2015 (10) TMI 1585 - AT - Income Tax

Penalty u/s 271(1)( c) - receipt of transfer fees and TDR premium received by the assessee - CIT(A) deleted penalty levy - Held that - in the quantum appeals for the assessment years 2003-04 to 2005-06 the issue is decided in favour of the assessee, therefore even if the Tribunal confirmed the addition for the assessment year under consideration it does not lead to the conclusion that the claim of the assessee by applying the principle of mutuality in respect of transfer fee and TDR premium is bogus claim or absolutely incorrect claim. When the issue is decided by the Hon ble Jurisdictional High Court in favour of the assessee then the claim of the principle of mutuality of this receipt is a bonafied claim and does not attract the penalty under section 271(1)( c) of the Act. Accordingly, we do not find any illegality of infirmity in the order of ld. CIT(A) in deleting the penalty levied under section 271(1)(c) of the Act for all these assessment years. - Decided against revenue.

Summary

Issues:
Appeals against penalty orders under section 271(1)(c) for various assessment years; Common issues raised in all appeals regarding addition of transfer fees and TDR premium; Discrepancy in Tribunal decisions for different assessment years; Application of principle of mutuality; Dismissal of penalty by CIT(A); Dismissal of appeals by Jurisdictional High Court; Legality of penalty under section 271(1)(c).

Analysis:
The Appellate Tribunal ITAT Mumbai heard six appeals by the revenue against penalty orders under section 271(1)(c) for different assessment years, all arising from orders of the CIT(A). The appeals were related to the addition of transfer fees and TDR premium. The Tribunal decided to consolidate the appeals due to common issues. The revenue raised grounds against the deletion of penalties by the CIT(A) for the assessment years, arguing that the additions were not voluntary contributions and lacked the principle of mutuality.

The Tribunal noted that there were conflicting decisions by the Tribunal itself on the addition of transfer fees and TDR premium. While some assessments were decided against the assessee, others were in their favor. The Jurisdictional High Court had dismissed the revenue's appeals for certain assessment years, supporting the assessee's position. The Tribunal emphasized that the issue was settled by the High Court's decision and that the principle of mutuality applied to the receipts, justifying the deletion of penalties by the CIT(A).

The Tribunal considered the arguments of both parties and concluded that the issue had been resolved in favor of the assessee by the High Court. Therefore, the Tribunal upheld the CIT(A)'s decision to delete the penalties imposed under section 271(1)(c) for all the assessment years in question. The appeals by the revenue were ultimately dismissed by the Tribunal. The order was pronounced in open court on 20.5.2015.