M/s Trivikram Real Estate Developer & Consultants Pvt. Ltd., Mohali V. ITO, W-6(1), Mohali

ITA 1698/CHANDI/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9599 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Revised return
• Section: 271(1)(c); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BEN CH B, CHANDIGARH , ! . .., # $, %& BEFORE: SH. SANJAY GARG, JM & DR. B.R.R. KUMAR, AM ./ ITA NO. 1698/CHD/2017 / ASSESSMENT YEAR : 2012-13 M/S TRIVIKRAM REAL ESTATE DEVELOPER & CONSULTANTS PVT. LTD. PLOT NO. 619, IA, PHASE IX, MOHALI THE ITO WARD 6(1), MOHALI ./ PAN NO: AADCT1179M / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI. JASPAL SHARMA # ! ' / REVENUE BY : SMT. CHANDRAKANTA $ % ! &/ DATE OF HEARING : 03/10/2018 '()* ! &/ DATE OF PRONOUNCEMENT : 28/11/2018 %'/ ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-2, GURGAON DT. 04/08/2017. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED FOLLOW ING GROUNDS: 1. THE IMPUGNED ORDER IS ERRONEOUS IN LAW AND VOID ABI NITIO AS THE LD.CIT(APPEALS) HAS ERRED IN HAVING CONFIRMED THE O RDER OF THE AO WHICH IS ILLEGAL AND BAD IN THE EYES OF LAW IN THE ABSENCE OF SATISF ACTION BY THE AO SPECIFYING THE CHARGE FOR INITIATION OF PENALTY U/S 271(L)(C). 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.C IT(APPEALS) HAS ERRED IN HAVING UPHELD THE PENALTY OF RS.8,29,950/- IMPOSED BY THE LD.AO U/S 271(L)(C) OF THE INCOME TAX ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.C IT(APPEALS) HAS ERRED IN HAVING CONFIRMED THE PENALTY FOR THE REASON THAT TH E ASSESSEE HAS NOT FILED APPEAL AGAINST ADDITION MADE U/S 143(3) NOR HAS MAD E ANY FRESH SUBMISSIONS OR CLARIFICATIONS DURING THE APPELLATE PROCEEDINGS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.C IT(APPEALS) HAS ERRED IN HAVING CONFIRMED THE PENALTY IMPOSED BY THE AO HOLD ING THAT THE ASSESSEE HAS CONCEALED HIS INCOME BY WRONGFUL INTERPRETATION AND CALCULATION OF THE SALE PROCEEDS FROM FLATS. 3. BRIEF FACTS TAKEN FROM THE SUBMISSIONS OF THE AS SESSEE AND THE RECORDS AVAILABLE ARE THAT THE ASSESSEE COMPANY WAS ENGAGE D IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. FOR THE ASSTT.YEAR 2012-13, THE ASSESSEE FILED RETURN SHOWING 2 NIL INCOME. THE ASSESSMENT WAS COMPLETED AT AN INCO ME OF RS.26,85,915/- MAKING THE ADDITION ON THE GROUND THAT THE ASSESSEE FAILED TO ACCOUNT FOR THE SALE CONSIDERATION OF FLATS SOLD BY ASSESSEE DURING THE YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT THE ASSESSEE FOLLOWS COMPLETE D CONSTRUCTION METHOD. THE ASSESSEE CONSTRUCTED FOUR FLOORS EACH ON PLOT NO.44 ,SH SHRESHTA VIHAR, NEW DELHI AND PLOT NO.113,SARITA VIHAR, NEW DELHI. DURING THE YEAR THE ASSESSEE SOLD THREE FLOORS BUILT ON PLOT NO.44 AND ALSO SOLD TWO FLOORS ON PLOT NO.113. SALE PROCEEDS OF THESE FLOORS SOLD, HAD BEEN TREATED AS ADVANCES FRO M CUSTOMERS IN THE BOOKS FOR THE YEAR UNDER CONSIDERATION AND ALL THE DIRECT AS WELL AS INDIRECT EXPENSES WERE ADDED TO THE COST OF WORK IN PROGRESS AT THE END OF THE YEAR. THIS WAS DONE ON THE GROUND THAT THE ASSESSEE FOLLOWS THE COMPLETED CONSTRUCTION METHOD AS SALE OF ALL THE FLOORS/FLATS BUILT ON SINGLE PLOT, WAS NOT MADE IN THE YEAR UNDER CONSIDERATION. 4. THE ASSESSEE ACCOUNTS FOR THE SALE OF ALL THE FL OORS IN ITS BOOKS OF ACCOUNTS ONLY WHEN SALE OF ALL THE FLOORS ON A COMMON PLOT, WAS COMPLETED. IT WAS SUBMITTED THAT THIS WAS FOLLOWED BECAUSE NO SEPARAT E ACCOUNT FOR THE COST OF THE CONSTRUCTION OF EACH FLOOR BUILT ON A SINGLE PL OT, WAS KEPT BY THE ASSESSEE AND AS SUCH UNLESS THE SALE OF ALL THE FLOORS BUILT ON A SINGLE PLOT, WAS COMPLETED, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO ASCERTAIN T HE COST OF CONSTRUCTION OF EACH FLOOR AND THE INCOME EARNED THEREON. THIS WAS THE M ETHOD OF ACCOUNTING WHICH WAS REGULARLY AND CONSISTENTLY FOLLOWED BY THE ASSE SSEE. 5. FROM THE DETAILS OF FLOORS SOLD IT IS EVIDENT TH AT SECOND FLOOR BUILT ON PLOT NO.44, COULD NOT BE SOLD DURING THE YEAR UNDER CONS IDERATION AND IT WAS SOLD DURING SUBSEQUENT YEAR. SIMILARLY THE SECOND AND TH IRD FLOORS ON PLOT NO.113, WERE SOLD DURING THE SUBSEQUENT YEAR. THE ENTIRE SA LE PROCEEDS FROM ALL THE FLOORS BUILT ON PLOT NO.44 AND 113, WAS ACCOUNTED F OR IN THE SUBSEQUENT YEAR 3 WHEN SECOND FLOOR ON PLOT NO.44 AND SECOND & THIRD FLOOR ON PLOT 113, WERE SOLD AND THE INCOME ARISING OUT OF SALE OF ALL THE FLOOR S ON BOTH THE PLOTS, WAS ACCOUNTED FOR IN THE SUBSEQUENT YEAR I.E. AY.2013-1 4. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO DIRECTED THE ASSESSEE TO PREPARE A PROFIT & LOSS ACCOUNT BY TAKI NG SALE CONSIDERATION AT RS. 1,87,00,000/- OF THE FLOORS SOLD BY THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION AND AS SUCH THE ASSESSEE SUBMITTED TH E PROFIT & LOSS ACCOUNT DECLARING NET PROFIT AT RS.26,85,915/- ON SALE CONS IDERATION AT RS.1,87,00,000/- AS DESIRED BY THE AO WHICH HAS BEEN ACCEPTED BY THE RE VENUE. 7. AS THE ASSESSEE ALREADY SUBMITTED ITS RETURN ON 22.09.2013 FOR THE SUBSEQUENT YEAR I.E. AY 2013-14 DECLARING TOTAL INC OME AT RS.97,91,276/- ON TOTAL SALE CONSIDERATION OF ALL THE FLOORS/FLATS ON BOTH THE ABOVE SAID PLOTS AT RS.7,13,00,000/- , THE ASSESSEE REVISED ITS RETURN ON 25.03.2015 FOR THE ASSTT. YEAR 2013-14 DECLARING NET PROFIT AT RS. 71,36,150/- 0N TOTAL TURNOVER AT RS.6,51,00,000/.- EXCLUDING TURNOVER DECLARED FOR THE AY2012-13. THE ASSESSMENT FOR THE AY 2013- 14 HAS BEEN COMPLETED ON 30.03.2016 ACCEPTING TURNO VER AND NET PROFIT DECLARED AS PER REVISED RETURN. 8. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTI ON 271(1) (C) ON THE INCOME DECLARED BY THE ASSESSEE OF RS. 26,85,910/-( ROUNDED UP) FOR THE CURRENT YEAR. THE PENALTY WAS CONFIRMED BY THE LD. CIT(A) H OLDING AS UNDER: I HAVE GIVEN CAREFUL CONSIDERATION TO THE FACTS OF THE CASE, ARGUMENTS PUT BY THE ASSESSEE AND THE REASONS FOR LEVY OF PENALTY AS GIV EN BY THE ASSESSING OFFICER IN THE PENALTY ORDER. I AGREE WITH THE ARGUMENTS BROUG HT OUT BY THE ASSESSING OFFICER, THAT THE APPELLANT HAS CONCEALED HIS INCOM E BY WRONGFUL INTERPRETATION AND CALCULATION OF THE SALE RECEIPTS FROM FLATS. IT IS SEEN THAT THE ASSESSEE HAS NOT FILED APPEAL AGAINST THE ADDITION MADE UNDER SECTIO N 143(3) NOR HAS MADE ANY FRESH SUBMISSIONS OR CLARIFICATIONS DURING THE APPE AL PROCEEDINGS CONTROVERTING THE ARGUMENTS MADE BY THE ASSESSING OFFICER, IN THE PENALTY ORDER. I THEREFORE, SEE NO MERIT IN INTERFERING WITH THE PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C). 4 9. BEFORE US, THE LD. AR ARGUED THAT THE ASSESSEE R ECOGNIZED TOTAL SALE CONSIDERATION OF ALL THE FLOORS BUILT ON PLOT NO.44 AND 113 DURING THE SUBSEQUENT YEAR I.E. AY 2013-14 AS PER METHOD OF ACCOUNTING RE GULARLY FOLLOWED BY THE ASSESSEE. THE BALANCE SHEET AND PROFIT & LOSS ACCOU NT, FOR THE SUBSEQUENT YEAR, WAS COMPLETED ON 01.09.2013 AND ORIGINAL RETURN DEC LARING PROFIT ON SALE CONSIDERATION OF ALL THE FLOORS, WAS SUBMITTED ON 2 2.09.2013 EVEN BEFORE SELECTION OF CASE UNDER CASS FOR THE AY 2012-13(YEA R UNDER CONSIDERATION) VIDE NOTICE U/S 143(2) ISSUED ON 24.09.2013. THEREFORE T HERE IS NO CONCEALMENT OF PARTICULARS OF INCOME ON THE PART OF ASSESSEE AS AL L THE PARTICULARS WERE BEFORE THE LD.AO. NO PENALTY CAN BE LEVIED IN VIEW OF RELI ANCE PETRO 322 ITR 158(SC). HE FURTHER ARGUED THAT THE PROJECT COMPLETION METHO D IS RECOGNIZED METHOD AND THERE IS NO LOSS OF REVENUE AS TAX RATES ARE SA ME IN BOTH THE YEARS IN THE CASE OF COMPANY. (299 ITR L(SC), 311 ITR 289(P&H). HE RELIED ON THE PROPOSITION THAT THE ADDITION IS MADE MERELY BY NON ACCEPTANCE OF METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. NO PENALTY CAN BE LEVIED. (247 ITR 696) (P&H) AND ALSO ON THE PROPOSITION THAT THE PENALTY CANNOT BE IMPOS ED MERELY BECAUSE ASSESSEE ACCEPTED THE ASSTT.ORDER. (359 ITR 565(KAR ), 152 ITD 871 (ITAT AGRA). 10. LD. DR ON THE OTHER HAND ARGUED THAT THE ASSESS EE HAS OFFER INCOME FOR THE CURRENT YEAR FOR TAXATION ONLY AFTER FINDING TH E FACTS BY THE ASSESSING OFFICER AND HENCE PENALTY HAS BEEN DIRECTLY LEVIED. 11. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE THE ASSESSE E HAS ORIGINALLY DECLARED THE ENTIRE TRANSACTIONS AFTER COMPLETION OF THE PROJECT BEFORE THE REVENUE AUTHORITIES. THE ASSESSING OFFICER HAS MERELY SHIFT ED THE PROFITS FROM ONE YEAR TO THE OTHER YEAR WITHOUT ANY CHANGE IN THE TOTAL TAXA BLE INCOME OVER THE PERIOD OF TWO YEARS. THE METHOD OF ACCOUNTING WAS REGULARL Y FOLLOWED BY THE ASSESSEE 5 AND CONTINUOUSLY AND WE FIND THERE WAS NO CHANGE IN THE METHOD OF ACCOUNTING WHICH IS DISADVANTAGEOUS TO THE REVENUE. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NATIONAL MINING COMPAN Y (311 ITR 289 ) HELD THAT IN THE EVENT OF CHANGE OF ACCOUNTING METHOD THE OFFER MADE BY THE ASSESSEE WAS GENUINE AND BONAFIDE AND NO PENALTY CAN BE LEVI ABLE WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE. SIMILA RLY IN THE CASE OF CIT VS. BHOJ RAJ & CO. (247 ITR 693) THE HONBLE COURT HELD THAT NO PENALTY IS LEVIABLE IN THE CASE WHERE THE ASSESSING OFFICER HAS REJECTED THE METHOD OF ACCOUNTING BEING FOLLOWED BY THE ASSESSEE AND BROUGHT CERTAIN AMOUNT TO TAXATION. IN THE CASE OF CIT VS. JH PARABIA (TRANSPORT) PVT. LTD. THE HONBL E HIGH COURT OF GUJARAT (284 ITR 361) HELD THAT ON THE BONAFIDES OF THE ASSESSEE COU LD NOT BE DOUBTED THE ASSESSEE CANNOT BE VISITED WITH PENALTY OF CONCEALM ENT UNDER SECTION 271(1)(C). SINCE IN THE INSTANT CASE ALSO THE ASSES SEE HAS DECLARED THE INCOME IN THE SUBSEQUENT YEAR AFTER COMPLETE SALE OF ALL THE FLOORS AND EMANATING FROM THE FACTS OF THE RECORDS THAT NO CASE OF CONCEALMEN T OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME COULD BE SAID TO H AVE BEEN ESTABLISHED. HENCE, WE HEREBY DELETE THE PENALTY LEVIED BY THE A SSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT,1961. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . .., # $, (SANJAY GARG ) ( DR. B.R.R. KUM AR, AM) / JUDICIAL MEMBER %& / ACCOUNTANT MEMBER AG DATE: 28/11/2018 (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT, 2.THE RESPONDENT, 3. THE CIT, 4. TH E CIT(A), 5. DR, ITAT, CHANDIGARH, 6. GUARD FILE