Income Tax Appellate Tribunal - Chandigarh
Dcit, Chandigarh vs Chandigarh Housing Board, Chandigarh on 23 July, 2021
आयकर अपील य अ धकरण, च डीगढ़ यायपीठ "ए" च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A', CHANDIGARH
BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
AND SHRI R.L. NEGI, JUDICIAL MEMBER
आयकर अपील सं./ ITA No.102/Chd/2019
नधा रण वष / Assessment Year : 2012-13
The D.C.I.T. , बनाम M/s Chandigarh Housing Board,
Central Circle-1(1), 8, Jan Marg, Sector 9,
Chandigarh. Chandigarh.
थायी लेखा सं./PAN NO: A A A L C 0 1 3 2 H
अपीलाथ /Appellant यथ /Respondent
नधा रती क! ओर से/Assessee by : Shri A.K. Jindal, CA &
Ms.Rattan Kaur, CA
राज व क! ओर से/ Revenue by : Smt.C. Chandrakanta, CIT DR
सन
ु वाई क! तार&ख/Date of Hearing : 30.06.2021
उदघोषणा क! तार&ख/Date of Pronouncement: 23.07. 2021
(Hearing through webex)
आदे श/Order
Per Annapurna Gupta, Accountant Member :
Th e a b ove a p pe a l ha s b ee n p ref e r re d b y t he Re ve n ue a ga i nst th e ord e r of the C om mis si one r of I n come Ta x (A pp e a ls )-1 , C ha n d ig a r h d a te d 2 2 .1 1 .2 0 1 8 r e la tin g to a sse ssme nt ye a r 2 0 1 2 -1 3, de le ti ng th e pe n a l ty le vie d u/s 27 1 ( 1) ( c) of t he o f th e I n co me Ta x Ac t, 1 9 6 1 ( h e re i na f te r re fe rre d to a s 'A ct') .
2. Th e fa cts re la t in g to the ca se a re tha t in the a s ses sme nt fr a me d on the a ss e ssee u /s 1 4 3 (3 ) of t he Act , a n a d di ti on of ITA No.102/Chd/2019 A.Y. 2012-13 Page 2 of 18 Rs. 14 , 8 7, 6 6 ,1 5 9 /- had been ma de on a cco un t of in te r e st in come e a r ne d on F D Rs ma d e o u t of f un d s r e c ei ve d b y the a sse sse e for tw o pr oj e c ts i. e . R a ji v G a nd h i C ha nd i ga r h Te ch nol og y Park ( RG C TP ) p r oj ec t f un ds and Ja w a ha r La l N e h ru N a t ion a l Urban Rur a l M is si on( JN N UR M) fu nd s as un de r :
1) Rs. 13 , 4 6, 5 1 ,8 9 0 /- o n a cc oun t of in te re st i nc ome fr om RG C TP p r oj e ct fu nd s a n d J N N UR M fu nd s k e p t in F D Rs i n ba nk .
2) Rs. 1, 4 1 ,1 4 ,2 6 9 /- in te re st e a r ne d on R GC TP pr oj e c t ke pt i n FDR 's in e sc ro w ac coun t.
3. Th e sa i d a d d i t ion was up h e ld by th e Ld . C I T( A) . Th e r e a fte r pe na l ty p r oce e d i ngs wer e i ni ti a te d a n d afte r g iv in g du e op p or tun i ty of he a r in g to t he a sse ssee a n d con si d e r in g the re p lie s fi le d b y i t, the A O he ld th a t i t w a s a cl e a r c a se of con ce a l me n t of p a r tic ul a r s of i nc ome a nd a cco rd i n gly , pr oc ee de d to le vy p e n a l ty on the sa me @ 1 0 0 % of t a x s oug ht to be e va de d a mo un ti ng to Rs .4 , 5 9 , 68 , 74 3 /-. Th e a sse ssee ca r r ie d the ma tt e r in a p pe a l be for e the Ld . C I T( A ) w h e re he pl e a de d tha t non-d i scl os ur e o f the sa i d in te re st in come w a s un de r the b ona fi d e be l ie f tha t th e sa i d i nte re st in co me w a s not the i nc ome of th e a s se sse e a t a ll a s th e f un d s on w h ic h i t a ccr u e d , wa s be li e ve d to be k e p t b y it in th e ca p a ci ty of be in g nod a l a ge nt o f the Go ve r n me n t for ca r r yi ng out th e spe ci fi c ITA No.102/Chd/2019 A.Y. 2012-13 Page 3 of 18 pr oj e c ts for wh i ch th e f un d s h a ve b ee n gi ve n . Tha t it w a s onl y la te r tha t th is is sue , of the ca p a c ity i n w hi ch f un d s we re be in g ke pt b y i t, w a s a mi ca b l y s e ttl e d w i th the dep a r tme nt on the di re c ti ons of t he Hi gh C our t in a d is pu te be for e it, a n d it wa s a gr ee d to t re a t t he i nte re st a s i nc ome of t h e a sse ssee a nd f ur th e r a gr e e d th a t n o p en a lt y b e i ng l e vie d f or n on di sc lo sur e of th e s a me . The Ld .C I T(A ) wa s co nv in ce d wi th the e xp la na ti on o f th e a sse ssee a n d he a l so t ook n ote of the f a ct tha t id e nti ca l pe na l ty le vie d i n th e p re ce d in g ye ar h a d bee n de le te d b y the I TA T. Ac cor d in gl y, h e de le te d the pen a lty l e vie d for the i mp ugn e d ye a r a ls o fol l ow in g the s a me .
4. Ag gr i e ve d b y t he sa me th e Re ve nue h a s co me up i n a pp e a l be fo re u s r a is in g th e f ol l owin g gr oun d s:
"1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case.
2. Whether on the facts and in the circumstances of the case and in law, the order of the C1T(A) is perverse as it has relied upon the 'record of discussions' held and finalized on 14.03.2013 without considering that the assessee had ample time to revise his return for the incumbent assessment year i.e. 2012-13?
3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in setting aside the penalty on account of disallowance of interest expenditure by relying upon the 'record of discussions' which were specific to the assessment year 2007-08?
4. Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in setting aside the penalty order passed by the AO, by relying upon order ITA No.102/Chd/2019 A.Y. 2012-13 Page 4 of 18 dated 30.04.2014 of the Hon'ble Supreme Court which was specific only to assessment year 2007-08?
5. Whether on the facts and in the circumstances of the case and in law, the 'record of discussion' which took place on 14.03.2013 and the order passed by the Hon'ble Supreme Court on 30.04.2014 and the Hon'ble High Court on 05.12.2014 can be held to be a relief in perpetuity against all wrong claims made by the assessee under the Income Tax Act?
6. Whether on the facts and in the circumstances of the case and in law, a wrong claim made by an assessee and accepted by the assessee during assessment proceedings under Section 143(3) absolve the assessee from the rigours of penalty under Section 271(l)(c) which is against the Hon'ble Supreme Court judgment in Mak Data Private Limited versus CIT (2013] 358 ITR 593?
7. It is prayed that the order of the Ld. CIT(A) be cancelled and that of the assessing officer may be restored.
8. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard or is disposed off."
5. Du r in g th e cou r se of he a r i n g be fore u s, the Ld . DR s ta ted tha t he r s ol ita r y a r gume nt a g a inst the or de r of the Ld .C I T(A ) pe r ta ine d to G rou nd N o. 5 r a is ed . S he con te n de d th a t the di sp u te a mic a b ly se ttle d be twee n t he a sse s see and the de pa r t me nt i n 2 01 3 w a s ye a r spe ci fi c i. e . i t re la te d t o th e ye a r i. e . a s se s sme n t ye a r 20 0 7 -0 8 , wh ich w a s th e re be for e t he H ig h C our t, a nd th e a gr ee me n t be tw ee n the tw o pa r ti e s of no pe na l ty b ei ng le vi e d me nti one d i n th e r e c or d of d is cu ssi on d id not a p p l y to oth e r ye a r s. Th e a s se s se e , t he re fo re , i t w a s con te n de d , w a s n ot e n ti tle d to a ny b e ne fi t o n a c cou nt of suc h ITA No.102/Chd/2019 A.Y. 2012-13 Page 5 of 18 a gr ee me nt be twee n the tw o p a rt ie s n ote d in t he re co rd of di sc us si on.
6. Th e Ld .C ou ns e l f or th e a ss e ss ee , on th e o the r han d , re lie d u p on the or d e r of the Ld . C I T( A) . H e fu r the r dre w our a tte n ti on to the or d e r of the I TA T se tti ng a s id e th e or de r of the Ld .C I T p a ss ed i n re v is io na r y p ro cee d in gs u/s 2 6 3 of the Act r e la t in g to as se s sme n t ye a r 20 1 1 -1 2 o n i d e ntic a l i ss ue of le vy o f pe na l ty f or s uch ye a r , wh ich th e A O ha d not le v ie d ,on a ccou nt of w hi ch th e Ld . C I T had he l d th e ord e r to be e r r one ous ca u si n g p r e j ud i ce to th e Re ve nu e . Th e Ld . C oun se l for t he a sse ssee , r e fe r r i ng to the sa i d or de r ,st a te d t ha t for the sa i d ye a r th e I TA T h a d giv e n a fi n di n g on me r i ts th a t non -d is cl osu r e of i n te re s t i nc ome e a r ne d on the i mp ugn ed fu nd s p a r k e d i n FD Rs w a s u nd e r th e b on a fi de be li e f th a t the fu nd s di d n ot be lon g to the a sse ssee a nd it w a s on ly w h e n the se tt le me n t was r e a c he d be twee n the a sse s see a nd the de pa r t me nt th a t the i ss ue was a mic a b ly se ttl e d and the a sse sse e ha d a gr ee d to re tu r n th e sa i d i nc ome a s it s ow n in come a n d th a t i t h a d a l so b e en a g re e d t ha t no p e na lty be le vie d on the s ame . He fu rt he r poi n te d out tha t the I TA T h a d he l d the se t tle men t to b e i ss ue sp e c if i c a n d n ot y ea r s pe ci fi c . He a c cor d in gl y su pp or te d the or de r o f the Ld . C I T( A) ITA No.102/Chd/2019 A.Y. 2012-13 Page 6 of 18
7. W e ha ve con si der e d the con te n tion s of b oth t he p a r ti e s. We ha ve a l so g one th ro ugh the f in d in gs of t he Ld. C I T( A) a t pa r a 5 .2 t o 5 . 5 of t he or de r a s unde r :
"5.2. HELD: I have considered the facts and circumstances of the case. Before getting into the factual matrix of the case, it is important to delve into the legal provisions of section 271(1)(c) and the interpretation thereof given by the various courts. The relevant portion of section 271 s reproduced below:
'271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person
(b) has failed to comply with a notice [under sub-section (2) of section 115WD or under sub-section (2) of section 115 WE or] under sub-section (1) of sectional42 or sub-section (2) of section 143 [or fails to comply with a direction issued under sub-section (2A) of section 142], or
(c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or] [(d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits.
he may direct that such person shall pay by way of penalty,--
(ii) in the cases referred to in clause (b), in addition to tax, if any, payable] by him, a sum of ten thousand rupees] for each such failure;
(iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits.
[Explanation 1.--Where in respect of any facts material to the computation of the total income of any person under this Act,-- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner( Appeals) or the Principal Commissioner or ITA No.102/Chd/2019 A.Y. 2012-13 Page 7 of 18 Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed.
5.2.1. For the interpretation of this section the following case laws are relevant:
1. B.A. Balasubramaniam& Bros. Co Vs CIT(116 Taxman
842. 236 ITR 977. 157 CTR 556] With the incorporation of the Explanation to section 271, the view which had been taken earlier in CIT v. Anwar Ali [1970] 76 ITR 696 (SC) no longer held the field and it was for the assessee to discharge the onus as contemplated in the said Explanation. In view of the fact that in the instant case the onus had not been discharged, the High Court judgment called for no interference. The appeals were, accordingly dismissed.
2. Union of India v. Dharamendra Textile Processors [(2007) 295 ITR 244] where Hon'ble Supreme Court held that Penalty under section 271(1)(c) is a civil liability for which willful concealment is not an essential ingredient for attracting the civil liability as is the case in the matter of proceedings under section 276C.
3. CIT Vs Zoom Communication (P.) Ltd. [191 Taxman 179 (Delhi)/[2010J 327 ITR 510 (Delhi)/[2010] 233 CTR 465] where Hon'ble Delhi High Court held that If assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271{1)(c) would come into play and assessee will be liable to penalty
4. CIT Vs Moser Baer India Ltd. (184 Taxman 8 (SC)/[2009] 315 ITR 460 (SC)/(2009) 222 CTR 213) where Hon'ble Supreme Court confirmed Penalty under section 271(1)(c) for wrong adjustment of Unabsorbed Depreciation.ITA No.102/Chd/2019
A.Y. 2012-13 Page 8 of 18
5. CIT Vs Gold Coin Health Food (P.) Ltd (172 Taxman 386 (SC)/[2008] 304 ITR 308 (SC)/[2008] 218 CTR
359)where Hon'ble Delhi Supreme Court held that amendment made in Explanation 4 to section 271(1)(c)(iii) with effect from 1-4-2003 is clarificatory and, therefore, will have retrospective effect
6. MAK Data P. Ltd vs. CIT [38 taxmann.com 448 (SC)/[2013] 358 ITR 593 (SC)/[2013] 263 CTR 1]Where Hon'ble Supreme Court held that Under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails to offer an explanation which is bona fide and proves that all the material facts have been disclosed. The Hon'ble Supreme Court has laid down the following principles. • The Assessing Officer, shall not be carried away by the plea of the assessee like Voluntary disclosure', 'buy peace', 'avoid litigation', 'amicable settlement', etc. to explain away its conduct.
• The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income.
• The burden is then on the assessee to show otherwise, by cogent and reliable evidence. • When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the revenue to show that the amount in question constituted the income and not otherwise.
7. CIT vs Gates Foam & Rubber Co [91 ITR 467] ClT vs India Seafood [105 ITR 708] where Hon'ble Kerala High Court held that Claiming excessive deduction also amounts to concealment of income.
8. Steel Ingots Ltd vs. CIT [296 ITR 228] where Hon'ble Madhya Pradesh High Court held that in case of concealment of true income chargeable to tax by making bogus claim, levy of penalty u/s 271(1)(c) read with Explanation 1 is justified.
9. CIT Vs Escorts Finance Ltd [183 Taxman 453 (Delhi)/[2010] 328 ITR 44 (Delhi)/[2009] 226 CTR ITA No.102/Chd/2019 A.Y. 2012-13 Page 9 of 18 105]where Hon'ble Delhi High Court held that if claim made in return of income appears to be ex facie bogus, it would be treated as a case of concealment or furnishing of inaccurate particulars and penalty proceeding would be justified
10. CIT Vs R.M.P. Plasto (P.) Ltd [184 Taxman 372 (SC)/[2009] 313 ITR 397 (SC)/[2009] 227 CTR 635] where Hon'ble Supreme Court held that Confirmed penalty upon assesses for concealment of income under section 271(1)(c) because positive income of assessee was reduced to nil after allowing set-off of carried forward losses of earlier years.
11.K.P. Madhusudhanan Vs CIT [[2001l 118 Taxman 324 (SC)/[2001] 251 ITR 99 (SC}/[2001] 169 CTR 489 (SC)]where Hon'ble Supreme Court held that where assessee was unable to furnish evidence for loans and it offered amount of transaction as additional income, Assessing Officer was justified in imposing penalty u/s271(1)(c) after finding the explanation to be unacceptable and applying Explanation 1(8) of the section.
5.2.2. From the above decisions, it is clear that the determination whether the penalty is leviable or not depends on the facts and circumstances of each case and cannot be brought in to any straight jacket formula. 5.3. Brief facts in the present case are that the Chandigarh Housing Board (CHB) was designated as Nodal Agency by the Chandigarh Administration for construction of 25728 one room tenements for the slum dwellers at various locations in Chandigarh under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and development of residential, commercial & other related infrastructure facilities as an integrated project at Rajiv Gandhi Chandigarh Technological Park on the land measuring approximately 123.79 acre. Under the scheme the Central Government and the Chandigarh Administration has provided the funds to the Chandigarh Housing Board for implementation. The land for the construction of these houses has been made available by the Chandigarh Administration, The development agreement was signed between the Chandigarh Administration & the Parsvnath Developers Limited mentioning the status of Chandigarh Housing Board as Nodal Agency and the physical possession was handed over for the development work for RGTCP Project. As per the guidelines issued by the Government of India, the funds may be kept in such a way that these are available for construction of houses as and when required and simultaneously these do not remain idle. Funds were kept in the nationalized banks and ITA No.102/Chd/2019 A.Y. 2012-13 Page 10 of 18 earned interest on the same. The appellant during the year has earned the interest income on FDR's. The AO has made additions of Rs.13,46,51,890/- on account of Interest Income from the RGCTP Project Funds and JNNRUM Funds kept in FDRs in Banks during the relevant assessment year. The addition of Interest Income of Rs. 1.41.14.269/- is related with RGCTP Project (Rajiv Gandhi Chandigarh Technology Park) at Chandigarh on the funds kept in FDRs in Escrow Account. The AO initiated penalty proceedings u/s 271(1)(c) for addition made during the assessment. The Ld. CIT (Appeals) vide order dated 28.01.2016 in Appeal No. 02/14-15 upheld the additions made by the assessing officer.
5,3.1. After settlement of Income Tax matter by the Secretary Finance, MOF, GOI on 14.03.2013 as per directions of the Hon'ble Punjab and Haryana High Court, Chandigarh dated 21.02.2013 and on the basis of recommendation given by the Department of Expenditure that "As an amicable view, it may be appropriate that Penalty is not levied on Chandigarh Housing Board in respect of the Income Tax dues. In view of the above, your good self is requested that penalty in this regard may not be imposed on this account. 1 1 The Hon'ble Supreme Court in an order dated30.04.2014also reiterated the implementation of above said settlement in an SLP filed by the Income Tax Department and in the process of compliance of the above said settlement through legal process, the Hon'ble ITAT, Chandigarh has deleted the penalty imposed for the AY 2007-08, AY 2008-09 and AY 2009-10 vide order dated 12.01.2015 by holding as under:
"14. The reading of the above order particularly along with order passed by Hon'ble Supreme Court clearly shows that parties has ultimately reached to an amicable settlement with regard to the taxability of the proceeds received on auction of the plots. The Hon'ble Supreme Court has clearly observed that no penalty proceedings would be initiated. In our opinion in view of the amicable settlement reached and the assurance given before the Hon'ble Supreme Court as well as High Court, no penalty could be levied. We feel that this is not a fit case of levy of penalty and accordingly we set aside the order of Ld. CIT(A) and delete the penalty."
5.3.2. Even the A.O. has dropped penalty proceedings initiated in A.Y.2010-11 & A.Y.2011-12 on the identical additions made in the assessment orders.
ITA No.102/Chd/2019
A.Y. 2012-13 Page 11 of 18 5.4. It is undisputed fact that the Hon'ble Punjab & Haryana High Court asked both the parties to reach at amicable settlement on 21.2.2013 by passing an interim order wherein it was held that "At the same time, we are of the opinion that there is a possibility of amicable solution of the dispute having regard to its nature. In these circumstances, we feel that the Secretary, Finance may summon both the parties and discuss the matter with them to find out the possible solution, if any." Thereafter, a meeting was called on 14.3.2013 which was attended by Member (L&C) CBDT, CIT-I Chandigarh, Chairman CHB, Controller General of Accounts, Joint Secretary (Budget), DCIT(I)(I) Chandigarh, DIT (Systems) - V, Special Secretary (Finance) Chandigarh, CF&AO, CHB, Director (Budget); wherein it was decided that "As an amicable view, it may be appropriate that penalty is not levied on Chandigarh Housing Board in respect of the Income Tax Dues. A decision in this regard can however be taken only by the Competent Income Tax Authority or in any appellate proceedings. Hon'ble High Court may consider passing appropriate orders in this regard." Against the interim order passed by the Hon'ble High Court of Punjab & Haryana, the Revenue filed an SLP before the Hon'ble Supreme Court. The Hon'ble Supreme Court passed order in SLP No. IA No.2 in SLP(C) No. 5346/13 in CIT vs Chandigarh Housing Board order dated 30.4.2014 as under:
"This special leave petition is filed against an interim order dated 07.05.2012 passed by the High Court in ITA No. 41/12. Since the matter is between the Income Tax Department and the Chandigarh Housing Board, which is a statutory Board under the provisions of Chandigarh Administrative, there was some discussion of an amicable settlement of the dispute between the parties. The 'Record of Discussion' held on 14.05.2013 is placed on record in IA. No. 2 of 2014, A perusal thereof would demonstrate that a sum of Rs. 278 crores, which was deposited by the Chandigarh Housing Board in the Government treasury, is agreed to be adjusted in Income Tax head and it is treated as final in so far as liability of Income Tax is concerned. Having regard to the settlement reached between the parties, it is clear that the dispute regarding payment of tax by the Chandigarh Housing Board to the Income Tax Department stands resolved. It is further agreed that no penalty proceeding would be initiated against the Chandigarh Housing Board. However, it is also stated that the decision in this regard can further be taken only by the competent Income Tax authority. Needless to mention that the competent authority shall keep in mind the spirit of the agreement arrived at in 'Record of Discussions'. The parties ITA No.102/Chd/2019 A.Y. 2012-13 Page 12 of 18 shall also approach the High Court for disposal of the pending ITA."
5.4.1 By considering the observations of the Hon'ble Supreme Court the assessee filed an application with Chief Commissioner of Income Tax, NWR, Chandigarh regarding waiver of penalty. The Commissioner in order u/s 273A of the Act declined the request by mainly observing that no settlement has been reached between the assessee and Department. Against the above order the assessee filed a Writ Petition before the Hon'ble Jurisdictional High Court. The Hon'ble High Court ultimately passed the following order:-
"Mr. G.C. Srivastava appearing for the revenue states, on instructions, that a compromise effected before the Secretary, Finance, Union of India, was reduced into writing and is titled as 'Record of Discussion'. Mr. Srivastava further states, on instructions, that observation by the Hon'ble Supreme Court in order dated 30.04.2014 passed in IA No. 2 in Special Leave to Appeal (Civil) No. 5346 of 2013 (Commissioner of Income Tax, Chandigarh Vs. Chandigarh Housing Board) recording that dispute regarding payment of tax by the Chandigarh Housing Board stands resolved, is correct. Mr. Srivastava also states that it is correct that it was agreed before the Hon'ble Supreme Court that no penalty proceedings would be initiated against the Chandigarh Housing Board and decision in this regard would be taken by the competent authority. Mr. Srivastava further states that he has instructions to make a positive statement that the revenue shall not oppose the assessee's prayer for quashing of penalty in the appeal pending before the Income Tax Appellate Tribunal. Liberty is granted to counsel for the assessee to file an application before the Tribunal for preopening the appeal. In case, such an application is filed, we hope and expect that the appellate authority takes up the appeal for hearing before the end of the year."
5.4.2. It is reiterated that in these facts and circumstances of the case the Hon'ble ITAT Chandigarh Bench has decided to delete the penalty on similar grounds for AY 2007-08, AY 2008-09 and AY 2009-10 by holding that the reading of the above order particularly along with order passed by Hon'ble Supreme Court clearly shows that parties have ultimately reached to an amicable settlement with regard to the taxability of the proceeds received on auction of the plots. The Hon'ble Supreme Court in its order dated 30.04.2014 has clearly observed that no penalty proceedings would be initiated.
ITA No.102/Chd/2019
A.Y. 2012-13 Page 13 of 18 5.5. The major issue on which addition has been made in the AY 2012-13 is "Disallowance of Interest at Rs.14,87,66,159/-". After discussing the entire gamut of facts in the preceedings paras, I am of the considered opinion that AO was not right in levying penalty. It is the same issue on which 'Record of Discussions' was made after directions of the Hon'ble High Court and subsequently the same were upheld by the Hon'ble Supreme Court vide its order dated30.04.2014.Keeping in mind the spirit of the agreement arrived at in 'Record of Discussions' penalty levied by the AO is cancelled. The Grounds of Appeal No.1 is allowed."
8. O n goi ng th ro ug h th e o rd e r of the Ld .C I T(A ) w e d o n ot fi nd a n y i n fi r mit y i n the sa me . The fa c ts re la tin g t o th e i s sue , a s st a nd re c or de d in the o rde r of t he Ld. C I T( A) , a nd n ot di sp u te d , a re th at the ta xa b i li ty of the i nte re st i ncome e a rned on t he fu nd s re ce i ve d by the a sse s see fr om the C ha n d ig a r h a dmi n is tr a ti on and th e C e n tra l gov e r nme nt f or sp e ci fi c pr oj e c ts. i .e . RG C TP & JN N RU M, on w h ic h pe na l ty ha s b e e n le vie d f or no n d i sc los ur e in th e pre se n t c a se , w a s a l w a ys di sp u te d b y the a sse sse e r i gh t from A. Y 2 0 0 7 -08 w h e n it fi r st a ccr u e d , cl a i min g th e fu nd s to b e in its p os se s sion on l y a s a nod a l a ge nt of th e gove r nme n t for e xe c uti on of the p r oje cts . Th a t the d is p ute tr a v e l le d to the H on 'b le H ig h C our t of P un ja b a nd H a r ya n a who a sk e d the pa r ti e s to se tt le i t a mi ca b l y, wh i ch was a cco rd i ng ly r e s olved on 2 1 -0 2 -2 01 3 , note d in Re co rd of D is cu ssi on , w h e n the ass e s see a gree d to p a y ta xe s on t he sa me t re ati ng it a s i ts i n come . Th a t i t w a s a l so a gr eed be twee n the p a r tie s to be a p pr op r ia te th a t n o pe na lty b e le vie d on th e a s se sse e ,th ou gh a f i na l de ci si on i n thi s re ga rd w a s le ft ITA No.102/Chd/2019 A.Y. 2012-13 Page 14 of 18 wi th th e c omp e te nt a u th or it y. Th a t Th e ma tt e r we nt u p to the Hon 'b l e S up re me c our t i n a n S LP a ga i ns t the i nter im o rd e r of the H i gh C our t, wh o took n ote of the e nt ire f a cts of th e case a nd a d d e d t ha t th e c omp e te nt aut hor i ty sh oul d ta k e note of the sp i r it of agr e e me n t be twee n the tw o p ar ti e s . Tha t sub s e q ue nt ly a n a pp l i ca ti on f il e d b y th e a sse ssee fo r w a i ve r of p e n a lt y wa s r e je cte d b y the c omp e te n t a ut hor i ty a ga i n st wh i ch th e a sse ssee we n t i n a p pe al to th e H i gh co ur t wh e re the C oun se l a p pe a r in g fo r th e Re ve n ue c once de d th a t it was a gr ee d b y the Reve nue be f ore the H on 'b le Su p re me c our t th a t no p e na l ty p r oce e d i ngs w ou ld be i n it ia te d a ga in st th e a sse ssee a nd tha t he h a d i n str u cti on s t o ma k e a po si ti v e sta te me nt tha t the Re ve n ue w ou ld n ot op pose the a sse sse s pr a y e r for q ua sh i ng p e n a lt y in a p p e a l pe nd i ng b e f ore the I TA T. Th a t con si de r in g t he a f ore st a te d f a cts re g a r di n g a g re e me n t be twee n the p a r tie s f or n o le vy of p e na l ty on se ttleme nt of the di sp u te , w hi ch wa s a p p r ove d b y t he h on'be a pex co ur t, th e I TA T d e l e te d pen a lt y l e v ie d u/s 2 7 1 (1 ) © of t he Ac t, f or n on di sc lo sur e of t he s a id in te re st in come i n A .Y 2 0 0 7 -0 8, 2 0 0 8 -09 a nd 2 0 0 9 -1 0.
9. F ur th e r in A. Y 20 1 0 -1 1 a n d 2 01 1 -1 2 , w e f i nd , t he or de r of the Ld. P r .C I T d i r e ct in g le v y of pe na l ty on i d e n tica l in te re st in come e a r ne d d ur i ng the ye a r , p a ss e d in e xer ci se of hi s ITA No.102/Chd/2019 A.Y. 2012-13 Page 15 of 18 re vi si on a ry p ower s u/s 2 6 3 of th e Ac t, w a s se t asi d e by the I TA T c ons id e ri n g th e a fore sta te d fa cts a nd f ur th e r h ol d ing tha t th e a g ree me nt fo r no le vy of p e n a lt y w a s no t ye a r spe ci fi c bu t w a s i ss ue r e la t e d a nd a p p li ed to a l l ye a r s a ff e cte d b y it, i. e . ti ll the r e sol ut ion of th e di sp u te note d in t he Re cor d of se tt le me n t d a ted 1 4 -0 3 -2 01 3 . Th a t in any c a se the n on di sc lo sur e of th e i nte re s t in com e , ti l l th e se ttle me nt of th e di sp u te , w a s un de r a b on a fi de be li e f o f the s a me not b e l ong in g to t he a s se s se e a nd he n ce n ot ta xa b l e . Th e r e l eva n t fi n di n gs of th e I TA T a t p a r a 24 -2 7 o f the or d e r a re a s un der :
" 2 4 . It i s n o t d i s p u te d t h a t i n t h e i m p u g n e d y e a r a l s o p e n a l t y p r o c e e d in g s we r e i n i t i a te d o n th e s a m e a d d i ti o n m a d e o f i n te r e s t o n F D R ' s, i n th e sa me f a c ts a s c i r c u ms ta n c e s, a s i n A . Y 2 0 0 7 - 0 8 to A . Y 2 0 0 9 - 1 0 a n d A . Y 2 0 1 2 - 1 3 an d A . Y 2 0 1 3 - 1 4 a s me n t io n e d a b o v e . In v i e w of th e f a c t th a t i n a l l t h o s e years p e n a l ty levied wa s d e l e te d by th e IT A T /C IT ( A ) , c o ns id e r i n g th e b a c k d r o p of th e c a se a s s t a t e d a b o v e , we h a v e n o h e si t a t io n in h o l d i n g th a t th e A . O ' s v i e w t h a t n o p e n al ty wa s l e v i a b l e f o r th e i mp u g n e d y e a r i . e . A . Y 2 0 1 1 - 1 2 , wa s a p l a u s i b l e v i e w a n d n o t o u t - r i g h tl y i n c o r r e c t a s c a n v a s se d b y th e R e v e n u e /P r . C IT . T h a t th e D e p a r tm e n t h a s c o n te s t e d th e d e l e ti o n o f p e n a l t y b y t h e I. T . A . T . in a s se s s me n t y e a r s 2 0 0 8 - 0 9 an d 2 0 0 9 - 1 0 i s, we h o l d , wh o l l y ir r e l e v a n t f or th e c o n c l u s i o n th a t th e v i e w of th e A . O . wa s a p l au s i b l e v i e w. T h e D e p a r tm e n t i s we l l wi t h i n i ts r i g h ts to c o n te s t a n y o r d e r as l e g a l l y p e r m i s s i b l e , b u t m e r e l y b y so c o n t e s t in g i t d o e s n o t m a k e th e o r d e r s c h a l l e n g e d a s b e i n g wh o l l y u n te n a b l e i n l a w.
2 5 . E v e n o th e r wi se , o n c o n s id e r i n g th e e n ti r e f a c t s of th e c a s e , we h o l d th a t t h e i n t e r p r e t a t i o n of f ac t b y th e A . O . th a t t h e i s su e wa s i d e n ti c a l t o A . Y 2 0 0 7 - 0 8 , wa s c o r r e c t. In A . Y 2 0 0 7 - 0 8 th e p e n al t y h a d b e e n d e l e te d o n t h e b a s i s of ag r e e me n t b e t we e n t h e ITA No.102/Chd/2019 A.Y. 2012-13 Page 16 of 18 a s se s se e a n d th e d e p a r tm e n t, a s r e c o r d e d in t h e R O D , to n o t l e v y p e n a l ty . T h i s a g r e e me n t, we h o l d, wa s a p p l i c a b l e to th e i mp u g n e d y e a r a l so . T h e r e a so n b e i n g , th e ag r e e me n t wa s r e g a r d i n g th e i s su e wh e th e r t h e a s se s se e wa s a n o d al ag e n c y of C h a n d i g a r h A d m i n i s tr a ti o n o r n o t . T h is i s e v i d e n t f ro m th e o r d e r o f th e H o n ' b l e H i g h C o u r t wh e r e t h e q u e s t io n of l a w f r a me d wa s v i s a v i s t h i s i s su e / a s p e c t o n l y a n d i t wa s t h i s a s p e c t wh ic h wa s d ir e c te d b y th e H o n ' b l e H ig h C ou r t to b e a m ic a b l y se t tl e d b y a g r e e me n t. T h e a g r e e me n t t h e r ef o r e f o r l e v y of n o p e n a l t y wa s to b e r e a d i n r e l a ti o n to th a t i s su e . M e a n in g t h e r e by th a t t h e p a r ti e s h a d a g r e e d to n o p e n a l t y b e i n g l e v i e d o n a c c o u n t of an y d ef au l t c o mm i t t e d b y th e a s se s se e b y t r e a ti n g i ts e lf a s a n o d al a g e n c y h i th e r to f o r e . T h u s a l l in c o me s n o t r e tu r n e d t o ta x b y t h e a sse s se e b ef o r e th e d a t e of a g r e e m e n t, o n a c c o u n t of tr e a ti n g i t s e l f th e n o d al a g e n c y o f C h a n d i g a r h a d m i n i s tr a ti o n wa s a g r e e d n o t to b e p e n al i z e d . T h e a g r e e me n t we h o l d wa s n o t y e a r s p e c if i c , a s h e l d b y th e L d . P r . C IT , b u t wa s i s su e s p e c if i c a n d a p p l ie d t o a l l y e a r s ef f ec te d b y th e i s su e . T h e re tu r n f o r th e i m p u g n e d y e a r , n o t d i s c l o s i n g i n te r e s t i n c o me f r o m F D R ' s c l a im in g i t s e lf a s n o d al a g e n c y of C h an d ig ar h a d m in i s t r a t io n , wa s f il e d we l l b ef o r e th e d a te of a g r e e m e n t, b e i n g f il e d o n 2 9 - 0 9 - 1 0 wh i l e th e a g r e e me n t wa s r e c o r d e d in th e R O D o n 1 4 - 0 3 - 1 3 . T h u s th e ag r e e me n t f o r n o p e n a l t y a p p l i e d t o th e i m p u g n e d y e a r al so a n d th e A O we h o l d h a d th e r e f o r e r i g h tl y h e l d th a t t h e f a c t s of th e i m p u g n e d y e ar we r e i d e n t i c a l to th a t i n A . Y 2 0 0 7 - 0 8 , wh il e d r o p p i n g th e p e n a l ty p r o c e e d i n g s initiated.
2 6 . E v e n o th e r wi s e , we h o l d , th a t t h e c l a i m o f th e a s se s se e th a t t h e i n te r e s t in c o me wa s n o t t ax a b l e in i ts h a n d s , wa s b a se d o n a b o n af id e b e l i ef th a t th e f u n d s i n v e s te d i n F D R ' s d i d n o t b e l o n g to i t a n d we r e c o l l e c te d b y i t a s a n o d a l a g e n c y of th e Chandigarh a d m in i s t r a t io n . This s ta n d wa s c o n si s te n tl y ta k e n b y th e a s s e sse e a n d wa s c o n c e d e d o n l y b y a mi c a b l e se t tl e me n t wi th th e d e p a r tm e n t o n t a k i n g a p r i m a f a c i e v i e w of th e m a tt e r . It is n o t t h a t th e c l a i m wa s f ou n d o u tr ig h t l y u n te n a b l e b y a n y a u th o r i ty . T h e r ef ore ti l l th e d a t e of se t tl e me n t o f th e d i sp u te th e c l a i m of th e a s se s s e e wa s u n d o u b t e d l y u n d e r a b o n af i d e b e l i ef . In v i e w of th e s a me th e r ef o r e th e a s se s se e c o u l d n o t b e ITA No.102/Chd/2019 A.Y. 2012-13 Page 17 of 18 c h a r g e d wi th h av in g c o n c e a l e d o r f u r n i sh e d a n y i n a c c u r a te p a r ti c u l a r s of in c o me s o as to l e v y p e n a l t y u / s 2 7 1 ( 1 ) © of th e A c t.
2 7 . W e th e r ef o r e h o l d th a t th e o r d e r p a s se d b y th e A O d r o p p i n g p e n a l ty p r o c e e d i n g s i n i ti a te d u / s 2 7 1 ( 1 ) © of th e A c t wa s n o t e r r o n e o u s an d th e o r d e r p a sse d b y th e L d . P r . C IT u / s 2 6 3 of th e A c t i s th e r e f o r e se t as i d e .
Th e f a cts of t he p r e se nt ca se ,we fi n d ,a r e i de n tic al ,w i th th a t of A .Y 2 0 0 7 -0 8 to 2 0 1 1- 12 , pe na l ty ha v in g be en l e vie d on id e n ti ca l i nc ome of i n te re s t e a r ne d on FD R's ma d e f r om th e sa me sp e ci f ic p ur p ose f un ds , i.e RG C TP a nd J N N RU M, An d re la te s to A. Y 2 0 1 2-1 3 , w h ic h is p r i or to th e se t tle me n t o f the d is p ute on 1 4 -03 -2 0 1 3 . Th e d e ci si on re nde re d b y t he I TA T in th e p re ce di n g y e a r s the re f ore , d e le ti n g t he pe n al ty l e v ie d b y hol d in g th a t the a gr ee me nt to le v y no pe n a l ty w oul d a pp l y ,th a t t he n on di sc l osur e of the in te re st in come w a s un d e r a bon a f id e be l ie f th a t i t wa s n on ta xa b l e , w oul d s qua r e l y a pp l y in the p re se n t ca se a l so . The a rgume nt o f th e Ld .D R th a t th e se tt le me n t of t he di sp u te was year sp e c i fi c me r i ts no con si de r a ti on a s w e f i nd th a t the I TA T ha d c a te gor i ca l l y he ld in i ts or de r p a ss e d f or A. Y 2 0 10 -1 1 & 2 0 1 1- 12 th a t th e se tt le me n t wa s is su e spe c if i c a nd no t ye a r sp e c if i c a n d a pp l ie d to a l l i n te re s t in come s not r e tur ne d u p to the d a t e of se tt le me n t.ITA No.102/Chd/2019
A.Y. 2012-13 Page 18 of 18
10 . I n vie w o f th e s ame , w e se e n o rea s on to i nte r fe re i n th e or de r of t he Ld . C I T( A) a n d t he a pp e a l f i le d b y the Re ve n ue is, the re fo re , d is mis se d .
11 . I n the re s ul t, the a p p e a l of t he Re ve nue i s d i smi sse d.
O r de r p r on oun ce d on 2 3 r d Jul y, 2 0 2 1 .
Sd/- Sd/-
(R.L. NEGI) (ANNAPURNA GUPTA)
याय क सद य/Judicial Member लेखा सद य/Accountant Member
Dated: 23rd July, 2021
*रती*
आदे शक! त,ल-पअ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु/त/ CIT
4. आयकरआयु/त (अपील)/ The CIT(A)
5. -वभागीय त न2ध, आयकरअपील&यआ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order,