ITO 9(2)(2), MUMBAI V. K.K. B DEVELOERS P.LTD, MUMBAI

ITA 1993/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2868 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI

Judgement Text

, IN THE INCOME-TAX APPELLATE TRIBUNAL -ABENCH M UMBAI , BEFORE S.SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHUKLA,JUDICIAL MEMBER /ITA NO.1993/MUM/2012, /ASSESSMENT YEAR 2006-07) INCOME TAX OFFICER-9(2)(2) ROOM NO.225, AAYAKAR BHAVAN M.K. ROAD MUMBAI- 400 020. VS. M/S. K.K.B. DEVELOPERS PVT. LTD. 203, SWASTIK SADAN, 8 TH ROAD, KHAR(W),MUMBAI-50. PAN: AACCK 1948 A ( / APPELLANT ) ( / RESPONDENT ) / ASSESSEE BY :NONE / REVENUE BY :SHRI R.A. DHYANI / DATE OF HEARING : 19.10. 2015 / DATE OF PRONOUNCEMENT : 28.10. 2015 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDERS DTD.25.01.2012OF THE CIT(A)- 20,MUMBAI,THE ASSESSING OFFICER(AO)HAS FILED THE PRESENT APPEAL.THE EFFECTIVE GROUND OF AP PEAL IS ABOUT DELETION OF PENALTY LEVIED U/S.271(1)(C) OF THE ACT. BRIEF FACTS: 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF CONSTRU CTING THE BUILDINGS,FILED ITS RETURN OF INCOME ON 29.11.2006,DECLARING INCOME OF RS.5.12 LA KHS.THE AO COMPLETED THE ASSESSMENT ON 26.12.2008 U/S.143(3) OF THE ACT,DETERMINING THE IN COME OF THE ASSESSEE AT RS.43.89 LAKHS. DURING THE ASSESSMENT PROCEEDINGS,THE AO ESTIMATED THE COST OF CONSTRUCTION @ 1,000/- PER SQ. FEET AS AGAINST RS.979.22 PER SQ.FT.SHOWN BY THE AS SESSEE.HE HELD THAT THE ASSESSEE HAD NOT FILED QUANTITY WISE DETAILS OF MATERIAL USED FOR CONSTRUC TION.BESIDES,THE AO DISALLOWED CERTAIN OTHER EXPENSES NAMELY DEVELOPMENT RIGHT PURCHASE(RS.2 LAK HS),FEE CHARGES PAID TO BMC(RS. 16.85 LAKHS),ADMINISTRATIVE AND SELLING EXPNSES(27.61 LAK HS).THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFORE THE FIRST APPELLATE AUTHORITY(FAA),WH O PARTLY ALLOWED THE APPEAL.HE GAVE RELIEF WITH REGARD TO THE FIRST TWO ITEMS BUT FOR T HE THIRD ITEM HE UPHELD THE ADDITION.IN THE MEANWHILE THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C)OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME.VIDE HIS ORDER DAT ED 29.03.2011,HE LEVIED A PENALTY OF RS.6,70,697/- U/S.271(1)( C) OF THE ACT. 3. DURING THE APPELLATE PROCEEDINGS,THE ASSESSEE CONTE NDED THAT THE AO NOT ASSIGNED ANY REASON FOR DISALLOWING THE ADMINISTRATIVE EXPENSES, THAT BOOKS OF ACCOUNTS WERE AUDITED AND WERE PRODUCED BEFORE THE AO,THAT REJECTION OF CLAIM MADE BY THE ASSESSEE WITHOUT GIVING ANY REASON COULD NOT BE EQUATED WITH FURNISHING OF INAC CURATE PARTICULARS. AFTER CONSIDERING THE MATERIAL AVAILABLE,THE FAA HE LD THAT THE AO HAD DISALLOWED THREE ITEMS OF EXPENDITURE WHILE COMPLETING THE ASSESSMENT WITH OUT ASSIGNING ANY REASON,THAT THE AO HAD NOT GIVEN ANY FINDING THAT THE ADMINISTRATIVE EXPEN SES WERE NOT GENUINE,THAT EXPENDITURE CLAIMED BY THE ASSESSEE AND REJECTED BY THE AO COUL D NOT LEAD TO LEVY OF PENALTY,THAT THE ISSUE AS TO WHETHER THE ADMINISTRATIVE SELLING AND GENERA L EXPENSES WOULD CONSTITUTE PART OF CONSTRUCTION OR NOT WAS A SUBJECTIVE MATTER,THAT AO WAS NOT JUSTIFIED IN LEVYING PENALTY. 4. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO.NO ONE APPEARED ON BEHALF OF THE AS SESSEE,AS STATED EARLIER. ITA NO.1993/MUM/2012KKB DEVELOPERS P.LTD. 2 2 5. WE HAVE PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD LEVIED PENALTY U/S.271(1) (C)OF THE ACT,AS HE WAS OF THE OPINION THAT THE ADM INISTRATIVE SELLING AND GENERAL EXPENSES WOULD CONSTITUTE PART OF CONSTRUCTION.IT IS NOT THE CASE OF THE AO THAT THE DETAILS ABOUT THE EXPENSES WERE NOT MADE AVAILABLE BY THE ASSESSEE.TH E INCURRING OF EXPENDITURE IS ALSO NOT IN DOUBT. THE AO HAS NOT ALLOWED THE EXPENDITURE.IN OU R OPINION,DISALLOWANCE OF AN EXPENDITURE DOES NOT AND SHOULD NOT RESULT IN AUTOMATIC LEVY OF CONCEALMENT PENALTY.SECONDLY,WE FIND THAT THE AO NOT ASSIGNED ANY REASON FOR MAKING DISALLOWA NCE.IN THESE CIRCUMSTANCES,WE ARE OF THE OPINION THAT IT WAS NOT A CASE OF CONCEALING OR FUR NISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE.THEREFORE,WE DO NOT SEE ANY JUSTIFICAT ION IN DISTURBING THE ORDER OF THE FAA. CONFIRMING HIS ORDER WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH ,OCTOBER,2015. !' 28 #$%& ,2015 '() SD/- SD/ ( # / AMIT SHUKLA ) ( / RAJENDRA ) * / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, !' DATE: 28.10.2015 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER. / DY./ASST. REGISTRAR , /ITAT, MUMBAI.