V.R.Anbuvelrajan, CHENNAI V. ACIT, CHENNAI

ITA 138/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77224 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM IRS
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Depreciation; Revised return
• Section: 142(1); 133(6); 131; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . . , ! ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.138/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010) SHRI. V.R. ANBUVELRAJAN NO.1C, SORRENTO ENCLAVE, 7/4, SARDAR PATEL ROAD, ADYAR, CHENNAI 600 020. [PAN: AGZPA9406B] ( #$ /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS RANGE IV, CHENNAI. ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI. K. BALASUBRAMANIAN, ADVOCATE / RESPONDENT BY : SHRI. GURU BHASHYAM, IRS, JCIT. /DATE OF HEARING : 17.04.2014. ! /DATE OF PRONOUNCEMENT : 25.04.2014. ' / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10; ARISES FROM ORDER OF THE COMMISSIONER OF INCOME TAX (APPEA LS)-V, CHENNAI DATED 02.09.2013, PASSED IN ITA NO.28/12-13(A)-V, C ONFIRMING PENALTY I.T.A.NO.138/MDS/2014. :- 2 -: OF E35,16,238/- IMPOSED BY THE ASSESSING OFFICER VI DE ORDER DATED 26.07.2012 U/S. 271(1)(C) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). 2. THE ASSESSEE; AN INDIVIDUAL, IS ENGAGED IN REAL ESTATE BUSINESS. ON 16.7.2010, HE HAD FILED HIS RETURN DISCLOSING INCOME OF E49,17,440/-. IN SCRUTINY AND THROUGH AIR INFORM ATION, THE ASSESSING OFFICER CAME TO KNOW ABOUT SALE OF IMMOVA BLE PROPERTY AT ASSESSEES INSTANCE. HE ALSO CAME THROUGH RELEVANT SALE DEED DOCUMENTS AND OTHER DETAILS. THE LAND SOLD WAS SIT UATED IN VILLAGE SIRUSERI. THE ASSESSEE CLAIMED TO HAVE SPENT A SU M OF E3.45 CRORES AS LAND DEVELOPMENT EXPENDITURE COUPLED WITH AN AMO UNT OF E 1 CRORES AS COMMISSION. HIS TOTAL TURNOVER WAS E8.89 CRORES. PER ASSESSING OFFICER, THIS APPEARED TO BE EXCESSIVE. THUS, HE SOUGHT FOR RELEVANT DETAILS. IN RESPONSE, THE ASSESSEE FURNIS HED PAYEES NAMES AND ADDRESSES, EVIDENCE OF TDS DEDUCTED AND REMITTE D WITH COPY OF CHALLAN. IT IS TO BE SEEN FROM THE ASSESSMENT ORDE R DATED 27.12.2011 THAT THE ASSESSING OFFICER IN ORDER TO VERIFY THE C LAIM, ISSUED NOTICE U/S 142(1) TO THE PAYEES. MOST OF THEM WERE RETURNED UNSERVED. THE ASSESSEE INFORMED THE ASSESSING OFFICER ABOUT CHANG ES IN PAYEES ADDRESSES AND FURNISHED FRESH ONES ALONGWITH CONFIR MATIONS. IN I.T.A.NO.138/MDS/2014. :- 3 -: ASSESSING OFFICER VIEW, THESE CONFIRMATIONS WERE R EADYMADE AND REPETITIVE. AGAIN, THE ASSESSEE JUSTIFIED THIS IN HIS EXPLANATION THAT THE PAYEES WERE RELATED AS A GROUP OF PERSONS HEADED B Y ONE PERSON. 3. IT EMANATES FROM THE CASE FILE THAT THE AS SESSING OFFICER STILL DID NOT AGREE. SO, HE ISSUED NOTICES U/S 131 ONLY TO TH REE PARTIES/PAYEES. IN RESPONSE, THE ASSESSEE PRODUCED SAID THREE PERSO NS, GOT RECORDED THEIR STATEMENTS SUPPORTING HIS CASE. PER ASSESSIN G OFFICER, THEY WERE INCONSISTENT IN SUBMISSIONS AND COULD NOT FURNISH T HE SUPPORTING DOCUMENTS I.E. BILLS OR VOUCHER FOR WORK DONE FOR D EVELOPING TH ELAND. SO, HE TREATED THEM AS MIDDLEMEN AND ISSUED NOTICE FOR DISALLOWING THE LAND DEVELOPMENT EXPENSES OF E3.5 CRORES BEING VERY MUCH ON HIGHER SIDE AND EXCESSIVE. AT THIS JUNCTURE, THE A SSESSEE CHOOSE TO RESTRICT HIS CLAIM OF E3.45 CRORES TO 2.45 CRORES A S UNDER:- THE ASSESSEE HAS PURCHASED NEARLY 80 ACRES AGRICU LTURAL LAND DURING THE LAST THREE YEARS IN SIRUSERI VILLAGE IN BITS AN D PIECES AND AFTER CONSOLIDATION, THE PURCHASED LANDS WERE LEVELED, BO UNDRIES WERE REMOVED AND WATER CHANNELS WERE FILLED UP AND THE L ANDS ARE MADE READY FROM AGRICULTURAL USE TO HOUSING SITES. THIS INVOLVES LOT OF DEVELOPMENT OPERATION, POWER AND MONEY. AS THE ASSESSEE DID NOT HAVE THE TIME AND MAN POWER AT HIS DISPOSAL FOR THE ABOVE OPERATIONS, HE ENTRUSTED THE WORK TO VARIOUS CONTRACTORS THROUGH A COMMON FRIEND. THESE CONTRAC TORS, HAVE COMPLETED THE JOB DURING MARCH 2009. EVEN THOUGH T HEY HAVE COMPLETED THE JOB, THE ASSESSEE COULD NOT ABLE TO P AY THEIR DUES IN TIME DUE TO PAUCITY OF FUNDS, AT THE FAG END OF THE FINANCIAL YEAR. BUT TO COMPLY WITH THE LEGAL PROVISION, THE ASSESSE E HAS PROMPTLY REMITTED THE TDS WITHIN THE TIME ALLOWED AS PER THE INCOME TAX ACT, 1961. I.T.A.NO.138/MDS/2014. :- 4 -: APART FROM THE ABOVE, THE ASSESSEE HAS PAID COMMIS SION TO VARIOUS PARTIES FOR PURCHASE OF LAND. THESE PAYMENTS WERE M ADE IN THE NORMAL COURSE OF BUSINESS AND TDS IS ALSO REMITTED IN TIME. WITH REGARD TO YOUR QUERY, THE EXPENSES CLAIMED I S HEAVY, YOUR HONOUR WILL KINDLY APPRECIATE THE PROCESS EXPLAINED IN PARA II ABOVE AND THE TIME AND LABOUR INVOLVED. IN ORDER TO DELI VER THE SIDE IN TIME TO L & T, SOME TIME WE PAY COST AT A HIGHER LEVEL. THEREFORE, THE EXPENSE CLAIMED ARE REASONABLE. BUT IN ORDER TO COO PERATE WITH THE DEPARTMENT AND BUY PEACE, WE HAVE NO ALTERNATIVE BU T TO RESTRICT OUR CLAIM UNDER THE HEAD LAND DEVELOPMENT CHARGES TO RS.2,45,00,000/. IN VIEW THEREOF, THE ASSESSING OFFICER IN ASSES SMENT ORDER DISALLOWED/ADDED A SUM OF E1 CRORE IN ASSESSE ES INCOME. COUPLED WITH THIS, HE HAD ALSO MADE SIMILA R DISALLOWANCE/ ADDITION OF A SUM OF E3,44,927/- UNDER SECTION 37 OF THE ACT @ 15% ON TRANSPORT EXPENSES OF E19,1 0,253/-, VEHICLE INSURANCE AND DEPRECIATION ETC. IN THIS MAN NER, THE ASSESSING OFFICER COMPUTED TOTAL INCOME AS E1,52,6 2,362/- AFTER GRANTING DEDUCTION UNDER SECTION 80CC OF E1,1 5,000/-. AT THE SAME TIME, HE INITIATED PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSESSEE F OR HAVING CONCEALED AND FURNISHED INACCURATE PARTICULARS OF I NCOME. THERE IS NO QUARREL BETWEEN THE PARTIES THAT THE AS SESSEE DID NOT PREFER AN APPEAL AND THE ASSESSMENT ATTAINED FI NALITY. 4. IN PENALTY PROCEEDING, THE ASSESSEE STRONGLY CONTESTED THE I.T.A.NO.138/MDS/2014. :- 5 -: ACCUSATION OF CONCEALMENT AS WELL AS THAT OF FURNIS HING INACCURATE PARTICULARS OF INCOME. HE SUBMITTED TO HAVE COOPERA TED AND VOLUNTARILY SURRENDERED THE EXPENDITURE OF E1 CRORE. THE ASSES SING OFFICER DID NOT AGREE AND OBSERVED THAT DISALLOWANCE OF E1 CROR E (SUPRA) FELL WITHIN FOUR CORNERS OF SECTION 271(1) (C) OF THE AC T. REGARDING OTHER DISALLOWANCE AT THE RATE OF 15%(SUPRA), HE HELD THE SAME WAS ONLY ON ESTIMATION BASIS WHICH DID NOT ATTRACT ANY PENALTY . THEREAFTER, IN PENALTY ORDER DATED 27.06.2012, THE ASSESSING OFFIC ER IMPOSED PENALTY OF E35,16,238/-. 5. THE CIT(A) HAS AFFIRMED THE AFORESAID PENALTY BY OBSERVING AS UNDER:- 7. I HAVE VERIFIED THE SUBMISSIONS MDE BY THE AR O F THE APPELLANT AGAINST THE PENALTY ORDER PASSED BY THE ASSESSING O FFICER WHEREIN THE ASSESSING OFFICER DURING THE COURSE OF ASSESSM ENT PROCEEDINGS PROPOSED TO ADD LAND DEVELOPMENT EXPENSES CLAIMED B Y THE ASSESSEE AT RS.3,45,00,000/- AND COMMISSION EXPENSE S OF RS.1,00,00,000/-. IN RESPONSE TO THE NOTICES ISSUE D U/S. 133(6) BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS TO THE PARTIES TO WHOM THESE PAYMENTS WERE MADE, MOST OF THE NOTICES RETURNED UN SERVED, A ONLY A FEW REPLIES WERE RECEI VED. THE ASSESSING OFFICER ISSUED SUMMONS TO A FEW PARTIES A ND ASKED THEM TO PRODUCE SUPPORTING DOCUMENTS, BILLS AND VOUCHERS SUPPORTING THE PAYMENTS RECEIVED FROM THE ASSESSEE. SINCE, THE PA RTIES DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE WORK DONE, THE ASSESSING OFFICER PROPOSED TO DISALLOW THE DEVELOPMENT EXPENS ES AND COMMISSION EXPENSES CLAIMED BY THE ASSESSEE. AT TH IS JUNCTURE, THE ASSESSEE AGREED FOR A DISALLOWANCE OF RS.1,00,00,00 0/- OUT OF THE TOTAL EXPENSES CLAIMED. SINCE THE OFFER MADE BY TH E ASSESSEE IS NOT A VOLUNTARY ACT AND THE ASSESSEE WAS FORCED TO SURR ENDER AN AMOUNT OF RS.1,00,00,000/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I.T.A.NO.138/MDS/2014. :- 6 -: THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEED INGS ON THE SURRENDER AMOUNT AND LEVIED PENALTY U/S.271(1) . 7.1 THE APPELLANT IN HIS SUBMISSIONS SATED THAT SI NCE THE ASSESSEE CO-OPERATED WITH THE DEPARTMENT DURING THE ASSESSME NT PROCEEDINGS, NO PENALTY CAN BE LEVIED ON THE SURREN DER AMOUNT OF RS.1,00,00,000/- EVEN THOUGH THE ASSESSEE HAD INCUR RED LAND DEVELOPMENTAL EXPENSES AND COMMISSION EXPENSES AT RS.3,45,00,000/-, RS.1,00,00,000/- RESPECTIVELY AND THE ASSESSEE HAD ALSO QENUINELY DEDUCTED TDS ON THIS EXPENSES HE NCE, THERE CANNOT BE ANY DISPUTE REGARDING THE GENUINTY OF THE CLAIM MADE BY THE APPELLANT. THE AUTHORISED REPRESENTATIVE OF TH E APPELLANT IN SUPPORT OF HIS CLAIM RELIED ON THE RATIOS HELD IN T HE CASE OF RAKESH KUMAR GUPTA VS. ITA WHEREIN HONBLE DELHI BENCH HEL D IN APPEAL NO.2690(DELHI) OF 2009 IF THE INCOME IS SURRENDERED WITH THE CONDITION THAT NO PENALTY. THE ASSESSING OFFICER I S TAKEN HIS STAND SINCE THE EXPENSES TOWARDS AND DEVELOPMENT AND COMM ISSIONER WERE NOT GROUND TO BE GENUINE THE ASSESSEE AGREED T O SURRENDER AN AMOUNT OF RS.1,00,00,000/- OUT OF THE TOTAL EXPENDI TURE CLAIMED AT RS.4,45,00,000/- ON ACCOUNT OF LAND DEVELOPMENT EXP ENSES AND COMMISSION EXPENSES. 7.2 THE ASSESSING OFFICER PLACED HIS RELIANCE ON TH E ALLAHABAD HIGH COURT DECISION IN THE CASE OF RAKESH SURI VS. CIT (331 ITR 458) (ALL) WHICH HELD THAT PENALTY U/S 271(1) (C) CAN BE LEVIED WHERE THE SURRENDER OF INCOME IS NOT VOLUNTARY BUT ON ENQUIRY INTO THE PARTICULARS OF INCOME BY THE ASSESSING OFFICER. SI MILARLY, THE PENALTY IS LEVIABLE EVEN THOUGH FOR THE ADDITION AGREED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AS WAS HELD IN TH E JURISDICTIONAL ITAT IN THE CASE KRISHNA & CO VS.(1979) 120 ITR 144 (MAD) IN THE CASE OF POLO SINGH & CO., VS. CIT 1975 (98 ITR 564) (DELHI), SIMILARLY, IN THE CASE ANAND LIQUORS VS. CIT (232 I TR 35) WHEREIN THE HONBLE KERALA HIGH COURT HAD HELD THAT FALSE I NFLATION OF EXPENSES ATTRACTED PENALTY. 7.3. KEEPING IN VIEW OF THE RELIANCE PLACED BY VARI OUS DECISIONS BY THE ASSESSING OFFICER, IN SUPPORT OF THE PENALTY LE VIED ON THE AMOUNT SURRENDERED BY THE ASSESSEE. I DO NOT FIND ANY INFI RMITY IN THE PENALTY ORDER EVEN THOUGH ASSESSEE SURRENDERED AN A MOUNT OF RS.1,00,00,000/- ON ACCOUNT OF THE EXPENSES CLAIMED IT IS NOT AN ACT OF VOLUNTARY SURRENDER NOR AS THE ASSESSEE HIMSELF FILED A REVISED RETURN BEFORE THE COMMENCEMENT OF ASSESSMENT PROCEE DINGS, HENCE THE ASSESSING OFFICER IS JUSTIFIED LEVYING THE PENA LTY ON THE AMOUNTS I.T.A.NO.138/MDS/2014. :- 7 -: SURRENDERED BY THE ASSESSEE DURING THE COURSE OF AS SESSMENT PROCEEDINGS AT 35,16,238/- AND HENCE THE SAME IS CO NFIRMED. THEREFORE, THE ASSESSEE IS IN APPEAL. 6. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CASE FILE. PER ASSESSEE, THE IMPUGNED PENALTY OUGHT TO HAVE BEEN D ELETED IN LOWER APPELLATE PROCEEDINGS. THE REVENUE STRONGLY CONTES TS THIS. IT ARGUES THAT THE LAND DEVELOPMENT CHARGES HAVE REMAINED U NPAID TO THE TUNE OF E2.6 CORES EVEN AS ON 31.03.2013 AND QUO TES CASE LAW OF MAK DATA (P). LTD VS. COMMISSIONER OF INCOME-TAX-I I [2013] 38 TAXMANN. COM 448(SC). IN VIEW OF THE DIVERGENT STA NDS ADOPTED BY THE PARTIES, THE QUESTION BEFORE US IS AS TO WHETHE R ASSESSEE CAN BE HELD TO HAVE CONCEALED AND FURNISHED INACCURATE PAR TICULARS OF INCOME U/S.271(1)(C) OF THE ACT OR NOT. WE DEEM IT APPRO PRIATE TO RE-NARRATE THE RELEVANT FACTS. THE ASSESSEE HAD CLAIMED LAND DEVELOPMENT EXPENSES OF E3.5 CRORES BY PRODUCING BILLS, PAYEES IN PERSON, THEIR CONFIRMATIONS, PROOF OF TDS DEDUCTION AND REMITTANC E. THIS FACTUAL POSITION HAS GONE UNDISTURBED. PER ASSESSING OFFIC ER, THE PAYEE HAD FAILED TO PROVE ANY DEVELOPMENT OF THE LAND. AFTER MAKING ALL EFFORTS WHICH HAD PROVED FUTILE, THE ASSESSEE CHOSE TO RES TRICT HIS CLAIM OF E3.45 CRORES TO E2.45 CRORES. THE ASSESSING OFFICER DULY ACCEPTED THIS AND TERMED DISALLOWANCE OF E1 CRORE AS EXCESSIVE DE VELOPMENT I.T.A.NO.138/MDS/2014. :- 8 -: CHARGES. THROUGHOUT, HE DID NOT QUOTE ANY COMPARABL E INSTANCE PROVING THE SAME TO BE EXCESSIVE. HE ALSO ACCEPTED BALANCE CLAIM OF E2.45 CRORES. THUS, EVEN AS PER ASSESSING OFFICE R THIS DISALLOWANCE OF E1 CRORES WAS NOT BOGUS OR A FALSE ONE BUT ONLY EXHORBITANT. AND THAT TOO, WITHOUT ANY EVIDENCE OF A COMPARABLE INS TANCE. TO THIS EFFECT, THERE IS NO FINDING FORTHCOMING QUESTIONING GENUINESS OF EXPENSES OR THAT THE SAME WAS NEVER INCURRED. SO, THIS DISALLOWED AMOUNT OF E1 CRORES IS NOT A FALSE OR BOGUS EXPENDI TURE TO BRING IT WITHIN THE PURVIEW OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS, WE HOLD THE IMPUGNED PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD NOT HAVE BEEN IM POSED. WHILST OBSERVING SO, WE REITERATE THE TRITE PREPOSITION OF LAW THAT ASSESSMENT AND PENALTY PROCEEDINGS STAND AN DIFFERENT FOOTINGS AND EACH AND EVERY DISALLOWANCE/ADDITION DOES NOT LEAD TO AUTOMA TIC IMPOSITION OF PENALTY. COMING TO THE REVENUES PLEAS (SUPRA), WE OBSERVE THAT SINCE A SUM OF E2.45 CRORES HAS ALREADY BEEN ACCEP TED IN SCRUTINY EVEN IF IT REMAINS UNPAID TO THE TUNE OF E2.26 CROR ES AS ON 31.03.2013, DOES NOT MAKE ANY DIFFERENCE AS IN PENALTY PROCEEDI NGS, WE CANNOT UPSET FINDINGS ARRIVED AT DURING THE COURSE OF ASS ESSMENT. SO FAR AS THE CASE LAW(SUPRA) IS CONCERNED, THE ASSESSEE THER EIN HAD FAILED TO SUBSTANTIATE HIS CLAIM EVEN AT THE FIRST INSTANCE. EVEN IN PENALTY I.T.A.NO.138/MDS/2014. :- 9 -: PROCEEDINGS, THERE WAS NO EXPLANATION FORTHCOMING. SO, THE SAME STANDS DISTINGUISHED. IN THIS MANNER, WE DELETE IM PUGNED PENALTY. 7. WE NOTICE ONE MORE ASPECT IN THIS CASE. IN P ENALTY ORDER, THE ASSESSING OFFICER HAD OBSERVED THAT QUA DISALLOWANC E @15%(SUPRA), PENALTY COULD NOT BE LEVIED. HOWEVER, IN COMPUTATI ON, THIS ESCAPED HIS WORTHY ATTENTION. SO, COMPUTATION OF PENALTY ALSO TURNS OUT TO BE ERRONEOUS. HOWEVER, ONCE WE HAVE DELETED THE MAIN P ENALTY ITSELF, THERE IS NO NEED TO DEAL WITH THIS ISSUE ANY MORE. 8 . CONSEQUENTLY, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 25TH OF APRIL, 2014 , AT CHENNAI. SD/- SD/- ( . ) ( . . ) ! (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER '# /CHENNAI, $% /DATED:25.04.2014. KV %& '( )( /COPY TO: 1. * APPELLANT, 2. / RESPONDENT, 3. + ( )/CIT(A), 4. + /CIT, 5. (,- . /DR, 6. -/ 0 /GF. I.T.A.NO.138/MDS/2014. :- 10 -: