B IN INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM Aayakr ApIla saM ITAs No. 3690 & 3691/Mum/2018 Assessment Year 2006-07 & 2007-08) M/S Bhavya Construction Asst. Commissioner of Income -tax Co. 25(2), Patyakshkar Bhavan, C11, 4, Bhide Bungalows, 37 -A, Vs. Bandra Kurla Complex, Bandra, M.G. Road, Vile Parle Mumbai-400 051 (East), Mumbai-400 057 (Appellant) Respondent) PAN No. AAAFB1375K Appellant by : Shri Dr. K Shivaram, Sr. Advocate Ms. Neelam Co Jadav, ARs Respondent by : Shri Chaudhary Arun Kumar Singh, CIT DR Date of hearing: 13.08.2019 Date of pronouncement : 21.08.2019 AadoSa / ORDER, PER MAHAVIR SINGH, JM: These two appeals of assessee are arising out of different orders of Commissioner of Income Tax (Appeals)-37, Mumbai in appeal Nos. CIT(A)-37/IT-218 & 219/ACIT-25(2)/16-17 of even date 14.03.2018. Assessments were framed by Income Tax Officer, Ward-21(1), Mumbai (in short ITO / AO) for A.Ys. 2006-07 and 2007- 08 vide even dated 12.03.2013, under section 143(3) of Income-tax Act, 1961 (hereinafter Act ). penalties were levied under section 271(1)(c) of Act vide orders of even date 31.03.2016 for AYs 2006-07 & 2007-08. 2 ITA s No .3 6 90 & 3 6 9 1/ Mum / 2018 2. only common issue in these two appeals of assessee is against order of CIT(A) confirming levy of penalty by AO under section 271(1)(c) of Act for furnishing of inaccurate particulars of income. For this assessee has raised following common grounds in both years and issue and facts are identical. Hence, we will take facts from AY 2006-07. grounds raised by assessee reads as under: - 1. learned Commissioner of Income-tax (appeals) 37 erred in facts and in law in not appreciating that show cause notice issued under section 247 read with section 271(1)(c) of Income-tax Act 1961 ( Act ) did not specify whether proceedings were initiated for concealment of income or for furnishing inaccurate particulars of income. 2. learned Commissioner of Income-tax (Appeals) 37 erred in facts and in law in holding that appellant had furnished inaccurate particulars of income and thereby levying penalty under section 271(1)(c) of Act of 9,65,870/-. 3. learned Commissioner of Income-tax (Appeals) 37 erred in facts and in view in not appreciating fact that claim of deduction under section 80IB(10) of Act of appellant is not debatable issue and therefore, it does not amount to concealment of furnishing inaccurate particulars of income. 3 ITA s No 3690 & 3691/ Mum / 2018 4. learned Commissioner of Income-tax (Appeals) 37 erred in facts and in law in not appreciating that Mumbai Tribunal, in case Ramesh Gunshi Dedhia v. ITO (2014) 148 ITD 356 and in case of ITO v. Asha Kashiparasad Ringsingha Pandurang Sadan (2013) 56 SOT 340, on similar issue involving claim of deduction under section 80IB(10) of Act had granted relief to assessee. 3. Briefly stated facts are that assessee is partnership firm engaged in business of construction of residential building and selling them. During previous year relevant to AY 2006-07, assessee had constructed housing project approved by Slum Rehabilitation Authority and completed to residential building under housing scheme/ project approved by SRA. Originally, assessee returned income earned from project and offered for tax. Subsequently, on being advised by assessee s consultant, assessee revised return of income and claimed deduction under section 80IB(10) of Act and according to assessee all conditions of section 80IB(10) of Act are satisfied. AO during course of assessment proceedings got conditions verified but scheme was not notified by CBDT and hence, claim of deduction under section 80IB(10) of Act was disallowed. Meanwhile, CBDT issued notification dated 03.08.2010 and 05.01.2011 and on this basis claim of deduction under section 80IB(10) of Act. But AO disallowed claim of deduction and CIT(A) in original order confirmed disallowance of deduction by stating that assessee has not been able to produce CBDT notification and hence, assessee is not eligible for deduction. Aggrieved, assessee preferred appeal before Tribunal in first round in ITA No. 3090/Mum/2010 for AY 2006-07 vide order dated 14.10.2011, whereby 4 ITA s No .3 6 90 & 3 6 9 1/ Mu m / 20 1 8 Tribunal has restored matter back to file of AO to examine conditions in view of CBDT notification No. S4189(e) dated 03.08.2010. Tribunal directed AO vide Para 3 as under: - 3. We have heard arguments of both sides and also perused relevant material on record. learned Counsel for assessee has submitted that scheme of assessee has now been notified by CBDT as per notification No. S4 1896(E) issued on 3rd August, 2010. He has submitted that since said notification has been issued by CBDT only after passing of impugned order by learned CIT (Appeals) on 22.01.2010, assessee could not produce same either before AO or before learned CIT(Appeals). He has argued that in view of said notification issued subsequently by CBDT, one more opportunity may be given to assessee to support and substantiate its claim for deduction under section 80IB(10) before Assessing Officer. Since learned Departmental Representative has also not raised any objection in this regard and assessee, in our opinion, deserves one more opportunity to justify its claim for deduction under section 80IB(10) in view of notification issued subsequently by CBDT on 3rd August, 2010, we set aside orders of authorities below on this issue and restore matter to file of AO for deciding issue 5 ITA s No .3 6 90 & 3 6 9 1/ Mu m / 20 1 8 relating to assessee s claim for deduction under section 80IB(10) afresh in light of said notification and after giving opportunity to assessee of being heard. 4. AO again framed assessment and denied deduction by stating that notification is dated 03.08.2010 and project is approved on or before 01.04.2005, and hence, notification cannot given benefit to project approved before 01.04.2005 as said notification is issued to give effect to above mentioned amendment and amendment is effective from 01.04.2005. According to AO, as per section 80IB(10) of Act as it is stood prior to 01.04.2005, minimum size required of land plot was one acre. However, as per amendment by Finance Act (No.2) 2004, 2.3.f 01.04.2005, proviso was added to said section and condition of one acre is relaxed in case of metros like Delhi or Mumbai for practical reasons. Therefore, AO again denied deduction claimed by assessee under section 80IB(10) of Act. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed action of Assessing Officer. Tribunal also confirmed order of CIT(A). Aggrieved, assessee carried matter before Hon ble Bombay High Court and question of law is admitted before Hon ble Bombay High court in Income Tax Appeal No. 653/2012 order dated 08.08.2014, whereby substantial question of law was admitted. 5. AO levied penalty vide order dated 31.03.2016 by stating that assessee has made wrong claim of deduction under section 80IB(10) of Act as date of approval is first approval of project which is to be considered for allowing deduction under section. According to him, assessee s buildings were approved in year 2001 and all buildings, be it given to slum dwellers are sale buildings together from composite project and thus, date of 6 ITA s No .3 6 90 & 3 6 9 1/ Mu m / 20 1 8 approval is to be taken for purpose of claim of deduction under section 80IB(10) of Act. Hence, AO levied penalty as assessee was never notified entity by CBDT as SRA project i.e. project approved after 01.04.2005. Hence, he levied penalty under section 271(1)(c) for furnishing of inaccurate particulars of income. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed action of AO. Aggrieved, now assessee is in appeal before Tribunal. 6. We have heard rival contentions and gone through facts and circumstances of case. We noted that AO has levied penalty only on issue that assessee has made wrong claim of deduction under section 80IB(10) of Act as CBDT has issued notified dated 03.08.2010 and 05.01.2011 approving SRA Project of assessee. We noted that assessee is in business of construction and sale of residential buildings and during year under consideration assessee constructed building project approved Slum Rehabilitation Authority and completed two residential buildings under said housing project. assessee originally has not claimed deduction but on advice by its consultant revised its return of income and claimed deduction under section 80IB(10) of Act in respect to profit earned from this project. We noted that in similar matter issue is pending before Hon ble High Court regarding eligibility of deduction under section 80IB(10) in respect of SRA Project i.e. whether proviso inserted in clause b) to section 80IB(10) by Finance (No.2) Act, 2004 and subsequent notification no 67/2010 dated 03.08.2010 issued by CBDT notifying SRA Project is clarificatory in nature and is retrospective in operation. We noted that even this issue is allowed by Mumbai ITAT in its order, in case of ITO vs. Asha Kashiprasad Ringsingha Pandurang Sadan (2013) 56 SOT 340 (Mumbai-Trib), wherein same question of amendment of section 80IB(10) as amended by Finance Act 7 ITA s No .3 6 90 & 3 6 9 1/ Mu m / 20 1 8 (No.2), 2004 is clarificatory and retrospective in nature. learned Counsel before us, stated that this is highly debatable issue and once, there is debate penalty under section 271(1)(c) for furnishing of inaccurate particulars of income cannot be levied. We are in agreement with argument of learned counsel that this is debatable issue in view of diversion view of this Tribunal on issue. Since, this is debatable issue, we delete penalty. 7. Similar are facts in AY 2007-08 in ITA No. 3691/Mum/2018, wherein same penalty was under challenge. Hence, for this year also we delete penalty. 8. In Result, both, appeals of assessee are allowed. Order pronounced in open court on 21 .08.2019. Sd/- Sd/- ( RAJESH KUMAR) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) , Mumbai, Dated: 21.08.2019 , Sudip Sarkar, Sr.PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy (Asstt. Registrar) ITAT, Mumbai Bhavya Construction Co. v. Asst. Commissioner of Income-tax 25(2), Mumbai