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TMI Blog2016 (4) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee holding the assessee to have furnished inaccurate particulars of income. The conditions for levy of penalty for concealment having not been fulfilled, does not warrant levy of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee - ITA No.737/PN/2014 - - - Dated:- 10-3-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Mazhar Akram For The Respondent : S/Shri Dharmesh Shah and Hari Krishan ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the Revenue is against the order of CIT(A)-II, Pune, dated 12.12.2013 relating to assessment year 2009-10 in deleting penalty levied under section 271(1)(c) of the Income-tax Act, 1961 (in short the Act ). 2. The Revenue has raised the following grounds of appeal:- 1. The learned Commissioner of Income Tax (Appeals) erred in deleting the penalty u/s. 271(1)(c) without examining the facts evidences available on record and brought out by the Assessing Officer in the penalty order in support of levy of penalty u/s. 271(1)(c) of the Act. 2. The learned Commissioner of Income Tax (Appeals) erred in deleting the penalty on the premise that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CBDT vide Notification dated 14.09.2006 had notified the Industrial Park having area of 61,780 sq. mtrs. and having minimum number of 30 units. The assessee had sold the entire project to M/s. N.V. Realty Pvt. Ltd. consisting of two floors of parking and Conference Hall plus 8 floors. The first floor had two industrial units and the remaining 7 floors had 4 industrial units upto 8th floor. However, during the year under consideration, the assessee had converted the units on the ground floor into two industrial units by creating a partition. Further, the assessee had constructed two units on the 9th floor. Since the approval for construction of two units at 9th floor was taken after 28.02.2006 i.e. after completion of Industrial Park, the Assessing Officer was of the view that the same could not be regarded as part of Industrial Park and hence, the deduction under section 80IA of the Act on sale of 9 th floor could not be allowed. The assessee was asked to explain as to why the said claim of deduction under section 80IA of the Act should be allowed to it. The explanation of the assessee was not accepted by the Assessing Officer since the assessee had constructed industrial unit at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view thereof, the Assessing Officer levied penalty under section 271(1)(c) of the Act on the said concealed income @ 100% and penalty was levied at ₹ 18,03,220/-. 5. The CIT(A) considered the explanation of assessee and reliance on several decisions and main emphasis of the assessee that it had furnished complete particulars of income and expenses relating to the project and the claim of deduction was made under the bonafide belief that it was eligible for deduction in respect of entire project of IT Park constructed by it. The CIT(A) was of the view that dispute was related to the claim of deduction for industrial units constructed on 9th floor of IT park. The CIT(A) considered the contention of assessee that Notification of CBDT refers to minimum number of industrial units and no restriction was given in the approval granted in respect of park. The CIT(A) was of the view that the said explanation prima facie appears to be correct on perusal of the said notification. Further, the contention of the Assessing Officer that the approval of IT Park was for ground plus 8 floors by the CBDT, was also found to be true from the material on record. The CIT(A) noted that the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the units of 9th floor were not eligible for deduction under section 80IA(iv) of the Act and hence, deduction to the extent of about ₹ 53 lakhs was denied to the assessee and the Assessing Officer was of the view that the assessee had furnished inaccurate particulars of income. Our attention was drawn to the application moved by the assessee before the Ministry of Commerce i.e. application for setting up of Industrial Park, which is placed at pages 4 to 9 of the Paper Book. Referring to page 7 of the Paper Book, the learned Authorized Representative for the assessee pointed out that the proposed allocable area of Industrial Park was 49,450 sq. mtrs., out of total area of 61,780. Further, the learned Authorized Representative for the assessee referred to the approval granted by the Ministry of Commerce Industry, copy of which is placed at pages 10 to 14 of the Paper Book, pointed out that the proposed area of Industrial Park was 61,780 sq. mtrs. and permission was given to the assessee to construct Industrial Park. The CBDT vide Notification dated 14.09.2006 also notified the development of Industrial Park by the assessee and notified that the undertaking being developed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee where he has concealed its income or furnished inaccurate particulars of income. In order to attract levy of penalty under section 271(1)(c) of the Act, it has to be established that the assessee has concealed its income or furnished inaccurate particulars of income. In case either of two conditions are not fulfilled, it cannot be held that the assessee is exigible to levy of penalty under section 271(1)(c) of the Act. Further, Explanation (1) to section 271(1)(c) of the Act also lays down certain conditions, under which penalty for concealment could be levied upon the assessee. However, where the assessee had made a claim, which as per him, was bonafide and complete particulars with regard to it had been furnished by the assessee, then in such circumstances, merely because the claim of the assessee has been rejected and addition has been made in the hands of assessee, the question is whether the assessee can be held to be liable for levy of penalty under section 271(1)(c) of the Act. 10. The Hon ble Supreme Court in CIT Vs. Reliance Petro Products Pvt. Ltd. (supra) have held as under:- We are not concerned in the present case with the mens rea. However, we have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure by way of furnishing the facts and materials in the computation of income and where no information or statement given by the assessee in the return of income or during the course of assessment proceedings, was found to be factually incorrect or inaccurate, case of the assessee could not be said to be case of concealing particulars of income or furnishing inaccurate particulars of income. Accordingly, p enalty levied under section 271(1)(c) of the Act was deleted. 12. Now, coming to the facts of the present case, we find that the assessee company was engaged in the business of setting up of Industrial Park and the profits arising from such activity were eligible for deduction under section 80IA(iv) of the Act. For the purpose of development of Industrial Park, the assessee needs to obtain permission from the Ministry of Commerce Industry in this regard. The assessee filed an application before the Ministry of Commerce Industry and in the said application, the assessee very clearly mentioned that it was proposing to construct 61,780 sq. mtrs. in the said building, against which it was entitled to claim deduction under section 80IA(iv) of the Act. The copy of the said appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in this regard, where complete information was furnished by the assessee along with return of income and even during the course of assessment proceedings, the assessee furnished the requisite information. Since the total constructed area of Industrial Park was within limits of proposed area of Industrial Park, the assessee bonafidely believed that it was entitled to the claim of deduction under section 80IA(iv) of the Act and the same was made in the return of income. The said claim was further supported by various evidences filed by the assessee and also the claim was in tune with the audit report given by the Auditors. In the entirety of the above said facts and circumstances and applying the ratio laid down by the Hon ble Supreme Court in CIT Vs. Reliance Petro Products Pvt. Ltd. (supra), we hold that there is no merit in levy of penalty proceedings under section 271(1)(c) of the Act upon the assessee holding the assessee to have furnished inaccurate particulars of income. The conditions for levy of penalty for concealment having not been fulfilled, does not warrant levy of penalty under section 271(1)(c) of the Act. Accordingly, upholding the order of CIT(A), we find no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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