TMI Blog2009 (8) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-IB(10) may not be allowed by the Department in future assessment proceedings and hence the same was withdrawn to buy peace and avoid litigation subject to non-levy of penalty under section 271(1)( c ) of the Income-tax Act, 1961. 4. Without prejudice to the above, the ld. CIT(A) failed to appreciate that to claim deduction under section 80-IB(10) of the Act, the appellant had filed all the particulars and had complied with all the necessary conditions and hence was under a genuine belief that its claim was properly made at the time of filing its original Return of income. 5. The ld. CIT(A) ought to have appreciated that withdrawal of claim under section 80-IB(10) by filing Revised Return after survey proceedings does not automatically follow that the deduction claimed under section 80-IB in original Return of income was not a bona fide claim. 6. The ld. CIT(A) ought to have appreciated that it was a clear case of difference of opinion between the authorities and the assessee with regard to the issue of deduction under section 80-IB(10) of the Income-tax Act, 1961 and hence it was clearly outside the scope of Explanation to section 271(1)( c ) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not fully conversant with the requirements and that the discrepancies occurred without any intention to defraud the revenue. Assessee referred to the fact that he complied with the promises was made by him during the survey in matters of withdrawal of the claim of deduction under section 80-IA(1), filing of revising return and payment of all tax liabilities. It was also pointed out that assessee requested for taking a lenient view in the matter of levy of penalty. On considering the above explanation of the assessee the Assessing Officer did not accept the same for the reason that the assessee withdrew the claim of deduction under section 80-IA(10) only after the survey action was carried out and the assessee was cornered by the findings of the survey. The assessee s plea of ignorance about requirements was also not accepted in view of the fact that the assessee was a builder and developer for many years and he had the assistance of the experts in making and filing the return of income. Accordingly, the Assessing Officer held that the assessee filed inaccurate particulars of income and made false claim under section 80-IB(10). Thus, penalty of Rs. 50,41,577 at the rate of 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at led to the disclosure, timing of the filing of the revise return, the circumstances of survey operation and other details discussed in Para 2.3-1 to Para 3.33 of the impugned order, and finally concluded stating that this is a fit case for levy of penalty. Accordingly, he confirmed the penalty levied by the Assessing Officer. 4. Aggrieved with the same, the assessee filed an appeal before the Tribunal. During the assessment proceedings, the Learned Counsel narrated the factual event and relied on various pages filed before us. The counsel mentioned that eventually, the survey under section 133A has resulted in the discovery of a couple of disputed observations, i.e., ( i ) with regard to date of commencement of the project and ( ii ) built-up area of few flats is found to be more than the permitted area of 1000 sq.ft. Referring to the first observation of the revenue authorities on the issue of date of commencement of the project, the counsel stated that the revenue erroneously taken into account the date of disapproval of the project instead of considering the fact actual date of commencement is 16-5-2001, the date of revalidation. In this regard, ld. Counsel referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.), K. Deedar Ahmed v. ITO [2005] 97 ITD 240 (Hyd.), Telebuild Construction (P.) Ltd. v. Asstt. CIT [2007] 13 SOT 218 (Mum.), Harnam Singh Bishan Singh Jewellers (P.) Ltd. v. Asstt. CIT [2000] 69 TTJ (Delhi) 14, Atul J. Joshi v. ITO [2005] 4 SOT 515 (Mum.), Prakash Chand Nahar v. ITO [2007] 110 TTJ (Jodh.) 886 to advance his case. These judgments also suggest that the event of survey operation leading to the disclosure of additional income in general or withdrawal of any statutory claims in particular itself do not indicate that the penal provisions are attracted. 6. Referring to the legal proposition in existence at this point of time, the counsel argued stating that there are large number of Tribunal orders in favour of the assessee on matters of date of commencement of the projects involving the revalidation of the disapproved proposals as well as on the disputes relating to built-up area of the three merged flats. Thus, the Ld. Counsel summed up stating that there is no violation on the issue of date of commencement of the project and on the issue of violation of the condition relating to built-up area of 3 merged flats, the matter is not free from disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, assessee cannot claim that he cannot be alleged to be a defaulter in matters of disclosure of information to the department. 8. We have heard the parties and perused the records available before us. All the citations relied on by the parties have also been gone considered. In brief, as evident from the grounds of appeal as well as the arguments of ld. counsel, the case of the assessee is that it should not be a fit case for levy of penalty as the claims in the original return of income are made under bona fide belief, the issues in question are disputed and debatable ones, the act of disclosure and filing the revised return and payment of taxes reflects the voluntariness of the assessee to buy peace and to avoid protracted litigation and they are supported by various judgments as described above. On the contrary, the case of the revenue is the assessee s claim in the original return is cannot be bona fide as he is aware of the fact of merger of the flats and assessee would not have withdrawn the claim but for the survey action and the outcome of the same. Further, there is nothing like conditional disclosure. Further, the request for lenient approach in matters o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est that factually, the development and construction of the housing project commenced prior to 1-10-1998 to make the assessee ineligible for the benefits of section 80-IB(10) of the Act. Therefore, this basis of the revenue for the levy of penalty is not apprecia-ted. By inference, we agree with the arguments of the Learned Counsel in this regard. 10. The other basis for the levy of penalty relates to the information gathered by the survey team by way of sworn statements of three flat owners as affirmed by the partners of the firm relating to the size of the residential units. During the survey action, the survey party visited the following three flat owners, namely, ( i ) Kruti Bimla Desai (flats 403 and 404 of A wing), Mr. Neil D Silva (209 and 210 of the C Wing) and Mrs. Lata Kamal Padia (409 and 410 of the C Wing) and found that the said units are constructed out of merger of 6 units. Survey party also recorded the sworn statements from them, who admitted that the merged units purchased by them are the ones, where two smaller units are merged by altering the original units in violation of the originally approved plan submitted to the concern Authorities. They also con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Ms. Kruti Bimla Desai, resident of flat No. A-403/404, Kamala Ashis (Daga) project, Building No. 3, recorded during the course of survey proceedings today. Please read the statement and confirm that you have read the statement fully. A. Yes, I confirm that I have read the statement of Ms. Kruti Bimal Desai, shown by you. Q.21 In the above statement of Ms. Kruti Bimla Desai, she has stated in reply to question No. 6, that the alteration of walls was done by the builder, i.e., M/s. Arpanna Development Corporation. Please confirm the correctness of his statement, and whether such a change is in accordance with the approved plan. A. Yes, I confirm the correctness of her statement and that such alteration done by us is not in accordance with the approved plan. Hence, I have stated to you in my earlier questions itself that I have decided to forego my claim of deduction under section 80-IB. [Emphasis supplied] 12. Thus, the information gathered by the survey team confirms that everything is not well with the housing project in question. At least, 6 residential units of the housing project are merged into 3 units and in our opinion, the same is done with prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding on the figures of the built-up area, the matter has to go to the files of the Assessing Officer. Assessing Officer is directed to garner the requisite facts after giving reasonable opportunity of being heard to the assessee and the assessee is directed to provide relevant details to the Assessing Officer to demonstrate that the saleable area is different from the built-up area and the built-up area of each merged unit is below 1000 sq.ft. as per the provisions of clause ( a ) of section 80-IB(14). Thus, this part of the ground is set aside. 15. Regarding citations relied on by the Counsel, we agree with the Counsel s argument that the survey action followed by some disclosure of income cannot in itself invite the penalty provisions, when there is no material to substantiate the concealment. However, in the instant case, considering the above information with regard to 6 residential units, it cannot be held that the present case is merely a case of withdrawal of the deduction under section 80-IB(10) without any incriminating material to suggest the concealment. Regarding the arguments on the conditional surrender of income, it is noticed that the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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