Revenue's Appeal Dismissed: Penalty Deletion Upheld

The appeal filed by the Revenue challenging the deletion of penalty of Rs. 8,72,520/- imposed on the assessee under section 271(1)(c) was dismissed by the Appellate Tribunal ITAT Pune. The penalty was deleted as the assessee had acted in good faith, disclosed all relevant facts, and withdrew the claim based on the Assessing Officer's opinion. The Tribunal upheld the decision of the CIT(A) emphasizing that penalty is not automatic after a quantum addition, and both penalty and quantum addition require separate considerations.

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Issues involved: Deletion of penalty u/s.271(1)(c) on assessee's claim of deduction u/s.80IB(10) for a housing project.

Summary:
The appeal was filed by the Revenue challenging the deletion of penalty of Rs. 8,72,520/- levied on the assessee u/s.271(1)(c). The assessee, a builder, claimed deduction u/s.80IB(10) for a housing project approved by the Pune Municipal Corporation. The dispute arose regarding the eligibility of profits derived from construction on the amenity space for deduction. The Assessing Officer reduced the claimed deduction amount based on the profit calculation for the residential and commercial parts sold by the assessee during the relevant year.

The assessee contended that it was entitled to the full claim u/s.80IB(10) as per a decision of the Hon'ble Bombay High Court, but the claim was withdrawn during assessment proceedings for A.Y. 2003-04. The penalty was imposed on the original claim of deduction u/s.80IB(10), which was a debatable issue at that time. The CIT(A) deleted the penalty considering that the assessee had disclosed all relevant facts, acted bonafide, and accepted the Assessing Officer's opinion by withdrawing the claim instead of appealing. It was emphasized that penalty is not automatic after a quantum addition, and both penalty and quantum addition have distinct considerations.

Ultimately, the Appellate Tribunal upheld the CIT(A)'s decision to delete the penalty, stating that there was no need for interference in this matter.

Therefore, the appeal filed by the Revenue was dismissed by the Appellate Tribunal ITAT Pune on February 27, 2013.

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