TaxTMI 
TaxTMI 
2019 (5) TMI 1868
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.... by the AO dropping penalty proceedings initiated u/s 271(1)(c) for the impugned year, was based on incorrect appreciation of facts .The Ld.Pr.CIT noted that the addition made in the assessment order passed for the impugned year, on account of interest earned on FDRs of Rs. 16,84,86,188/-, had been confirmed both by the Ld.CIT(A) and the I.T.A.T. The Ld. Pr.CIT further noted that the A.O. had dropped the penalty proceedings finding the issue in the impugned year identical to that in A.Y 2007-08, wherein penalty levied u/s 271(1)(c) of the Act had been deleted by the ITAT, and the department had not contested the order of the ITAT. Ld. Pr.CIT further noted that the AO had also considered the fact of deletion of penalty in A.Y 2008-09 and 2009-10 by the ITAT, while dropping penalty proceedings initiated for the impugned year. 3. The Ld.Pr.CIT considered the entire facts relating to A.Y 2007-08,as recorded by the AO in his order, and found that the same were not identical to the impugned year. She noted that the ITAT had deleted penalty levied u/s 271(c) of the Act in A.Y 2007-08 ,since the disputed addition, for the year had been resolved by amicable settlement, on the direction o....
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....by you against the imposition of penalty has been allowed by the Hon'ble ITAT, however, the decision has not been accepted by the Revenue and further appeals filed are pending before the Hon'ble High Court for adjudication. The penalty proceedings initiated u/s 27l(l)(c) of the, I.T. Act were wrongly dropped by the AO by relying on the decision of the Hon'ble ITAT in your case for the A.Y. 2007-08 wherein the decision of the Hon'ble ITAT in A.Y.2007-08 was not contested on the basis of Record of Discussion and order dated 30.04.2014 of the Hon'ble Supreme Court. 5. The order passed by the AO dropping penalty initiated u/s 271(l)(c) of the I.T. Act in the A.Y. 2010-11 is therefore erroneous and prejudicial to the interest of Revenue. You are therefore requested to show cause as to why the aforesaid order dropping the penalty proceedings u/s 271(l)(c) of the I.T. Act may not be reviewed under the provisions of section 263 of the I.T. Act. 6. Your case stands fixed for hearing on 27.09.2016 at 11:30 AM. In case of failure on your part to comply with this notice, it would be presumed that you have nothing to say in this regard and order u/....
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....tulated as under: i) During the course of assessment proceedings, it was noticed that the assessee had not offered for taxation the interest income from some FDRs on RGCTP & JNNURM Projects amounting to Rs. 16,84.86,188/- on which income the TDS had however, been claimed. Thus, a contrary position of disowning 'income but claiming deduction from tax of TDS on the same incomes which stood credited to the bank account of the assessee was noticed. When the Assessing Officer questioned the assessee on this issue, the assessee explained that since the funds of these FDRs belonged to Chandigarh Administration, thus the interest income also belonged to them and accordingly the same was not disclosed. After duly considering the reply of the assessee, the A.O. added back a sum of Rs. 16,84,86,188/-. Penalty proceedings u/s 271(l)(c) were also initiated for furnishing inaccurate particulars of income. (ii) Further, as stated above, this addition was confirmed by the CIT(Appeals) as well as the Hon'ble ITAT in the favour of the department. However, the penalty proceedings initiated u/s 271(l)(c) on this issue were subsequently erroneously dropped by the assessing off....
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....y any ground of appeal on or before the disposal of the same." 8. Before us the Ld. counsel for assessee, reiterating the contention made before the Ld. Pr.CIT ,stated that the view and the opinion of the A.O. was a plausible view which is evident from the fact that even the I.T.A.T. based on the same facts and circumstances had deleted the penalty levied in assessment years 2008-09 and 2009-10. The Ld. counsel for assessee further pointed out that in subsequent years also i.e. assessment years 2012-13 and 2013-14, identical penalty u/s 271(1)(c) of the Act had been levied for concealing the particulars of income relating to interest earned on FDRs which had been deleted in first appeal by the Ld.CIT(A) following the same reasoning as that of the A.O. in deleting the penalty in the impugned year. Copies of the orders were placed before us. Ld.Counsel for the assessee stated that evidently the view of the AO that no penalty was leviable was a plausible view and therefore the order passed by him was not erroneous. 9. The Ld. DR, on the other hand heavily relied upon the order of the Ld. Pr.CIT and stated that the A.O. had erroneously appreciated the facts of the case while hold....
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....gh auction of plots in this park.To facilitate the development of RGCTP the assessee purchased certain lands from Chandigarh administration and after necessary formalities, some of the plots were auctioned through public auction. In the bidding M/s Parsvanath Developers Ltd. was sold a plot as a developer of RGCTP and some funds were received from them in A.Y 2007-08 .As per the guidelines issued by the Government of India, the funds were to be kept in such a way that these were available for construction of houses as and when required and simultaneously they did not remain idle. The funds were kept in the nationalized banks as FDR's and earned interest on the same. The assessee neither returned income from the sale of development rights nor interest earned on FDR's to tax, treating itself as nodal agency of Chandigarh administration. Assessment u/s 143(3) of the Act was made for A.Y 2007-08 making addition of Rs. 800,89,75,168/- being taxable surplus on sale of development rights of Land transferred to the assessee under a conveyance deed by the Chandigarh UT Administration, to M/s Parsvnath Developers, being the Developer in Rajiv Gandhi Chandigarh Technology Park (RGCTP) account....
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....referably be conducted by Ex-Chairman of the Central Board of Direct Taxes alongwith an expert mediator. Counsel of parties say that one month time be given them to have instructions in the matter. We, accordingly, adjourn the matter to 31.01.2013" 18. In the order dated 21.02.2013 the Hon'ble Court observed that both the parties be summoned for working out an amicable settlement of the dispute, as under: "Mr. Ramaswamy, learned senior counsel appearing for the respondents states that since there is no provision for mediation under the Income Tax Act, that course of action, as suggested in our orders dated 18.12.2012, may not be acceptable to the respondents. 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. 19. Consequently, the Worthy Finance Secretary, Govt. of India held a meeting on 12.03.2013 with the Member (L&C), CBDT, New Delhi, the Commissioner of Income Tax-I, Chandigarh and the Chair....
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....e Tax, NWR, Chandigarh regarding waiver of penalty. The Commissioner in order u/s 273A of the Act declined the request by mainly observing that no settlement has been reached between 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 noting therein the statement of the counsel appearing for the Revenue that the assesses prayer for quashing penalty would not be opposed by the Revenue in appellate proceedings before the ITAT. : - "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. Srivastav....
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....cts in the proceedings paras, I am of the considered opinion that AO was not right in levying penalty. It is the same issue on which 'Record of Discussions' was made after directions of the Hon'ble High Court and subsequently the same were upheld by the Hon'ble Supreme Court vide its order dated 30.04.2014. Keeping in mind the spirit of the agreement arrived at in 'Record of Discussions' penalty levied by the AO is cancelled. The Grounds of Appeal No.1 is allowed." 24. It is not disputed that in the impugned year also penalty proceedings were initiated on the same addition made of interest on FDR's, in the same facts as circumstances, as in A.Y 2007-08 to A.Y 2009-10 and A.Y 2012-13 and A.Y 2013-14 as mentioned above. In view of the fact that in all those years penalty levied was deleted by the ITAT/CIT(A), considering the backdrop of the case as stated above, we have no hesitation in holding that the A.O's view that no penalty was leviable for the impugned year i.e. A.Y 2011-12, was a plausible view and not outrightly incorrect as canvassed by the Revenue/Pr.CIT. That the Department has contested the deletion of penalty by the I.T.A.T. in assessment year....