ACIT CEN CIR 3, THANE vs. AKSHAR DEVELOPERS, NAVI MUMBAI

Facts in brief:– A search and seizure action under section 132 of the Act was conducted on 29th September 2011, in assessee’s case. The assessee for the assessment year under consideration filed return of income on 30th September 2009, declaring total income of ` 6,78,84,609. A return u/s 153A was also filed 22nd September 2019, showing nil income after claiming deduction of ` 6,78,84,610. The Assessing Officer completed assessment on 28th March 2014, under section 143(3) r/w section 154A determining total income of ` 6,78,84,610, observing that the assessee is not eligible for deduction under section 80IB(10). Accordingly, the Assessing Officer made various additions which subsequently resulted in initiation of penalty proceedings under section 271(1)(c). Meanwhile, during the first round of litigation before the first appellate authority, the learned Commissioner (Appeals) confirmed the additions made in the assessment order on account of disallowance under section 80IB amounting to ` 6,78,84,610, observing that the income was brought to tax as a result of search action under section 132. He observed that had there been no search proceedings, there would not have been any addition on account of this income. Since the quantum addition was confirmed by the learned Commissioner (Appeals), the Assessing Officer imposed penalty of ` 2,09,76,344, u/s 271(1)(c). The assessee being unsuccessful in litigation before the Assessing Officer again filed appeal before the first appellate authority.

The learned Commissioner (Appeals) examined the issue of disallowance of deduction claimed under section 80IB(10) of the Act which resulted in imposition of penalty in the light of the identical issue decided by the Tribunal, vide order dated 28th February 2018, passed in ITA no.6242/Mum./2016, wherein the Tribunal has directed the Assessing Officer to allow deduction claimed under section 80IB(10) of the Act for the project Shreeji Heights. The learned Commissioner (Appeals) relying upon certain judicial pronouncements held that the assessee is eligible for claiming deduction under section 80IB of the Act. The relevant observations made by the learned Commissioner (Appeals) are reproduced below:– “9. Further, the reason for not claiming deduction in the original return filed, as indicated above, appears to be a satisfactory explanation and therefore, the appellants attempt to claim the said deduction u/s 153A return for assessment year 2009-10 cannot be held against him for levy of penalty u/s 271(1)(c) of the Act for concealment of particulars of income. Moreover because all the details have been submitted by the appellant in its return of income, both u/s 139(1) and u/s 153A.

The apex court in the case of Reliance Petro Products Pvt Ltd 322 hR 158 (SC) 2010 have held that mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. In RELIANCE Petro Products (Supra) the apex court has held as under:– “the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself

The claim of the AO in the order u/s 271(1)(c) that the assessee neither included this income in the profit and loss account/ Computation of income nor paid taxes in respect of the above undisclosed income does not bear out from the facts of the case and hence, is held to be misplaced.

On the facts and circumstances of the case, the levy of penalty u/s 271(1)(c) by the AO on account of concealment of particulars of income is directed to be deleted.”

Since the quantum addition was deleted by the learned Commissioner (Appeals), consequently, the penalty order passed by the Assessing Officer became infructuous. Therefore, the learned Commissioner (Appeals) directed the Assessing Officer to delete the penalty. The Revenue, being not satisfied with the order of the learned Commissioner (Appeals), carried the issue of deletion of penalty before the Tribunal.

Before us, the learned Departmental Representative submitted that the assessee was not eligible for deduction under section 80IB(10) of the Act. The learned Commissioner (Appeals) held that no new and fresh claim can be made in the return of income filed under section 153A of the Act. He submitted that the assessee neither included this income in the Profit & Loss Account nor in the computation of income and also not paid tax in respect of the undisclosed income. He submitted that the income was brought to tax as a result of search undertaken under section 132 of the Act and, therefore, the assessee was defaulted within the meaning of section 271(1)(c) of the Act. The learned Departmental Representative relied on the decision of the Hon’ble Delhi High Court in CIT v/s Zoom Communication Pvt. Ltd., [2010] 191 Taxman 179 (Del.) for the proposition that if the assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim which is not found to be bona fide, provisions of Explanation–1 to section 271(1)(c) of the Act would come into play and the assessee will be liable for penalty. He submitted that the assessee’s case is identical to the aforesaid decision of the Hon’ble Delhi High Court, hence, the Assessing Officer was justified in levying penalty under section 271(1)(c) of the Act and prayed for upholding the penalty order passed by the Assessing Officer.

The leaned Counsel for the assessee on the other hand relied upon the observations of the learned Commissioner (Appeals) and prayed for upholding the same.

Considered the rival submissions and perused the material on record. As it appears from the relevant material available before us that the assessee had derived profit from the project named Shreeji Heights. We notice that the learned Commissioner (Appeals) observed that the assessee did not make the said claim in the return of income since the assessee was under mistaken understanding of the law that since it has constructed commercial units, it cannot claim benefit under section 80IB(10) of the Act. Further the learned Commissioner (Appeals) noticed that the assessee’s housing project was approved on 16th April 2004, therefore, the project was eligible for claiming deduction under section 80IB of the Act which fact is in conformity with the judgment of the Hon'ble Jurisdictional High Court in CIT v/s Brahma Associates, 51 DTR 298 (Bom.), wherein it has been held that the claim is fully allowable in case the project was approved prior to the amendment made in law w.e.f. 1st April 2005. In view of these observations, the learned Commissioner (Appeals) held that the assessee was eligible for claiming deduction under section 80IB of the Act. Further, we observe that the Co–ordinate Bench has allowed the claim of assessee under section 80IB of the Act for the assessment

In the result, Revenue’s appeal is dismissed. Order pronounced open court on 11.03.2021