DCIT 25(3), MUMBAI V. BHOOMI ENTERPRISES, MUMBAI

ITA 1897/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2497 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1897/MUM/2013 ( %' ( / ASSESSMENT YEAR: 2006-07) D.C.I.T.25(3) 308, C-11, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400051 ' / VS. M/S. BHOOMI ENTERPRISES 123/124, SONA SHOPPING, CENTRE TRIKAMDAS ROAD, KANDIVALI(W), MUMBAI - 400067 ./ ./ PAN/GIR NO. : AAFFB6143C ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 22.04.2016 !' /DATE OF PRONOUNCEMENT: 20.07.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS CHALLENGED THE ORDER DATED 04.12.20 12 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 35, MUMBAI [HE REINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2 006-07 WHEREIN THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271(1) (C) OF THE ACT HAS BEEN ORDERED TO BE DELETED. ASSESSEE BY: SHRI VIRAG H. SHAH DEPARTMENT BY: SMT. POOJA SWAROOP ITA NO.1897/MUM/13 A.Y.2006-07 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- (I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S.271(1)(C) OF THE I.T.ACT, 1961, WITHOUT APPRECI ATING THE FACT THAT THE ASSESSEE IS FOLLOWING PERCENTAGE COMP LETION METHOD AND THE PROJECT WAS SUBSTANTIALLY COMPLETED IN A.Y.2006-07 AND ADDITION OF RS.75,36,434/- MADE BY THE ASSESSING OFFICER IN THE INCOME OF THE ASSESSEE HAS BEEN CONFIRMED BY ITAT IN APPEAL AGAINST THE ORDER OF CI T(A)- 35, MUMBAI. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT ASSESSEE S AMOUNTING TREATMENT HAS NOT CAUSED ANY LOSS TO THE REVENUE IN ABSOLUTE TERMS BUT ONLY A DEFERMENT IN PAYMENT O F TAXES, SINCE THE BASIS FOR ADDITIONS WERE ALSO LITIGIOUS W ITH DIFFERING VIEWS OF THE APPELLATE AUTHORITIES WITHOU T APPRECIATING THE FACT THAT IN INCOME TAX PROCEEDING S EACH YEAR IS LOOKED AS AN INDEPENDENT ASSESSMENT IGNORIN G THE FACTS THAT THE HONBLE ITAT HAS CONFIRMED THE ADDIT ION TO THE INCOME OF THE ASSESSEE AND THERE IS CLEAR CASE OF FILING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME AGAINST THE ASSESSEE. (III) THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME TO THE TUNE OF RS.19, 44,606/- ON 30.10.2006. THE RETURN WAS PROCESSED AND THEREAFTE R THE CASE WAS SELECTED FOR SCRUTINY. NOTICE U/S.143(2) AND 142( 1) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT) WERE ISSUED AND SERVED UPON THE ITA NO.1897/MUM/13 A.Y.2006-07 3 ASSESSEE. THE ASSESSEE IS A FIRM CARRYING ON THE B USINESS OF CONSTRUCTION OF BUILDING AND LAND DEVELOPMENT. DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN CONSTRUCTION ACTIVITIES IN PROJECT CALLED DEEP NIKETAN AT MALAD (W). DURING THE YEAR UNDER ASSESSMENT, IT WAS FOUND THAT THE ASSESSEE HAS TAKE N THE OCCUPATION CERTIFICATE FROM THE RELEVANT AUTHORITIES, THEREFOR E, THE ASSESSING OFFICER HAS TREATED THE WORK AS COMPLETED BUT THE A SSESSEE HAS FILED THE WORK IN PROGRESS METHOD. THEREFORE BY GIVING AN OPPORTUNITY OF BEING HEARD AND TREATING THE COMPLETION OF THE PROJ ECT, THE PROFIT OF THE ASSESSEE WAS WORKED OUT TO THE TUNE OF RS.94,81,040 /-. THEREAFTER, THE ASSESSING OFFICER INITIATED THE PENALTY WHICH WAS O RDERED TO BE DELETED BY THE CIT(A) BY VIRTUE OF ORDER DATED 04.1 2.2012. FEELING AGGRIEVED THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1. 2&3 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND HAVE GONE THROUGH THE RECORD. THE REVENUE HAS TAKEN THE PLEA THAT THE CIT(A) HAS WRON GLY DELETED THE PENALTY BY VIRTUE OF ORDER DATED 04.12.2012. THE L EARNED REPRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT TH E ASSESSEE HAS SHOWN THE WORK IN PROGRESS METHOD WHILE FILING HIS RETURN BUT THE WORK AND THE PROJECT HAD BEEN COMPLETED AS THE ASSE SSEE HAD TAKEN THE WORK COMPLETION CERTIFICATE FROM THE CONCERNED AUTH ORITY, THEREFORE, THE ASSESSEE CONCEALED THE INCOME AND ALSO FURNISH ED THE INACCURATE ITA NO.1897/MUM/13 A.Y.2006-07 4 PARTICULARS TO EVADE THE TAX THEREFORE, THE ASSESS ING OFFICER HAS RIGHTLY IMPOSED THE PENALTY BUT THE CIT(A) HAS WRON GLY DELETED THE SAID PENALTY, THEREFORE ORDER DATED 04.12.2012 IS W RONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. 4.1 LEARNE D REPRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT THE INCOME TAX APPEL LATE TRIBUNAL HAS CONFIRMED THE FINDING OF THE ASSESSING OFFICER IN I TA NO.885/MUM/2010 IN ASSESSEES OWN CASE, THEREFORE I N THE SAID CIRCUMSTANCES THE ASSESSING OFFICER HAS RIGHTLY LEV IED THE PENALTY WHICH HAS WRONGLY BEEN DELETED BY THE CIT(A) BY VIR TUE OF ORDER DATED 04.12.2012 IN QUESTION. ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE WAS ADOPTING THE WORK COMPLETION METHOD ON THE PERCENTA GE BASIS THEREFORE THE ASSESSEE HAS RIGHTLY FURNISHED HIS RE TURN BECAUSE THE WORK WAS PENDING. HOWEVER, THE WORK COMPLETION CER TIFICATE HAS TAKEN BUT THERE WAS NOT CONCEALMENT OF INCOME NOR I NACCURATE PARTICULARS WERE FURNISHED, THEREFORE THE CIT(A) HA S RIGHTLY DELETED THE PENALTY IN QUESTION AND HAS ALSO PLACED RELIANC E ON THE LAW SETTLED IN [2002] 120 TAXMAN 676 (GUJ) IN COMMISSIONER OF I NCOME TAX VS. MANILAL TARACHAND AND [2010] 189 TAXMAN 322 (SC) SU PREME COURT OF INDIA IN COMMISSIONER OF INCOME TAX, AHMEDABAD VS. RELIANCE PETROPRODUCTS (P.) LTD. AND [2003] 133 TAXMAN 320 ( RAJ.), HIGH COURT OF RAJASTHAN, JAIPUR BENCH IN COMMISSIONER OF INCOM E TAX VS. HARSHVARDHAN CHEMICALS & MINERALS LTD. ITA NO.1897/MUM/13 A.Y.2006-07 5 5. BY GIVING THE CAREFUL THOUGHTS TO THE CONTENTION RAISED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSING THE RECORD, IT CAME INTO NOTICE THAT THE ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD ON PERCENTAGE BASIS FROM THE PRECEDING YEARS. NO D OUBT PROJECT COMPLETION CERTIFICATE HAS BEEN TAKEN BY THE ASSESS EE BUT CERTAIN WORK YET TO BE CONCLUDED. THE ASSESSEE HAS TAKEN THE FO LLOWING DEFENSE:- A) THE APPELLANT FIRM HAS FILED ITS RETURN OF INCOM E IN A TIMELY MANNER AND FURNISHED THE FULLEST OF PARTICUL ARS DEMANDED BY THE AO DURING THE ASSESSMENT PROCEEDING S. B) THE APPELLANT FIRM HAS CONSISTENTLY FOLLOWED PER CENTAGE COMPLETION METHOD OF ACCOUNTING AND HAS OFFERED INCOME FOR TAX ON AN ESTIMATE BASIS ON THE INCREASE OF WIP, IRRESPECTIVE OF THE FACT WHETHER ANY SALES HAV E BEEN EXECUTED OR NOT. IN IMPUGNED A.Y.2006-07, A SUBSTA NTIAL AMOUNT OF RS.19.44 LACS IS OFFERED FOR TAX AND THUS IT IS NOT A PREMEDITATED ATTEMPT TO CONCEAL ITS INCOME. C) THE PROJECT IS COMPLETED IN THE NEXT YEAR AND TH E ENTIRE BALANCE PROFIT FROM THE PROJECT IS ADMITTED FOR THE INCOME-TAX PURPOSES IN THE RETURN OF INCOME FOR A.Y.2007-08 AND DILIGENTLY PAID THE TAXES THEREON. ITA NO.1897/MUM/13 A.Y.2006-07 6 D) THE OCCUPANCY CERTIFICATE DATED 18.02.2006 WAS N OT A FINAL PROOF OF COMPLETION BUT A CONDITIONAL APPROVA L SUBJECT TO FULFILLMENT OF CERTAIN STIPULATIONS MENT IONED THEREIN. E) PROJECT RELATED EXPENSES WERE INCURRED IN THE SU BSEQUENT YEAR RELEVANT TO A.Y.2007-08 MATERIAL WERE PURCHA SED UPTO MAY 2006, CONTRACT WORK WAS CARRIED UPTO AUGU ST 2006, PAYMENT FOR SECURITY SERVICES WAS MADE TILL NOVEMBER 2006 AND WATER AND ELECTRIC CHARGES WERE PAID UPTO FEBRUARY 2007. F) 3 FLATS AND 3 SHOPS WERE UNSOLD AS ON 31.03.2006 , WHICH WERE SOLD FOR RS.54.24 LACS IN THE SUBSEQUENT YEAR RELEVANT TO A.Y.2007-08. G) RELIANCE IS PLACED ON AS 9 REVENUE RECOGNITIO N AND AS- 2 VALUATION OF INVENTORIES AND HOW ITS PRINCI PLES VALIDATE THE ACCOUNTING TREATMENT ADOPTED BY THE APPELLATE FIRM. H) IN ABSENCE OF FURNISHING FULL AND ACCURATE PARTI CULARS OF INCOME, CIT(A) 35 WOULD NOT HAVE RENDERED A POSIT IVE RULING IN FAVOUR OF THE APPELLANT FIRM. I) SUBSEQUENT OVERRULING BY THE ITAT, MUMBAI, INDIC ATES THAT THE IMPUGNED CLAIM IS CONTENTIOUS AND BASED ON OF ITA NO.1897/MUM/13 A.Y.2006-07 7 LEGAL PRECEDENTS, NO PENALTY U/S. 271(1)(C) CAN BE IMPOSED ON DEBATABLE ADDITIONS. 6. WHILE AT THE TIME OF EXAMINATION OF RECORD IN PU RSUANCE OF NOTICE ISSUED BY THE ASSESSING OFFICER U/S.133(6) O F THE ACT, THE NECESSARY DOCUMENTS WERE PRODUCED, AND OCCUPANCY CE RTIFICATE HAD ALSO BEEN FURNISHED. THE ASSESSEE WAS FOLLOWING TH E PERCENTAGE COMPLETION METHOD FROM THE LAST PRECEDING YEARS AND THE SAID METHOD HAS BEEN ADOPTED BY THE ASSESSING OFFICER REGULARLY . THE ORDER OF THE ASSESSING OFFICER ON QUANTUM WAS REVERSED BY THE CI T(A), SUBSEQUENTLY ON FILING THE APPEAL BY THE REVENUE, T HE ORDER OF THE ASSESSING OFFICER WAS UPHELD BY THE INCOME TAX APPE LLATE TRIBUNAL BY VIRTUE OF ORDER DATED 04.12.2012, THEREFORE THE TRIBUNAL WAS OF THE VIEW THAT THE PROJECT WAS COMPLETED SUBSTANTIAL LY. HOWEVER,TRIBUNAL NOWHERE ACCEPTED THIS VIEW THAT TH E PROJECT HAS BEEN COMPLETED WHOLLY. THE ASSESSEE HAS FURNISHED THE TAX DETAILS ON THE BASIS OF THE RELEVANT RECORD. NOTHING CAME INT O THE NOTICE THAT THE ASSESSEE CONCEALED THE INCOME AND FURNISHED THE INA CCURATE PARTICULARS TO EVADE THE TAX. IN VIEW OF LAW SETTLED IN [2002] 120 TAXMAN 676 (GUJ) IN COMMISSIONER OF INCOME TAX VS. MANILAL TAR ACHAND AND [2010] 189 TAXMAN 322 (SC) SUPREME COURT OF INDIA I N COMMISSIONER OF INCOME TAX, AHMEDABAD VS. RELIANCE PETROPRODUCTS (P.) LTD. AND [2003] 133 TAXMAN 320 ( RAJ.), HIGH COURT OF RAJASTHAN, JAIPUR BENCH IN COMMISSIONER OF INCOM E TAX VS. ITA NO.1897/MUM/13 A.Y.2006-07 8 HARSHVARDHAN CHEMICALS & MINERALS LTD. WE ARE OF T HE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY BY VIRTUE OF ORDER DATED 04.12.2012. FINDING NO GROUND TO INTERFERE WITH A T THIS APPELLATE STAGE, WE INCLINED TO DISMISS THE APPEAL OF THE RE VENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 20 TH JULY, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI