2014 (7) TMI 632 - AT - Income Tax

Penalty u/s 271(1)(c) - deduction u/s 80IB(10) - project was not completed on/or before 31st March 2008 Held that - CIT(A) has deleted the penalty after detail discussion on merits - in the quantum proceedings, the Tribunal has set aside the matter to the file of the CIT(A) and the orders of the CIT(A) for all the years under appeal should also to be restored thus, the order of the CIT(A) is set aside and restored for fresh adjudication in accordance with law after deciding the quantum proceedings Decided in favour of Revenue.

Summary

Issues:
Challenging of penalty orders under section 271(1)(c) of the Income Tax Act, 1961 for assessment years 2004-05, 2005-06, 2006-07, and 2007-08.

Analysis:
1. The Revenue appealed against the orders of the Commissioner (Appeals) for penalty proceedings related to the disallowance of claims under section 80IB(10) of the Income Tax Act, 1961. The Revenue contended that the Commissioner erred in directing the deletion of penalties imposed by the Assessing Officer. The appeals were consolidated due to the common issue involved.

2. The Assessing Officer disallowed the deduction under section 80IB(10) citing reasons such as the project not being completed, exceeding built-up area limits, and containing commercial areas. The first appellate authority upheld this disallowance based on the project's incomplete status by the stipulated date.

3. The Commissioner (Appeals) allowed the deduction on a prorata basis by excluding profits related to commercial areas and flats exceeding 1,000 sq.ft. The Tribunal's order in the assessee's case for the same assessment years was also presented during the proceedings.

4. The Counsel argued for setting aside the penalty matters to the Commissioner (Appeals) in line with the Tribunal's decision to set aside the quantum appeals for fresh adjudication. The Departmental Representative agreed to restore the penalty issue back to the Commissioner (Appeals).

5. The Tribunal, after considering the arguments, set aside the penalty orders passed by the Commissioner (Appeals) for all years under appeal. The issue was restored to the Commissioner (Appeals) for fresh consideration in alignment with the law and after deciding the quantum proceedings.

6. Consequently, the Revenue's appeals for the assessment years 2004-05, 2005-06, 2006-07, and 2007-08 were allowed for statistical purposes. The decision was pronounced in open court on 22nd May 2014.