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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri Waseem Ahmed & Shri T.R. Senthil Kumar
The Asst. Commissioner Jamnagar Area of Income-tax Development (Exemptions), Circle-2, Vs Authority 1st Floor, Ahmedabad, Dr. Hegdewar (Appellant) Commercial Complex, Near M.P. Shah College, Sat Rasta, Jamnagar-361001 PAN: AAALJ0188Q (Respondent) Appellant by : Shri James Kurian, CIT/DR Respondent by : Shri Vimal Desai, A.R. Date of hearing : 19-07-2022 Date of pronouncement : 22-07-2022 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
Revenue against the order dated 01.10.2019 passed by the Commissioner of Income Tax (Appeals)-9, Ahmedabad, who confirmed the penalty levied u/s.271(1)(c) of the Act of the Income Tax Act, 1961 (hereinafter & 2/Ahd/2020 A.Y. 2012-13 & 2015-16 Page No 2 ACIT vs. Jamnagar Area Development Authority referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2012- 13.
The brief facts of the case is that the assessee is a local authority notified by the Government of Gujarat under Gujarat Town Planning and Urban Development Act, 1976. For the Assessment Year 2012-13, the assessee field its return of income on 21.03.2013 declaring its total income at Rs. NIL. The return was processed u/s. 143(1) of the Act and then selected for scrutiny assessment determining total income of Rs. 4,25,77,239/- by disallowing the claim of exemption u/s. 11(2) of Rs. 2,65,76,340/- and u/s. 11(1)(a) of Rs. 89,67,794/- and disallowance of capital expenditure of Rs. 70,33,105/-.
Aggrieved against the same, the assessee filed an appeal before the Ld. CIT(A). The CIT(A) vide order dated 15.02.2016 dismissed the appeal field by the assessee and confirmed the demand raised by the Assessing Officer. It is thereafter the assessing officer proceeded with the penalty proceedings initiated u/s. 274 r.w.s. 271(1)(c) of the Act and thereby levied penalty of Rs. 2,54,61,737/- for concealment of income.
Aggrieved against the same, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) deleted the penalty following assessee’s quantum appeal passed by the Co-ordinate Bench of this Tribunal for the Assessment Year 2012-13 in dated 22.04.2019 which has followed by the Hon’ble I.T.A No. 1 & 2/Ahd/2020 A.Y. 2012-13 & 2015-16 Page No 3 ACIT vs. Jamnagar Area Development Authority High Court of Gujarat in the case of Ahmedabad Urban Development Authority reported in 396 ITR 323 wherein the Hon’ble High Court granted exemption u/s. 11 of the Act and further holding that provisions of Section 2(15) of the Act would not apply in the case of the assessee being a notified area development authority.
Aggrieved against the same, the Revenue is in appeal before us raising the following Grounds of Appeal: i. Whether the Ld. Commissioner of Income Tax (Appeals) has erred.in law and on the facts of the case in deleting the penalty levied of Rs.2,54,61,737/- relying on the decision of Hon. ITAT in without appreciating the findings of the Assessing Officer and Ld. CIT(Appeals) in the quantum appeals. ii. Whether the Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case in not appreciating the findings of the AO in the penalty order, wherein the AO has clearly brought out the default of the assessee in furnishing the inaccurate and or concealing the particular of income. iii. Whether the Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case deleting the penalty levied of Rs.2,54,61,737/-relying on the decision of Hon. ITAT in ITA No.l02/Rjt/2016 for AY 2012-13 against which Tax Appeal 760/2019 was filed before the Hon. High Court and the decision Hon. High Court has not been accepted though further SLP, has not preferred on account of the quantum of tax involved.
The ld. D.R. Mr. James Kurian appearing for the Revenue in support of its grounds claimed that the penalty is to be restored and supported the penalty order passed by the A.O.
Per contra, the ld. Counsel Mr. Vimal Desai appearing for the assessee produced before us the copy of the quantum appeal in and also relied upon by the Hon’ble High Court I.T.A No. 1 & 2/Ahd/2020 A.Y. 2012-13 & 2015-16 Page No 4 ACIT vs. Jamnagar Area Development Authority of Gujarat in the case of Ahmedabad Urban Development Authority cited (supra). Following the jurisdictional High Court judgment, the Tribunal held that the assessee is eligible for exemption u/s. 11 of the Act. Though the case is restored for verification of calculation of exemptions u/s. 11 of the Act. The impugned penalty does not have any leg to stand. Therefore, the penalty levied is liable to be deleted.
We have given our thoughtful consideration and perused the materials available on record. As it can be seen from the grounds of appeal
, the quantum of appeal in is travelled before the High Court of Gujarat in R/Tax Appeal No. 760 of 2019 filed by the Revenue, which was dismissed on 10.12.2019 held as follows:
4. As can be seen from the impugned order, the Tribunal has merely applied the decision of this court in the case of Ahmedabad Urban Development Authority v. Assistant Commissioner of Income Tax (Exemptions), (2017) 396 ITR 323 (Guj.) to the facts of the present case. It is not the case of the appellant that the Tribunal has wrongly applied the decision to the facts of the present case. The sole ground put forth is that the Special Leave Petition filed by the revenue against the said decision is pending before the Supreme Court. In the aforesaid premises, it is not necessary to set out the facts and contentions in detail.
5. For the reasons recorded in the decision of this court in the case of Ahmedabad Urban Development Authority v. Assistant Commissioner of Income Tax (Exemptions) (supra,), this court does not find any infirmity in the impugned order passed by the Tribunal so as to give rise to any question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, summarily dismissed.
8.1. Thus, the quantum appeal itself is being allowed in favour of the assessee by granting exemption u/s. 11 of the Act, consequently penalty levied u/s. 271(1)(c) for concealment of & 2/Ahd/2020 A.Y. 2012-13 & 2015-16 Page No 5 ACIT vs. Jamnagar Area Development Authority income is liable to be deleted. Further more, the Ld. CIT(A) also as follows various case laws on the ground penalty cannot be levied on highly debatable issues of applicability of proviso to Section 271(1)(c) of the Act. The same are reproduced as follows: (A) ITAT Pune in the case of Kambay Software India (P) Ltd. 122 TTJ 721 (Pune) wherein it is held that "particulars" refer to facts, defects, specifics of the information about someone or something. Thus, the details or information about the income would deal with the factual details of income and cannot be extended to areas which are subjective such as status of taxability of income, admissibility of deduction and interpretation of law. Accordingly, it was held that mere rejection of legal claim would not amount to furnishing of inaccurate particulars of income. This view is accepted by Hon'ble Supreme Court in the case of Reliance Petro Products reported at 322 ITR 158. In this case, the claim of the assessee u/s 36(1)(iii) r.w.s. 14A of the Act was rejected by the A.O. and this order was upheld by the Hon. ITAT. The A.O. imposed penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. The penalty was held to be illegal by the tribunal, since the factual details of income furnished by the assessee were found to be correct. The matter ultimately reached to Hon'ble Supreme Court which upheld the view of the tribunal by holding that mere making the claim which is not sustainable in law, by itself, would not amount to furnishing of inaccurate claim or furnishing inaccurate particulars regarding the income of the assessee. (B) CIT v/s. PHI Seeds India Ltd. (2008) 301 ITR 29, the Hon'ble Delhi High Court held that provisions of section 271(1)(c) are attracted only in those instances where the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income with an intention to mislead the revenue. (C) The Hon'ble Gujarat High Court in the case of National Textiles v/s. CIT (2001) 249 ITR 295 has held that for levying penalty u/s 271(1)(c) of the IT. Act, the Revenue has to prove animus i.e. conscious concealment or act of furnishing inaccurate particulars of income. In this case, it is also held that if the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation 1 to section 271(1)(c) cannot help the department because there will be no material to show that the amount in question was the income of the assessee. This way, if any erroneous claim of & 2/Ahd/2020 A.Y. 2012-13 & 2015-16 Page No 6 ACIT vs. Jamnagar Area Development Authority deduction is made or if the explanation of the appellant remains unproved, provisions of concealment of penalty are not attracted.
Thus, in our considered view, the penalty levied has leg to stand when the quantum appeal is allowed in favour of the assessee and therefore the grounds raised by the Revenue are hereby rejected and appeal field by the Revenue is hereby dismissed.
The present appeal has been filed by the Assessee against the order dated 01.10.2019 passed by the Commissioner of Income Tax (Appeals)-9, Ahmedabad, as against the Assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2015- 16.
For the Assessment Year 2015-16, the assessee field its return of income on 31.10.2015 declaring its total income at Rs. NIL. The return was selected for scrutiny assessment and the A.O. determined total income as Rs. 40,52,38,755/- by disallowing the claim of exemption u/s. 11(2) of Rs. 11,70,10,332/- and u/s. 11(1)(a) of Rs. 2,74,03,835/- and disallowance of capital expenditure of Rs. 1,87,30,868/- and three additions on account of income not offered for taxation of Rs. 5,94,01,490/-.
Aggrieved against the same, the assessee filed an appeal before the Ld. CIT(A). The CIT(A) vide order dated 15.02.2016 partly & 2/Ahd/2020 A.Y. 2012-13 & 2015-16 Page No 7 ACIT vs. Jamnagar Area Development Authority allowed the appeal field by the assessee following the order passed by the ITAT in assessee’s own case in ITA No. 102/Rjt/2016 for the Assessment Year 2012-13 wherein the Tribunal held that the assessee is eligible for exemption u/s. 11, being notified area development Authority.
Aggrieved against the same, the Revenue is in appeal before us raising the following Grounds of Appeal:
1. Whether the Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case, was justified in holding that the activities of the assessee are not in the nature of commerce/trade/business without considering the fact that the assessee is involved in widespread commercial activities which is covered under first and second provisos to section 2(15) of the Act and thus exemption u/s.l 1 & 12 of the Act are not available to the assessee?
2. Whether the Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case in relying on the decision Hon. High Court of Gujarat in the case of Ahmedabad Urban Development Authority Vs. ACIT(E) (2017) 83 taxmann.com 78 (Guj.)/ (2017) 396 ITR 323 (Guj,) which is subject matter of SLP before the Hon. Supreme Court which is pending?
3. Whether the Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case in allowing exemption of Rs. 11,70,10,3327-u/s.ll(2) and Rs.2,74,03,835/- u/s.ll(l)(a) without considering the fact that once the proviso to section 2(15) of the Act is applicable to the assessee, the assessee forfeited all the exemption u/s. 11 & 12 of the Act?
4. Whether the Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case in allowing capital expenditure of Rs.1,87,30,868/- without considering the fact that once the proviso to section 2(15) of the Act is applicable to the assessee, the assessee forfeited all the exemption u/s. 11 & 12 of the Act?
15. We have considered this issue at Paragraph 8 of this order, wherein assessee’s own case Hon’ble High Court of Gujarat dismissed Revenue’s appeal in R/Tax Appeal No. 760 of 2019 and & 2/Ahd/2020 A.Y. 2012-13 & 2015-16 Page No 8 ACIT vs. Jamnagar Area Development Authority thus allowed the claim of exemption u/s. 11 in favour of the assessee for the Assessment Year 2012-13. As the facts are similar to the present Assessment Year 2015-16 respectfully following jurisdictional High Court judgment, the grounds raised by the Revenue are hereby rejected and the appeal field by the Revenue is hereby dismissed.
In the result, both the appeals filed by the Revenue are hereby dismissed.