HARSH UNIQUE CONSTRUCTIONS, MUMBAI V. ITO 25(2)(1), MUMBAI

ITA 2225/MUM/2012

• Counselvise Citation: 222519914 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-05-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 03-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Section: 133A

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI .. , # %, & # ' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M ./ I.T.A. NO.2225 /MUM/2012 ( &% % / ASSESSMENT YEAR : 2006-2007 HARSH UNIQUE CONSTRUCTIONS, 103/104, ANURADHA APARTMENT, TPS ROAD, PLOT NO. 183, BORIVALI (WEST), MUMBAI 400 092. / VS. INCOME TAX OFFICER 25(2)(1), C-11, IST FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA, MUMBAI. ./ PAN : AADFH 1865 P ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI HITESH SHAH R E SPONDENT BY : SHRI OM PRAKASH MEENA / DATE OF HEARING : 13-05-2014 / DATE OF PRONOUNCEMENT : 06#06#2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) -35, MUMBAI DATED 23-2-2012 WHEREBY HE CONFI RMED THE PENALTY OF RS. 27,88,994/- IMPOSED BY THE A.O. U/S 271(1)(C) OF TH E INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN ASSOCIATI ON OF PERSONS (AOP) WHICH IS ENGAGED IN THE BUSINESS OF BUILDING CONSTR UCTION. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 30-10-2006 DECLARING A LOSS OF RS. 1048/-. THE ASSESSEE HAD UN DERTAKEN A PROJECT NAMELY POONAM SAGAR COMPLEX AT MIRA ROAD (EAST) AND DEDUCT ION U/S 80IB(10) OF ITA 2225/M/12 2 THE ACT WAS CLAIMED IN RESPECT OF PROFIT DERIVED FR OM THE SAID PROJECT FOR THE IMMEDIATELY PRECEDING YEAR I.E A.Y. 2005-06. A SURV EY U/S 133A OF THE ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 25-1 -2006 AND IN THE ASSESSMENT COMPLETED FOR A.Y. 2005-06 PURSUANT TO T HE SAID SURVEY, THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB(10) WAS DISALLOWED BY THE A.O. ON THE GROUND THAT THE PROVISIONS OF SECTION 80IB(1 0) PRIOR TO ITS AMENDMENT HAD NO PROVISION OF INCLUSION OF COMMERCIAL AREA. I N THE SAID ASSESSMENT MADE FOR A.Y. 2005-06, THE A.O. ALSO REDUCED THE PR OFITS SHOWN BY THE ASSESSEE BY RS. 98,28,575/- ON THE GROUND THAT THE ASSESSEE HAD VALUED ITS CLOSING STOCK AS PER THE MARKET PRICE AS AGAINST TH E ADOPTED PRINCIPLE OF VALUING THE STOCK AT COST OR MARKET PRICE WHICHEVER IS LESS. CONSEQUENTLY THE OPENING STOCK OF THE ASSESSEE FOR THE YEAR UNDER CO NSIDERATION I.E 2006-07 WAS ALSO REDUCED BY THE A.O. BY RS. 98,26,575/- AND THE BUSINESS PROFITS OF THE ASSESSEE WAS COMPUTED BY HIM AT RS. 82,85,781/- AS AGAINST THR LOSS DECLARED BY THE ASSESSEE. HE ALSO DISALLOWED THE AS SESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF THE SAID PROFIT ON THE SAME GROUND AS GIVEN IN A.Y. 2005-06. THE PENALTY PROCE EDINGA U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED BY THE A.O. AND SINCE T HE EXPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICED ISSUED BY HIM WAS NOT FOUND SATISFACTORY, THE A.O. IMPOSED PENALTY OF RS. 27,88,994/- U/S 271(1)(C) OF THE ACT BEING 100% OF THE SOUGHT TO BE EVADED BY THE ASSESSEE IN RESPECT OF THE ADDITION MADE TO ITS TOTAL INCOME ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE ACT. ON APPEAL, THE LD. CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT. AGGR IEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFO RE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUE RELATING TO THE ADDITION MADE T O THE TOTAL INCOME OF THE ASSESSEE FOR A.Y. 2006-07 ON ACCOUNT OF DISALLOWANC E OF DEDUCTION U/S ITA 2225/M/12 3 80IB(10) OF THE ACT HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE ITS COMMON ORDER DATED 8 TH AUGUST, 2012 PASSED IN ITA NO. 3365 & 4465/MUM/2007 (A.Y. 2005-06) AND ITA NO. 448 7/MUM/2009 (A.Y. 2006-07. A COPY OF THE SAID ORDER IS ALSO PLACED O N RECORD AND PERUSAL OF THE SAME SHOWS THAT THE CLAIM OF THE ASSESSEE FOR DEDUC TION U/S 80IB(10) FOR A.Y. 2005-06 WAS ALLOWED BY THE TRIBUNAL DELETING THE AD DITION MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) ON THIS ISSUE. AS REGARDS THE VALUATION OF CLOSING STOCK ADOPTED BY THE A.O. FOR A.Y. 2005-06, THE TRIBUNAL UPHELD THE ACTION OF THE A.O. ON THIS ISSUE AS THE SAME WAS NO T PRESSED BY THE ASSESSEE. THE TRIBUNAL, HOWEVER, DIRECTED THE A.O. TO ADOPT T HE SAME VALUE OF CLOSING STOCK TAKEN BY HIM FOR A.Y. 2005-06 AS THE VALUE OF OPENING STOCK FOR A.Y. 2006-07 FOR THE PURPOSE OF ALLOWING DEDUCTION TO TH E ASSESSEE U/S 80IB(10) OF THE ACT. THE ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE IN A.Y. 2006- 07 BY WAY OF DISALLOWANCE OF DEDUCTION U/S 80IB(10) THUS HAS BEEN DELETED BY THE TRIBUNAL. CONSEQUENTLY THE VERY BASIS OF THE IM PUGNED PENALTY IMPOSED U/S 271(1)(C) OF THE ACT NO MORE SURVIVES AND THE S AME IS LIABLE TO BE CANCELLED HAVING NO LEGS TO STAND. WE, THEREFORE, CANCEL THE PENALTY IMPOSED BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) AND ALL OW THIS APPEAL FILED BY THE ASSESSEE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JUNE, 2014 . . / 0 06#06#2014 SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) .3 JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 0 DATED 06#06#2014 [ ITA 2225/M/12 4 .3../ RK , SR. PS , -&./ 0/ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 5 () / THE CIT(A)22 MUMBAI. 4. 5 / CIT 10, MUMBAI 5. 8 33: , : , / DR, ITAT, MUMBAI D BENCH 6. = / GUARD FILE. / BY ORDER, 8 3 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI