The Commissioner Of Income Tax – 9, Mumbai v. M/S.goyal Properties & Estates Private Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.1422 OF 2012 The Commissioner of Income Tax – 9, Mumbai Versus M/s.Goyal Properties & Estates Private Limited ..Appellant. ..Respondent. Mr.Vimal Gupta, Senior Advocate with Ms.Padma Divakar for the appellant.Mr.Atul K Jasani for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 16[th] January 2013 P.C. : 1.In this appeal filed by the Revenue for assessment year 2006-2007, following question of law has been proposed for our consideration. “Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the penalty levied by the assessing officer under Section 271(1)(c) of the Income Tax Act, 1961 being 100% of the tax sought to be evaded by the assessee company even though it was an admitted fact that a false claim was made by the assessee company in the original return of income ?” 2.The respondent – assessee is engaged in the business of construction of residential and commercial buildings. In its return of income, originally filed, the respondent – assessee had claimed deduction of Rs.4.55 crores under Section 80-IB (10) of the Income Tax Act, 1961 ('the Act'). 3.Subsequently, on account of survey proceedings, the respondent – assessee withdrew its claim for deduction under Section 80-IB of Rs.4.55 crores. Thereafter, the assessee filed revised return of income and paid taxes. At the time of passing assessment order, the assessing officer initiated proceedings under Section 271(1)(c) of the Act and by an order dated 22[nd ]May 2009 imposed penalty of Rs.1.53 crores. 4.In appeal, the Commissioner of Income Tax (A) held that the penalty is not imposable. On the Revenue's appeal, the Tribunal by its order dated 7[th] May 2012 upheld the finding of the Commissioner of Income Tax (A) that the respondent – assessee had accepted the claim of the officers involved in the survey proceedings so as to buy peace of mind and avoid litigation. The Tribunal further held that the issue was debatable and on merits now the issue is covered in favour of the respondent – assessee by the decision of this Court in the case of Commissioner of Income Tax V/s. Vandana Properties Limited in Income Tax Appeal No.3633 of 2009 decided on 28[th] March 2012. 5.In view of the fact that the issue was debatable, imposition of penalty is not justified. Further the Apex Court in the case of Commissioner of Income Tax V/s. Reliance Petroproducts Private Limited reported in (2010) 322 ITR 158 (SC) has held that the penalty cannot be imposed merely because the claim is not sustainable in law when there is a bona fide basis for making the claim. 6.In view of the above, we see no reason to entertain the proposed question of law. Accordingly, the appeal is dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)