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TMI Blog2013 (9) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, we set aside the impugned order passed by the learned Commissioner (Appeals) and delete the penalty levied - Decided in favour of assessee. - ITA no. 649/Mum./2011 - - - Dated:- 13-9-2013 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER Assessee by : Mr. Vijay Mehta Revenue by : Mr. O.P. Singh ORDER PER AMIT SHUKLA, J.M. The present appeal has been preferred by the assessee, challenging the impugned order dated 9th December 2010, passed by the learned Commissioner (Appeals)-XXXVII, Mumbai, for the assessment year 2005 06, in the matter of penalty of ₹ 74,85,091, levied under section 271(1)(c) by the Assessing Officer and confirmed by the learned Commissioner (Appeals). 2. Facts in brief: The assessee is a partnership firm which is engaged in the real estate development. The assessee was developing a housing project named as Amartaru VII at Andheri (E), Mumbai. In the return of income filed on 31st October 2005, the assessee had shown the net profit from the business to the tune of ₹ 2,04,55,261 and the same was claimed as 100% deduction under section 80IB(10). Such a claim was duly suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected the assessee s contention and also noted the fact that after the search, it has come to the notice that the assessee has not completed the project before 31st March 2008 and, therefore, the assessee has violated the other conditions of section 80IB(10) and that the assessee has, later on, withdrawn the claim of deduction earlier claimed under section 80IB(10). However, the Assessing Officer found that initial findings of the Assessing Officer in the original assessment order is sufficient for levying penalty under section 271(1)(c). Accordingly, penalty of ₹ 74,85,091, was made on the entire claim of deduction of ₹ 2,04,55,261. 6. During the first appellate proceedings, the learned Commissioner (Appeals) has confirmed the penalty mainly on the ground that after the search and seizure operation, the assessee had made disclosure and admitted under section 132(4) that its project could not be completed before 31st March 2008 and has itself withdrawn the entire claim. Solely on this ground the learned Commissioner (Appeals) has given very detail reasoning as to why penalty has to be confirmed. Such a detail finding has been given by the learned Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT) 250 (Adh.) (SB). 8. On the other hand, the learned Departmental Representative submitted that admittedly after the search, it came to the lime light that the assessee has not fulfilled the main condition of completing the project, before 31st March 2008, therefore, the entire claim of the assessee was not genuine and, therefore, the findings of the learned Commissioner (Appeals) is entirely correct. He thus strongly relied upon the findings of the learned Commissioner (Appeals) on this score. On the issue of levy of penalty by the Assessing Officer, he submitted that there was no substantial change in law and one of the conditions of flats sold for less than 1,000 sq.ft., was clearly violated, therefore, the penalty is justified. 9. We have carefully considered the rival contentions, perused the relevant findings of the Assessing Officer as well as the learned Commissioner (Appeals) and the material placed on record. The assessee which has developed a housing project had received the approved plans on 10th October 2003. As on 31st March 2005, the assessee completed 65% of the work in respect to the said housing project. Since the assessee was following percentage completi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge or basis. The assessee s explanation has to be seen qua the charge levied by the Assessing Officer when the penalty proceedings were initiated. The assessee s explanation cannot be rejected on all together for different charge or conditions at a subsequent stage. Thus, in our opinion, the confirmation of penalty by the learned Commissioner (Appeals) on different ground is unwarranted in law. 10. Even otherwise also, it is a settled law that the conditions of furnishing of inaccurate particulars or concealment of particulars of income have to be seen at the time of filing of the return of income. Once it has been found that at the stage of filing of return of income, the assessee has furnished inaccurate particulars and or has concealed particulars of income then onlyl the penalty proceedings under section 271(1)(c) can be initiated. In the present case, at the time of filing of return of income, the assessee was eligible for deduction under section 80IB(10) on its profit which was based on percentage completion method. Whether the assessee could complete the project up to 31st March 2008 or not, is a much subsequent event which cannot be taken into cognizance at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion method i.e., percentage completion method. 11. The charge levied by the Assessing Officer in the assessment order that the assessee has violated the conditions of constructing the unit (flats) of more than 1,000 sq.ft. is not correct, because insofar as the assessee is concerned, it has constructed all the units less than 1,000 sq.ft. and later on the purchasers have joined the two flats, this cannot be the ground for denying the benefit of the claim under section 80IB(10) to the assessee. At least this cannot be adversely viewed in the penalty proceedings and the assessee s explanation has not been found to be false or any material has been brought on record, that right from the development stage to the sale of flats, the assessee has constructed flats for more than 1,000 sq.ft. or has sold any unit for more than 1,000 sq.ft. Thus, on this charge, the assessee cannot be held to be guilty of furnishing of inaccurate particulars of income or for concealment of income. Thus, the penalty cannot be levied or confirmed on this score. Accordingly, we set aside the impugned order passed by the learned Commissioner (Appeals) and delete the penalty levied by the Assessing Officer an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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