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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI JASON P. BOAZ & SHRI SANDEEP GOSAIN
PER SANDEEP GOSAIN, JUDICIAL MEMBER :
The present appeal has been filed by the assessee against the order of CIT(A)-1, Mumbai dt. 18.10.2013 for A.Y 2009-10 in Appeal No. 86/12-13 on the following grounds of appeal :
“1. The learned AO erred in holding the addition of Rs.27,99,653/- by scaling down claim of deduction u/s. 80IB(10) to be amounting to furnishing of inaccurate particulars of income.
The learned AO failed to appreciate that relevant particulars in respect of working of deduction u/s 80 IB (10) carried the sufficient openness as per I.T. Return filed and relevant details furnished when called upon.
The learned AO failed to take into account decision of Apex Court in the case of CIT v/s Reliance Petroproducts Pvt Ltd reported at - (2010) 322 ITR 158 (sc) wherein the disallowance of claim for deduction is held be not amounting to furnishing inaccurate particulars of income.
4. The learned AO erred to equate the resultant addition as based on facts and the disallowance to be not legal disallowance.
5. The appellant craves leave to add, alter amend or omit any of the grounds of appeal.”
2. The brief facts of the case are that the return showing income of Rs.55,16,220/- was filed on 29.9.2009. The appellant was proprietor of two concerns, i.e., M/s. Mittal Gas Agency, engaged in the business of gas agency distribution and M/s. Neel Builders & Developers, engaged in the business of building development and construction. The assessee claimed deduction u/s. 80IB(10) amounting to Rs.1,02,38,668/- which was restricted to Rs.76,46,298/- by Assessing Officer by disallowing the excess claim of Rs.30,37,440/-. Penalty proceedings were initiated u/s 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) and after seeking reply from the assessee, penalty order u/s 271(1)(c) of the Act was passed by the ACIT on 13.6.2012 thereby levying penalty upon the assessee for furnishing of inaccurate particulars of income. Aggrieved by the order of the ACIT, assessee preferred an appeal before the Ld. CIT(A) and Ld. CIT(A), after considering the case of both the parties dismissed the appeal vide order dt. 18.10.2013. Aggrieved by the order of the Ld. CIT(A), assessee has filed the present appeal before us on the grounds mentioned hereinabove.
3. Ground nos. 1 to 4 are interconnected and relate to challenging the penalty levied by ACIT and confirmed by the Ld. CIT(A).
The Ld. AR appearing on behalf of assessee submitted that in the course of business as builder developer, the assessee continued development of project “Neel Splendour” and the profit from the said project was eligible for deduction u/s 80IB(10). It was further submitted by the Ld. AR that although in this particular year under consideration, i.e., A.Y 2009-10 it was the only project from which he derived the profit, in the immediate past years, the profits were derived from several projects, i.e., eligible projects and other projects. Therefore, in order to know the project profit, assessee consistently followed method of maintaining project-wise accounts. On the basis of these project-wise accounts maintained, the profit in respect of eligible profit was reported and claimed as deduction u/s 80IB(10). It was further argued by the Ld. AR that the acceptance of addition or not disputing the same or discussion in the assessment proceedings no way leads to the conclusion that it is admission of concealment on the part of the assessee. The Ld. AR relied upon the unreported judgment of ITAT ‘A’ Bench, Mumbai in the case of M/s. Aassia Management and Consultancy Pvt. Ltd. vs. ACIT in dt. 13.4.2011. In addition, the Ld. AR also relied upon the decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 (SC). Lastly, the Ld. AR submitted that the penalty order passed by the Assessing Officer and confirmed by the Ld. CIT(A) may be set aside.
On the other hand, the Ld. DR appearing on behalf of the Revenue relied upon the order passed by the Assessing Officer as well as the Ld. CIT(A). It was submitted that the assessee was entitled for deduction of Rs. 76,46,298/- against which the assessee had made a claim of deduction of Rs.1,06,83,738/-. It was argued by the Ld. DR that the allowability of deduction u/s 80IB(10) is not the issue under consideration and the issue under consideration is excess claim of deduction made by the assessee in the return of income which amounts to furnishing of inaccurate particulars of income. It was also argued that had it not been for the scrutiny assessment, the excess claim of deduction of Rs.30,37,440/- would have gone undetected thereby causing loss of revenue to the exchequer. The Ld. DR also relied upon the judgment of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) and submitted that although the case law of Hon'ble Supreme Court is not squarely applicable in the assessee’s case, however, the observations of the Hon'ble Supreme Court therein are squarely applicable in the assessee’s case.
We heard the counsels for both the parties, perused the materials placed on record as well as the orders passed by the lower authorities. The Ld. CIT(A) has dealt with this issue in operative paragraph 10 to 15 of his order which is reproduced hereunder :
“10. I have carefully considered the appellant's submissions, the AO's observations in the assessment order and the penalty order, the facts of the case and various judgments relied upon by the appellant. It is seen that the appellant had claimed deduction u/s. 80IB(10) on profit on sale of plot of land and rental income. Deduction u/s. 80IB(10) is available on the profits of the undertaking engaged in the business of building and developing housing projects. The appellant knew fully well that profit on sale of plot and rental income were in no way related to developing and building housing project and therefore, deduction u/s 80IB(10) was not available in respect of these amounts, still he knowingly included these amounts in the claim of deduction. The contention of the appellant that he had accepted the addition during the course of assessment proceedings to co-operate with the department is not borne out from the assessment order. Nowhere in the assessment order has the A.O. mentioned any such fact.
The case laws relied upon by the appellant are not applicable in his case as the facts of these cases are different from facts of the appellant's case. In the case of CIT vs Jakson Ltd. (supra) there was no question about the allowability of the deduction u/s. 80IB, only the amount of deduction had been reduced. In the appellant's case, it is clear that deduction u/s 80IB(10) was not allowable at all on profits on sale of plot and on rental income as these amounts have nothing to do with the building and development of housing project.
In the case of Parikh Investment & Development (P) Ltd. (supra) deduction u/s 80IB(10) had been claimed on miscellaneous income which was disallowed. Penalty u/s 271(1)(c) was deleted because the issue involved was debatable. In the appellant's case there is no debate at all about the deduction u/s. 80IB(10) not being available on profit on sale of plot and on rental income.
In the case of Reliance Petroproducts (P) Ltd., it was held that mere claim, which was not sustainable in law, did not amount to furnishing of inaccurate particulars or concealment of income. In the appellant's case, the deduction u/s. 80IB(10) is not allowable to the appellant on the facts of the case itself and it is not a legal disallowance.
In view of the detailed discussion made as above, it is held that penalty has rightly been imposed by the A.O. for furnishing of inaccurate particulars of income by claiming deduction u/s. 80IB(10) in respect of sums which was not available at all on the facts of the case itself. Penalty u/s. 271(1)(c) amounting to Rs. 10,32,424/- is therefore, confirmed.
In result, the appeal of the appellant is dismissed.”
After hearing the counsels for both the parties and perusing the order passed by the Ld. CIT(A) we are of the considered view that the Ld. CIT(A) has considered the issue in detail and passed a well-reasoned and speaking order. The Ld. CIT(A) has taken into consideration that deduction u/s 80IB is available on the profits of the undertaking engaged in business of building and developing housing projects. The assessee knew fully well that profit on sale of plot and rental income were in no way ‘related’ to developing and building housing projects and, therefore, deduction u/s 80IB(10) was not available in respect of these amounts, but even then, the assessee included these amounts in the claim of deduction. The Ld. CIT(A) has also taken into consideration the contention of the assessee that he had accepted the addition during the course of the assessment proceedings to co- operate with the Department is not borne out from the assessment order. From the co-joint reading of the orders passed by the revenue authorities as well as hearing the counsels for the parties, we are also of the view that the assessee has acted in conscious disregard of its obligation and the assessee fully knew that profit on sale of plot and rental income were in no way related to developing and building housing project and, therefore, deduction u/s 80IB was not available in respect of these incomes, but even then knowingly the assessee has included these amounts in the claim of deduction and made a wrong claim, so much so, the assessee has not even filed any revised return. Therefore, all these facts lead to the conclusion that the penalty has been rightly imposed by the Assessing Officer and upheld by the Ld. CIT(A) for furnishing of inaccurate particulars of income for claiming deduction u/s 80IB in respect of sums which were not at all available on the facts of the case.
In the result, appeal filed by the assessee is dismissed.
Order pronounced in the open court on 25th May, 2016.