TMI Blog2016 (9) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... Nashik for the assessment year 2008-09. In ITA No. 1848/PN/2014 the assessee has assailed the order of Commissioner of Income Tax (Appeals) dated 23-04-2014. The First Appellate Authority vide impugned order has dismissed the appeal of assessee against levy of penalty ₹ 1,95,248/- u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) as having become infructuous. ITA No. 1849/PN/2014 is directed against the order of Commissioner of Income Tax (Appeals) dated 14-08-2014 in confirming the levy of penalty ₹ 6,10,893/- u/s. 271(1)(c) of the Act. 2. The brief facts of the case as emanating from records are: The assessee company is engaged in the business of building and developing real estate. The assessee had developed a housing project named Siddhamuni Residential Complex at Ganeshbaba Nagar, Off Pune Road, Nashik on which deduction u/s. 80IB(10) was claimed. The assessee filed its return of income for the impugned assessment year on 05-08-2008 declaring total income as Nil. The assessee claimed deduction of ₹ 2,01,88,958/- u/s. 80IB(10) of the Act in the aforesaid return of income. Thereafter, the assessee filed revised return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,95,248/- u/s. 271(1)(c) on 21-03-2013 for concealing/furnishing inaccurate particulars of income to the extent of ₹ 6,50,828/-. Ostensibly, at the time of passing of penalty order, the Assessing Officer was unaware of the order passed by Tribunal on 25-02-2013 enhancing the disallowance from ₹ 6,50,828/- to ₹ 19,77,000/-. The assessee filed appeal before the Commissioner of Income Tax (Appeals) on 05-04-2013 against the penalty order dated 21-03-2013. Subsequently, the Assessing Officer in giving effect to the order of Tribunal passed another order levying penalty of ₹ 6,10,893/- u/s. 271(1)(c) of the Act on 21-08-2013. The assessee filed appeal against the second order levying penalty u/s. 271(1)(c) before the Commissioner of Income Tax (Appeals) on 26-09-2013. 2.3 The Commissioner of Income Tax (Appeals) dismissed the former appeal of the assessee against levy of penalty ₹ 1,95,248/- u/s. 271(1)(c). The Commissioner of Income Tax (Appeals) while dismissing the appeal of the assessee observed that the Tribunal has enhanced the addition to ₹ 19,77,000/- and the Assessing Officer subsequently passed penalty order on 21-08-2013 in line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The amount of ₹ 19,77,000/- admitted by the assessee during the course of survey was on account of extra sales consideration for additional facilities provided by the assessee to the allottees. This fact has been acknowledged by the Assessing Officer in the assessment order. The additions made during the assessment proceedings on the basis of disclosure statement during survey would be revenue neutral as they would also be eligible for deduction u/s. 80IB(10). There was no intention on the part of assessee to suppress such receipts. The Assessing Officer made addition of the amount disclosed during survey under the head Income from other sources , whereas it should have been considered as Income from Business . The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals) against the findings of Assessing Officer for making addition under the head Income from other sources . The Commissioner of Income Tax (Appeals) upheld the findings of Assessing Officer in treating the extra sale consideration as Income from other sources . In second appeal the Tribunal confirmed the findings of authorities below. The ld. AR submitted that it is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for concealing of income or furnishing of inaccurate particulars of income or both. The ld. AR prayed for setting aside the impugned order and accepting the appeal of the assessee. 5. Au contraire Shri R.K. Rastogy and Shri Sudhanshu Shekar representing the Department vehemently supported the order of Commissioner of Income Tax (Appeals) in confirming the levy of penalty u/s. 271(1)(c) of the Act. The ld. DR submitted that in quantum proceedings the Tribunal has nowhere held that the additional income declared by the assessee was towards extra sales consideration. The Tribunal and the authorities below had categorically held that the additional income declared is liable to be assessed under the head, Income from other sources . Thus, the assessee was not eligible to claim deduction u/s. 80IB(10) on the additional income declared i.e. ₹ 19,77,000/-. The ld. DR further contended that the assessee has not filed any appeal against the findings of Commissioner of Income Tax (Appeals) holding extra sale consideration as not eligible for deduction u/s. 80IB(10) of the Act. 6. The ld. AR of the assessee vehemently rebutted the submissions made by the ld. DR with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounting for it/not disclosing the same in return of income filed, penalty proceedings for concealment of income u/s. 271(1)(c) is separately initiated as the assessee has also filed inaccurate particulars of such income. 8. A perusal of the findings of Assessing Officer clearly indicates that the addition has been made on account of extra sale consideration received on sale of flats. Yet the addition was made under the head Income from other sources . The findings of the Assessing Officer have been upheld by the Tribunal. The Co-ordinate Bench of the Tribunal in the case of Malpani Estates Vs. Assistant Commissioner of Income Tax (supra) has held onmoney received by the assessee and declared as additional income during the search action u/s. 132 as business income eligible for deduction u/s. 80IB(10). In the said case the assessee was engaged in construction business and was subject to search action u/s. 132 of the Act. In the course of search, one of the partners of the assessee firm in statement recorded u/s. 132(4) admitted certain undisclosed income in relation to housing project developed by the assessee. The assessee disclosed the additional income in its return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stand of the assessee that such additional income was a business income of the assessee relating to the housing project, The Crest at Pimple Saudagar, Pune. However, as per the CIT(A), the income in question is assessable under the head income from other sources . Ostensibly, the CIT(A) has not agreed with the inference of the Assessing Officer that the impugned income does not fall under any heads of income u/s 14 of the Act because according to her such income is liable to be assessed under the head income from other sources. Thus, as of now, before us the inference of the Assessing Officer does not survive any longer since the order of the Assessing Officer has merged in the order of the CIT(A) and in any case the Revenue is not in appeal on this aspect. Be that as it may, factually speaking, it cannot be denied that the additional income in question relates to the housing project, The Crest at Pimple Saudagar, Pune undertaken by the assessee. The material seized in the course of search; the deposition made by the assessee s partner during search u/s 132(4) of the Act; and, also the return of income filed in response to notice issued u/s 153A(1)(a) of the Act after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03. Clause (b) of sub-section (1) of section 153A postulates assessment or reassessment of total income of six assessment years preceding the assessment year relevant to the previous year in which such search is conduced or requisition is made. Shorn of other details, it would suffice for us to notice clause (i) of the Explanation below section 153A(2) of the Act, which reads as under :- Explanation. For the removal of doubts, it is hereby declared that, - (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section. 14. In terms of the above referred clause (i) of the Explanation, it is evident that all the provisions of the Act shall apply to an assessment made u/s 153A of the Act save as otherwise provided in the said section, or in section 153B or section 153C of the Act. In the background of the expression all other provisions of this Act shall apply contained in Explanation (i) below section 153A of the Act, and in the context of the controversy before us, the moot point to be examined is as to whether or not deductions enumerated in Chapter VIA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only, and there is no finding of the Revenue Authorities that it is otherwise, once it has been disclosed pursuant to search in the hands of the assessee. The department is unable to dislodged the same by any cogent reasoning. In such situation, Revenue Authorities were not justified to ignore the same as far as assessee s claim of deduction u/s.80IB(10) in this regard is concern. It is settled legal position that document has to read as whole has to appreciate which whole making assessment on the basis of seized document Revenue authorities are not allowed to make pick and choose approach while interpreting the notings of seized document. In view of above, the CIT (Appeals) has grossly erred in viewing the 'on money' component, as unrecorded in the regular books of accounts which was in fact offered as income during the course of recording of statement u/s. 132(4) of the Act during the course of search proceedings carried out. The return of income filed in pursuance of notice u/s. 153A is the return of income u/s. 139 of the Act only. The said books of accounts are duly audited and supported by the requisite audit report u/s. 80IB in form No. 10CCB dated 25/01/2012. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted as 354 ITR 27 (P H) has deleted the penalty levied u/s. 271(1)(c) of the Act where the assessee claimed grant in aid as capital receipt and the Revenue treated the same as revenue receipt. The Hon'ble High Court held that the issue is debatable hence no penalty u/s. 271(1)(c) can be imposed. 11. In the case of Commissioner of Income Tax Vs. Lakhani India Limited reported as 1 taxmann.com 164 (P H), the Hon'ble High Court deleted the penalty levied for concealment of income u/s. 271(1)(c) on the ground that the issue is debatable. In the said case, the assessee claimed deduction u/s. 80HHC which was disallowed by the Assessing Officer. The Assessing Officer levied penalty u/s. 271(1)(c) of the Act. In first appeal the Commissioner of Income Tax (Appeals) deleted the penalty on ground that merely for raising debatable issue, penalty could not be imposed in absence of any concealment or misappropriation by the assessee. The Hon'ble High Court upholding the order of Commissioner of Income Tax (Appeals) and Tribunal observed that penalty could not be imposed on debatable issue. 12. In view of the facts of the case and the judgments discussed above, we hold that in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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