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TMI Blog2021 (9) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... lement was issue specific and not year specific and applied to all interest incomes not returned upto the date of settlement. We see no reason to interfere in the order of the Ld.CIT(A) and the appeal filed by the Revenue is, therefore, dismissed. - ITA No.102/Chd/2019 (Assessment Year: 2012-13) - - - Dated:- 23-7-2021 - SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI R.L. NEGI, JUDICIAL MEMBER Assessee by: Shri A.K. Jindal, CA Ms.Rattan Kaur, CA Revenue by: Smt.C. Chandrakanta, CIT DR ORDER Per Annapurna Gupta, Accountant Member: The above appeal has been preferred by the Revenue against the order of the Commissioner of Income Tax (Appeals)-1, Chandigarh dated 22.11.2018 relating to assessment year 2012-13, deleting the penalty levied u/s 271(1)(c) of the of the Income Tax Act, 1961 (hereinafter referred to as Act ). 2. The facts relating to the case are that in the assessment framed on the assessee u/s 143(3) of the Act, an addition of ₹ 14,87,66,159/- had been made on account of interest income earned on FDRs made out of funds received by the assessee for two projects i.e. Rajiv Gandhi Chandigarh Technology Park (RGCTP) project fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law, the CIT(A) has erred in setting aside the penalty on account of disallowance of interest expenditure by relying upon the 'record of discussions' which were specific to the assessment year 2007-08? 4. Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in setting aside the penalty order passed by the AO, by relying upon order dated 30.04.2014 of the Hon'ble Supreme Court which was specific only to assessment year 2007-08? 5. Whether on the facts and in the circumstances of the case and in law, the 'record of discussion' which took place on 14.03.2013 and the order passed by the Hon'ble Supreme Court on 30.04.2014 and the Hon'ble High Court on 05.12.2014 can be held to be a relief in perpetuity against all wrong claims made by the assessee under the Income Tax Act? 6. Whether on the facts and in the circumstances of the case and in law, a wrong claim made by an assessee and accepted by the assessee during assessment proceedings under Section 143(3) absolve the assessee from the rigours of penalty under Section 271(l)(c) which is against the Hon'ble Supreme Court judgment in Mak Data Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual matrix of the case, it is important to delve into the legal provisions of section 271(1)(c) and the interpretation thereof given by the various courts. The relevant portion of section 271 s reproduced below: '271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person (b) has failed to comply with a notice [under sub-section (2) of section 115WD or under sub-section (2) of section 115 WE or] under sub-section (1) of sectional42 or sub-section (2) of section 143 [or fails to comply with a direction issued under sub-section (2A) of section 142], or (c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or] [(d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits. he may direct that such person shall pay by way of penalty,- (ii) in the cases referred to in clause (b), in addition to tax, if any, payable] by him, a sum of ten thousand rupees] for each such failure; (iii) in the cases referred to in cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271{1)(c) would come into play and assessee will be liable to penalty 4. CIT Vs Moser Baer India Ltd. (184 Taxman 8 (SC)/[2009] 315 ITR 460 (SC)/(2009) 222 CTR 213) where Hon'ble Supreme Court confirmed Penalty under section 271(1)(c) for wrong adjustment of Unabsorbed Depreciation. 5. CIT Vs Gold Coin Health Food (P.) Ltd (172 Taxman 386 (SC)/[2008] 304 ITR 308 (SC)/[2008] 218 CTR 359) where Hon'ble Delhi Supreme Court held that amendment made in Explanation 4 to section 271(1)(c)(iii) with effect from 1-4-2003 is clarificatory and, therefore, will have retrospective effect 6. MAK Data P. Ltd vs. CIT [38 taxmann.com 448 (SC)/[2013] 358 ITR 593 (SC)/[2013] 263 CTR 1]Where Hon'ble Supreme Court held that Under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails to offer an explanation which is bona fide and proves that all the material facts have been disclosed. The Hon'ble Supreme Court has laid down the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and applying Explanation 1(8) of the section. 5.2.2. From the above decisions, it is clear that the determination whether the penalty is leviable or not depends on the facts and circumstances of each case and cannot be brought in to any straight jacket formula. 5.3. Brief facts in the present case are that the Chandigarh Housing Board (CHB) was designated as Nodal Agency by the Chandigarh Administration for construction of 25728 one room tenements for the slum dwellers at various locations in Chandigarh under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and development of residential, commercial other related infrastructure facilities as an integrated project at Rajiv Gandhi Chandigarh Technological Park on the land measuring approximately 123.79 acre. Under the scheme the Central Government and the Chandigarh Administration has provided the funds to the Chandigarh Housing Board for implementation. The land for the construction of these houses has been made available by the Chandigarh Administration, The development agreement was signed between the Chandigarh Administration the Parsvnath Developers Limited mentioning the status of Chandigarh Housi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le settlement reached and the assurance given before the Hon'ble Supreme Court as well as High Court, no penalty could be levied. We feel that this is not a fit case of levy of penalty and accordingly we set aside the order of Ld. CIT(A) and delete the penalty. 5.3.2. Even the A.O. has dropped penalty proceedings initiated in A.Y.2010-11 A.Y.2011-12 on the identical additions made in the assessment orders. 5.4. It is undisputed fact that the Hon'ble Punjab Haryana High Court asked both the parties to reach at amicable settlement on 21.2.2013 by passing an interim order wherein it was held that At the same time, we are of the opinion that there is a possibility of amicable solution of the dispute having regard to its nature. In these circumstances, we feel that the Secretary, Finance may summon both the parties and discuss the matter with them to find out the possible solution, if any. Thereafter, a meeting was called on 14.3.2013 which was attended by Member (L C) CBDT, CIT-I Chandigarh, Chairman CHB, Controller General of Accounts, Joint Secretary (Budget), DCIT(I)(I) Chandigarh, DIT (Systems) - V, Special Secretary (Finance) Chandigarh, CF AO, CHB, Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee and Department. Against the above order the assessee filed a Writ Petition before the Hon'ble Jurisdictional High Court. The Hon'ble High Court ultimately passed the following order:- Mr. G.C. Srivastava appearing for the revenue states, on instructions, that a compromise effected before the Secretary, Finance, Union of India, was reduced into writing and is titled as 'Record of Discussion'. Mr. Srivastava further states, on instructions, that observation by the Hon'ble Supreme Court in order dated 30.04.2014 passed in IA No. 2 in Special Leave to Appeal (Civil) No. 5346 of 2013 (Commissioner of Income Tax, Chandigarh Vs. Chandigarh Housing Board) recording that dispute regarding payment of tax by the Chandigarh Housing Board stands resolved, is correct. Mr. Srivastava also states that it is correct that it was agreed before the Hon'ble Supreme Court that no penalty proceedings would be initiated against the Chandigarh Housing Board and decision in this regard would be taken by the competent authority. Mr. Srivastava further states that he has instructions to make a positive statement that the revenue shall not oppose the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o settle it amicably, which was accordingly resolved on 21-02-2013,noted in Record of Discussion, when the assessee agreed to pay taxes on the same treating it as its income. That it was also agreed between the parties to be appropriate that no penalty be levied on the assessee ,though a final decision in this regard was left with the competent authority. That The matter went up to the Hon ble Supreme court in an SLP against the interim order of the High Court, who took note of the entire facts of the case and added that the competent authority should take note of the spirit of agreement between the two parties. That subsequently an application filed by the assessee for waiver of penalty was rejected by the competent authority against which the assessee went in appeal to the High court where the Counsel appearing for the Revenue conceded that it was agreed by the Revenue before the Hon ble Supreme court that no penalty proceedings would be initiated against the assessee and that he had instructions to make a positive statement that the Revenue would not oppose the assesses prayer for quashing penalty in appeal pending before the ITAT. That considering the aforestated facts regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evy penalty. This agreement, we hold, was applicable to the impugned year also. The reason being, the agreement was regarding the issue whether the assessee was a nodal agency of Chandigarh Administration or not. This is evident from the order of the Hon'ble High Court where the question of law framed was vis a vis this issue/aspect only and it was this aspect which was directed by the Hon ble High Court to be amicably settled by agreement. The agreement therefore for levy of no penalty was to be read in relation to that issue. Meaning thereby that the parties had agreed to no penalty being levied on account of any default committed by the assessee by treating itself as a nodal agency hithertofore. Thus all incomes not returned to tax by the assessee before the date of agreement, on account of treating itself the nodal agency of Chandigarh administration was agreed not to be penalized. The agreement we hold was not year specific, as held by the Ld.Pr.CIT, but was issue specific and applied to all years effected by the issue. The return for the impugned year, not disclosing interest income from FDR s claiming itself as nodal agency of Chandigarh administration, was filed well be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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