Income Tax Appellate Tribunal - Chandigarh
Chandigarh Housing Board, Chandigarh vs Assessee on 13 January, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B' CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
SHRI T.R. SOOD, ACCOUNTANT MEMBER
ITA No. 76/Chd/2013
Assessment Year: 2007-08
Chandigarh Housing Board, vs The AC IT, Circle 1(1),
Sector 9, Chandigarh
Chandigarh
PAN No. AAALC0132H
ITA No. 975/Chd/2014
Assessment Year: 2008-09
Chandigarh Housing Board, vs The DC IT, Circle 1(1),
Sector 9, Chandigarh
Chandigarh
ITA No. 976/Chd/2014
Assessment Year: 2009-10
Chandigarh Housing Board, vs The AC IT, Circle 1(1),
Sector 9, Chandigarh
Chandigarh
&
ITA No. 965/Chd/2014
Assessment Year: 2008-09
The DC IT, Circle 1(1), Chandigarh Housing Board,
Chandigarh Sector 9, Chandigarh
(Appellant) (Respondent)
Appellant By : S/Shri Ravi Shankar, B.M. Monga & Rohit Kaura
Respondent By : Smt. J yoti Kumari
Date of hearing : 31.12.2014
Date of Pronouncement : 12-01-2015
ORDER
PER T.R.SOOD, A.M.
These appeals filed by the assessee and Revenue are directed against the separate orders dated 17.12.2012, 22.8.2014 & 29.5.2013 respectivel y of CIT(A) Chandigarh.
2
2. Since the issues involved are identical and all the appeals were heard together they are being disposed of by this common order for the sake of brevit y.
3. First we shall take up appeal of the assessee in ITA No. 76/Chd/2013 for assessment year 2007-08.
4. In this appeal various grounds have been raised but the only dispute is regarding confirmation of levy of penalt y u/s 271(1)(c) of the Act.
5. The brief facts of the case are that there were some slums area in cit y of Chandigarh and with a view to develop such slum areas, Chandigarh Administration floated a scheme in which one room residential flats was to be allotted to poor / some slum dwellers on a monthl y license fee. In order to raise funds for the said scheme it was decided to develop Rajiv Gandhi Chandigarh Technology Park (RGCTP) on Public Private Partnership basis and to generate funds through auction of plots in this park. To facilitate the development of RGCTP the assessee purchased certain lands from Chandigarh Administration and after necessary formalities, some of the plots were auctioned though public auction. In the bidding M/s Parsavnath Developers Ltd work was sold a plot as a Developer of the RGCTP and some funds were received from them. This sale was not offered to taxation by claiming that assessee was onl y a nodal agenc y to Chandigarh Administration and therefore, sums were received on behalf of the Chandigarh Administration. However, Assessing Officer did not agree with this and these funds amounting to Rs. 8,00,89,75,168/- were taxed as income of the assessee. The addition has been confirmed later on by Ld. CIT(A) as well as Tribunal. On this addition, penalt y proceedings u/s 271(1)(c) were also initiated.
3
6. Later on, penalt y u/s 271(1)(c) was levied which has been confirmed by CIT(A).
7. Both the parties were heard.
8. After considering the rival submissions carefull y we find that when addition was confirmed by the Tribunal, the assessee has approached the Hon'ble Punjab & Haryana High Court and the appeal was admitted. The Hon'ble High Court asked both the parties to reach at amicable settlement and on 21.2.2013 passed an interim order, which is as under:-
"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."
9. The assessee in the meantime deposited a sum of Rs. 278 crores with the Hon'ble High Court. 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), DC IT(I)(I) Chandigarh, DIT (Systems) - V, Special Secretary (Finance) Chandigarh, CF&AO , CHB, Director (Budget);
and ultimatel y it was observed as under:-
"As an amicable view, it may be appropriate tht 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."
10. Against the interim order passed by the Hon'ble High Court of Punjab & Haryana, the Revenue filed an S LP before the Hon'ble Supreme Court. The 4 Hon'ble Supreme Court passed the following order in SLP No. IA No.2 in SLP(C) No. 5346/13 in CIT vs Chandigarh Housing Board order dated 30.4.2014 "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 I.A. 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 shall also approach the High Court for disposal of the pending ITA."
11. In view of the above observation of the Hon'ble Supreme Court the assessee filed an application with Chief Commissioner of Income tax and NWR Chandigarh regarding waiver of penalt y (copy of the application is available at pages 28 to 31 of the paper book). The Commissioner in order u/s 273A declined the request by mainl y observing that no settlement has been reached 5 between the assessee and Department. In fact, the relevant portion of the order is as under:-
"A careful perusal of the minutes of the meeting / record of discussions and the order of Hon'ble Supreme Court, brings out that no 'settlement' was ever arrived at in respect of waiver of penalty...
Since, the penalty proceedings have already not only been initiated but infact penalty stands levied / imposed, any further decision can only be taken in the appellate proceedings pending before the ITAT and the CIT(A) respectively and such technical propriety stands noted in the "Record of discussion".
12. Against the above order the assessee filed a Writ Petition before the Hon'ble Jurisdictional High Court.
13. The Hon'ble High Court ultimatel y 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.6
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."
14. The reading of the above order particularl y along with order passed by Hon'ble Supreme Court clearl y shows that parties has ultimatel y reached to an amicable settlement with regard to the taxabilit y of the proceeds received on auction of the plots. The Hon'ble Supreme Court has clearly observed that no penalt y 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 penalt y could be levied. We feel that this is not a fit case of levy of penalt y and accordingl y we set aside the order of Ld. CIT(A) and delete the penalt y.
15. In the result appeal of the assessee is allowed.
ITA Nos. 975 & 976/Chd/2014 :
16. In both these cases the facts are identical to the facts of ITA No. 76/Chd/2013 for assessment year 2007-08 and following that order we delete the penalties in these two years also.
17. Resultantl y, both the appeals are allowed.
ITA No. 965/Chd/2014
18. The Revenue has raised the following grounds:-
1. The Ld. CIT(A) has erred in deleting the penalty on the amount duly confirmed by the Hon'ble ITAT in ITA No. 386 & 549/Chd/2012.
2. The Ld. CIT(A) has erred in deleting the penalty u/s 271(1)(c) without appreciating the facts of the case as the case is 7 squarely covered by the judgment of Hon'ble Delhi High Court in the case of CIT vs Zoom Communication (P) Ltd. (2010)327 ITR 510 wherein the Hon'ble Court upheld the penalty levied for wrong claim of deduction.
19. The Ld. DR submitted that this issue is not related to the issue of taxabilit y of certain receipts out of the sale proceeds of RGCTP and this is an independent issue in which penalt y was levied.
20. The assessee has claimed expenditure of Rs. 17,41,935/- on account of consultancy charges which was paid to M/s Feedback Advertisers. According to Assessing Officer the perusal of agreement itself shows that expenditure was incurred for improvement in the work and procedures being deployed by the assessee and, therefore, the Assessing Officer had treated this as capital expenditure and allowed onl y 25% depreciation.
21. On this background penalt y was levied u/s 271(1)(c) of the Act. However, on appeal, penalt y was deleted by Ld. CIT(A) by observing that assessee has not concealed any particulars of income in repeat of these items.
22. Before us Ld. DR submitted that nature of expenditure clearly shows that the same was for enduring benefit and, therefore, it was a case of wrong claim of expenditure as Revenue expenditure and therefore, levy of penalt y was justified.
23. On the other hand Ld. Counsel of the assessee submitted that issue is debatable. In any case merel y disallowance of expenditure would not invite penal action.
24. We have considered the rival submissions carefull y and we agree with the observation of Ld. CIT(A) that assessee has made complete disclosure in respect of this item. At best, it is a case of disallowance of a particular item of expenditure because same was in the nature of capital expenditure but that does 8 not mean that assessee has furnished inaccurate particulars or concealed some particulars. In our opinion, the Ld. CIT(A) has correctl y deleted the penalt y and therefore, we confirm his order.
25. In the result, appeal is dismissed.
Order pronounced in the Open Court on 12.01.2015.
Sd/- Sd/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 12 January, 2015 rkk
Copy to: The Appellant, The Respondent, The C IT, The CIT(A), The DR