IS THAT THE ASSESSEE CLAIMED DEDUCTION UND ER SECTION 8OIB(1O) FOR THE REASON THAT THE A PROJECT APPROVAL CERTIFICATE WAS FILED AND THE POSSESSION DELIVERED: MAY-BE THE TECHNICAL FORMALIT Y OF OBTAINING COMPLETION CERTIFICATE WAS NOT SATISFIED, BUT ,IT W ILL-NOT MEAN THAT THE FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 9 ASSESSEE HAS CLAIMED INCORRECT OR FALSE DEDUCTION. MERE NON-SATISFACTION OF. A CONDITION OF DEDUCTIONS WILL NOT MEAN THAT TH E ASSESSEE HAS FURNISHED INCORRECT RETURN, WHICH WILL MAKE IT LIABLE FOR PEN ALTY. STILL FURTHER, THE COMMISSIONER OF INCOME TAX (APPE ALS) AND THE TRIBUNAL HAVE GIVEN A FINDING OF FACT THAT THERE WAS NO INCO RRECT DECLARATION FILED BY THE ASSESSEE. SAID IS A FINDING OF FACT, WHICH DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. ACCORDINGLY, BOTH THE APPEALS ARE DISMISSED. 14. LD. COUNSEL FOR THE ASSESSEE ALSO STATED AT THE BAR THAT THE THE APPEAL OF THE ASSESSEE I.S FORTUNE BUILDERS RELATIN G TO QUANTUM ADDITION IS PENDING BEFORE THE HONBLE APEX COURT. THIS FACT PROVES THAT THERE IS A SUBSTANTIAL QUESTION OF LAW IN T HE GROUND RAISED BY THE ASSESSEE ON THE QUANTUM ADDITION WHICH MEANS TH AT TWO LEGAL VIEWS WERE POSSIBLE AT THE TIME OF CLAIMING DEDUCTI ON U/S 80IB OF THE ACT AND ONE CANNOT IGNORE THE POSSIBILITY THAT THE ASSESSEE MAY SUCCEED. 15. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX V SURABHI HOMES PVT. LTD (SUPRA) AND ALSO LOOKING TO THE FACT THAT SUBSTANTIAL QUESTION OF LAW IS PENDING BEFORE T HE HON'BLE APEX COURT IN THE CASE OF THE ASSESSEE, WE ARE OF THE CO NSIDERED VIEW THAT FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 10 THE LOWER AUTHORITIES ERRED IN LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT FOR DISALLOWANCE OF DEDUCTION U/S 80IB(10) MERELY ON A TECHNICAL GROUND. WE THEREFORE ALLOW THE RELEVANT GROUND NO.3 FOR ALL THE THREE APPEALS CHALLENGING THE PENALTY CONFI RMED BY LD.CIT(A) U/S 271(1)(C ) OF THE ACT. 16. APROPOS TO THE ADDITIONAL GROUND RELATING TO TH E LEGALITY OF NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT W E REFRAIN OURSELVES FROM ADJUDICATING THE SAME IT BEING ACADEMIC IN NAT URE, AS WE HAVE ALREADY DELETED THE IMPUGNED PENALTY FOR ALL THE TH REE YEARS ADJUDICATING THE MERITS OF THE CASE. THEREFORE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ARE DISMISSED AS INFRUCTUOUS . 17. THE OTHER GROUNDS ARE GENERAL IN NATURE WHICH N EEDS NO ADJUDICATION. 18. IN THE RESULT ALL THE THREE APPEALS OF THE ASSE SSEE ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.10.201 8. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 18 OCTOBER, 2018 /DEV FORTUNE BUILDERS ITA NO.82 TO 84/IND/2017 11 COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER ASSISTANT REGISTRAR, ITAT, INDORE