2020 (4) TMI 846 - AT - Income Tax

Penalty u/s 271(1) (c) - Disallowance of deduction u/s 80IB(10) in respect of project 'Damodar Residency' - HELD THAT - CIT(Appeals) while deleting the penalty has noted that the Tribunal vide order in BHUJBAL BROTHERS CONSTRUCTION COMPANY 2015 (11) TMI 582 - ITAT PUNE had directed the AO to allow the claim of deduction u/s.80IB(10) - Since deduction on which penalty has been levied has itself been deleted, there remains no basis for sustaining the penalty. DR could not bring any material to demonstrate that the order of Tribunal allowing the claim of deduction u/s.80IB(10) has been set aside/overturned by higher judicial forum meaning thereby that the order granting deduction to assessee u/s.80IB(10) has attained finality. - Decided against revenue.

Summary

Issues:
1. Disallowance of deduction u/s.80IB(10) of the Income Tax Act.
2. Imposition of penalty u/s.271(1)(c) of the Act.
3. Deletion of penalty by CIT(Appeals) and appeal by Revenue.

Analysis:
1. The case involved disallowance of deduction u/s.80IB(10) of the Act by the Assessing Officer concerning a housing project. The Tribunal allowed the appeal of the assessee by granting the deduction, which led to the imposition of a penalty by the Assessing Officer. The CIT(Appeals) noted that since the deduction itself was allowed by the Tribunal, there was no basis for sustaining the penalty u/s.271(1)(c) of the Act. The CIT(Appeals) directed the deletion of the penalty based on this reasoning.

2. The Revenue appealed the CIT(Appeals) order, challenging the deletion of penalty. The Revenue raised grounds questioning the allowance of the deduction u/s.80IB(10) and argued that the project did not meet the prescribed minimum area requirement. Additionally, the Revenue contended that the order of the ITAT against the quantum addition was pending before the High Court. However, the Revenue's appeal was dismissed by the ITAT.

3. During the appeal hearing, neither the assessee nor their representative was present. The ITAT proceeded to hear the appeal based on the material available on record. The ITAT considered the arguments presented by the Revenue and the CIT(Appeals' decision. The ITAT observed that the order of the Tribunal allowing the deduction had not been overturned by a higher judicial forum, indicating the finality of the deduction granted to the assessee u/s.80IB(10). Consequently, the ITAT upheld the CIT(Appeals) decision to delete the penalty, dismissing the Revenue's appeal.

In conclusion, the ITAT upheld the deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act, as the deduction u/s.80IB(10) was allowed by the Tribunal and had attained finality. The appeal filed by the Revenue challenging the deletion of the penalty was dismissed by the ITAT.