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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI DR. A.L. SAINI
Aforesaid appeal by the Revenue is against order dated 25th October 2016, passed by the learned Commissioner (Appeals)–32, Mumbai, deleting the penalty of ` 18,87,410, imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short “the Act”), for the assessment year 2010–11.
When the appeal was called for hearing no one was present on behalf of the assessee in spite of service of hearing notice issued and 2 M/s. M.M. Enterprises served through RPAD which is evident from the postal acknowledgment kept in record. Even, the assessee has not filed any application seeking adjournment. In view of the aforesaid, we proceed to dispose off the appeal ex–parte, qua the assessee after hearing the learned Departmental Representative and on the basis of material on record.
Brief facts are, the assessee a partnership firm filed its return of income on 10th September 2010 declaring nil income after claiming deduction under section 80IB(10) of the Act for an amount of ` 54,58,318. In course of assessment proceedings, the Assessing Officer for verifying the deduction claimed under section 10IB(10) of the Act, called upon the assessee to furnish the details of the housing project to find out whether the conditions of section 80IB(10) of the Act were fulfilled. In response, it was submitted by the assessee that the housing project was approved by the Mumbai Municipal Authority and a commencement certificate was issued on 6th March 2006. It was further submitted that though the area of plot is less than one acre but the condition of section 80IB(10)(b) of the Act is not applicable as the housing project was approved under the re–development scheme as per section 33(7) of Development Control Regulation For Greater Mumbai,1991 and notified on 25th March 1991, therefore, it comes within the exception provided in the proviso to section 80IB(10)(b) of 3 M/s. M.M. Enterprises the Act. In support of such claim, the assessee also relied upon certain notifications issued by the Central Board of Direct Taxes (CBDT). Thereafter, in response to further query made by the Assessing Officer, it was submitted by the assessee that the project has been approved by the Municipal Authority under the Slum Re–development Project and assessee has also filed revised Form no.10CCB. The Assessing Officer after considering the submissions of the assessee in the context of fact and material on record found that the assessee’s housing project has not been approved either under section 37(2) of The Maharashtra Regional Town Planning Act, 1966, or as per the scheme under regulation 33(10) of Development Control Regulation for Greater Mumbai 1991. Referring to the proviso under section 80IB(10)(b) of the Act the Assessing Officer observed that the re– development projects which are notified by the CBDT can avail of deduction under section 80IB(10) of the Act. He observed, as per the notifications issued by the CBDT re–development projects approved under section 37(2) of The Maharashtra Regional Town Planning Act, 1966, or under regulation 33(10) of Development Control Regulation for Greater Mumbai 1991 are eligible for deduction under section 80IB(10) of the Act even though they are constructed over an area of less than one acre. He observed, since, assessee’s project was approved under section 33(7) of Development Control Regulation for Greater Mumbai 1991, the housing project cannot avail deduction
4 M/s. M.M. Enterprises under section 80IB(10) of the Act as it is not notified under the notifications issued by the CBDT. Thus, he disallowed assessee’s claim of deduction made under section 80IB(10) of the Act. Undisputedly, the aforesaid disallowance made by the Assessing Officer was accepted by the assessee. On the basis of the aforesaid disallowance made, the Assessing Officer initiated proceedings for imposition of penalty under section 271(1)(c) of the Act for concealing particulars of income and furnishing inaccurate particulars of income. In response to the show cause notice issued under section 274 r/w section 271(1)(c) of the Act, though, the assessee furnished its explanation accepting that the disallowance made by the Assessing Officer is in consonance with the notification issue by the CBDT, however, it was submitted that the deduction claimed under section 80IB(10) of the Act was under a bona fide impression that the housing project is eligible to claim deduction under section 80IB(10) of the Act. Thus, it was submitted that there being no attempt on the part of the assessee to furnish inaccurate particulars of income, penalty under section 271(1)(c) of the Act should not be imposed. The Assessing Officer, however, did not find the Explanation furnished by the assessee acceptable. He observed, in Form no.10CCB, which is required for claiming deduction under section 80IB(10) of the Act, the assessee has deliberately not filled up the appropriate boxes requiring to state the fact whether the project is carried out in accordance with a scheme framed by the Central / State
5 M/s. M.M. Enterprises Government for re–development of a slum even though it has claimed deduction under section 80IB(10) of the Act. Thus, it was observed by the Assessing Officer, the assessee being conscious of the fact that the housing project constructed by it is not eligible for claim of deduction under section 80IB(10) of the Act has still claimed it which amounts to concealing particulars of income and furnishing of inaccurate particulars of income. Accordingly, he proceeded to impose penalty of ` 18,87,410 under section 271(1)(c) of the Act. Being aggrieved of the penalty order so passed, assessee preferred appeal before the first appellate authority.
The learned Commissioner (Appeals) after considering the submissions of the assessee and following the decision of the Hon'ble Supreme Court in case of CIT v/s Reliance Petro products Pvt. Ltd., 322 ITR 158 (SC) deleted the penalty on the reasoning that the assessee has merely claimed a deduction which was disallowed by the Assessing Officer, hence, there is no concealment of income nor furnishing of inaccurate particulars of income.
The learned Departmental Representative submitted, assessee’s housing project was constructed on a land having area of less than one acre, therefore, it is not eligible for deduction as per section 80IB(10)(b) of the Act. However, for claiming deduction under the said provision, the assessee claimed that the said project is approved as 6 M/s. M.M. Enterprises per the proviso to section 80IB(10)(b) of the Act and in this context, the assessee referred to certain notifications issued by the CBDT. He submitted, when the Assessing Officer pointed out to the assessee that the housing project was approved under regulation 33(7) of Development Control Regulation for Greater Mumbai 1991, therefore, the CBDT notifications were not applicable, the assessee failed to demonstrate that the housing project comes within the exception provided under the proviso to section 80IB(10)(b) of the Act. Therefore, the assessee knowing very well that the housing project is not eligible for deduction under section 80IB(10) of the Act, has claimed it. He submitted, if assessee’s return would not have been selected for scrutiny, the deduction wrongly claimed by the assessee would have been allowed. Therefore, he submitted that the facts on record clearly reveal that the assessee has concealed particulars of income and furnished inaccurate particulars of income.
We have heard the learned Departmental Representative and perused the material on record. Undisputedly, the area of plot on which the assessee has constructed the housing project is less than one acre. Therefore, ordinarily, the assessee is not eligible for deduction under section 80IB(10) of the Act as per the conditions imposed under section 80IB(10)(b) of the Act. However, the assessee has sought exception under the proviso below section 80IB(10)(b) of 7 M/s. M.M. Enterprises the Act by claiming that the housing project is an approved slum re– development project. In this context, the assessee has specifically pleaded in course of assessment proceedings that the housing project has been approved under rule 33(7) of Development Control Regulation for Greater Mumbai,1991 and notified on 25th March 1991. In this context, the assessee has also relied upon certain notifications issued by the CBDT. However, on verifying the CBDT notifications, the Assessing Officer found that a re–development project approved under rule 33(7) of Development Control Regulation For Greater Mumbai,1991 is not covered by the CBDT notifications, hence, not eligible for deduction under section 80IB(10) of the Act. Therefore, he disallowed the deduction. It is a fact on record that the assessee has accepted the aforesaid decision of the Assessing Officer to be correct. This is evident from the written submissions filed by the assessee in course of penalty proceedings before the Assessing Officer and first appellate authority. Further, the Assessing Officer in the penalty order has stated that in Form no.10CCB the assessee has consciously left certain portions relating to the claim of eligibility under section 80IB(10) of the Act blank. Therefore, to that extent, the allegation of the Assessing Officer that the assessee has furnished inaccurate particulars of income, prima–facie, appears to be correct. However, from the written submissions filed by the assessee in course of penalty proceedings, it is noticed that the assessee claimed that the slum re–
8 M/s. M.M. Enterprises development project have also been approved under section 37(2) of The Maharashtra Regional Town Planning Act, 1966. It is evident that the assessee has not taken the aforesaid contentions in course of assessment proceedings. In the assessment order, the Assessing Officer has recorded a finding that the re–development projects approved under section 37(2) of The Maharashtra Regional Town Planning Act, 1966, and regulation 33(10) of Development Control Regulation For Greater Mumbai, 1991 are eligible for deduction under section 80IB(10) of the Act. Therefore, going by the aforesaid conclusion of the Assessing Officer, if the assessee’s housing project is approved under section 37(2) of The Maharashtra Regional Town Planning Act, 1966, then, there may not be a case for imposition of penalty under section 271(1)(c) of the Act. However, the aforesaid claim of the assessee requires verification. Neither the Assessing Officer nor the learned Commissioner (Appeals) in course of penalty proceeding have examined the aforesaid fact. Since, the assessee has not appeared before us and clarified the fact, we are not in a position to record any finding on this aspect. In fact, the learned Commissioner (Appeals) without analyzing the factual aspect relating to the issue has deleted the penalty imposed by merely relying upon the decision of the Hon'ble Supreme Court in Reliance Petro products Pvt. Ltd. (supra). In view of the aforesaid, we are inclined to set aside the impugned order of learned Commissioner (Appeals) and restore the issue back to her
9 M/s. M.M. Enterprises for deciding afresh after properly examining the facts and after due opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
In the result, Revenue’s appeal is allowed for statistical purposes. Order pronounced in the open Court on 27.06.2018