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Income Tax Appellate Tribunal, INDORE BENCHE, INDORE
Before: SHRI CHANDRA MOHAN GARG, JUDICIAL & SHRI O.P.MEENA
आदेश / O R D E R
PER CHANDRAMOHAN GARG, J.M: This appeal has been filed by the Revenue against the order of Ld. Commissioner of Income Tax(Appeals)-2, Bhopal [in short ‘CIT(A)’], dated 29.05.2015 for A.Y. 2009-10 by which penalty imposed by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961(in short ‘the Act’) has been cancelled.
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The sole ground raised by the Revenue reads as follows: “On the facts and in the circumstances of the case and in law, the CIT(Appeal) has erred in:- Deleting the penalty stating that there is absences of any adverse material brought on record when the assessee being well aware that it is not eligible for claim of deduction u/s 80IA(4) of the Income Tax Act has been making such claim and hence furnishing false and inaccurate particulars of income.”
Brief facts of the case are that the assessee company is engaged in the business of infrastructure development work like construction of roads etc. carried through tenders obtained from various government departments. As per return filed by the assessee on 26.09.2009 for A.Y. 2009-10, the assessee declared nil income after claiming deduction u/s 80IA(4) of the Act, at Rs.1,27,33,201/- for the assessment order dated 30.11.2011 passed u/s 143(3) of the Act the deduction claimed by the assessee u/s 80IA(4) of the Act, has been disallowed by the AO and this disallowance has been upheld by the Ld. CIT(A)-II, Bhopal.
Subsequently, the AO initiated penalty proceedings u/s 271(1)(c) of the Act, and passed penalty order on 27.03.2014 imposing penalty of Rs.65,00,000/-. Being aggrieved, the assessee carried the matter before the Ld. CIT(A) and the first appellate authority cancelled the penalty by observing that the assessee is not liable to pay penalty u/s 271(1)(c) of the Act, for claiming deduction u/s 80IA(4) on the profit derived from its infrastructure development activities during the A.Y. 2009- 10. Now, the aggrieved the Revenue is before the Tribunal
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challenging the cancellation of penalty by the Ld. CIT(A) with the sole ground as reproduced hereinabove.
We have heard both the parties and also perused the relevant material placed on the record of the Tribunal, inter alia, assessment order, impugned order of the Ld. CIT(A) upholding the disallowance, penalty order and impugned order of the Ld. CIT(A) under challenged, which deleted the penalty. The Ld. Senior Departmental Representative (DR), supporting the penalty order vehemently contended that by way of claiming wrong deduction the assessee has concealed its particulars of income by furnishing inaccurate particulars of income within the meaning of section 271(1)(c) of the Act, therefore, the assessee was liable for penalty under the said provisions. He further contended that the AO rightly imposed penalty but the same was deleted by the Ld. CIT(A) without any justified reason and basis, therefore, the impugned order may kindly be set aside by restoring that of the AO.
Replying to the above, the Ld. Counsel of the assessee drew our attention towards various judicial pronouncements of Hon’ble High Court and the Tribunal including decision of Hon’ble jurisdictional High Court of Madhya Pradesh dated 11.1.2017 passed in assessee’s own cases pertaining to A.Ys. 2005-06 to 2008-09 and submitted that in the identical facts and circumstances the penalty levied by the AO u/s 271(1)(c) of the Act, on the same issue, which was deleted by the Ld. CIT(A) and findings of the First Appellate Authority
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were confirmed by the Tribunal and lastly appeal of the Revenue against the order of the Tribunal has been dismissed by the Hon’ble High Court upholding the cancellation of penalty. Copy of the order of Hon’ble High Court was also placed before us which was kept in the record.
On careful consideration of our submissions at the very outset, we observe that the Ld. CIT(A) has deleted and cancelled the penalty for A.Y. 2009-10 with following observations and conclusions: “ 5.7 Reference can also be made to the decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158(SC). In this case, the Hon’ble Supreme Court observed as under: “A glance at the provisions of section 271(1)(c) of the Income Tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the work “particulars” used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, no exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incurred or
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erroneous or false there is no question of inviting the penalty under section 271(1)(c). A 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. Such a claim made in the return cannot amount to furnishing inaccurate particulars.” 5.8 In the instant case also, there is no finding on record that any details supplied by the appellant in its returns of income for these years are found to be incorrect or false and therefore, there is no question of levying penalty u/s 271(1)(c). A mere making of a claim u/s. 80IA(4), which was not allowed by the assessing officer, by itself will not amount to furnishing of inaccurate particulars of concealing the income. 5.9 It is further seen that AO has relied heavily on the decision of Ho’ble Delhi High Court in the case of CIT vs. HCIL Kalindee ARSSPL, ITA 480/2012 dtd. 29.07.2013. The said decision also says that it is to be examinee as to whether a taxpayer’s case falls within sub-clause(A) or (B) of Explanation 1 to Section 271(1)(c) and the effect thereof. In the case of the appellant, it is to be seen as to whether its explanation for making claim of said deduction is bona fide or not. After perusal of assessment order and assessment records of the AO, in my considered view, the appellant’s case does not fall in any of the category of cases whereby penalty u/s 271(1)(c) is found imposable. In fact, while deleting same penalty on similar facts for claim of deduction u/s 80IB(7A) of the IT Act, Hon’ble Allahabad High Court in the case of Rave Entertainment Pvt. Ltd. Vs. CIT vide order dtd. 16.04.2015 passed in ITA No.65 of 2015 has also duly considered the case of CIT v. HCIL Kalindee ARSSPL(2013) 37 Taxmann 347(Del) which has been relied on by the AO. Therefore, considering the facts and circumstances of the case, appellant’s submissions, absence of any adverse material brought on record by the AO during the course of penalty proceedings who has relied solely on the fact of disallowance of deduction claim made in the assessment order and legal position of the issue, I am of the considered view that the appellant is not liable for penalty u/s 271(1)(c) for claiming deduction u/s 80IA(4) on the profits derived from its infrastructure development activities during A.Y. 2009-10.
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Accordingly, penalty order u/s. 271(1)(c) for the assessment year under consideration imposing penalty of Rs.65,00,000/- is hereby, cancelled.
From the order of Hon’ble Jurisdictional High Court of Madhya Pradesh dated 11.01.2017(Supra) we observe that the Hon’ble High Court has upheld findings of the Tribunal in assessee’s own cases wherein the order of the Ld. CIT(A) cancelling the penalty which was imposed by the AO on account of dismissal of deduction claimed u/s 80IA(4) of the Act, has been upheld. For the sake of completeness in our findings, we find it necessary and appropriate to reproduce the relevant operative paras of judgment of Hon’ble High Court of Madhya Pradesh which read as follows:
“3. The order passed by the Assessing Officer was interfered with by the Commissioner, Appeals and challenging the order of Commissioner, (Appeal), the appeal was filed before the Tribunal by the Revenue. With reference to assessment year 2005-2006 to 2008-2009, various assessment orders were passed and deduction claimed under Section 80(1)(a)(4) of the Income Tax Act was disallowed by the Assessing Officer, the Appellate Authorities and the Tribunal. Challenging the dis- allowance, appeals were filed by respondent assessee under Section 260-A of the Income Tax Act in the High Court. Substantial questions of law were framed and the appeals after admission were pending consideration before the Appellate forum. In the meanwhile, as proceedings for imposing penalty were initiated under the provisions of Section 271(1)(c) and ultimately when penalty were imposed by the Assessing Officer at the instance of respondent -assessee, matter traveled to the Commissioner, Appeal and the same having been allowed at the instance of Revenue, matter was agitated with Tribunal and the Tribunal after taking note of various aspects of the matter, came to the conclusion that penalty
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could not be imposed when the appeal under Section 260A has been admitted in the matter of addition made or deduction permissible under Section 80(1)(a)(4) and after taking note of certain judgments of the Tribunal and the Bombay High Court in the case of Nayan Builders and Developers Pvt. Ltd. Vs. The Taxing Authorities, concurrent finding s are recorded by the Commissioner (Appeal) and the Tribunal, they came to the conclusion that when an appeal involving a substantial question of law was pending consideration before the High Court, the addition became a debatable one and when the addition was debatable and subjudice before the Appellate Authority, penalty under Section 271(1)(c) of the Income Tax Act could not be levied as the admission of appeal and the substantial question of law framed credence to the bonafide of the assessee to say that there was no deliberate concealment. Accordingly, following the judgment of the Bombay High Court and consistent orders of the Appellate Tribunal in this regard, the appeals filed by the Revenue were dismissed and the orders passed by the Commissioner, Income Tax Appeal, Bhopal, was upheld. 4. The findings recorded by the Commissioner, Income Tax Appeal was to the extent that as the question of deduction was pending consideration in the appellate forum, therefore, penalty imposed should be cancelled. 5. We find that the aforesaid view taken by the Tribunal, to say that till decision on the appeal by the High Court the bona fide of the assessee in claiming the deduction cannot be disputed, the Commissioner, Income Tax Appeals and the Tribunal have not committed any error and in dismissing the appeal of revenue on such consideration, no error has been committed nor any substantial question of law arises warranting consideration.” 9. In view of above, on specific query from the Bench, the Ld. Senior DR could not show us any contrary decision of Hon’ble High Court which could lead us to take a different view. We also point out that the Ld. Senior DR has fairly accepted that
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the facts and circumstances of A.Y. 2009-10 are quite similar and identical as were in A.Ys. 2005-06 to 2008-09. It is a well accepted legal proposition that in imposing penalty u/s 271(1)(c) of the Act, it is to be examined as to whether the case false within sub-clause(A) or (B) of Explanation 1 to Section 271(1)(c) of the Act, and the Explanation of the assessee for making a claim, which was dismissed by the Revenue Authorities, is bona fide or not. The Hon’ble Allahabad High Court in the case of Rave Entertainment Pvt. Ltd. Vs. CIT vide order dtd. 16.04.2015 passed in ITA No.65 of 2015 since reported as (2016) of 66 taxman.com 369 (Ald), has held that where assessee’s claim for deduction u/s 80IB was rejected for not satisfying condition u/s 80IB(7A), penalty u/s 271(1)(c) of the Act, was not leviable.
From the judgment of Jurisdictional High Court of Madhya Pradesh in assessee’s own appeals dtd. 11.01.2017(Supra) it is amply clear that their lordship speaking for Hon’ble Jurisdictional High Court held that till decision on the appeal by the Hon’ble High Court bona fide of the assessee in claiming deduction u/s 80IA(4) of the Act, cannot be disputed. Therefore, the Ld. CIT(A) and the Tribunal have not committed any error in dismissing the appeal of the Revenue on such consideration. With these observations the Hon’ble High Court has confirmed the order of the Tribunal which approved the findings of the Ld. CIT(A) cancelling the penalty on the similar issue. Therefore, respectfully following the same, we hold that there is no valid reason before us to interfere with the
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impugned order of the Ld. CIT(A) and thus, we uphold the same. Accordingly, sole ground of Revenue is being devoid of merits is dismissed.
In the result, the appeal of the Revenue is dismissed.
Order was pronounced in the open court on 29.03.2017.
Sd/- Sd/- (CHANDRA MOHAN GARG) (O.P. Meena) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER
Indore; �दनांक Dated :29 /03/2017 Patel, P.S/.�न.स.