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Income Tax Officer, Ward–25 (2) (3) , Mumbai Versus Shri Gunshi Karsan Dedhia

2016 (1) TMI 858 - ITAT MUMBAI

Penalty u/s 271(1)(c) - disallowance of deduction under section 80IB(10) - CIT(A) deleted the penalty - Held that:- It may be a fact that assessee has accepted the disallowance under section 80(IB)(10) by not preferring any appeal against the order of the learned Commissioner (Appeals) but that cannot be a reason alone for concluding that assessee has furnished inaccurate particulars of income. When there are enough material on record to show that the issue on which assessee’s claim of deduction .....

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ame Annexure–A of the audit report, it would be relevant to note that the assessee has also mentioned the area of plot as 3207.20 sq.mtr. which measure to less than one acre.

Thus, it appears that the statement of the assessee that plot of area is more than one acre as referred to by the learned Departmental Representative, a bonafide mistake and cannot be termed as furnishing of inaccurate particulars of income. In view of the aforesaid, we are of the opinion that learned Commission .....

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, passed by the learned Commissioner (Appeals)-32, Mumbai, deleting the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") by Assessing Officer for the assessment year 2007-08. 2. Briefly stated the facts are, the deceased assessee, who is represented in the present appeal through his legal heirs, filed his return of income for the impugned assessment year on 29th October 2007, declaring taxable income of 1,17,500. During the assessment proceeding .....

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fficer found that assessee has undertaken a slum rehabilitation project at Ghatkopar named Ghatkopar Janta Buddha Nagar Shri Saidham CHS Ltd., after obtaining approval from Slum Rehabilitation Authority of Maharashtra. The Assessing Officer referring to the provisions of section 80I8(10), observed, for availing deduction under the said provision certain conditions have to be satisfied. However, in case of housing project undertaken by the assessee, he found that some of the conditions of section .....

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ea of commercial establishment exceeds 2,000 sq.ft. He, therefore, directed the assessee to show cause why deduction claimed under section 80IB(10) will not be disallowed. Though, the assessee objecting to the proposed disallowance of deduction claimed submitted a detailed explanation but the Assessing Officer disallowed assessee s claim of deduction under section 80IB alleging non-fulfillment of conditions of section 80IB(10) as enumerated by him. Being aggrieved of such disallowance, the asses .....

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ee did not challenge the decision of the first appellate authority by preferring further appeal. Thus, the disallowance of deduction under section 80IB(10) become final as far as the impugned assessment year is concerned. On the basis of the disallowance made, proceedings for imposition of penalty under section 271(1)(c) of the Act was initiated by the Assessing Officer by issuing a show cause notice to the assessee. Of-course, he also brought within the purview of the penalty proceedings two ot .....

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urnishing of inaccurate particulars of income as such claim is not legally allowed. As far as other disallowances are concerned, the Assessing Officer was of the opinion that assessee has claimed the deduction by furnishing inaccurate particulars. He, therefore, proceeded to pass an order imposing penalty under section 271(1)(c) of the Act. Being aggrieved of the penalty order, the assessee preferred appeal before the learned Commissioner (Appeals). 4. Before the first appellate authority, the a .....

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the Maharashtra Government under Maharashtra Regional Town Planning Act, 1966, should be deemed to be a project approved by the CBDT for the purpose of section 80IB(10) from the assessment year 2005-06 onwards. He, therefore, submitted that in view of such notification of the Board, the assessee is eligible for deduction under section 80IB(10). As far as the allegation of the Assessing Officer with regard to non-fulfillment of other conditions relating to built-up area and completion of project, .....

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g minimum one acre land. He also observed that the conditions for completion of project by 31st March 2008, was inserted w.e.f. 1st April 2005. Whereas, the assessee s project was approved much before. The learned Commissioner (Appeals) observed that since the issuance of notification by CBDT is a matter between the State Government and CBDT, the assessee did not have any control over that. However, as per the amendment, slum rehabilitation scheme are exempt from the condition of having the proj .....

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t would, and applicable from the assessment year 2005-06. It was observed by the learned Commissioner (Appeals) that as at the time of filing of return of income for the assessment year under consideration, the assessee was under bona fide impression that the conditions of clause (a) and (b) of section 80IB(10) was not applicable to projects developed under slum rehabilitation scheme of Government of Maharashtra it claimed the deduction. The learned Commissioner (Appeals), therefore, held that m .....

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CIT v/s Brahma Associates, [2011] 333 ITR 289 (Bom.), this condition will not apply to the projects which commenced before 1st April 2005. Similarly, he held that since the assessee has claimed deduction under section 80IB(10) on pro-rata basis for the flats which are having built-up area of 1,000 sq.ft., it cannot be said that it has furnished inaccurate particulars of income. As far as the other two disallowances are concerned, he observed, they are not as a result of furnishing of inaccurate .....

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attention of the Bench to column no.23 of the audit report, he submitted that the assessee left certain columns blank without furnishing necessary information. He submitted that non-furnishing of relevant information also amounts to furnishing of inaccurate particulars of income. Further, the learned Departmental Representative referring to Annexure-A of the said audit report, submitted, in Para-3, the assessee has mentioned the size of plot of land on which the project was constructed as more .....

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while claiming deduction under section 80IB(10), imposition of penalty under section 271(1)(c) was justified. 6. The learned Counsel for the assessee, on the other hand, strongly support the decision of the learned Commissioner (Appeals) submitted, the Assessing Officer has proceeded to impose penalty only for the reason that deduction claimed by the assessee under section 80IB(10) has been disallowed and disallowance was upheld by the first appellate authority which was accepted by the assessee .....

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wever, that cannot be used against the assessee for imposition of penalty. The learned Counsel submitted notwithstanding the fact that assessee has accepted the disallowance of deduction claimed but still it is eligible for deduction under section 80IB(10) as none of the conditions of section 80IB(10) have been violated. He submitted, as far as the allegation of the Assessing Officer that commercial area has exceeded 2,000 sq.ft., the said condition will not be applicable to assessee s project a .....

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te to the fact that it is a SRS project, then the condition of plot having more than one acre is not applicable. He submitted, the notification issued by the CBDT also clarified the position. The learned Counsel for the assessee referring to notification no.1 dated 5th January 2011, submitted, the said notification has to be read along with the proviso to section 80BI(10), hence, will apply retrospectively. In this context, he referred to the decision of the Tribunal, Mumbai Bench, in Ramesh Gun .....

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, that the only other condition, the assessee is alleged to have violated is non-furnishing of completion certificate. It was submitted, as the assessee s project was approved prior to 1st April 2005, the amendment made to section 80IB(10), requiring furnishing of completion certificate was introduced from 1st April 2005, there is no need to furnish completion certificate.. In this context, he relied upon the decision of the Hon'ble Delhi High Court in CIT v/s CHD Developers Ltd., [2014] 362 .....

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more than one view is possible, hence, assessee s claim of deduction under bona fide impression will not amount to furnishing of inaccurate particulars of income. He, therefore, submitted that penalty has been rightly deleted by the first appellate authority. 7. We have considered the submissions of the parties and perused the material available on record. As could be seen, the major addition on which penalty has been imposed is on account of disallowance of assessee s claim of deduction under s .....

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t is clear from the notification issued by the CBDT that such condition will not apply to SRS projects. In this context, it has been submitted by the learned Departmental Representative that since at the time of filing of return of income, the notification was not there, the assessee could not have claimed the deduction. However, it is found that the Tribunal, Mumbai Bench, in case of Ramesh Gunshi Dedhia (supra), has held that the notification issued by the Board on 5th November 2011, will have .....

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