ITO 20(2)(3), MUMBAI vs. PRAMUKH ENTERPRISES, MUMBAI

PER AMARJIT SINGH, JM:

This appeal filed by the Revenue against the order of learned Commissioner of Income Tax(Appeals) - 31, Mumbai [hereinafter referred to as the “learned CIT(A)”] dated 05.12.2012 relevant to the A.Y.2005-06 wherein learned CIT(A) has deleted the penalty imposed by the Assessing Officer to the tune of Rs.1,05,70,770/- u/s. 271(1)(c) of the of the Income Tax Act, 1961 ( in short “the Act”). The levy of penalty in this case emanated from the Assessment Year: 2005-06

disallowances / additions made by the Assessing Officer to the returned income of the appellant in pursuance to the findings of the survey action u/s. 133A of the Act undertaken by the Department. During the survey, the Assessing Officer found that the appellant had claimed the deduction u/s. 80IB(10) of the Act but did not fulfil the condition thereof. Accordingly the claim for this deduction (which the appellant had withdrawn by filing a revised return dated 13.02.2006 and once again thereafter vide a subsequent revised return dated 31.03.2007) was disallowed. While completing the assessment u/s. 143(3) of the Act, the Assessing Officer has also taken into account of the documents impounded during the survey, which showed unaccounted funds in the hands of the appellant. On this count, he had made an addition of Rs.59,20,000/- u/s. 69A of the Act. Regarding, the appellant’s claim u/s. 80IB(10) of the Act, it was observed that that the same while being allowed at the first appellant level, was disallowed by the Tribunal. Regarding, the addition of Rs.59,20,000/- u/s. 69A, the same was upheld to the tune of Rs.8,20,000/- by the learned CIT(A) and the Hon’ble Income Tax Appellate Tribunal both. The learned CIT(A) deleted the penalty levied on the basis of claim raised u/s. 80IB(10) and confirmed the penalty imposed on account of addition u/s.69A of the Act.

2 Assessment Year: 2005-06

carefully. Before deciding the matter of controversy it is necessary to advert the finding of the learned CIT(A) on record:-

“3.2 I have carefully considered the facts of the case. Regarding the claim deduction u/s. 80IB(10), it is apparent that the claim has been found not allowable by the Assessing Officer and the Hon’ble ITAT, whereas on the same set of facts, the CIT(A) had concluded that the claim was allowable. Thus, there is a situation where despite facts being unchanged, the applicability or otherwise of legal provisions to the instant case has been differently interpreted by the authorities concerned. There is however, nothing to suggest that this variation in conclusion is due to furnishing of inaccurate particulars by the appellant. The phrase “furnishing of inaccurate particulars” and the word “inaccurate” has been discussed at length in the judgment of the Apex Court in the case of Reliance Petroproducts reported in 348 ITR 306 (SC) and the Court has clarified that it is the details given by any assessee in the return filed that must

3 Assessment Year: 2005-06

provide the basis for the levy of penalty. The court has further stated that in case, there is not finding that the details mentioned in the return are erroneous or false, simple a claim which is found inadmissible will not amount to furnishing of inaccurate particulars of income. In the instant case, the allowance and subsequent disallowance of the claim u/s. 80IB(10) by the 1st and 2nd appellate authorities rested on the differing interpretations of whether the condition of completion of project on or before 31.03.2005 would apply to the appellant considering that it was carrying out a Slum Rehabilitation Scheme. The Tribunal held the claim disallowable stating that the clarification issued F.No.205/3/2001/ITA-II dated 04.03.2001 relied upon by the appellant could not be said to be a notification by the Board under the concerned provisions and therefore the appellant could not be held eligible to claim the deduction u/s. 80IB(10) having failed to complete the project by the stipulated date.

4 Assessment Year: 2005-06

law settled in Reliance Petro Products reported in 348 ITR 306 (SC). Merely finding the claim which is not allowable in accordance with provision of law does not attract the provision of penalty u/s. 271(1)(c) of the Act. No doubt in the said circumstance the learned CIT(A) has passed the order in question judiciously and correctly which does not require to be interfere with at this appellate stage therefore the appeal of the revenue is hereby ordered to be dismissed.

Order pronounced in the open court on 16th March, 2016. (AMARJIT SINGH) (D.KARUNAKARA RAO) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 16th March, 2016 MP MP MP MP

6 Assessment Year: 2005-06

आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant