Deputy Commisisoner of Income-tax, V. Shri Gurumukh J. Sukhwani, Pune

ITA 1191/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9353 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 26-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY DHOKE
• Assessee Lawyers: VIPIN GUJRATHI
• Section: 80IB; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO , AM AND SHRI VIKAS AWASTHY, JM . / I TA NO. 1191 /PUN/20 15 / ASSESSMENT YEAR : 2005 - 06 DEPUTY COMMISSIONER OF INCOME TAX. CENTRAL CIRCLE - 2(2) PUNE . ....... / APPELLANT / V/S. SHRI GURUMUKH J. SUKHWANI, SUKHWANIES 350, ROAD NO. 3, SINDH HOUSING SOCIETY, AUNDH, PUNE - 411 007. PAN : ACEPS8693K / RESPONDENT REVENUE BY : SHRI AJAY DHOKE A SSESSEE BY : SHRI VIPIN GUJRATHI / DATE OF HEARING : 14.06.2017 / DATE OF PRONOUNCEMENT : 16 .06.2017 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL HAS BEEN FILED BY THE D EPARTMENT ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), PUNE - 6 DATED 05.05.2015 FOR THE ASSESSMENT YEAR 2005 - 06 DELETING PENALTY LEVIED U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT). 2 ITA NO. 1191/PUN/2015 A.Y. 2005 - 06. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECORD ARE: THE ASSESSEE IS A PROMOTER AND DEVELOPER. THE ASSESSEE DEVELOPED A COMMERCIAL PROJECT IN THE NAME OF SUKHWANI R EALITIES ON PLOT NO. 4 & 5 AT MORWADI, PIM P RI, PUNE. SIMULTANEOUSLY, T HE ASSESSEE WAS ALSO DEVELOPING A RESIDENTIAL PROJECT ON THE ADJACENT P LOT NO. 6. THE RESIDENTIAL PROJECT FLOATED BY THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IB (10) OF THE ACT. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT PROFIT MARGIN ON SALE IN RESPECT OF COMMERCIAL PROJECT IS 5.5%, WHEREAS PROFIT MARGIN ON SALE OF RESIDENTIAL PROJECT WHICH IS ELIGIBLE FOR DEDUCTION U/S 80IB (10) OF THE ACT IS 50%. THE ASSESSING OFFICER SOUGHT E XPLANATION FROM ASSESSEE FOR WIDE GAP IN THE PROFIT MARGIN S BETWEEN SALE OF COMMERCIAL PROJECT AND HOUSING PROJECT. THE ASSESSEE GAVE VARIOUS REASONS FOR VARIATION IN THE PROFIT MARGIN. NOT CONVINCED WITH REASONS FURNISHE D BY THE ASSESSEE, THE ASSESSING OFFICER RE - COMPUTED PROFIT MARGIN OF THE ASSESSEE IN RESPECT OF COMMERCIAL PROJECT AND MADE ADDITION OF RS. 46 ASSESSEE IN RESPECT OF COMMERCIAL PROJECT AND MADE ADDITION OF RS. 46 LAKHS. THE ASSESSING OFFICER FURTHER INITIATED PENALTY PROCEEDINGS ON SUCH ADDITION U/S 271(1) (C) OF THE ACT. T HE ASSESSING OFFICER VIDE ORDER DATED 28.03.2013 LEVIED PENALTY OF RS. 15,48,360/ - U/S 271 (1) (C) READ WITH EXPLANATION 5 FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSION ER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER APPRECIATING FACTS OF THE CASE , DELETED THE PENALTY. NOW, THE DEPARTMENT IS IN APPEAL BEFORE TRIBUNAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY L EVIED U/S 271(1) (C) OF THE ACT. 4. SHRI AJAY DHOKE REPRESENTING DEPARTMENT VEHEM ENTLY DEFENDING THE ORDER LEVYING PENALTY SUBMITTED THAT SEARCH ACTION U/S 132 OF THE ACT WAS 3 ITA NO. 1191/PUN/2015 A.Y. 2005 - 06. CARRIED OUT IN THE CASE OF SUKHAWANI GROUP ON 14.06.2006. THE ASSESSEE HAD UNDERVALUED WO RK IN PROGRESS TO THE EXTENT OF RS.43, 38,463/ - AND FURTHER DISCLOSED LOWER PROFIT MARGIN IN THE COMMERCIAL PROJECT. THE UNACCOUNTED TRANSACTION S W ERE REVEALED UNDER SEARCH ACTION. B UT FOR SEARCH ACTION, CONCEALED INCOME WOULD HAVE ESCAPED TA X NET . THE ASSESSEE HAD FILED APPEAL AGAINST ADDITION MADE BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS UPHELD THE ASSESSMENT ORDER. THEREAFTER, THE ASSESSEE HAS NOT FILED FURTHER APPEAL, T HUS, THE ORDER PASSED BY THE COM MISSIONER OF INCOME TAX (APPEALS) HAS ATTAINED FINALITY. IN PENALTY PROCEEDINGS, T HE COMMISSIONER OF INCOM E TAX (APPEALS) HAS ERRED IN DELETING PENALTY WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. THE COMMISSIONER OF INCOME TAX (APPEALS) IGNORED THE FACT TH AT THERE WAS WIDE DISPARITY BETWEEN COST OF CONSTRUCTION AND PROFIT MARGIN BETWEEN COMMERCIAL PROJECT AND HOUSING PROJECT ELIGIBLE FOR BENEFIT U/S 80IB(10) OF THE ACT. THE ACT. 5. ON THE OTHER HAND, SHRI VIPIN GUJRATHI APPEARING ON BEHALF OF THE ASSESSEE STRONG LY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELET ING PENALTY. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAD MADE ADDITION MERELY ON PRE SUMPTIONS. THE BOOKS OF ACCOUNT OF ASSESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER BEFORE MAKING ADDITION OF RS.46 LAKHS. THE A SSESSEE FILED APPEAL AGAINST ASSESSMENT ORDER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) BUT THE SAME WAS NOT CONTESTED AS THE ADDITION WAS MADE ON ACCOUNT OF CLOSING WORK IN PROGRESS , THAT WOULD BECOME OPENING WORK IN PROGRESS IN THE NEXT ASSESSMENT YEARS. THUS, IT WOULD NOT HAVE MATERIALLY AFFECTED THE TAX LIABILITY OF THE ASSESSEE. THE LD. AR SUBMITTED THAT A PERUSAL OF DOCUMENTS ON RECORD CLEARLY SHOW 4 ITA NO. 1191/PUN/2015 A.Y. 2005 - 06. THAT THERE WAS NO CONCEALMENT OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER HAD MADE ADDITION BY MERELY THRUSTING HIS POINT OF VIEW. THE PROFIT ON SALE O F COMMERCIAL PR EMISES IN ASSESSMENT YEAR 2005 - 06 AND 2006 - 07 PUT TOGETHER WAS OVER 10% AND PROFIT IN ENTIRE RESIDENTIA L PROJECT WAS APPROXIMATELY 39%. THE ASSESSEE HAD GIVEN DETAIL ED REASONS FOR LOWER MARGIN IN COMMERCIAL PROJECT. THE L D. AR PRAYED FOR DISMISSING THE APPEAL OF THE REVENUE AND UPHOLDING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6. BOTH SIDES HEARD. O RDERS OF AUTHORITIES BELOW PERUSED . THE ASSESSING OFFICER HAS LEVIED PENALTY U/S 271(1) (C) READ WITH EXPLANATION 5 IN RESPECT O F ADDITION OF RS. 46 LAKHS ON ACCOUNT OF UNDER VALUATION OF WORK IN PROGRESS OF COMMERCIAL PROJECT SUKHWANI REALITIES . A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER MERELY ON THE BASIS OF PRESUMPTIONS AND ESTIMATIONS . THE ADDITION MADE DURING ASSESSMENT HAS BEEN ACCEPTED BY ASSESSEE. IT IS A WELL SETTLED LAW THAT EVERY ADDIT ION MADE DURING ASSESSMENT PROCEEDINGS NEED NOT RESULT IN LEVY OF PENALTY U/S 271(1) (C) OF THE ACT. PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND INDEPENDENT. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED PENALTY U/S 271 (1) (C) B Y HOLDING AS UNDER: 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. ADDITION OF RS. 46,00,000/ - WHICH ACTED AS TRIGGER FOR INITIATION OF PENALTY U/S 271 (1) (C) OF INCOME TAX ACT AND FINALLY LEVY OF PENALTY IS O N ACCOUNT OF VALUATION ADOPTED BY THE ASSESSING OFFICER OF COMPLETED /SOLD PORTION OF THE COMMERCIAL PROJECT IN RESPECT OF UNSOLD PROJECT OF THE PROJECT @575 SQFT INSTEAD OF RS. 375/ - SQFT CLAIMED BY THE APPELLANT. THE APPELLANT HAS NOT PURSUED THE MATTER FURTHER AS HE IS LIKELY TO GET BENEFIT OF OPENING STOCK IN THE NEXT YEAR ON ACCOUNT OF THIS ADDITION. THE IMPORTANT POINT TO BE SEEN IS THAT WHETHER THERE WAS FILLING OF INACCURATE PARTICULARS IN THIS REGARD. IT MUST BE APPRECIATED THAT EVEN AFTER CONDUCTI NG SEARCH U/S 132 OF THE INCOME TAX ACT IN THE APPELLANTS CASE NO EVIDENCE IN RESPECT OF SUPPRESSION OF WIP COULD BE FOUND BY THE ASSESSING OFFICER AND ADDITION WAS MADE AFTER ADOPTING ESTIMATION ROUTE. IN MY OPINION ALL THE FACTS PERTAINING TO THE PROJEC T 5 ITA NO. 1191/PUN/2015 A.Y. 2005 - 06. WERE DISCLOSED BY THE APPELLANT AND JUST BECAUSE VALUATION OF WIP WAS NOT ACCEPTED ON THE BASIS OF SUBJECTIVE OPINION OF THE ASSESSING OFFICER; IT CANNOT BE SAID THAT THERE WAS FILLING OF INACCURATE PARTICULARS OF INCOME IN THIS REGARD. THEREFORE, CONSID ERING THE TOTALITY OF FACTS, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING PENALTY U/S 271(1) (C) OF INCOME TAX ACT. ACCORDINGLY, HE IS DIRECTED TO DELETE THE SAME. THUS, GROUND IS ALLOWED. WE DO NOT FIND ANY INFIRMITY WITH THE FINDINGS OF FIRST APPELLATE AUTHORITY AND WE CONCUR WITH THE REASONS FOR DELETING PENALTY. ACCORDINGLY, THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF DEPARTMENT IS DISMISSED BEING DEVOID OF MERITS . 7 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRO NOUNCED ON FRIDAY , THE 16 TH DAY OF JUNE , 201 7 . SD/ - SD/ - ( . / D. KARUNAKARA RAO ) ( /VIKAS AWASTHY ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 16 TH JUNE , 2017 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) - 12 , PUNE. 4. THE CIT - 12 , PUNE . 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, /ASSISTANT REGISTRAR , / ITAT, PUNE .