ACIT, Coimbatore V. M/s. Cotton City Developers Pvt. Ltd., Coimbatore

ITA 1794/CHNY/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8157 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 17-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Reopening of assessment; Unexplained expenditure; Business expenditure; Opportunity of being heard; Wrong claim; Valuation report; Reason to believe; Revenue expenditure; Reassessment proceedings
• Section: 69C; 142(1); 133A; 115JB; 147; 131; 69; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' , # $% & [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD , JUDICIAL MEMBER ] ./ I.T.A.NO.1575 & 1794/MDS/2012 / ASSESSMENT YEARS : 2008-09 AND 2009-10 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I(1) COIMBATORE VS. M/S COTTON CITY DEVELOPERS PVT. LTD 1029, AVINASHI ROAD (OPP TO PRS) COIMBATORE 641 018 [PAN AAACC 7317 D ] ( '( / APPELLANT) ( ')'( /RESPONDENT) / APPELLANT BY : SHRI P RADHAKRISHNAN, JCIT /RESPONDENT BY : SHRI S SRIDHAR, ADVOCATE / DATE OF HEARING : 17 - 12 - 2015 / DATE OF PRONOUNCEMENT : 22 - 01 - 2016 * / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINS T THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)- I, COIMBATORE, DATED 21.5.2012 AND 10.7.2012 FOR ASSESSMENT YEARS 2008-09 AND 2009-10, RESPECTIVELY. ITA NO. 1575 & 1794/12 :- 2 -: I.T.A.NO.1794/MDS/2012 A.Y 2009-10 2. THE REVENUE RAISED A GROUND IN ITS APPEAL THAT THE CIT(A) ERRED IN HOLDING THAT PROVISIONS OF SEC. 142A IS NO T APPLICABLE TO THE ASSESSEES CASE AS THE ASSESSING OFFICER HAS NOT RE JECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMMEN CED THE HOUSING PROJECT MANCHESTER GRAND AND COMPLETED DU RING THE FINANCIAL YEAR 2008-09. THE ASSESSING OFFICER REFE RRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER TO ASCERTAIN THE COST OF THE PROJECT. AS PER THE DVOS REPORT, THE VALUATION OF THE BUSIN ESS ASSET WAS DONE BY THE DVO BY DETERMINING THE COST OF CONSTRUCTION AT ` 28,16,77,000/- AS AGAINST THE ADMITTED COST OF CONSTRUCTION OF ` 26,38,53,630/-. THUS, THERE WAS A DIFFERENCE OF ` 1,78,23,640/-. THE ASSESSING OFFICER MADE AN ADDITION OF ` 1,75,00,000/- U/S 69B OF THE ACT TOWARDS THIS DISCREPANCY. THE ASSESSEE CHALLENGED THIS ADDITIO N BEFORE THE CIT(A) STATING THAT THE PROVISIONS OF SEC. 142A IS NOT APP LICABLE FOR VALUATION OF STOCK-IN-TRADE AS HELD BY THE SUPREME COURT OF I NDIA IN THE CASE OF SARGAM CINEMA VS CIT, [2010] 328 ITR 513. THE ASS ESSEE ALSO RELIED ON THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS LUCKNOW PUBLIC EDUCATIONAL SOCIETY, [2011] 339 ITR 588 FOR THE PROPOSITION THAT BEFORE REFERENCE TO DVO, THE ASSES SING OFFICER IS DUTY ITA NO. 1575 & 1794/12 :- 3 -: BOUND TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESS EE IN TERMS OF SEC. 145(1) OF THE ACT. THE CIT(A) OBSERVED THAT FIRST OF ALL, THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT BEFOR E REFERRING THE MATER TO DVO FOR VALUATION. IF THE ASSESSING OFFIC ER STRAIGHT AWAY REFERS THE MATTER TO DVO WITHOUT REJECTING THE BOOK S OF ACCOUNT, THE REFERENCE TO DVO IS BAD IN LAW AND CONSEQUENTLY, TH E ASSESSMENT FRAMED IS ALSO BAD IN LAW. HE ALSO OBSERVED THAT T HE PROVISIONS OF SEC. 142A IS NOT APPLICABLE TO REFER THE STOCK-IN-TRADE FOR VALUATION BY DVO SO AS TO APPLY SEC. 69B OF THE ACT. ONLY THE INVES TMENTS COULD BE VALUED BY DVO IN TERMS OF SEC. 142A OF THE ACT. AG AINST THIS FINDING OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ID ENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE CO-ORDINATE BENCH IN T HE CASE OF M/S LEGEND ESTATES PVT LTD. VS DCIT IN I.T.A.NO. 1542/H YD/2010, FOR ASSESSMENT YEAR 2007-08 AND THE TRIBUNAL VIDE ORDER DATED 30.3.2012 HAS HELD AS FOLLOWS: 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL, WE HAVE TO GO THROUGH THE PROVISION OF SEC. 142A OF THE ACT TO CO NSIDER THE ISSUE IN HAND. THE RELEVANT PROVISION SUB-SECTION 1 OF SEC. 142A READS AS UNDER: 142A(1) FOR THE PURPOSE OF MAKING AN ASSESSMENT OR RE-ASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE ITA NO. 1575 & 1794/12 :- 4 -: VALUE OF ANY INVESTMENT REFERRED TO IN SEC. 69 OR S ECTION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE REFERRED TO IN SECTION 69A OR SECT ION 69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE O F SUCH VALUE AND REPORT THE SAME TO HIM. 9. WE FIND FROM THE FACTS OF THE CASE THAT THERE WA S A SURVEY U/S 133A OF THE INCOME TAX ACT ON 23-08-2006. DURIN G COURSE OF SURVEY, IT WAS FOUND THAT THERE WERE CERTAIN CAS H PAYMENTS TOWARDS CONSTRUCTION MATERIAL LIKE SAND, BRICKS ETC AND OTHER ITEMS WHOSE EXPENDITURE WAS NOT FULLY VERIFIABLE. T HE ASSESSEE HAS NOT MAINTAINED DAY TO DAY STOCK REGIST ERS. THE QUANTIFICATION OF LABOUR PAYMENTS WAS ALSO NOT AVAI LABLE. SINCE THE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT FULLY SUPPORTED BY VOUCHERS AND PROPER EVIDENCE, THE ASSE SSEE OFFERED ADDITIONAL INCOME TO THE TUNE OF RS. 1.60 C RORES. IN MEAN TIME THE ASSESSING OFFICER MADE REFERENCE TO T HE DISTRICT VALUATION OFFICER ON 04-09-2006 AND THE DV O SUBMITTED THE VALUATION REPORT ON 14-09-2009 AS PER WHICH THE COST OF CONSTRUCTION OF THE 22 PROPERTIES WAS ARRIV ED AT RS55,83,05,733/-. THE ASSESSEE HAS DISCLOSED THE COST OF CONSTRUCTION OF THESE PROPERTIES IN ITS BOO KS AT RS.38,58,53,602. THE DIFFERENCE BETWEEN THESE TWO W AS WORKED AT RS. 17,24,53,131/- WHICH WAS SPREAD OVER TO 5 ASSESSMENT YEARS. THE UNEXPLAINED EXPENDITURE RELAT ING TO THIS ASSESSMENT YEAR 2007-08 WAS WORKED OUT AT RS. 6,51,01,056/-. PERUSAL OF THE ASSESSMENT ORDER SHOW S THAT THERE IS NO REFERENCE TO ANY MATERIAL/ EVIDENCE/INF ORMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE COST O F CONSTRUCTION WAS SHOWN BY ASSESSEE WAS UNDERSTATED OR ANYTHING A BOVE WHAT WAS DISCLOSED BY ASSESSEE IN THE BOOKS OF ACCO UNT. IT IS A CLEAR CUT CASE THAT THE ASSESSEE HAS M/S. LEGEND ESTATES PVT. LTD. PRODUCED THE BOOKS OF ACCOUNT BUT THE AS SESSING OFFICER HAS NOT REJECTED OR NO DEFECT WAS POINTED O UT IN THE BOOKS OF ACCOUNT REGARDING COST OF CONSTRUCTION OF THE PROJECT BEFORE REFERENCE TO THE DVO. WE FURTHER FIN D FROM THE CASE RECORDS THAT EVEN BEFORE VERIFYING THE BOOKS O F ACCOUNT REGULARLY MAINTAINED AND WITHOUT POINTING OUT ANY D EFECTS IN THE BOOKS THE COST OF CONSTRUCTION WAS REFERRED TO DVO. WE ARE OF THE VIEW, ON THE BASIS OF EVIDENCES PRODUCED BEFORE US, THAT THE ASSESSEE HAS REGULARLY MAINTAINED BOOK S OF ACCOUNT AND VARIOUS RECORDS ALONG WITH SUPPORTING E VIDENCES OF VARIOUS RAW MATERIALS LIKE CEMENT, STEEL, BRICKS , SAND, WOOD, LABOUR COST, SANITARY WARES ETC. BUT THE AO HAS NOT FOUND OUT ANY DEFECT IN THE BOOKS/RECORDS/BILLS ETC. AND HAS NOT REJECTED BOOKS OF ACCOUNT. WITHOUT CAUSING ANY DEFECTS IN BO OKS REGULARLY MAINTAINED AND WITHOUT REJECTING THE BOOK S U/S.145, ITA NO. 1575 & 1794/12 :- 5 -: OF THE ACT THERE IS NO REASON TO ADD ANY AMOUNT ON THE PRESUMPTION THAT THE COST/INVESTMENT IN CONSTRUCTIO N IS LOW. THUS, WITHOUT REJECTING THE BOOKS OF ACCOUNT REGULA RLY MAINTAINED, THE ADDITION CANNOT BE MADE ONLY ON THE BASIS OF THE DVO'S REPORT. WE FURTHER FIND THAT THE ASSESSEE HAS SUPPLIED REQUISITE INFORMATION TO DVO AND ALSO PROD UCED BEFORE ASSESSING OFFICER WHICH HE HAS SEEN AND VERI FIED BUT HAS NO COMMENTED ON THE GENUINENESS OF THE BILLS AN D NOT POINTED OUT ANY DEFECTS IN THE BILLS AND HENCE NOT REJECTED THE RECORDS MAINTAINED AND PRODUCED BY ASSESSEE. 10. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, T HE PROVISION OF SEC.142A OF THE ACT, WE ARE OF THE VIE W THAT NO PROCEEDINGS WERE PENDING AT THE TIME OF REFERENCE M ADE TO THE DVO I.E 04.09.2006 ON REGARDING ASCERTAINMENT O F COST OF CONSTRUCTION OF THE PROJECT AS THE RETURN OF INCOME IN THIS CASE IS FILED ONLY ON 01.12.2007. WE FIND FROM THE START ING WORDS OF THE SECTION THAT FOR THE PURPOSE OF MAKING AN ASSES SMENT OR REASSESSMENT UNDER THIS ACT, ONCE THE PROCESS OF AS SESSMENT IS INITIATED, THE WORD 'MAKING' SHOULD BE PRESUMED TO BE ASSOCIATED WITH BOTH 'ASSESSMENT' OR 'REASSESSMENT', THE REFERENCE U/S. 142A OF THE ACT CAN BE MADE. WHEN TH ERE IS PROCESS OF ASSESSMENT, WHICH IS INITIATED AFTER FIL ING OF THE RETURN OF INCOME OR ISSUANCE OF NOTICE U/S. 142(1) AND SIM ILARLY, THE PROCESS OF REASSESSMENT COULD BE INITIATED ONLY AFT ER ISSUANCE OF NOTICE U/S.148(1) AFTER DULY FULFILLING THE FORMALITIES MENTIONED THEREIN, THE REFERENCE U/S 142A OF THE ACT CAN BE MADE. IT CLEARLY SHOWS THAT THE INVOKING OF SEC. 142A IS A PROCESS AFTER THE INITIATION OF THE ASSESSMENT PROCEEDINGS. FURTH ER, IT IS MENTIONED IN THIS SECTION THAT 'WHERE ESTIMATE OF T HE VALUE OF ANY INVESTMENT REFERRED TO IN SEC. 69 IS REQUIRED TO BE MADE. THIS ALSO SHOWS THAT A REFERENCE TO DVO U/S 142A CAN BE MADE ONLY WHEN A REQUIREMENT IS FELT BY THE AO FOR MAKING SUCH REF ERENCE. REQUIREMENT WOULD ARISE OR COULD BE FELT ONLY WHEN THERE IS SOME MATERIAL WITH THE AO TO SHOW THAT WHATEVER ESTIMATE ASSESSEE HAS SHOWN IS NOT CORRECT OR NOT RELIABLE. THE USE O F WORD 'REQUIRE' IS NOT SUPERFLUOUS BUT SIGNIFIES A DEFINI TE MEANING WHEREBY SOME PRELIMINARY FORMATION OF MIND BY THE A A IS NECESSARY WHICH REQUIRES HIM TO MAKE A REFERENCE TO THE DVO U/S142A. IT CAN ONLY BE DURING THE COURSE OF PENDEN CY OF ASSESSMENT OR REASSESSMENT THAT THE AO FRAME HIS MI ND TO REFER THE PROPERTY TO VALUATION CELL OF THE DEPARTM ENT. SUCH MIND CAN BE FRAMED IF THERE IS A BASIS TO THINK THAT THE ASSESSEE MAY HAVE UNDERSTATED THE COST OF CONSTRUCTION OR WHATEV ER IS DECLARED BY HIM IN THIS REGARD IS NOT BELIEVABLE. THEREFORE, IT IS QUITE APPARENT THAT REFERENCE TO VALUATION CELL U/S.142A CAN BE MADE DURING THE COURSE OF ASSESSMENT AND REASSESSMENT AN D NOT FOR ITA NO. 1575 & 1794/12 :- 6 -: THE PURPOSE FOR INITIATING ASSESSMENT. THIS VIEW IS CLEARLY SUPPORTED BY THE DECISION OF AHMEDABAD BENCH IN THE CASE OF UMIYA CO-OPERATIVE HOUSING SOCIETY LTD. V I TO (2005) 94 TTJ 392 (AHD), WHEREIN IT IS HELD AS UNDER:- '7. FROM THE ABOVE, IT IS EVIDENT THAT S.142A EMPOW ERS THE AO TO REQUIRE THE VALUATION OFFICER FOR MAKING THE EST IMATE OF THE VALUE OF ANY ASSET PROVIDED THE AO, REQUIRED THE SA ME FOR THE PURPOSE OF MAKING ASSESSMENT OR REASSESSMENT. HE A BOVE PROVISION DOES NOT EMPOWER THE AO TO REFER THE MATT ER TO THE DVO FOR GATHERING INFORMATION FOR REOPENING OF ASSE SSMENT. MAKING THE REASSESSMENT AND REOPENING OF ASSESSMENT ARE TWO DIFFERENT THINGS. 8. WHEN THE PROCESS OF REOPENING OF ASSESSMENT ENDS AND THE ASSESSMENT IS VALIDLY REOPENED THEREAFTER THE PROCE SS OF MAKING REASSESSMENT STARTS. THEREFORE EVEN AFTER THE INSERTION OF S.142A, THE AO SHOULD HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT AS PROVIDED UNDER S. 147 AND THEREAFTER ONLY THE NOTIC E FOR REASSESSMENT CAN BE ISSUED UNDER S. 148. EVEN AFTER THE INSERTION OF S.142A, THERE IS NO AMENDMENT IN THE L ANGUAGE OF S. 147. THEREFORE, THE CONDITION PRESCRIBED UNDER S . 147 FOR REOPENING OF ASSESSMENT STILL EXITS. THE HON'BLE GA UHATI HIGH COURT IN THE CASE OF BHOLA NATH MAJUMDAR AND THE TR IBUNAL, JODHPUR BENCH, IN THE CASE OF VI JAY KUMAR (SUPRA) HAVE TAKEN THE VIEW THAT THE VALUATION REPORT IS ONLY AN OPINI ON OF THE VALUER AND AN OPINION OF A THIRD PARTY CANNOT BE A REASON TO BELIEVE OF THE ITA. THE HON'BLE BOMBAY HIGH COURT I N THE CASE OF J AMNADAS MADHAVJI & CO. (SUPRA) HAS HELD THAT THE AA CANNOT ISSUE SUMMONS UNDER S. 131 FOR THE PURPOS E OF MAKING INVESTIGATION FOR REOPENING OF THE ASSESSMEN T.' 11. THE ABOVE DECISION OF THE TRIBUNAL HAS BEEN CON FIRMED BY THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. UMIYA CO-OPERATIVE HOUSING SOCIETY LTD. IN TAX APPE ALS NO.1496 TO 1498 OF 2005 DATED 12-07-2006, WHEREIN I T IS HELD AS UNDER:- 'THE SHORT CONTROVERSY INVOLVED IN THESE APPEALS WH ETHER THE ASSESSING OFFICER CAN REFER ANY MATTER FOR VALU ATION OF THE PROPERTY OF AN ASSESSEE THOUGH ASSESSMENT AND / OR REASSESSMENT PROCEEDINGS ARE NOT PENDING. THE TRIBU NAL IS OF THE VIEW THAT WHEN THE ASSESSMENT PROCEEDINGS AR E NOT ITA NO. 1575 & 1794/12 :- 7 -: PENDING THE ASSESSING OFFICER HAS NO JURISDICTION A ND IS NOT EMPOWERED TO REFER ANY PROPERTY FOR VALUATION TO TH E VALUATION OFFICER. THE TRIBUNAL HAS DISCUSSED THIS ISSUE AS UNDER: 8. WHEN THE PROCESS OF REOPENING OF ASSESSMENT ENDS AND THE ASSESSMENT IS VALIDLY REOPENED THEREAFTER, THE PROCESS OF MAKING REASSESSMENT STARTS. THEREFORE, EVEN AFTER T HE INSERTION OF SECTION 142A, THE ASSESSING OFFICER S HOULD HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT AS PROVIDED U/S.147 AND THER EAFTER ONLY THE NOTICE FOR REASSESSMENT CAN BE ISSUED U/S. 148. EVEN AFTER THE INSERTION OF SECTION 142A THERE IS N O AMENDMENT IN THE LANGUAGE OF SECTION 147. THEREFORE , THE CONDITION PRESCRIBED U/S.147 FOR REOPENING OF ASSES SMENT STILL EXISTS. THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF BHOLA NATH MAJUMDAR AND THE ITAT JODHPUR BENCH IN T HE CASE OF VI JAY KUMAR (SUPRA) HAVE TAKEN THE VIEW TH AT THE VALUATION REPORT IS ONLY AN OPINION OF THE VALUER A ND AN OPINION OF A THIRD PARTY CANNOT BE A REASON TO BELI EVE OF THE ITO. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF JAMNADAS MADHAVJI AND CO.(SUPRA) HAVE HELD THAT THE ASSESSING OFFICER CANNOT ISSUE SUMMONS U/S. 131 FOR THE PURPOSE OF MAKING INVESTIGATION FOR REOPENING OF TH E ASSESSMENT. 9. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THE ISSUE OF NOTICES U/S.148 IN ALL THREE YEARS UNDER CONSIDE RATION WAS NOT IN ACCORDANCE WITH LAW. WE, THEREFORE QUASH THE NOTICES ISSUED U/S.148 AND CONSEQUENTLY THE ASSESSM ENTS COMPLETED IN PURSUANCE TO NOTICES U/S. 148 ARE ALSO QUASHED. SINCE THE ASSESSMENT ITSELF HAS BEEN QUASH ED, THE GROUNDS RAISED BY BOTH THE PARTIES WITH REGARD TO THE MERITS OF THE ADDITIONS FOR UNDISCLOSED INVESTM ENTS IN THE HOUSE PROPERTY NEED NO ADJUDICATION AT THIS STA GE BECAUSE ONCE THE ASSESSMENT IS CANCELLED, THE ADDIT ION DOES NOT SURVIVED. MR. BHATT HAS MAINLY EMPHASIZED ON SECTION 142A OF THE ACT. HE SUBMITS THAT THE ASSESSING OFFICER AT ANY T IME CAN MAKE REFERENCE TO THE VALUATION OFFICER FOR VALUING THE PROPERTY FOR THE PURPOSE OF ASSESSMENT OR REASSESSM ENT, WHERE THE VALUE OF ANY INVESTMENT REFERRED TO IN SE CTION 69 OR SECTION 69B OR SECTIONS 69A & 69B IS REQUIRED TO BE MADE. WHETHER ANY INCOME CAN BE TAXED BY DEEMING THE VALUE OF INVESTMENT NOT DISCLOSED, ARE ISSUES W HERE ITA NO. 1575 & 1794/12 :- 8 -: SUCH TYPES OF QUESTIONS ARISE WHILE SOME PROCEEDING S ARE PENDING FOR ASSESSMENT. IN ABSENCE OF SUCH PROCEEDI NGS, THE ASSESSING OFFICER CANNOT REFER ANY PROPERTY FOR VALUATION TO VALUATION OFFICER. IN OPENING PART OF SECTION 142A THE WORDS USED ARE FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UN DER THE ACT. THE INTENT OF THE LEGISLATION IS THAT THE MATTER CAN BE REFERRED TO THE VALUATION OFFICER ONLY WHEN THE PROCEEDINGS OF ASSESSMENT OR REASSESSMENT ARE PENDI NG BEFORE THE ASSESSING OFFICER. WHEN NO SUCH PROCEEDINGS ARE PENDING, THE ASSESSING OFFICER HAS NO JURISDICTION TO REFER ANY PROPERTY FOR ASSESSMENT. WHEN THE NOTICE U/S.148 HAS BEEN ISSUED, AND ADDITI ON HAS BEEN MADE BY ADOPTING THE VALUE ESTIMATED BY THE VA LUATION OFFICER, AND WHEN WE FIND THAT THE ASSESSING OFFICE R IS NOT EMPOWERED TO REFER ANY PROPERTY FOR VALUATION IN A CASE WHERE NO ASSESSMENT PROCEEDINGS OR REASSESSMENT PROCEEDIN GS OF THE ASSESSEE IS PENDING BEFORE HIM, WE SEE NO JUSTIFICA TION TO MAKE ANY ADDITION IN SUCH CASES.' EVEN THE HON'BLE APEX COURT HAS ALSO DISMISSED THE SLP OF THE REVENUE IN THIS CASE AND AFFIRMED THE JUDGMENT OF HON'BLE HIGH COURT IN SLP NO. CC 187 OF 2007 DATED 07-03-20 07. AS THE ISSUE IN THESE APPEALS OF THE PRESENT ASSESSEE BEFORE US IS EXACTLY IDENTICAL, WHAT WAS BEFORE THE HON'BLE HIGH COURT IN THE CASE OF UMIYA COOPERATIVE HOUSING SOCI ETY LTD.(SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE AR E OF THE CONSIDERED OPINION THAT THE REFERENCE U/S.142A OF T HE ACT CAN BE MADE ONLY WHEN THE PROCEEDINGS UNDER THIS ACT IS PENDING AND NOT OTHERWISE. ACCORDINGLY, THIS LEGAL ISSUE, W E DECIDE IN FAVOUR OF THE ASSESSEE AND AGAINST THE RE VENUE'. 12. WE FURTHER FIND FROM THE CASE RECORDS THAT EVEN IF A REFERENCE U/S. 142A IS MADE BY THE ASSESSING OFFICE R ON CERTAIN CONSIDERATION SUCH AS ANYTHING FIND DURING THE COURSE OF SURVEY U/S 133A OF THE ACT OR ON THE BASIS OF A TAX EVASION PETITION OR A REFERENCE IS REQUIRED TO BE MADE DURI NG THE COURSE OF OTHER PROCEEDINGS OR A REPORT OF THE DVO IS AVAI LABLE TO THE AO BEFORE MAKING AN ASSESSMENT OR REASSESSMENT THEN SAME CAN BE UTILIZED ONLY IN ACCO RDANCE WITH SUB-SEC.(3) OF SEC. 142A I.E., THE ASSESSEE HA S TO BE GIVEN AN OPPORTUNITY OF BEING HEARD BEFORE SUCH A R EPORT IS UTILIZED AND IN ACCORDANCE WITH SEC.145 WHERE BOOKS OF ACCOUNT ARE REQUIRED TO BE REJECTED BY POINTING OUT SOME APPARENT DEFECTS. IN OUR CONSIDERED VIEW THE PROVIS IONS OF SEC. ITA NO. 1575 & 1794/12 :- 9 -: 142A CANNOT BE READ IN ISOLATION TO SEC.145. IN OTH ER WORDS, IF BOOKS OF ACCOUNT ARE FOUND TO BE CORRECT AND COMPL ETE IN ALL RESPECT AND NO DEFECT IS POINTED OUT THEREIN AND CO ST OF CONSTRUCTION OF BUILDING IS RECORDED THEREIN, THEN THE ADDITION ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION CO ULD NOT BE MADE EVEN IF A REPORT IS OBTAINED WITHIN THE MEANIN G OF SEC.142A FROM THE DVO. IT IS BECAUSE THE USE OF THE REPORT OF THE DVO OBTAINED U/S.142A IS NOT MANDATORY BUT IS DISCRETIONARY AS THE WORD USED IS 'MAY' THEREIN. AC CORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT IN THE PRESENT CASE WHEN AO HAS NOT REJECTED THE BOOKS OF ACCOUNT BY POINTING O UT ANY DEFECTS REFERENCE TO THE DVO WILL NOT BE VALID AND, THEREFORE, DVO'S REPORT COULD NOT BE UTILIZED FOR FRAMING ASSE SSMENT EVEN IF SUCH A REPORT IS CONSIDERED TO BE OBTAINED U/S.1 42A. SINCE REFERENCE TO DVO BEING HELD AS INVALID, THE ASSESSM ENT/ REASSESSMENT FRAMED THEREAFTER WOULD ALSO BE INVALI D. EVEN OTHERWISE, THE ISSUE OF UNEXPLAINED EXPENDITURE U/S .69C OFTHE ACT IS NOT COVERED UNDER THE POWERS OF SEC.142A OF THE ACT AND THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF AAR PEE APARTMENTS (P) LTD. (S UPRA). THE HON'BLE DELHI HIGH COURT HELD AS UNDER:- '6. BEFORE WE ADVERT TO THE INTERPRETATION TO THE AFORESAID PROVISION WE DEEM IT PROPER TO REPRODUCE THE FOLLOWING DISCUSSIONS DETAINED IN THE ORDER OF TRIB UNAL ON THIS ASPECT:- 'THE NEXT POINT T O BE DETERM I N E D IS WHETH ER THE AO IS JUSTIFIED IN R EF ERRIN G TO TH E DVO FOR COMPUTI N G COST OF C O N S T R U C TION C L AI MED AS REVENUE EX PENDITURE. P RIO R TO INSERTION OF SEC . 1 4 2A BY FIN A N CE ( NO. 2) A C T , 2 004 WITH RETROSPECTIVE EFF ECT FR O M 15TH N OV. 1972, THE REFE R ENCE TO DV O I N ASSES SM EN T PROCEEDINGS OTHER THAN A S PERMISSIBL E UNDER S . 55A WAS HELD TO BE IN VA LI D AS H E LD BY HON'BLE SUPREME COURT I N THE C ASE O F F SMT . AMIYA BALA PAUL VS . CIT (2 0 03 ) 182 CT R ( SC) 489 : (2003) 262 I TR 40 7 (SC) . SEC. 142A , WAS INS E RTED WITH R E TRO S P E CTIVE EFFEC T FROM 15TH NOV . , 1972 , HOWEVE R , EVEN UNDER S . 142A, A R E FERENCE C AN B E MADE FOR AS SESSMENT OR REASSESSM E NT W H E R E AN E S TIMATE OF VALUE O F ANY INV ES TM E NT R E F ERRE D TO IN S . 69 OR S . 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES REFERRED IN S. 69A OR 69B I S REQUIRED TO BE MADE. THE AO MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE ITA NO. 1575 & 1794/12 :- 10 -: AND REPORT UNDER S. 142A(1), FOR THE PURPOSE OF MAK ING AS ASSESSMENT UNDER ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN S. 69A OR S. 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLE REFERRED TO IN S. 69A OR S.69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATI ON OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. THUS THE POWER AVAILABLE UN DER S. 142(1) IS REQUIRING THE VALUATION OFFICER TO VAL UE ANY INVESTMENT OR BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE REFERRED IN S.69, S 69A OR S.69B OF THE ACT ,. THESE POWERS DO NOT EXTEND TO ESTIMATE THE AMOUNT O F UNEXPLAINED EXPENDITURE REFERRED IN S. 69C OF THE A CT. ADMITTEDLY, IN THE PRESENT CASE THE EXPENDITURE ON CONSTRUCTION ARE CLAIMED AND ALLOWED AS REVENUE EXPENDITURE AND CANNOT BE CONSIDERED AS AN INVESTME NT OR BULLION, JEWELLERY ETC. REFERRED IN S. 69, S. 69 A OR S.69B, OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFERENCE TO DVO IS NOT IN ACCORDANCE WITH THE PROVISIONS OF S. 142A. HENCE THE DECISION OF HON'BL E SUPREME COURT IN THE CASE OF SMT. AMIYA BALA PAUL (SUPRA) WILL STILL APPLY TO HOLD THAT NO ADDITION C AN BE MADE MERELY RELYING UPON THE VALUE ARRIVED AT BY DVO. IN VIEW OF THE ABOVE DISCUSSION, ADDITION OF RS.19,69,881 IS DIRECTED TO BE DELETED.' 7. WE ARE IN AGREEMENT WITH THE AFORESAID INTERPRET ATION GIVEN BY THE TRIBUNAL TO SEC. 142(A) OF THE ACT. OUR DISC USSION ON THIS ASPECT PROCEEDS AS UNDER: 8. SEC. 142(A) IS TO THE FOLLOWING EFFECT:- '142A. FOR THE PURPOSES OF MAKING AN ASSESSMENT OF REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF T HE VALUE OF ANY INVESTMENT REFERRED TO IN S 69 OR S. 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE RE FERRED TO IN S. 69A OR S. 69B IS REQUIRED TO BE MADE, THE AO MAY RE QUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO B HIM.' 9. IT IS CLEAR FROM THE READING OF SUB-S.(1) OF THI S PROVISION THAT IT ENABLES THE AO TO GET THE VALUATION DONE FROM TH E VALUATION OFFICER IN CERTAIN SPECIFIC TYPES OF CASES. THESE W OULD BE THE CASES WHEREIN AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN S. 69 OR S. 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES REFERRED TO IN S. 69A OR ITA NO. 1575 & 1794/12 :- 11 -: 69B IS REQUIRED. THERE IS NO MENTION ABOUT S. 69C O F THE ACT. AS IS CLEAR FROM THE ABOVE, S 69A DEALS WITH UNEXPLAINED MONEY. SEC. 69B LIKEWISE RELATES TO THE AMOUNT OF INVESTMENT ETC. NOT FULLY DISCLOSED IN BOOKS OF ACCOUNTS. ON THE OTHER HAND, THE PROVISION RELATES TO UNEXPLAINED EXPENDITURE IS IN S. 69C. 10. IN THE PRESENT CASE THE AO HAD DOUBTS ABOUT THE EXPENDITURE INCURRED ON THE PROJECT. AS POINTED OUT ABOVE THE ASSESSEE HAD SHOWN THE EXPENDITURE ON THE AT RS. 38,58,53,602. SINCE AO HAD DOUBTED THIS EXPENDI TURE, HE REFERRED THE MATTER TO DVO FOR THE PURPOSE OF DETERMINING THE COST OF CONSTRUCTION OF SAID PROJEC T. HOWEVER, AS POINTED OUT ABOVE, FOR THE PURPOSE OF G ETTING HIMSELF SATISFIED ABOUT THE PURPORTED UNEXPLAINED EXPENDITURE UNDER S. 69C POWERS UNDER S. 1142A COUL D NOT BE INVOKED. 11. LEARNED COUNSEL FOR REVENUE SUBMITTED THAT SUCH A POWER COULD BE TRACED TO S. 69B OF THE ACT WHICH RE LATES TO AMOUNT OF INVESTMENT ETC. NOT FULL DISCLOSED IN THE BOOKS OF ACCOUNTS. 12. HER SUBMISSION WAS THAT THE EXPENDITURE' INCURR ED SHOULD BE CONSIDERED AS COMING WITHIN THE EXPRESSIO N 'INVESTMENT'UG. WE CANNOT AGREE WITH THIS SUBMISSIO N OFLEARNED COUNSEL FOR REVENUE. IF INVESTMENTS COULD INCLUDE WITHIN ITS FOLD HE EXPENDITURE AS WELL WHIC H IS INCURRED BY A BUSINESSMAN DURING THE COURSE OF HIS BUSINESS, THERE WAS NO NECESSITY OF HAVING A SEPARA TE PROVISION UNDER S. 69C OF THE ACT WHICH DEALS WITH UNEXPLAINED 'EXPENDITURE' AND READS AS UNDER: '69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF HE AO SATISFACTORY , THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. ' 14. THE SCOPE AND AMBIT OF SS. 69B AND 69C ARE ALTO GETHER DIFFERENT. THE CONNOTATION TO THE INVESTMENT APPEAR ING IN S. 69B HAS TO BE IN THE CONTEXT OF INVESTMENTS MADE IN SOME PROPERTY OR ANY OTHER TYPE OF INVESTMENT AND IT COULD NOT ITA NO. 1575 & 1794/12 :- 12 -: BE THE BUSINESS EXPENDITURE. THE WORD 'INVESTMENT' CONTAINED IN S. 69B DEALS WITH INVESTMENT IN BULLIO N, JEWELLERY OR OTHER VALUABLE ARTICLES, ETC. IF THE C ONTENTION OF LEARNED COUNSEL FOR REVENUE IS ACCEPTED AND THE IS GIVEN WIDER MEANING AS SOUGHT TO BE MADE OUT, THE PROVISI ONS OF S. 69C SHALL BE RENDERED OTIOSE. 15. THE LEARNED COUNSEL FOR REVENUE HOWEVER TOOK AN OTHER PLEA TO BUTTRESS HER SUBMISSION. HE SUBMITTED THAT HAVING REGARD TO THE CIRCUMSTANCES UNDER WHICH S. 142A WAS INSERTED BY THE FINANCE ACT, 2004, IT BE DEEMED THA T THE INTENTION OF LEGISLATURE WAS TO INCLUDE EVEN THOSE UN- EXPLAINED EXPENDITURE STIPULATED IN S. 69C. NO DOUB T THE NEED BEHIND INSERTING S. 142A WAS TO EMPOWER THE AO TO MAKE A REFERENCE TO THE VALUATION OFFICER AS THERE WAS NO SUCH SPECIFIC POWERS AND EXISTING PROVISION CONTAINED IN S. 131 WERE INADEQUATE. HOWEVER, EVEN THIS STATEMENT OF OBJECT AND REASON CLEARLY CONFINED AND LIMITED THE REFERENCE 'TO HOLD A SCIENTIFIC, TECHNICAL AND EXPERT INVESTIGATION ETC.' LEARNED COUNSEL FOR THE ASSESSE E HAS DRAWN OUR ATTENTION TO CBDT CIRCULAR ISSUED BY IT EXPLAINING THE FINANCE BILL, 2004 WHICH SPECIFICALL Y OMITS THE WORD 'EXPENDITURE' AS WELL AS S. 69C. IT IS ON THIS BASIS THAT THE S. 142A WAS INSERTED IN T HE FORM AS IT APPEARS ON THE STATUTE BOOK NOW. IF TH E INTENTION WAS TO INCLUDE UNEXPLAINED EXPENDITURE AS CONTEMPLATED IN S. 69C OF THE ACT AS WELL THI S PROVISION SHOULD HAVE BEEN SPECIFICALLY MENTIONED I N S. 142A OF THE ACT. 16. FROM THE READING OF SUB-S.(1) OF S. 142A, IT IS CLEAR THAT THE LEGISLATURE REFERRED TO THE PROVISION OF SS. 69, 69 A AND 69B BUT SPECIFICALLY EXCLUDED 69C. THE PRINCIPLE OF CASUS O MISSUS BECOMES APPLICABLE IN A SITUATION LIKE THIS. WHAT IS NOT IN CLUDED BY THE LEGISLATURE AND RATHER SPECIFICALLY EXCLUDED, CANNO T BE INCORPORATED BY THE COURT THROUGH THE PROCESS OF INTERPRETATION. TH E ONLY REMEDY IS TO AMEND THE PROVISIONS. IT IS NOT THE FUNCTION OF THE COURT TO LEGISLATE OR TO PLUG THE LOOPHOLES IN THE LAW. 17. IN THE PRESENT CASE EXCEPT THE REPORT OF DVO ON WHICH THE AA RELIED UPON, THERE WAS NOTHING ON RECORD TO SUGGEST THAT THERE WAS ANY OF THE EVIDENC E TO DISBELIEVE THE EXPENDITURE SHOWN BY THE ASSESSEE. IN FACT DURING THE COURSE OF ARGUMENTS, L EARNED COUNSEL FOR THE ASSESSEE PRODUCED THE ASSESSMENT ORDER WHICH CLEARLY DEMONSTRATES THAT TH E EXPENDITURE ITA NO. 1575 & 1794/12 :- 13 -: SHOWN BY THE ASSESSEE FROM THE TIME, WHEN IT WAS AN ON-GOING PROJECT, WAS EXAMINED AND ACCEPTED BY, THE AO 13. IN VIEW OF THE ABOVE FACTS AND THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF AAR PEE APARTMENTS PVT. LTD. ( SUPRA) WE ARE OF THE CONSIDERED VIEW THAT THE LEGISLATURE HAS NOT IN CLUDE, UNEXPLAINED EXPENDITURE STIPULATED IN SEC.69C OF THE ACT FOR IN VOCATION OF PROVISIONS OF SEC.142A OF THE ACT. WE FURTHER FIND THAT EVEN THE CBDT CIRCULAR ISSUED BY IT, EXPLAINING THE FINANCE BILL, 2004SPECIFICALLY OMITTED THE WORD 'EXPENDITURE' AS WELL AS SEC.69 FR OM THE AMBIT OF SEC.142A OF THE ACT AS INSERTED IN THE FORM AS IT A PPEARS ON THE STATUE BOOK. IF THE INTENTION OF THE LEGISLATURE TO INCLUD E UNEXPLAINED EXPENDITURE AS CONTEMPLATED IN SEC.69C OF THE PROVI SION OF SEC.142A SHOULD HAVE BEEN SPECIFICALLY MENTIONING THE SAME. FURTHER THE COST OF FLAT BEING SHOWN BY THE ASSESSEE AS CURRENT ASSE TS NOT AS AN INVESTMENT, IT CANNOT BE SUBJECT MATTER OF REFERENC E U/S 142A. EVEN OTHERWISE, THE ASSESSING OFFICER REFERRING THE MATT ER TO THE DVO FOR VALUATION OF CURRENT ASSETS IN ONE ASSESSMENT YEAR, HE CANNOT DISTURB THE CONCLUDED ASSESSMENTS OF OTHER ASSESSMENT YEARS . ACCORDINGLY, WEDECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND A GAINST THE REVENUE. 14. IN VIEW OF THE ABOVE DECISION ON BOTH THE LEGAL ISSUES, WE DECIDE THIS APPEAL OF THE ASSESSEE INFAVOUR OF THE ASSESSE E AND THE ISSUES ON MERITS HAVE BECOME ACADEMIC AND NEEDS NO ADJUDIC ATION. 5. IN VIEW OF THE ABOVE DECISION OF THE CO-ORDINATE BE NCH, WE ARE INCLINED TO DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 6. IN THE RESULT, THE REVENUES APPEAL I.T.A.NO.1794/M DS/2012 IS DISMISSED. I.T.A.NO.1575/MDS/2012 A.Y 2008-09 7. IN THIS APPEAL FOR ASSESSMENT YEAR 2008-09, THE REV ENUE HAS CHALLENGED THE DELETION OF PENALTY LEVIED U/S 271 (1)(C) OF THE ACT. ITA NO. 1575 & 1794/12 :- 14 -: 8. THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIME D PAYMENT OF DEVELOPMENT CHARGES OF ` 59,77,000/- IN RESPECT OF LAND SOLD TO SMT. SOUNDARAM AND SMT SEEMA SINHA. THE ASSESSEE PRODUCED ONLY VOUCHERS SIGNED BY THE MANAGING DIRECTOR OF THE COM PANY. THE ASSESSEE HAS NOT GIVEN FULL PARTICULARS OF LAND DEV ELOPMENT WORK CARRIED OUT BY THE ASSESSEE. THE LAND DEVELOPMENT WORK SAID TO BE CARRIED ON BY THE MANAGING DIRECTOR WAS PRIOR TO PU RCHASE OF LAND BY THE ASSESSEE-COMPANY AND THE LAND WAS ALSO NOT IN T HE POSSESSION OF THE ASSESSEE-COMPANY OR MANAGING DIRECTOR AND THERE WAS NO DETAILS OF NATURE OF DEVELOPMENT WORK CARRIED OUT BY THE A SSESSEE. THE ASSESSING OFFICER OBSERVED THAT IT WAS ONLY AGRICUL TURAL LAND AND THE VOUCHERS FOR THE LAND DEVELOPMENT EXPENSES SAID TO BE INCURRED WERE DATED BEFORE 20.4.2005. HOWEVER, THE PROPERTIES WE RE ACQUIRED FROM 5.8.2005 TO 20.10.2005. FROM THE SAME, THE ASSESSI NG OFFICER CAME TO THE CONCLUSION THAT THE EXPENDITURE WAS NOT GENU INE AND DISALLOWED THE EXPENDITURE. CONSEQUENT TO THIS, HE INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY AT 100 % OF THE TAX SOUGHT TO BE EVADED. 9. ON APPEAL, THE CIT(A) OBSERVED THAT LAND DEVELOPMEN T EXPENDITURE WAS INCURRED BY ASSESSEES MANAGING DI RECTOR TOWARDS SWIMMING POOL DEMOLITION AND CLEARANCE EXPENSES BEF ORE JUNE 2005. ALL THESE EXPENSES WERE INCURRED BY THE MANAGING DI RECTOR OF THE ITA NO. 1575 & 1794/12 :- 15 -: ASSESSEE-COMPANY ON BEHALF OF THE ASSESSEE-COMPANY. AS AT THAT TIME THE ASSESSEE WAS NOT HAVING SUFFICIENT FUNDS, THE MANAGING DIRECTOR HAS NOT SUBMITTED THE BILLS FOR REIMBURSEM ENT. THE MANAGING DIRECTOR HAD DISCLOSED RECEIPT OF THE EXPENDITURE F ROM THE ASSESSEE AND SHOWN IT AS HIS INCOME AND PAID TAX IN HIS INDI VIDUAL CAPACITY. ACCORDING TO THE CIT(A), THERE WAS NO EVIDENCE BROU GHT ON RECORD BY THE ASSESSING OFFICER TO PROVE THAT NO EXPENDITURE WAS INCURRED ON LAND DEVELOPMENT. SINCE THE EXPENDITURE CLAIMED IN THE HANDS OF THE ASSESSEE WAS SHOWN AS RECEIPT IN THE HANDS OF THE M ANAGING DIRECTOR OF THE ASSESSEE-COMPANY AND HE HAD PAID TAX THEREON WHICH WAS VOLUNTARY ACTION OF THE MANAGING DIRECTOR AND NO MO TIVE COULD BE ATTRIBUTABLE. FURTHER, THE ASSESSEE-COMPANY PAID T AX ON THE BASIS OF BOOK PROFITS DETERMINED UNDER THE PROVISIONS OF SEC . 115JB OF THE ACT AND IT CANNOT BE CONSTRUED THAT ASSESSEE TRIED TO REDUCE THE TAX LIABILITY WHILE COMPUTING THE SHORT TERM CAPITAL GA INS. CONSIDERING THE CASE LAWS RELIED ON BY THE ASSESSEE, THE CIT(A) OP INED THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, HE DELETED THE PENALTY AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE, THE ASSESSEE SAID TO BE INCU RRED EXPENDITURE TOWARDS LAND DEVELOPMENT WORK BEFORE ACQUISITION OF CERTAIN LAND. AS SEEN FROM THE FACTS OF THE CASE, THE ASSESSEE TOOK A PLEA THAT BEFORE ITA NO. 1575 & 1794/12 :- 16 -: ACQUISITION OF LAND, THERE WERE CERTAIN DEVELOPMENT EXPENDITURE TO BE INCURRED. ON THIS REASON, THE MANAGING DIRECTOR OF THE ASSESSEE INCURRED THE EXPENDITURE AND SINCE THERE WAS NO SUF FICIENT FUNDS IN THE HANDS OF THE ASSESSEE, HE HAS NOT SUBMITTED THE BI LLS TO THE ASSESSEE- COMPANY. THIS AMOUNT HAS BEEN SHOWN AS RECEIPT IN THE HANDS OF THE MANAGING DIRECTOR OF THE ASSESSEE AND PAID TAX TH EREON VOLUNTARILY, THEREFORE, NO PENALTY COULD BE LEVIED, ACCORDING TO THE LD. COUNSEL. HOWEVER, THE VOUCHERS SUBMITTED BY THE ASSESSEE BE FORE THE ASSESSING OFFICER ARE ONLY SELF-MADE VOUCHERS AND T HEY DO NOT BEAR FULL DETAILS OF THE EXPENDITURE. THE ASSESSING OFFICER OBSERVED THAT THE DETAILS OF THE SERVICES RENDERED BY THE MANAGING DI RECTOR WERE NOT DISCLOSED, THE EXPENDITURE WAS INCURRED BEFORE ACQU ISITION OF THE LAND BY THE ASSESSEE AND THE CIRCUMSTANCES UNDER WHICH THE PAYMENT WAS MADE WITHOUT DISCLOSING THE NATURE OF SERVICES REND ERED. IT IS NOTHING BUT WRONG CLAIM MADE BY THE ASSESSEE. IT IS INTER ESTING TO KNOW THAT THE CIT(A) PUT ITS STAMP OF APPROVAL THAT IT IS COM MON TO INCUR SUCH EXPENDITURE BY MANAGING DIRECTOR ON BEHALF OF THE A SSESSEE-COMPANY. WHEN NO SERVICE HAS BEEN RENDERED BY THE MANAGING D IRECTOR SHOWING THE RECEIPT FROM ASSESSEE-COMPANY IN HIS HANDS AS I NCOME AND PAYING TAX THEREON, DOES NOT DISENTITLE THE ASSESSING OFFI CER FROM LEVY OF PENALTY U/S 271(1)(C) OF THE ACT OF THE ACT. WE HAVE EXAMINED THE PENALTY PROCEEDINGS. IN OUR OPINION, THE ORDER OF THE ASSESSING OFFICER ITA NO. 1575 & 1794/12 :- 17 -: IMPOSING PENALTY WAS WITHOUT ANY BLEMISH AND THERE WAS NO CAUSE FOR INTERFERING IN IT BY THE CIT(A). THE REASONS GIVEN BY THE CIT(A) IN DELETING THE PENALTY ARE TOTALLY IRRELEVANT AND NOT GERMANE TO THE ISSUE. RATHER, THE CIT(A) HAS LOST SIGHT OF THE AF ORESAID ASPECT OF NON- RENDERING THE SERVICES BY THE MANAGING DIRECTOR TH AT ALSO BEFORE ACQUISITION OF LAND BY THE ASSESSEE. MERE PAYMENT OF TAX BY THE MANAGING DIRECTOR CANNOT BE A REASON TO DELETE THE PENALTY IN THIS CASE. THE CIT(A) HAS FAILED TO TAKE NOTE OF THE FA CT THAT THE PAYMENT OF EXPENDITURE DISALLOWED WAS NOT ONLY BECAUSE OF T HE REASON THAT INSUFFICIENT INFORMATION IN VOUCHERS AND ALSO FOR T HE REASON THAT IT WAS INCURRED BEFORE ACQUISITION OF LAND BY THE ASSESSE E. IN OUR OPINION, IT IS NOT FOR THE CIT(A) TO SUBSTITUTE HIS OWN WISDOM WITH THAT OF THE ASSESSING OFFICER. IF HE WANTS TO GIVE ANY RELIEF TO THE ASSESSEE, THE FACTS SHALL BE BORNE OUT OF THE RECORD OF THE ASSE SSEE THAT THE MANAGING DIRECTOR HAS RENDERED SERVICE TO THE ASSE SSEE SO AS TO DEVELOP THE LAND. IN OUR OPINION, THE FINDINGS GIVE N IN THE ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. IN THIS CASE, THE ASSESSEE FAILED TO FURNISH FULLY AND ACCURATELY ALL PARTICULARS OF EXPENDITURE SAID TO BE INCURRED FOR THE LAND DEVELO PMENT. THE CLARIFICATION GIVEN BY THE ASSESSEE IS NOT SUFFICI ENT TO SUBSTANTIATE OR DEVELOP ANY CONFIDENCE SO AS TO HOLD THAT ASSESSEE- COMPANY HAS ACTUALLY INCURRED ANY EXPENDITURE IN LAND DEVELOPME NT. EVEN IF ANY ITA NO. 1575 & 1794/12 :- 18 -: DEDUCTION IS CLAIMED B THE ASSESSEE WRONGLY BUT BO NAFIDE AND NO MALAFIDE CAN BE ATTRIBUTED, THE PENALTY WOULD NOT B E LEVIED. IF THERE IS A DELIBERATE CONCEALMENT AND FALSE/INACCURATE RETUR N WAS FILED, WHICH WAS REVISED AFTER THE ASSESSEE WAS EXPOSED OF THE FALSEHOOD, IT WOULD ATTRACT PENALTY. FURTHER, WHERE THE CLAIM MADE IN T HE RETURN APPEARS TO BE EX FACIE BOGUS, IT WOULD BE TREATED AS A CASE OF CONCEALMENT OR INACCURATE PARTICULARS AND PENALTY IS TO BE LEVIED. WE MAY ALSO TAKE NOTE OF THE OBSERVATION OF THE SUPREME COURT IN TH E CASE OF UNION OF INDIA VS DHARMENDRA TEXTILE PROCESSORS 306 ITR 277, WHEREIN HELD THAT THE EXPLANATION APPENDED TO SEC. 271(1)(C) OF THE ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY ON THE AS SESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING T HE RETURN. THE JUDGMENT IN THE CASE OF DILIP N SHROFF, 291 ITR 519 , HAS NOT CONSIDERED THE PROVISIONS OF SEC. 276C OF THE ACT. THE OBJECT BEHIND THE ENACTMENT OF SEC.271(1)(C) OF THE ACT READ WITH THE EXPLANATIONS INDICATE THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IN THE CASE OF PROSECUTION U/S 276C OF THE ACT. IN VIEW OF THIS, WE HAVE NO HESITA TION IN REVERSING THE ORDER OF THE CIT(A) AND RESTORING THAT OF THE ASSES SING OFFICER IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 11. IN THE RESULT, I.T.A.NO.1575/MDS/2012 IS ALLOWED. ITA NO. 1575 & 1794/12 :- 19 -: 12. TO SUMMARIZE, REVENUES APPEAL I.T.A.NO.1575/MDS/20 12 IS ALLOWED AND I.T.A.NO.1794/MDS/2012 IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, 22 ND JANUARY, 2016, AT CHENNAI. SD/- SD/- ( ! ' ) ( CHALLA NAGENDRA RASAD) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' / CHENNAI #$ / DATED: 22 ND JANUARY, 2016 RD $%&& '(&)( / COPY TO: & 1 . / APPELLANT 4. & * / CIT 2. / RESPONDENT 5. (+,& - / DR 3. & *&./ / CIT(A) 6. ,0&1 / GF