Income-tax Officer, V. M/s. Immediate Construction, Nashik

ITA 1618/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7310 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-10-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 25-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LALIT SANGLE
• Section: 143(3); 142(1); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1618/PUN/2014 [ [ / ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD 1(4), NASHIK. . / APPELLANT V/S M/S. IMMEDIATE CONSTRUCTION, G-11, UTILITY CENTRE, OPP: RAJIV GANDHI BHAVAN, NASHIK 422 002. PAN : AABFI3664F. . / RESPONDENT ASSESSEE BY : SHRI LALIT SANGLE. REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) I, NASHIK DT. 17.06.2014 FOR THE ASSESSMENT YEAR 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED AS PROPERTY DEVELOPER AND BUILDERS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2006-07 ON 08.11.2017 DECLARING TOTAL INCOME AT / DATE OF HEARING : 04.10.2017 / DATE OF PRONOUNCEMENT: 17.10.2017 2 RS.73,02,910/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.26.12.2008 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,81,44,947/- BY INTER-ALIA MAKING ADDITION OF RS.82,91,530/- ON ACCOUNT OF COMPUTATION RECEIVED IN LIEU OF DEVELOPMENT AGREEMENT. ON THE AFORESAID ADDITION, AO WHILE ORDER DT.28.03.2013 PASSED U/S 271(1)(C) OF THE ACT, HELD THAT ASSESSEE HAS CONCEALED THE INCOME WITHIN THE MEANING OF PROVISIONS OF SEC.271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS.27,90,929/-. AGGRIEVED BY THE PENALTY ORDER, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DELETED THE PENALTY ORDER BY HOLDING AS UNDER : 8. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, PENALTY ORDER, CASE RECORD, SUBMISSION OF THE APPELLANT AND THE MATERIAL AVAILABLE ON RECORD. I FIND FROM THE RECORDS THAT THE APPELLANT ENTERED INTO A DEVELOPMENT AGREEMENT WITH SHRI SANJAY SHIVNARAYAN BHUTADA AND THREE OTHERS ON 02/04/2005 IN RESPECT OF SALE OF ITS IMMOVABLE PROPERTY AT SURVEY NO.659/3/2, NASHIK FOR A CONSIDERATION OF RS. 3 , 17,32,000/-. WHILE OTHER TWO CO-OWNERS VIZ . SHRI BABURAO VISHWANATH BAGADE AND SHRI DHARMENDA DHANAJI VARU RECEIVED A CONSIDERATION OF RS. 85,70,000/- EACH, THE APPELLANT FIRM RECEIVED RS. 63,00,000/- VIDE CHEQUE BESIDES AN AREA OF 4500 SQ. FTS. AS A PART OF SALE CONSIDERATION IN KIND. THIS AREA, TO BE DEVELOPED BY SHRI SANJAY SHIVNARAYAN BHUTADA & OTHERS, WAS VALUED AT RS. 82,91,530/-. THUS THE TOTAL CONSIDERATION FOR THE ABOVE REFERRED LAND WAS RS. 3,17,32,000/ - AS AGAINST THE MARKET VALUE RS. 1,63,03,530/-. THE APPELLANT INSTEAD OF FILING THE RETURN FOR A . Y. 2006-07, FILED A TAX AUDIT REPORT U/S 44AB ON 31/10/2006 SHOWING CONSIDERATION OF RS. 63,00,000 / - ONLY . . IN THIS TA X AUDIT REPORT THE APPELLANT FIRM HAD NOT MENTIONED ABOUT THE SALE CONSIDERATION IN THE FORM OF 4500 SQ. FTS OF AREA FOR WHICH THE VALUE WAS ASSIGNED AT RS. 82,91,5 3 0 / -. IN THE MEAN TIME, THE MATTER WAS INVESTIGATED BY INVESTIGATION WING OF THE DEPARTMENT AND IT WAS FOUND OUT THAT THE PURCHASERS V IZ. SHRI SANJAY SHIVNARAYAN BHUTADA AND 3 OTHERS HAD ALSO SHOWN WIP AT RS. 2,34,40,000/- (RS. 3,17,32,000/- - RS. 82,91,530/-) INSTEAD OF RS.3,17,32,000/ - I . E. THE ACTUAL SALE CONSIDERATION MENTIONED IN THE DEVELOPMENT AGREEMENT. THE PURCHASERS HAD ALSO NOT SHOWN RS. 82,91,530/ - I . E. THE VALUE ASSIGNED TO RS. 4500 SQ. FT. AREA TO BE DEVELOPED AND HANDED OVER TO THE APPELLANT IN FUTURE. AFTER THIS INVESTIGATION, BOTH THE PURCHASERS AS WELL AS THE APPELLANT FIRM AGREED FOR REVISING THEIR COMPUTATION OF INCOME. THE APPELLANT FIRM FILED A RETURN OF INCOME ON 08/11/2007 ALONGWITH TAX AUDIT REPORT DATED 31/10/2007 WHEREIN THE APPELLANT IN ITS TRADING ACCOUNT HAD 3 SHOWN SALES AT RS. 63,00,000/- AND CLOSING STOCK ON ACCOUNT OF AREA ADMEASURING 4500 SQ. FT. AT RS. 82,91,530/-. IT IS SEEN FROM THE RECORDS THAT THE APPELLANT HAD FILED THE RETURN FOR THE FIRST TIME FOR THE ASSESSMENT YEAR UNDER APPEAL ON 08/11/2007. IT IS ALSO FOUND FROM THE RECORD THAT NO NOTICES U/S 142(1) OR 148 WERE ISSUED BY THE DEPARTMENT TO THE APPELLANT FIRM. AS MENTIONED IN PARA 4 OF THE APPELLATE ORDER, THE AO LEVIED PENALTY OF RS. 27,90,92RS./- U/S 271(1)(C) VIDE ORDER DATED 28/03/20L3 HOLDING THAT THE APPELLANT FIRM HAD CONCEALED INCOME TO THE EXTENT OF RS. 82,91,530/-. 8 .1 THE APPELLANT, AS MENTIONED EARLIER IN THE ORDER, HAS DISPUTED THE LEVY OF THE ABOVE REFERRED PENALTY BY THE AO. THE APPELLANT'S MAIN GROUND IS THAT THE LEVY OF PENALTY U/S 271(1)(C) IS WITH REFERENCE TO THE RETURN OF INCOME FILED. IN THIS REGARD THE APPELLANT HAS RELIED UPON A NUMBER OF COURT CASES WHICH HAVE BEEN PLACED ON RECORD. A PERUSAL OF THE PROVISIONS OF SECTION 271(1)(C) REVEALS THAT CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME ARE WITH RESPECT TO THE FILING OF THE RETURN. IN THE CASE UNDER APPEAL, THE APPELLANT DID NOT FILE ANY RETURN OF INCOME FOR A . Y. 2006-07 U/S 139(1) OF THE ACT. THE APPELLANT FIRM SIMPLY FILED A TAX AUDIT REPORT ENCLOSING THEREWITH PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AND OTHER STATUTORY FORMS ON 31/10/2006. THE APPELLANT FOR THE FIRST TIME FILED THE RETURN OF INCOME FOR A . Y. 2006-07 ON 08/11/2007 SHOWING TOTAL CONSIDERATION OF RS.1 , 45,91,530/- (RS. 63,00,000 / - RECEI V ED B Y CHEQUE AND RS. 82,91,530 / - IN THE FORM VALUATION OF 4500 SQ. FT. AREA). THE RETURN WAS FILED WITHIN THE TIME LIMIT GIVEN IN SECTION 139(4) OF THE I . T . ACT, 1961 . THE APPELLANT HAD ALSO FILED A RE V ISED TA X AUDIT REPORT ALONG W ITH THE RETURN OF INCOME. IT WAS NOT A CASE OF REVISING THE RETURN PURSUANT TO ANY NOTICE BY THE AO. 8.2 AS ALREADY POINTED OUT, THE APPELLANT DID NOT RECEIVE ANY NOTICE FROM THE DEPARTMENT FOR FURNISHING OF THE RETURN. THE AO HAS ALSO ACCEPTED THE TOTAL CONSIDERATION AS SHOWN BY THE APPELLANT IN ITS RETURN OF INCOME FILED ON 08/11/2007. CERTAIN OTHER ADDITIONS MADE BY THE AO HAVE SINCE BEEN DELETED BY THE CIT(A). STARTING POINT OF DETERMINING THE CONCEALMENT FOR IMPOSING PENALTY IS THE RETURN OF INCOME. IF THE RETURN OF INCOME DECLARES INCOME WHICH IS ULTIMATELY BROUGHT TO TAX THERE CANNOT BE A CASE OF THE AO THAT ASSESSEE IS FOUND GUILTY OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. VARIOUS COURTS HAVE HELD THAT COMBINED READING OF PROVISIONS OF SECTION 139, 142, 148, RULE 12 AND THE PRESCRIBED RETURNS SHOWS THAT THE PARTICULARS OF INCOME ARE REQUIRED TO BE FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME. CONCEALMENT, IF ANY, HAS TO BE SEEN WITH REFERENCE TO THE RETURN AND NOT IN ANY OTHER MANNER. IN THE FACTS AND THE CIRCUMSTANCES MENTIONED ABOVE, I AM OF THE CONSIDERED VIEW THAT NO PENALTY U / S 271(1)(C) CAN BE LEVIED ON INCOME WHICH HAS ALREADY BEEN DECLARED IN THE RETURN OF INCOME. THE HON'BLE SUPREME .COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. 322 ITR 158 HAS ALSO HELD AS UNDER:- IT MUST BE SHOWN THAT THE CONDITIONS U/S 271(1)(C) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH 4 THE PARTICULARS OF HIS INCOME - CIT VS. ATUL MOHAN BINDAL (2009) 225 CTR (SC). READING THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY U/S 271 (1)(C)'. 8.3 THE APPELLANT HAS RAISED ANOTHER CONTENTION THAT PENALTY U/S 271(1)(C) IS NOT LEVIABLE, AS THERE IS NO TAX SOUGHT TO BE EVADED IN ITS CASE. I FIND THAT THERE IS NO DIFFERENCE IN THE RETURNED INCOME VIS-A . -VIS THE ASSESSED INCOME FOR THE PURPOSE OF LEVY OF PENALTY U / S (L)(C) AFTER THE DECISION OF THE CIT(A) VIDE ORDER DATED 28 / 12/2011 . THE HON'BLE ITAT PUNE IN THE CASE OF PRANILA D . AASHTHEKAR AND OTHERS HAS HELD THAT 'TA X SOU G HT TO BE E V ADED' APPEARING IN CLAUSE (C) IN SECTION 271(1) IS TO BE UND E RSTOOD AS A DIFFERENCE BETW E EN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND INCOME FINALLY ASSESSED. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE ITAT PUNE IN THE CASE OF CHANDAN K. SHEWANI VS. DCIT, ITA NOS. 235 & 236 / PN/2010 DATED 29/08 / 2012. THE APPELLANT HAS RELIED UPON V ARIOUS OTHER DECISIONS W HICH SUPPORT ITS CONTENTION IN THIS REGARD. IN THE APPELLANT'S CASE THE INCOME RETURNED AND FINALLY ASSESSED ARE THE SAME AND HENCE THERE CANNOT BE ANY TAX SOUGHT TO BE E V ADED. 8 . 4 THE HON'BLE ITAT PUNE IN APPELLANT'S OWN CASE FOR A . Y. 200 6 -0 7 I . E. YEAR UNDER APPEAL (I.T.A . NO.384 /P N / 2012 DATED 12 / 09 / 2013) HAS ALSO MADE AN OBSER V ATION THAT THE ASS E SSEE COULD NOT COMMENCE THE CONSTRUCTION. THEREFORE, IN THE TAX A UDIT REPORT DATED 31 / 10/200 6 FILED W ITH THE A O , THE ASSESSEE HAD SHOWN A TOTAL TURNOVER OF RS. 63,00,000 /- ONLY WHICH WAS PART OF TOTAL CONSIDERATION OF RS.1 , 45,91,530 / -. THE APPELLANT HAD HOWE V ER, POT FILED THE INCOME TAX RETURN. AS MENTIONED EARLIER, PURSUANT TO IN V ESTIGATION B Y THE INVESTIGATION WING OF THE DEPARTMENT, THE ASSESSEE REVISED ITS ACCOUNTS AND FILED A REVISED TAX AUDIT REPORT ON 31 / 10 / 2007. IN THE RE V ISED ACCOUNTS THE ASSESSEE OFFERED TO TA X THE REMAINING CONSIDERATION OF RS. 82,91,530 / - UNDER THE HEAD CLOSING STOCK . IN VIEW OF THE FACT THAT THE CONSTRUCTION HAD NOT COMMENCED ON THE PLOT AND THE SALES OF RS. 63,00,000 / - AND CLOSING STOCK OF RS. 82,91,530/- WAS REQUIRED TO BE SHO W N ON THE MATCHING PRINCIPL E OF ACCOUNTANCY, THE ASSESSEE CLAIMED A DEDUCTION OF RS. 22,00,000 /- W HICH IT HAD CLAIMED TO HAVE PAID TO 11 DWELLING PERSONS WHICH IT HAD NOT CLAIMED EARLIER IN ITS TAX AUDIT REPORT DATED 31 / 10 / 2006. 8.5 IN VIEW OF THE FACTS AND THE CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT APPELLANT DID NOT HAVE ANY MALAFIDE INTENTION OF CONCEALING ITS TOTAL SALE CONSIDERATION AND THE MI S TAKE IN THE ORIGINAL TA X AUDIT REPORT OF NOT CONSIDERING THE PART OF SALE CONSIDERATION, TO BE RECEIVED IN FUTURE IN KIND IN THE FORM OF CONSTRUCTED AREA WAS INADVERTENT AND UNINTENTION A L. I AM, TH E REFORE, OF THE CONSIDER E D V IE W THAT A O W AS NOT JU S TIFIED IN LE V YING P E N A LT Y OF RS. 2 7,90,929 / - U / S 27 1(1)(C) O F TH E AC T A ND TH E SAM E I S CANCELLED. 5 AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-1, NASHIK IS JUSTIFIED IN DELETING THE PENALTY OF RS.27,09,929/- IMPOSED U/S 271(1)(C) OF THE ACT, 1961, IGNORING THE FACT THAT THE ASSESSEE HAD DISCLOSED INCOME ON WHICH PENALTY WAS IMPOSED ONLY AFTER ITS DETECTION BY THE INVESTIGATION WING OF THE DEPARTMENT ? 2. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 3. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE HIS CASE. 3. BEFORE US, LD.D.R. TOOK US THROUGH THE ORDER OF AO AND SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND SUPPORTED THE ORDER OF LD.CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DELETION OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT. WE FIND THAT LD.CIT(A) WHILE DELETING THE PENALTY HAS NOTED THAT AO HAS ACCEPTED THE TOTAL CONSIDERATION SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME ON 08.11.2007 AND OTHER ADDITIONS MADE BY THE AO WERE DELETED BY LD.CIT(A). HE HAS NOTED THAT THERE IS NO DIFFERENCE IN THE RETURNED INCOME VIS--VIS THE ASSESSED INCOME AND THEREFORE RELYING ON THE DECISION OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH IN THE CASE OF PRANILA D. AASHTHEKAR AND OTHERS HELD THAT THERE WAS NO CASE OF EVASION OF TAX AND THEREFORE PENALTY FOR CONCEALMENT OF INCOME WAS LEVIABLE BEFORE US, REVENUE HAS NOT CONTROVERTED THE FINDINGS OF LD.CIT(A) NOR POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). WE 6 THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THE GROUNDS OF REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 17 TH DAY OF OCTOBER, 2017. SD/- SD/- SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 17 TH OCTOBER, 2017. YAMINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-I, NASHIK. CIT-I, NASHIK. , , / DR, ITAT, A PUNE; [ / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE.