THE ACIT, (EXEMPTION) CIRCLE-2,, AHMEDABAD vs. JAMNAGAR AREA DEVELOPMENT AUTHORITY, JAMNAGAR

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 ITA No. 102/Rjt/2016 dated 22.04.2019 which has followed by the Hon’ble

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 ITA No.l02/Rjt/2016 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 ITA No. 102/Rjt/2016 and also relied upon by the Hon’ble High Court

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 ITA No. 102/Rjt/2016 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.

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.

ITA No. 2/Ahd/2020 for Assessment Year 2015-16

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

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?

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

In the result, both the appeals filed by the Revenue are hereby dismissed.