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2016 (4) TMI 460 - ITAT PUNE

2016 (4) TMI 460 - ITAT PUNE - TMI - Penalty under section 271(1)(c) - claim of deduction under section 80IA(iv) - Held that:- We find merit in the claim of the assessee in this regard, where complete information was furnished by the assessee along with return of income and even during the course of assessment proceedings, the assessee furnished the requisite information. Since the total constructed area of Industrial Park was within limits of proposed area of Industrial Park, the assessee bonaf .....

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we hold that there is no merit in levy of penalty proceedings under section 271(1)(c) of the Act upon the assessee holding the assessee to have furnished inaccurate particulars of income. The conditions for levy of penalty for concealment having not been fulfilled, does not warrant levy of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee - ITA No.737/PN/2014 - Dated:- 10-3-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Mazhar Akra .....

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s & evidences available on record and brought out by the Assessing Officer in the penalty order in support of levy of penalty u/s. 271(1)(c) of the Act. 2. The learned Commissioner of Income Tax (Appeals) erred in deleting the penalty on the premise that the assessee had correctly filed the return and all the material facts were brought on record, de hors his findings in para 3.4 of his order that the assessee had constructed an extra floor in contravention to the approval granted by CBDT fo .....

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laim is made in the return of income but the material facts are disclosed during the assessment proceedings, no such penalty was leviable. 5. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 3. The issue raised in the present appeal filed by the Revenue is against deletion of penalty under section 271(1)(c) of the Act. 4. Briefly, in the facts of the present case, the assessee is an AOP, who had declared income from business, commission income and income from o .....

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) of the Act on the sale of Industrial Park. During the course of assessment proceedings, the assessee furnished details of sales made during the year, which constitute of release of amount out of sales made in the earlier years totaling ₹ 2.29 crores, sale of ground floor of the Info Citi Park at ₹ 5.97 crores and sale of 9th floor of the Info City Park at ₹ 2.54 crores. The assessee furnished the details of Info Citi Project i.e. date of approval, area of project, notificatio .....

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industrial units upto 8th floor. However, during the year under consideration, the assessee had converted the units on the ground floor into two industrial units by creating a partition. Further, the assessee had constructed two units on the 9th floor. Since the approval for construction of two units at 9th floor was taken after 28.02.2006 i.e. after completion of Industrial Park, the Assessing Officer was of the view that the same could not be regarded as part of Industrial Park and hence, the .....

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. The Assessing Officer thus, disallowed the claim of deduction under section 80IA of the Act to the extent of ₹ 53,79,539/-. Further, the addition was made in the hands of assessee for non-deduction of tax at source to the extent of ₹ 1,33,102/- by applying provisions of section 40(a)(ia) of the Act. The Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act in respect of both the additions for furnishing inaccurate particulars of income. During penalty p .....

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o offer an explanation or offers an explanation which is found to be false. Further, penalty may also be levied when person offers an explanation, which he is not able to substantiate and further fails to prove that such explanation was bonafide and that all the facts relating to the same and materials to the computation have been disclosed by him. The claim of the assessee was that the onus to prove that the provisions are applicable was on the Assessing Officer. Further, reliance was placed on .....

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ce, the same could not be part of the project. The assessee however, constructed 9th floor and claimed deduction under section 80IA of the Act, which act of the assessee was deliberate violation of provisions of section 80IA of the Act. In view thereof, the Assessing Officer levied penalty under section 271(1)(c) of the Act on the said concealed income @ 100% and penalty was levied at ₹ 18,03,220/-. 5. The CIT(A) considered the explanation of assessee and reliance on several decisions and .....

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imum number of industrial units and no restriction was given in the approval granted in respect of park. The CIT(A) was of the view that the said explanation prima facie appears to be correct on perusal of the said notification. Further, the contention of the Assessing Officer that the approval of IT Park was for ground plus 8 floors by the CBDT, was also found to be true from the material on record. The CIT(A) noted that the accounts of assessee were subject to audit and no adverse comment in t .....

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al to the computation of income, then the assessee can be held to have fully and truly disclosed all material facts necessary for its assessment and for determining the eligibility of claim of deduction under section 80IA of the Act during those years. The CIT(A) further held that the disallowance made does not ipso facto lead to levy of penalty for concealment and where the assessee had disclosed all the material facts relevant for its assessment and the issue was a debatable vis-à-vis t .....

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r facts before the authority and had not acted bonafidely, hence, the CIT(A) held that no penalty under section 271(1)(c) of the Act, was leviable. Reliance was placed on series of decisions for the said proposition and it was held that at best it was a case of incorrect reading of law or failure to apply the same correctly, which as per the CIT(A), could not attract the provisions of section 271(1)(c) of the Act, hence, the same was deleted. 6. The Revenue is in appeal against the order of CIT( .....

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the assessee and the Assessing Officer was of the view that the assessee had furnished inaccurate particulars of income. Our attention was drawn to the application moved by the assessee before the Ministry of Commerce i.e. application for setting up of Industrial Park, which is placed at pages 4 to 9 of the Paper Book. Referring to page 7 of the Paper Book, the learned Authorized Representative for the assessee pointed out that the proposed allocable area of Industrial Park was 49,450 sq. mtrs. .....

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that the undertaking being developed and maintained and operated by the assessee as an Industrial Park. For the purpose of clause (3) to section 80IA(iv) of the Act, area of Industrial Park was 61,780 sq. mtrs. and the minimum number of industrial units were 30 units. The learned Authorized Representative for the assessee referred to another application moved before the Ministry of Commerce and Industry, which is placed at pages 19 to 21 of the Paper Book, which was filed on 07.05.2007, under w .....

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in 33 units were enlisted and on 9th floor, there were two units and total area of units of each floor of all the floors was 4,84,898 sq. ft. equivalent to 45048 sq. mtrs. The assessee explained that the proposed area of Industrial Park was 61780 sq. mtrs. and the assessee claimed that the profits arising from the said portion were also eligible for deduction under section 80IA(iv) of the Act. However, on the reworking of deduction under section 80IA(iv) of the Act, no appeal was filed against t .....

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td. (2003) 259 ITR 212 (Raj) and also decision of Pune Bench of Tribunal in ITO Vs. Sharada Construction & Investment Company (2014) 50 taxmann.com 331 (Pune - Trib). 9. We have heard the rival contentions and perused the record. The issue arising before us is with regard to levy of penalty under section 271(1)(c) of the Act. The said section 271(1)(c) of the Act has two limbs i.e. penalty for concealment could be levied upon the assessee where he has concealed its income or furnished inaccu .....

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uld be levied upon the assessee. However, where the assessee had made a claim, which as per him, was bonafide and complete particulars with regard to it had been furnished by the assessee, then in such circumstances, merely because the claim of the assessee has been rejected and addition has been made in the hands of assessee, the question is whether the assessee can be held to be liable for levy of penalty under section 271(1)(c) of the Act. 10. The Hon ble Supreme Court in CIT Vs. Reliance Pet .....

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uot;particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) .....

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that there was no dispute that everything would depend upon the return filed by the assessee, because that was only document where the assessee can furnish the particulars of its income. It was further held that in order to attract penalty, the details supplied in the return of income must not be accurate, not exact or correct, not according to truth or erroneous. In order to levy penalty under section 271(1)(c) of the Act, there should be a finding that the details supplied by the assessee in .....

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as against which, the assessee had made disclosure by way of furnishing the facts and materials in the computation of income and where no information or statement given by the assessee in the return of income or during the course of assessment proceedings, was found to be factually incorrect or inaccurate, case of the assessee could not be said to be case of concealing particulars of income or furnishing inaccurate particulars of income. Accordingly, p enalty levied under section 271(1)(c) of th .....

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ry and in the said application, the assessee very clearly mentioned that it was proposing to construct 61,780 sq. mtrs. in the said building, against which it was entitled to claim deduction under section 80IA(iv) of the Act. The copy of the said application made by the assessee is available on record. The CBDT also approved the construction and development of Industrial Park by the assessee and necessary approval was granted to the assessee for proposed area to be built up of 61,780 sq. mtrs. T .....

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duction to the assessee since the 9th floor was constructed after completion of the project of ground plus 8 floors. The Assessing Officer also referred to an application moved by the assessee in respect of another project, under which, the proposed area of about 51,096 sq. mtrs. only. Hence, the Assessing Officer re-computed the deduction under section 80IA(iv) of the Äct, against which the assessee was held to have furnished inaccurate particulars of income and penalty under section 271(1 .....

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laim of the assessee was not bonafide. Further, the assessee claims to have furnished complete information vis-à-vis its deduction under section 80IA(iv) of the Act along with return of income in the form of audit report prepared by the Auditor in Form No.10CB and other information filed in the return of income. In view of the above said facts and circumstances, the assessee claimed that since it had made a bonafide claim, which was though not allowed to it, the Explanation (1) to section .....

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