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This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-24, Mumbai ('CIT(A)' for short) dated 31.01.2011, confirming the levy of penalty u/s.271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter) for the Assessment Year (A.Y.) 2004-05 in its case by the Assessing Officer (A.O.) vide order dated 24.03.2009.

2.1 Though the appeal raises as many as five grounds, the same in substance only agitates the impugned penalty levied in the sum of Rs.17,87,820/-. It would be relevant to recount the background facts of the case, which find mention both in the assessment order (dated 29.11.2006) as well as the penalty order by the A.O. The assessee, a partnership firm engaged in the business of contractors, filed its return of income on 01.11.2004, i.e., a due date, at an income of Rs. Nil. The same bore a deduction u/s.80- Dushyant Development Corporation vs. Dy. CIT IB(10) of the Act at Rs.79,83,468/-. A survey u/s.133A of the Act was conducted at the assessee's business premises at Samuel Street, Vadgadi, Mumbai on 30.12.2005 to verify the assessee's claim for deduction u/s.80-IB, which could not be substantiated by it. It, accordingly, filed a 'revised' return on 29.03.2006 declaring income at Rs.49.83 lakhs, i.e., after deducting Rs.30 lakhs on account of remuneration to partners, withdrawing its entire claim for deduction u/s.80-IB(10). The same was not considered by the Revenue as a revised return u/s.139(5) inasmuch as the revision had been motivated by the detection of a wrong claim by the Department through a survey conducted in pursuance to the assessment proceedings initiated by service of notice u/s.143(2), placing reliance on the decisions in the case of CIT vs. J.K.A. Subramania Chettiar [1977] 110 ITR 602 (Mad) and Addl. CIT v. Radhey Shyam [1980] 123 ITR 125 (All.). The assessee's case was that it had undertaken the construction of building commonly known as 'Haridas Park', with Wings 'A' to 'G'. The construction of the project commenced prior to 01.10.1998, so that it did not qualify for deduction u/s.80-IB(10). The assessee's claim was qua on the construction of the Wings C & D, part of which was sold during the year, the construction of which commenced only after 01.10.1998, so that the project being approved, the same qualified for deduction u/s.80-IB(10). The same stood rejected by the Revenue as different Wings of a project did not constitute different projects by themselves and, admittedly, the construction of the project stood commenced much prior to 01.10.1998, i.e., during the year 1986-87. Even for argument sake, if each Wing was to be treated as a separate project, the land available for each Wing would stand reduced to less than 1 acre. The assessee filed an appeal before the first appellate authority, challenging the non acceptance of its 'revised return' as a valid return u/s. 139(5) of the Act, claiming that there was nothing adverse found or detected by the Revenue, and that the said revision, withdrawing the claim u/s. 80-IB(10), was only to buy peace and avoid litigation. The first appellate authority, vide its order dated 03.07.2007 (PB pgs. 61 - 63), was of the view that the matter is not appealable inasmuch as the same is only relevant in the context of initiation of penalty u/s. 271(1)(c) of the Act, which are separate and distinct proceedings. The assessee having withdrawn its claim, the validity or otherwise Dushyant Development Corporation vs. Dy. CIT of the said withdrawal per 'revision' would arise only in the context of the penalty proceedings, so that the assessee's challenge was premature and could not be entertained.

2.3 In appeal, the assessee raised several grounds, which stand enumerated at pgs. 2 to 7 of the impugned appellate order. The assessee's claim for deduction u/s.80-IB(10), to which it was not eligible, stood withdrawn only consequent to the discovery of its invalidity per survey proceedings on 30.12.2005. There was no basis for the assessee's claim inasmuch as there is no differentiating factor between different Wings of the housing project, all of which constitute and form part of a single project. Even taking the separate Wings to constitute separate projects would not help the assessee inasmuch as the area per Wing would fall below one acre, which represents a basic, qualifying condition for claim u/s.80-IB(10). As such, the assessee's claim of having withdrawn its claim only to secure peace with the Department, relying on the decision by the hon'ble apex court in the case of CIT vs. Suresh Chandra Mittal [2001] 251 ITR 9 (SC), is not maintainable. The decision in the case of Telebuild Construction (P) Ltd. vs. ACIT (in distinguishable, as the matter had been taken by the assessee u/s.264. In fact, the assessee had not even appealed against the disallowance of its claim; rather, preferring to withdraw it in view of its untenability. The decision in the case of CIT vs. Backbone Enterprises [2010] 6 Taxmann.com 3(Guj.) was also found distinguishable, as the claim had been withdrawn by filing a valid revised return, which was not the case in the instant Dushyant Development Corporation vs. Dy. CIT case. He, therefore, confirmed the penalty, relying on the decisions in the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC) as well as Reliance Petro Products Pvt. Ltd. [2010] 322 ITR 158 (SC), reproducing a part thereof wherein it stands clarified that everything would depend upon the return filed by the assessee; that being only the document where the assessee furnish the particulars of his income (refer para 12 of the impugned order). Aggrieved, the assessee is in further appeal.