COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. AHMEDABAD URBAN DEVELOPMENT AUTHORITY.

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TAXAP/1014/2018HC GujaratGJHC24048083201813 August 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Revenue's appeal. The Court observed that even if the Gujarat High Court's decision in the quantum appeal were to be reversed and quantum additions sustained, there would be no basis for imposing a penalty. The Court reasoned that AUDA had consistently filed its return and put forth its exemption claim, which was not a "totally unsustainable and fictitious claim." It was a claim made by a statutory body regarding its entitlement to exemption based on its creation, constitution, and activities, a claim that had been accepted by the Gujarat High Court in a detailed judgment. Therefore, the Court concluded that under any eventuality, no case for penalty was made out. The operative direction was the dismissal of the Tax Appeal.

What were the facts?

The Revenue filed an appeal before the High Court of Gujarat challenging an order of the Income Tax Appellate Tribunal (ITAT) dated March 19, 2018. The appeal pertains to the assessment year 2010-11 concerning the respondent-assessee, Ahmedabad Urban Development Authority (AUDA). AUDA, a statutory body registered as a trust under Section 12AA, claimed exemption under Sections 11 and 12 of the Income Tax Act, 1961. The Assessing Officer rejected this claim and initiated penalty proceedings, eventually levying a penalty of Rs. 101,24,35,719/- under Section 271(1)(c) of the Act. The Commissioner of Income Tax (Appeals) and the ITAT deleted the penalty, primarily on the grounds that AUDA had succeeded in its quantum appeal before the Gujarat High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal is justified in holding that the penalty of Rs. 101,24,35,719/- levied under Section 271(1)(c) of the Act does not survive, without appreciating that the decision of the Gujarat High Court in respect of the quantum appeal has not attained finality, as the department has filed a Special Leave Petition before the Hon'ble Supreme Court against the same? Assessee's Contention: The judgment records no specific contentions from the assessee regarding this issue. The ITAT's decision to delete the penalty was based on AUDA's success in the quantum appeal. Revenue's Contention: The Revenue contended that the penalty should survive because the Gujarat High Court's decision in the quantum appeal (reported in 396 ITR 323) had not attained finality, as a Special Leave Petition (SLP) was pending before the Supreme Court. Therefore, the Revenue argued that the appeal should be admitted.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 11,Section 12,Section 12AA

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/1014/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1014 of 2018 ========================================================== COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus AHMEDABAD URBAN DEVELOPMENT AUTHORITY. ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 13/08/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.

This appeal is filed by the Revenue challenging judgement of the Income Tax Appellate Tribunal dated 19.03.2018 raising following question for our consideration: “Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal is justified in holding that the penalty of Rs. 101,24,35,719/- levied u/s. 271(1)(c) of the Act does not survive, without appreciating the fact that the decision of the Hon'ble Gujarat High Court in respect of the quantum appeal has not attained finally, as the department has filed Special Leave Petition before Hon'ble Supreme Court against the same?”

2.

The appeal relates to the assessment year 2010-11. Respondent-assessee is Ahmedabad Urban Development Authority ['AUDA' for short]. The return filed by the C/TAXAP/1014/2018 ORDER respondent for the said assessment year was scrutinized by the Assessing Officer. During such scrutiny, the assessee contended that it is a statutory body carrying on plant development of areas defined and designated by the Government of Gujarat. It is registered trust under section 12AA of the Act. The assessee claimed exemption under sections 11 and 12 of the Act. The Assessing Officer rejected, the claim and also instituted penalty proceedings. By the order dated 12.03.2015, he imposed penalty of Rs. 101.24 cores being 1/3rd of the maximum imposable penalty. The assessee us it plainly appears that even if the judgement of the High C/TAXAP/1014/2018 ORDER JYOTI V. JANI

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