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2020 (12) TMI 163 - AT - Income TaxPenalty u/s 271(1)(c) - refusal of bonafide claim u/s 80IB(10) - HELD THAT - In this case assessee had not even identified the customer from whom such unaccounted receipt i.e On money was received which could have helped to ascertain the proported existence of obligation to return the On money . Due to lack of this details, Coordinate Bench decided that the unaccounted money is to be taxed in the year of receipts itself. Whereas the facts of the appeal, we are dealing in are different as all details relating to specific flats were provided and were even found by Revenue authorities during the course of survey. The On money which was offered to revenue in subsequent assessment year were shown as liability as advance for sale of flat Due to these variation of facts Revenue will be unable to get any benefit out of this decision. Respectfully following the decisions of Co-ordinate Bench and in the case of Nilkanth Developers Vs ITO 2014 (12) TMI 928 - ITAT AHMEDABAD are of the view that as the Adinath project was eligible for housing project u/s.80IB(10) and there is no other business carried on by the assessee, it deduction u/s.80IB(10) has been rightly claimed on the On money . This issue is also decided in favour of assessee.
Issues Involved:
1. Levy of penalty under section 271(1)(c) for furnishing inaccurate particulars or concealment of income. 2. Eligibility of deduction under section 80IB(10) on "on money" receipts. 3. Taxability of "on money" as business income or income from other sources. 4. Timing of "on money" taxation – whether in the year of receipt or the year of sale deed execution. Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c): The appeal was directed against the order of the Commissioner of Income Tax (Appeals), which upheld the penalty levied under section 271(1)(c) for AY 2010-11. The penalty was based on the claim that the assessee furnished inaccurate particulars or concealed income. The assessee argued that the penalty was wrongly confirmed without framing a specific charge and that mere disallowance of a claim does not constitute furnishing inaccurate particulars. 2. Eligibility of Deduction under Section 80IB(10) on "On Money" Receipts: The assessee, a partnership firm engaged in property development, claimed a deduction under section 80IB(10) for "on money" receipts, which was denied by the AO. The AO argued that the "on money" was not shown in the sale deeds and should be taxed as "Income from other sources." The Tribunal, however, found that the project "Adinath" was eligible for deduction under section 80IB(10) and that the assessee had rightly claimed the deduction on the "on money." 3. Taxability of "On Money" as Business Income or Income from Other Sources: The Tribunal observed that the "on money" receipts were related to the sale of flats and should be considered as part of the business income. The AO had treated these receipts as "Income from other sources" because they were not included in the sale consideration in the sale deeds. The Tribunal, following the precedent set by the jurisdictional High Court and Co-ordinate Bench decisions, held that the "on money" receipts were part of the business income and not income from other sources. 4. Timing of "On Money" Taxation – Year of Receipt or Year of Sale Deed Execution: The Tribunal examined whether the "on money" should be taxed in the year of receipt or the year when the sale deed was executed. It was noted that the assessee had accounted for the "on money" in the year when the sale deeds were executed. The Tribunal, referring to the jurisdictional High Court's decision, held that the "on money" should be taxed in the year of sale deed execution, not the year of receipt. Conclusion: The Tribunal concluded that the penalty levied under section 271(1)(c) was not sustainable as the additions on which the penalty was based had been deleted. The Tribunal allowed the assessee's appeal, granting relief on all grounds, including the eligibility of deduction under section 80IB(10) on "on money," the classification of "on money" as business income, and the timing of its taxation. The penalty order was thus set aside, and the appeal was allowed in favor of the assessee.
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