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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER Assessment Year: 2009-10 M/s Fortune Associates, Income Tax बनाम/ 157, Zone-I, M.P. Nagar, Officer -1(2), Vs. Bhopal Bhopal (Appellant) (Revenue) PAN: AABFF3398F Appellant by Shri N.D. Patwa, Adv. Revenue by Shri Rajeeb Jain, Sr. DR Date of Hearing: 15.10.2019 Date of Pronouncement: 17.10.2019 आदेश / O R D E R PER MANISH BORAD, A.M: This appeal at the instance of Assessee pertaining to A.Y. 2009-10 is directed against the order of Commissioner of Income Tax-(Appeals)-1, Bhopal, (in short ‘CIT’), dated 26.06.2018 which is arising out of the order u/s 271(1)(c) of the Income Tax Act 1961(hereinafter called as the ‘Act’) framed on 05.03.2014 by ITO- 1(2), Bhopal.
M/s Fortune Associates ITANo.715/Ind/2018 2. The assessee has raised following grounds of appeal: “On the facts and in the circumstances of the case:-
1. The Ld. CIT(A) was not justified in confirming the order of penalty, which is void-ab-initio, invalid, unjustified, barred by limitation and therefore, liable to be quashed.
2. The ld. CIT(A) did not provide proper and meaningful opportunity of being heard to the appellant and passed ex- parte order.
3. The Ld. CIT(A) was not justified in confirming the levy of penalty u/s 271(1)(c) of the Rs.2,00,000/-.”
3. The solitary grievance of the assessee’s appeal is against the levy of penalty u/s 271(1)(c) of the Act at Rs.2,00,000/- confirmed by Ld. CIT(A).
4. Briefly stated facts as culled out from the records are that the assessee is a partnership firm. E-return of income for A.Y. 2009-10 filed on 27.09.2009 declaring nil income after claiming deduction u/s 80IB(10) of the Act at Rs.5,81,281/-. Case picked up for scrutiny assessment and assessment u/s 143(3) of the Act was completed on 29.12.2011 in which claim u/s 80IB(10) was denied and income assessed at Rs.5,81,280/-. Penalty proceedings u/s 271(1)(c) of the Act were initiated. Subsequently, vide order dated 05.03.2014 after considering the submissions of the assessee penalty of Rs.2,00,000/- was levied for furnishing of inaccurate particulars of income.
M/s Fortune Associates ITANo.715/Ind/2018
Against this levy of penalty assessee preferred an appeal before the Ld. CIT(A) but failed to succeed.
Now the assessee is in appeal before the Tribunal. 7. Ld. counsel for the assessee submitted that the quantum issue is pending before the Hon'ble Jurisdictional High Court for A.Ys. 2004-05 & 2006-07. The Hon'ble Jurisdictional High Court in the case of CIT vs. Surabhi Homes in Income-tax Act, 1961. No.68/2016 and 69/2016 dated 21.03.2017 has held that “no penalty is to be levied u/s 271(1)(c) of the Act in case the deduction u/s 80IB(10) is not granted on the ground of not receiving completion certificate”.
Per Contra Ld. Departmental Representative (DR) supported the order of Ld. CIT(A).
We have heard rival contentions and perused the record placed before us. We observe that in the instant case, the assessee was denied benefit u/s 80IB(10) of the Act. Ld. AO treated the assessee as contractor and not as a builder. In the past also assessee had been denied benefit. Quantum issues are pending before the Hon'ble Jurisdictional High Court.
It has been consistently held by various Hon'ble courts that if the quantum issue is pending before Hon'ble High Court & Apex Court which shows that there is a substantial question of law and the M/s Fortune Associates ITANo.715/Ind/2018 issue is debatable which may be decided in either way then penalty is not leviable u/s 271(1)(c) of the Act.
10.The assessee’s case is also similar because it had made a claim believing it to be a correct claim but the revenue authorities denied the claim and this question of law is now pending before Hon'ble Jurisdictional High Court.
Hon'ble Bombay High Court in the case of Nayan Builders and Developers in of 2012, dismissed the department’s appeal and upheld the Tribunal’s order of deleting penalty on the ground that when the High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debatable and in such circumstances penalty cannot be levied”.
Coordinate Bench, Indore in the case of Shri Yugal Kishor Jajoo vs. DCIT (ITANo.271/Ind/2011) has held that, when the Hon'ble High Court has admitted the appeal to decide the substantial question of law, no penalty can be imposed.
Respectfully following the above judgments and in the given facts and circumstances of the case wherein the penalty has been levied for denial of deduction u/s 80IB(10) of the Act and in the preceding years the assessee has carried the issue before the Hon'ble Jurisdictional High Court wherein the issue has been M/s Fortune Associates ITANo.715/Ind/2018 admitted having substantial question of law, we are of the view that the assessee should not be visited with the penalty u/s 271(1)(c) of the Act which has been levied merely on a technical ground and without finding any mistake in the details filed by the assessee in the return of income. Accordingly penalty of Rs.2,00,000/- levied u/s 271(1)(c) of the Act stands deleted.
In the result, the appeal of the assessee is allowed.
Order was pronounced in the open court on 17.10.2019.