2017 (3) TMI 1714 - HC - Income Tax

Penalty u/s 271(1)(c) - Deduction u/s 80IB (10) denied - assessee does not satisfy the conditions to avail the benefit in the orders of assessment passed on 30.12.2008 and 17.12.2009 - Held that - In the present case, AO found that the assessee has produced a invalid project approval certificates. The invalidity was in respect of automatic cancellation of the permission to raise construction of building. Another ground for imposition of penalty was that possession was given to the allottees before obtaining the a completion certificates which is said to be in gross violation of condition No.7 of the approval certificate. Such facts have been taken into consideration by the Commissioner of Income Tax (Appeals), wherein the Commissioner has recorded the finding referred to above. The fact is that the assessee claimed deduction u/s 80IB(10) for the reason that the a project approval certificates was filed and the possession delivered. May be the technical formality of obtaining completion certificate was not satisfied, but it will not mean that the assessee has claimed incorrect or false deduction. Mere non-satisfaction of a condition of deductions will not mean that the assessee has furnished incorrect return, which will make it liable for penalty. - decided in favour of assessee.

Summary

Issues:
1. Claim of deduction under section 80IB(10) of the Income Tax Act, 1961.
2. Imposition of penalty under section 271(1)(c) for concealing income and furnishing inaccurate particulars.
3. Validity of project approval certificate and possession delivery before obtaining completion certificate.
4. Interpretation of legal provisions regarding penalty for incorrect claims.

Analysis:

1. Claim of deduction under section 80IB(10):
The appellant claimed a deduction under section 80IB(10) of the Income Tax Act, 1961. However, the Assessing Officer rejected this claim citing non-satisfaction of conditions necessary to avail the benefit. The Commissioner of Income Tax (Appeals) upheld the decision, stating that the mere claim of deduction, even if disallowed, does not amount to furnishing inaccurate particulars or concealing income. The Tribunal also did not interfere with this decision, as there was no finding that the details supplied by the appellant were incorrect or false.

2. Imposition of penalty under section 271(1)(c):
Following the rejection of the deduction claim, the Assessing Officer initiated penalty proceedings under section 271(1)(c) for concealing income and furnishing inaccurate particulars. However, the Commissioner of Income Tax (Appeals) set aside the penalty order, emphasizing that the appellant did not provide incorrect details in their returns. The Commissioner held that merely making a claim that was not allowed does not warrant a penalty. The Tribunal upheld this decision, leading to the cancellation of the penalty orders for the relevant assessment years.

3. Validity of project approval certificate and possession delivery:
The Assessing Officer found discrepancies in the project approval certificate and the possession delivery process, leading to the imposition of penalties. The Commissioner of Income Tax (Appeals) considered these facts and concluded that the technical non-compliance with obtaining a completion certificate did not amount to incorrect or false claims by the assessee. The Tribunal did not find any substantial question of law arising from these findings and dismissed the appeals.

4. Interpretation of legal provisions regarding penalty:
The appellant's counsel referred to a Delhi High Court order to argue that non-debatable issues could lead to penalties. However, the High Court in this case found no question of law requiring consideration. It was emphasized that the mere technical non-compliance with certain conditions for deductions does not automatically render the appellant liable for penalties under section 271(1)(c). Both the Commissioner of Income Tax (Appeals) and the Tribunal concurred that there was no incorrect declaration filed by the assessee, leading to the dismissal of the appeals.

In conclusion, the High Court upheld the decisions of the Commissioner of Income Tax (Appeals) and the Tribunal, emphasizing that the mere disallowance of a deduction claim does not warrant penalties if the appellant did not provide incorrect or false information. The technical non-compliance with certain conditions for deductions does not automatically lead to penalties, as long as there is no deliberate concealment or furnishing of inaccurate particulars.