The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the revenue’s appeal against penalty for disallowance of deduction under Section 80IA(4) of Income Tax Act,1961 citing the assessee’s eligibility as a developer.
The revenue-appellant appealed against the order dated 04.12.2015 for Assessment Year 2010-11,passed by Commissioner of Income Tax(Appeals)[CIT(A)] , arguing that the CIT(A) wrongly deleted the penalty of ₹65,57,761/- under Section 271(1)(c). It contended that the order of the Assessing Officer(AO) should have been upheld and prayed for the restoration of the original order.
BGSCTPL-MSKEL(JV),respondent-assessee,claimed a deduction under Section 80IA(4) during the quantum proceedings, which the AO disallowed. The disallowance was made on the basis that the assessee was a contractor, not a “developer” as required. The CIT(A) upheld the Assessing Officer’s decision. The AO then initiated penalty proceedings under Section 271(1)(c) for concealment of income, which the CIT(A) also confirmed.
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The tribunal heard the appeal filed by the assessee against the penalty order confirmed by the Ld. CIT(A) under Section 271(1)(c). The assessee’s counsel pointed out that the issue regarding the deduction under Section 80IA(4) had been resolved in the assessee’s favor in ITA Nos. 2498/Ahd/2013 & 828/Ahd/2016, and ITA Nos. 829 & 830/Ahd/2016 for the A.Ys. 2010-11 & 2011-12, in an order dated 07.11.2024.
With the quantum proceedings decided in the assessee’s favor, the counsel argued that there was no basis for levying the penalty for concealment of income or providing inaccurate particulars.
The appellate tribunal referred to the relevant order, which stated that the assessee was a developer, not just a works contractor, and was entitled to the deduction under Section 80IA(4). The appeal was decided in favor of the assessee.
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The two member bench comprising Siddhartha Nautiyal (Judicial Member) and Narendra P.Sinha (Accountant Member) noting the quantum proceedings were decided in favor of the assessee, held that the penalty under Section 271(1)(c) could not be sustained.
In short,the appeal filed by the revenue was dismissed.
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