Pr. Commissioner Of Income Tax-Central, New Central Revenue Building, Statue Circle, Jaipur (Raj v. Order

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 168 / 2017 Pr. Commissioner of Income Tax-Central, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Smt. Renu Agarwal, 25, Dayal Nagar, Gopalpura Byepass, Jaipur ----Respondent _____________________________________________________For Appellant(s) : Mr. Anil Mehta with Mr. Sameer JainFor Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 08/08/2017 By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal preferred by the department. Counsel for the appellant has framed the following question of law:- i) Whether on the facts and in the circumstancesof the case and in law, the ITAT was right indeleting the penalty of Rs. 1,47,78,000/-imposed by the assessing officer u/s 271(1) (c)of the Income Tax Act, 1961. Counsel for the appellant has raised the contention that though the AO found the certificate taken from the Panchayat was fraud and the penalty was imposed but no such contention has been raised or any ground was taken before the Tribunal. We have gone through the judgment of the Tribunal. In para 2.1 & 2.4 the Tribunal observed as under: “2.1 The facts of the issue as emerges from theorder of the ld. CIT(A) is as under:- 3.1.3 I have duly considered assessee'ssubmission and carefully gone through penaltyorder passed by the AO. I have also perused thefacts of the case. On perusal, following pointsemerge:- (i) The AO levied penalty u/s 271(1)(© in respectof disallowance of deduction claimed u/s 80IB ofthe Act amounting to Rs. 4,58,25,167/- byholding the assessee had made a wrong claim ofdeduction u/s 80IB of the Act. The factualposition is that the assessee claimed deductionu/s 80IB on the basis of audit report in Form No.10CCB.the claim of the assessee was based onlegaldocumentnamed‘’DevelopmentAgreement’’. In the assessment proceedings also,assessee has submitted her explanation forjustification of claim of deduction u/s 80IB videletter dated 18-03-2013 (Refer PB pg 126 to128) and letter dated 21-03-2013 & 26- 03-2013(Refer PB pg 129 to 131). Therefore, the claim ofassessee for deduction u/s 80IB was bona fideand based on experts advice. In the case of GuruPragya, the claim of deduction of 80IB for A.Y.2010-11 was disallowed by the AO for want tocompletion certificate but the same as allowed byCIT (Appeals)-1, Jaipur vide order dated 24-2-2015 in ITA No. 25/13-14. However, the assesseewithdrew her claim of deduction u/s 80IB byfiling revised return u/s 139(5) of the Act withinthe time allowed by the Act and also paid taxesalongwith interest thereof. It is also pertinent tomention note that the assessee filed revised ROIbefore any show cause notice from the AO orbringing to the notice to the assessee aboutenquiries conducted by the AO of the developer.AO simply rejected the revised ROI u/s 139(5) ofthe Act on the ground that there was noinadvertent mistake, discovery of omission orwrong statement In the ROI (refer pg 23-24 ofthe penalty order). Assessee is allowed under thelaw to revise her ROI within the stipulated timeframe u/s 139(5) of the Act. The dictionarymeaning of OMISSION is ‘’the act of not including or not doing’’. Further, the dictionary meaning ofMISTAKE is ‘’an action or an opinion that is notcorrect’’. Therefore, the action of withdrawal of80IB claim comes within the purview of mistake.AO has summarily rejected the explanation of theassessee with regard to the revised return filed. or not doing’’. Further, the dictionary meaning ofMISTAKE is ‘’an action or an opinion that is notcorrect’’. Therefore, the action of withdrawal of80IB claim comes within the purview of mistake.AO has summarily rejected the explanation of theassessee with regard to the revised return filed. (ii) AO has levied penalty u/s 271(1)© on theground of furnishing of inaccurate particulars ofincome by the assessee. It is a fact that claimsmade by the assessee were based on expertsadvice and backed by certification issued in Form10CCB. Further, revised return so filed was also avalid return filed within the stipulated time. ARhas also relied upon the Hon'ble JurisdictionalHigh Court’s decision in the case of Chander PalBagga & Harshwardhan Chemicals & Minerals Ltd.(supra) wherein it is held that no penalty can beimposed if exemption is claimed on the basis ofadvice of advocate. Even the Hon'ble Apex Courtin the case of Price Waterhouse Coopers (P) Ltd.(supra) has held that inadvertent and bona fideerror does not amount to concealment orfurnishing of inaccurate particulars. (iii) Even otherwise also as per sub clause 3 ofSection 271AAA of the Act, no penalty is levibaleu/s 271(1)© of the Act on the facts andcircumstances of the case. (iv) It is also a fact that deemed dividend u/s2(22)(e) is a deeming provision and addition wasmade on the basis of entries in the regular booksof accounts which is created under deemingfiction and in such case, penalty for concealmentor furnishing of inaccurate particulars cannot belevied. During the course of assessmentproceedings the assessee has furnishedexplanation vide letter dated 27-03- 2013 (referPB pg 183 to 188) that transaction is in thenature of commercial transaction and theassessee received money from the companyagainst the agreement to sale of land to thecompany and assessee has submitted evidence insupport of contention. AO has simply rejected theexplanation without any positive materials whichcan be prove assessee's explanation as false oruntrue. In view of facts and circumstance of the case asmentioned above, levy of penalty of Rs.1,47,78,000/- u/s 271(1)© of the Act cannot besustained, hence deleted.’’ 2.4 We have heard the rival contentions andperused the materials available on record. Asearch was conducted on 22-09-2010 in the caseof Shree Ram Group, Jaipur to which the In view of facts and circumstance of the case asmentioned above, levy of penalty of Rs.1,47,78,000/- u/s 271(1)© of the Act cannot besustained, hence deleted.’’ 2.4 We have heard the rival contentions andperused the materials available on record. Asearch was conducted on 22-09-2010 in the caseof Shree Ram Group, Jaipur to which the assessee belongs. The assessee is an individualand she derives income from real estatebusiness, and capital gain. The assesseepurchased agricultural land and got it convertedinto residential and commercial plot after gettingthe same approved from JDA (i.e. JaipurDevelopment Authority). The assessee filedreturn of income declaring total income at Rs.7,11,74,000/-/- on 27-09-2011 u/s 139(1) (Copyat PB Page 8-12). In original return filed u/s139(1), she claimed deduction of Rs.4,58,25,167/- u/s 80IB(10) against the jointventure housing project with Guru PragyaInfrastructure Pvt Ltd. In support of this claim,the assessee filed Certificate of CA in Form No10CCB (Copy at PB Page 36-42). However, whenit came to the knowledge of the assessee thatthe claim of deduction u/s 80IB(10) would attractthe prolonged litigation with department, shechoose the path of peace and in order to avoidthe litigation, she withdrew the claim ofdeduction u/s 80IB vide letter dated 26.03.2013(Copy at PB Page 130- 131) and filed revisedreturn u/s 139(5) of Income Tax Act within thetime allowed by the law. The Revised return ofincome was filed on 26- 03-2013 declaring totalincome at Rs. 11,69,99,170/- (Copy at PB Page43-47) and due taxes were paid alongwith therevised return thereon. In the assessment, theAO made a further addition of Rs. 20,00,000/- onaccount of deemed dividend u/s 2(22)(e) ofIncome Tax Act, 1961 treating the businessadvance taken from company naming M/s AshishBuildcon Pvt Ltd as loans & advances covered u/s2(22)(e) of Income Tax Act, 1961 (Copy of orderat PB Page 156 to 182). The AO rejected thesubmission of the assessee because of mainlyfollowing reasons: - (i) Claim of deduction u/s 80IB(10) is notbonafide as the assessee actually sold land andshowed the same as contributed to joint venture. (ii) The assessee revised the return only on26.03.2013 after knowing the view of thedepartment in respect of wrong claim ofdeduction u/s 80IB. (iii) The revised return is not valid as there wasno discovery of any omission or wrong statementin the original return of income. (iv) the immediate source of profit is from sale ofland and not from development of project. (v) findings have been noticed by the A.O. at thetime of assessment, hence penalty u/s 271(1)(c)can be imposed and there is no overlapping with section 271AAA. (vi) Penalty is imposed for intentionally fillinginaccurate particulars of income. The AO thus passed an order under section271(1) (c) of I.T. Act, 1961 imposing a penalty ofRs. 1,47,78,000/- being 100% of tax leviable onfollowing income treating the same as concealedincome of the assessee: - i) Rs. 4,58,25,167/- on a/c of withdrawals ofdeduction u/s 80IB of Income Tax Act, 1961 onincome earned on joint venture housing projectwith Guru Pragya Infrastructure Pvt Ltd. ii) Rs. 20,00,000/- on a/c of addition u/s 2(22)(e) of Income Tax Act, 1961. (v) findings have been noticed by the A.O. at thetime of assessment, hence penalty u/s 271(1)(c)can be imposed and there is no overlapping with section 271AAA. (vi) Penalty is imposed for intentionally fillinginaccurate particulars of income. The AO thus passed an order under section271(1) (c) of I.T. Act, 1961 imposing a penalty ofRs. 1,47,78,000/- being 100% of tax leviable onfollowing income treating the same as concealedincome of the assessee: - i) Rs. 4,58,25,167/- on a/c of withdrawals ofdeduction u/s 80IB of Income Tax Act, 1961 onincome earned on joint venture housing projectwith Guru Pragya Infrastructure Pvt Ltd. ii) Rs. 20,00,000/- on a/c of addition u/s 2(22)(e) of Income Tax Act, 1961. Further the AO also imposed penalty u/s 271AAAof Income Tax Act, 1961 by passing a separateorder on alleged undisclosed income which shedetermined by treating the land under JV asoutright sale on income of Rs. 10,60,80,000/-,therefore on same income two different penaltieswere imposed one treating the undisclosedincome and other for concealment of particularsof income. The assessee carried the matterbefore the ld. CIT(A) who cancelled the penaltyvide his detailed order dated 31-08-2015. It isnoted from the records that the claims made bythe assessee were based on experts advice andbacked by certification issued in Form 10CCB. Itis also noted that the revised return so filed wasalso a valid return filed within the stipulatedtime. The ld. AR relied on the decision ofJurisdictional High Court in the case of ChanderPal Bagga & Harshvardhan Chemicals Ltd whereinit is held that no penalty can be imposed ifexemption is claimed on the basis of advice ofadvocate. The Hon’ble Supreme Court in the caseof Price Waterhouse Coopers Pvt. Ltd held thatinadvertent and bona fide error does not amountto concealment or furnishing of inaccurateparticulars. It is also noted that the assessee hadfurnished the explanation vide letter dated 27-03-2013 (pg 183 to 188) that transaction is inthe name nature of commercial transaction andthe assessee received money from the companyagainst the agreement to sale of land to thecompany and assessee has provided all theevidence in support of her contention. Thus inview of the above facts and circumstances of thecase, we concur with the findings of the ld.CIT(A) on the issue in question. Thus the appealfiled by the Revenue is dismissed.” In that view of the matter, no substantial question of law arises. Hence, the appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/33