Income Tax Appellate Tribunal - Mumbai
Bhumiraj Homes P. Ltd, Mumbai vs Department Of Income Tax on 15 June, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI "B" BENCH
BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND
SHRI S.S.GODARA, JUDICIAL MEMBER
ITA No. 2869/M/2011 (AY: 2004-05)
ITA No.2870/M/2011 (AY: 2005-06)
ACIT Cir - 10(3),
Room No. 451, 4th Floor,
Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ....... Appellant
Vs.
M/s. Bhumiraj Homes P. Ltd.,
D-2, Big Splash Sector-17,
Vashi, Navi Mumbai - 400 705.
PAN: AABCB6735H ....... Respondent
Appellant by: Shri Pravin Varma & P.C. Mourya
Respondent by: Shri Pradip N Kapasi
Date of hearing: 17.5.2012 Date of Order:15.6.2012
ORDER
PER S.S. GODARA, JM:
These two Revenue's appeals arise from order of Ld. CIT (A) dated 16.4.2010 deleting penalty u/s 271(1)(c) of the Act for Assessment Years 2004-05 and 2005-06 respectively.
2. Facts of the case in AY 2004-05 are that in assessment proceedings which were finalized on 31.3.2006 by AO, deduction u/s 80-IB of the Act was allowed to assessee of Rs. 2.23 crores. Thereafter, the AO issued reopening notice and reopened the assessment u/s 147 of the Act. Vide order dated 14.12.2007, AO withdrew the deduction u/s 80-IB(10) 2 ITA No. 2869/M/2011 (AY: 2004-05) ITA No. 2870/M/2011 (AY: 2005-06) (supra). The reason as stated was that assessee's project in question was residential cum commercial which did not qualify for deduction u/s 80-IB (10).
3. In assessee's appeal against the reassessment order, the Ld. CIT (A) also confirmed the AO's findings vide order dated 23.1.2009.
4. On the other side, since the Ld. CIT (A) had upheld the reassessment order (supra), penalty proceedings commenced against the assessee. In response to the show cause notice, it submitted only those facts which had already been filed during assessment proceedings. The AO vide penalty order dated 29.3.2010 held that assessee had failed to prove the genuineness or justification of the allowance in hand claimed in return of income which amounted to furnishing inaccurate particulars of income, so, there was enough material on record to prove that the assessee had made an attempt to evade the taxes by claiming wrong deduction. Further, the AO placed reliance on Hon'ble Supreme Court judgment in the case of CIT vs. Dharmendra Processors 306 ITR 277 and imposed penalty of Rs. 80,30,820/- u/s 271(1)(c) of the Act.
5. The assessee went in appeal against the penalty order. The Ld. CIT (A) has accepted the same by holding that the disallowance in question in the reassessment had been on the basis of material which was already on record as the assessee was of bonafide belief that its claim of deduction u/s 80-IB was allowable. The CIT (A) has also observed that AO had not brought any material so as to prove it as a case of 'furnishing of inaccurate particulars' of income or any continumous intention of the assessee. The CIT (A) while deleting the penalty has also relied on the Hon'ble Supreme Court judgment in case of Reliance Petro Chemicals Ltd. 322 ITR 158.
3ITA No. 2869/M/2011 (AY: 2004-05) ITA No. 2870/M/2011 (AY: 2005-06)
6. Opening his arguments, ld DR before us has submitted that the assessee's conduct in claiming wrong deduction is squarely covered by the penalty provisions of the Act. In this regard, he has placed reliance on penalty order and findings contained therein and prayed that same may be upheld.
7. The ld AR before us has opposed the Revenue's arguments by submitting that in quantum proceedings, the disallowance in question has already been deleted by ld Coordinate Bench of Mumbai ITAT. He has also submitted that the Hon'ble jurisdictional High Court has also upheld the deletion of disallowance in question vide order dated 29.11.2011 (copies of the orders of ITAT and Hon'ble High Court have also been produced). In the light thereof, he has prayed that the penalty in question does not have any legs to stand.
8. We have heard both the learned representatives in detail. Admittedly, in the reopening proceedings, the AO made disallowance of the claim already allowed u/s 80-IB of the Act. It has come on record that in quantum proceedings, the assessee's appeal against the disallowance in question has been accepted by Coordinate Bench in ITA No. 2170/M/2009 decided on 25.3.2011, the operative part reads as under.
"We are not convinced with the submission advanced by the learned Departmental Representative. On a pertinent query it was admitted by him that there was no evidence about the commercial area not being on the ground floor. It, therefore, depicts that the commercial area being shops etc. were situated on the ground floor of the building. If that be the case then the built up area for staircase and passage, lift or lift room are to be considered as part and parcel of residential area because these are only to facilitate residents for going up and coming down from the building. It does not assist shops, in any manner, to function with the help of staircase, lift area, lift room etc. In such a situation the built up area covered under 4 ITA No. 2869/M/2011 (AY: 2004-05) ITA No. 2870/M/2011 (AY: 2005-06) staircase, lift passage, lift room etc. has to be considered as part and parcel of residential area and not as commercial area. The learned Departmental Representative then contended about the size of plot which is admittedly more than one acre in this case as per his calculation. We are unable to appreciate the view point of the department that the un-built up area. It is obvious that there cannot be 100% construction on any plot. Some area has to be left open as per the plan and construction can be done only as per the specifications approved by the competent authority. By no stretch of imagination can an open area be considered as proportionately relatable to residential as well as commercial area. As the size of the plot in this case is more than one acre, condition u/s 80-IB(10)(b) also stands fully satisfied. Insofar as the reliance of the Kolkata Bench order in Bengal Abuja Housing Development Ltd. (supra) is concerned, we are again unable to find any finding given by the Tribunal which comes in the way of granting deduction to the assessee in consonance with the judgment of the Hon'ble jurisdictional High Court. The learned Departmental Representative has referred to certain submissions made before the Kolkata Bench but was unable to point out the relevant parts of the Tribunal order wherein such submissions have been accepted. We are further not convinced with the contention put forth by him that only the "housing projects" should be considered as eligible for deduction which, in his opinion, emerges from the plain reading of sub- section (10) of section 80-IB. The reason is obvious that the Hon'ble jurisdictional High Court, after thorough analysis of the provision, has held that deduction is eligible to housing project approved by the local authority as such or as "residential plus commercial project having residential as well as commercial units to the extent permitted under the DC Rules. As the assessee all the relevant conditions for the grant of deduction under this section, we are of the considered opinion that the ld. CIT (A) was not justified in refusing to grant deduction accordingly.
Since, the present proceedings are emerging from notice u/s 148 and the assessment has been framed u/s 143(3) r.w.s. 147, the assessee can be allowed deduction u/s 80-IB (10) only to the extent it was disallowed in the present proceedings which amounts to Rs. 2,23,85,571. Insofar as the 5 ITA No. 2869/M/2011 (AY: 2004-05) ITA No. 2870/M/2011 (AY: 2005-06) disallowance of deduction to the tune of Rs. 31,70,650/- is concerned, the same cannot be conferred on the assessee for the reason that it was disallowed in the original assessment order passed u/s 143(3) and no material has been brought to our notice to indicate that such order has been modified in any manner. As the reassessment proceedings are aimed at taxing the income which has escaped assessment, these cannot be taken as a tool for putting the assessee in a better position than in which it was before such proceedings. We, therefore, direct to allow deduction u/s 80-IB (1) for Rs. 2.23 crores and odd, which has been disallowed in the present proceedings."
9. We also find it from the paper book that the Hon'ble Bombay High Court has also upheld the ld Coordinate Bench order on 29.11.2011 by observing as under:-
"Counsel for the appellant states that the questions sought to be raised in the appeal are covered against the revenue by the decision of this Court in the case of CIT vs. Brahma Associates reported in (2011) 333 ITR 289 (Bom). In this view of the matter, the appeal is dismissed with no order as to costs."
10. In the light of our above discussion and developments as mentioned above, there exists no basis to levy penalty u/s 271(1)(c) of the Act. We, therefore, do not find any infirmity in CIT (A)'s order deleting penalty.
11. The appeals stand rejected.
Order pronounced in the open court on 15.6.2012.
Sd/- Sd/-
(G.E. VEERABHADRAPPA) (S.S. GODARA)
PRESIDENT JUDICIAL MEMBER
Date : 15.6.2012
At :Mumbai
6
ITA No. 2869/M/2011 (AY: 2004-05)
ITA No. 2870/M/2011 (AY: 2005-06)
Okk
Copy to :
1. ACIT Cir-10(3) Mumbai.
2. M/s. Bhumiraj Homes P. Ltd.
3. The CIT (A)-22, Mumbai.
4. The CIT concerned.
5. The DR "B", Bench, ITAT, Mumbai.
6. Guard File.
// True Copy//
By Order
Assistant Registrar
ITAT, Mumbai Benches, Mumbai