ABODE CONSTRUCTION P. LTD, MUMBAI V. ITO WD 9(1)(1), MUMBAI

ITA 2729/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3796 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 23-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR DR
• Keywords: Business income; Difference of opinion
• Section: 143(3); 115JB

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENC H, MUMBAI . . , . , ! '#$ ' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKA RA RAO, AM ' ./I.T.A. NO.2729/M/2012 ( %& ' / ASSESSMENT YEAR :2003-2004) M/S. ABODE CONSTRUCTION PVT. LTD., C/O. S A R A & ASSOCIATES CHARTERED ACCOUNTANTS, 1 ST FLOOR, PEEKAY MANSION, 470 JSS ROAD, CHIRA BAZAR, MUMBAI 400 002. & / VS. THE INCOME TAX OFFICER, WARD-9(1)(1), MUMBAI. $( ! ' ./PAN : AACCA 9745 K ( () /APPELLANT) .. ( *+() / RESPONDENT) () , - ' / APPELLANT BY : SHRI RAJESH AGARWAL *+() , - ' / RESPONDENT BY : SHRI MANOJ KUMAR, DR ' & , .! /DATE OF HEARING : 8.5.2013 /0' , .! /DATE OF PRONOUNCEMENT : 15.5.2013 #1 #1 #1 #1 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 23.04.2012 IS AGAINST THE ORDER OF CIT (A)-IX, MUMBAI DATED 16.2.2009 FOR THE ASSESSMENT Y EAR 2003-2004. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (A) ERRED IN HOLDING THAT INCOME ON SALE OF BUILDING OFFERED FOR TAX UNDER THE HEAD CAPITAL GAIN AND ASSESSED UNDER THE HEAD BUSINESS INCOME AMOUNTS TO FURNISHING INACCURATE PARTICULARS OF INCOME; THEREBY ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 WITHOUT PROPE RLY APPRECIATING THE FACTS OF THE CASE AND LAW APPLICABLE THERETO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (A) FAILED TO APPRECIATE THAT COMPLETE DISCLOSURE HAS BEEN MADE I N THE RETURN AS TO TAXABILITY OF PROFIT ON SALE OF BUILDING UNDER THE HEAD CAPITAL GAIN WHICH IS ADEQUATELY SUPPORTED BY VARIOUS CASE LAWS. THEREFORE, THERE IS NO INACCURA TE PARTICULARS WHICH HAVE BEEN SUBMITTED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (A) ERRED IN HOLDING THAT MERE CHANGE OF INCOME HEAD AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (A) ERRED IN DIFFERENTIATING VARIOUS CASE LAWS RELIED UPON BY TH E APPELLANT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND LAW APPLICAB LE THERETO. 5. THE APPELLANT PRAYS THAT PENALTY U/S 271(1)(C) C ONFIRMED BY THE CIT (A) MAY BE DELETED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDINGS. ASSESSE E FILED THE RETURN OF INCOME DECLARING THE LOSS OF RS. 18,700/- UNDER THE NORMAL PROVISIONS OF THE ACT AND COMPUTED THE BOOK PROFIT UNDER THE PROVISIONS OF SE CTION 115JB AT RS. 1,10,52,192/-. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE BUSINESS INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 1,65,70,477/-. DURI NG THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE ASSESSEE ACQUIRED A LAND IN 199 1 AND DEVELOPED A COMMERCIAL BUILDING OVER THE PERIOD OF TIME. DURING THE YEAR U NDER CONSIDERATION, A PART OF THE BUILDING WAS SOLD AND ASSESSEE OFFERED PROFIT ON SA LE OF BUILDING UNDER THE HEAD CAPITAL GAIN. IN COMPUTATION OF CAPITAL GAINS, BE NEFIT OF INDEXATION WAS CLAIMED AND LONG TERM CAPITAL GAIN HAS BEEN COMPUTED. BUT THE A O DID NOT ACCEPT THE SAME AND CAME TO THE CONCLUSION THAT THE BUILDING CONSTRUCTI ON ACTIVITY CONSTITUTES BUSINESS AND THEREFORE, HELD THAT THE INCOME DERIVED THEREFR OM IS ASSESSABLE UNDER THE HEAD BUSINESS INCOME AS AGAINST THE CAPITAL GAIN CLA IMED BY THE ASSESSEE. AGGRIEVED WITH THE DECISION OF AO, ASSESSEE FILED AN APPEAL B EFORE THE FIRST APPELLATE AUTHORITY. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE A UTHORITY ON MERITS OF THE ADDITIONS, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISMISSED THE ASSESSEES APPEAL. CIT (A) WAS OF THE OPINION THAT THE INCOME FROM SALE OF BUILDING SHOULD BE TAXED UNDER THE HEAD PROFITS AND GAINS F ROM BUSINESS OR PROFESSION. EX- CONSEQUENTI , AFTER GIVING EFFECT TO CIT (A)S ORDER, AO INITIA TED PENALTY PROCEEDINGS AND LEVIED THE SAME U/S 271(1)(C) OF THE ACT. AGGRI EVED, ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CAS E FOR THE AY 2002-2003 VIDE ITA NO.1860/M/2009 DATED 21.10.2011. DRAWING ANALOGY O F THE FACTS, LD COUNSEL MENTIONED THAT THE GROUNDS RAISED IN THE SAID ORDER OF THE TRIBUNAL DATED 21.10.2011 ARE IDENTICAL IE THE TAXABILITY OF INCO ME EARNED ON SALE OF BUILDING UNDER 3 THE HEAD CAPITAL GAINS OR UNDER THE HEAD BUSINES S INCOME AND THE LEVIABILITY OF THE PENALTY U/S 271(1)(C) OF THE ACT FOR MERE CHANGE OF HEAD OF INCOME. ASSESSEE CLAIMED THE SAID INCOME AS CAPITAL GAINS, WHEREAS T HE AO ASSESSED THE SAME AS BUSINESS INCOME, WHICH IS CONFIRMED BY THE CIT (A). WITH THE ABOVE FACTS, THE PENALTY WHICH WAS LEVIED BY THE AO AND CONFIRMED BY THE CIT (A), AND IT WAS FINALLY DELETED BY THE TRIBUNAL VIDE THE CONTENTS O F PARA 10 OF THE SAID TRIBUNALS ORDER DATED 21.10.2011. 5. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDE RS OF THE REVENUE AUTHORITIES AS WELL AS THE CONTENTS OF PARA 10 OF T HE SAID TRIBUNALS ORDER IN THE LIGHT OF THE FACTS RELATED TO THE CASE OF THE ASSESSEE FO R THE AY 2003-2004. IN VIEW OF ITS IMPORTANCE, THE SAID PARA 10 IS REPRODUCED HERE UND ER: 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND IN THE PENALTY ORDER THAT THE ASSE SSING OFFICER HAS SIMPLY MENTIONED THAT THE ASSESSEE COMPANY HAS DECLARED INCOME UNDER THE HEAD CAPITAL GAIN WHICH IS TO BE TAXED UNDER THE HEAD BUSINESS. THIS IS CONFIRMED BY THE CIT (A) AND ON THIS BASIS ONLY IT HAS BEEN HELD THAT TH E ASSESSEE HAS SUBMITTED INACCURATE PARTICULARS OF INCOME. THE DEPARTMENT HAS NOT BRO UGHT ANYTHING ON RECORD TO SHOW THE FAILURE ON THE PART OF THE ASSESSEE WHEREBY EIT HER PARTICULARS OF INCOME HAS NOT BEEN DISCLOSED OR THE ASSESSEE HAS SUBMITTED INACCU RATE PARTICULARS OF INCOME. IT HAS BEEN HELD IN CIT VS. RELIANCE PETRO PRODUCTS (322 I TR 158) (SC) THAT INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE P ARTICULARS, AND MERE CHANGE OF HEAD OF INCOME BY THE ASSESSING OFFICER IN ASSESSME NT CANNOT BE CONSTRUED AS CONCEALMENT SO AS TO ATTRACT PENAL PROVISIONS. IN THE CASE OF DURGAKAMAL RICE MILLS VS. CIT (265 ITR 25) (CAL.) HELD THAT WHEN TWO VIEW S ARE POSSIBLE ABOUT TAXABILITY OF A PARTICULAR ITEM, PENALTY CANNOT BE LEVIED. IN THE CASE OF ACIT VS. GLASS LTD., IN ITA NO.332/MUM/2007, THE HONBLE TRIBUNAL HAS HELD THAT WHEN THE ASSESSEE HAS OFFERED THE INCOME UNDER THE HEAD BUSINESS INCOME AND THE S AME WAS ASSESSED BY THE ASSESSING OFFICER INCOME FROM HOUSE PROPERTY, THERE IS AN HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT AND WHEN THE EXPLANATION GIVEN BY THE ASSESSEE IS BONA FIDE, IT CANNOT BE A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREFORE PENALTY UNDER SECTION 271( 1) CANNOT BE LEVIED. HENCE, WE ARE OF THE OPINION THAT WHEN THERE IS NO CONCEALMENT OR FURNISHING INACCURATE PARTICULARS AND EXPLANATION GIVEN BY THE ASSESSEE IS BONA FIDE, WE ARE INCLINED TO FOLLOW THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. (322 ITR 158) (SC), WE DELETE THE PENALTY AND ALLOW THE APPEAL OF THE ASSESSEE. 7. THE ABOVE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IS RELEVANT FOR THE PROPOSITION THAT THE PENALTY U/S 271(1)(C) OF THE ACT ARE NOT ATTRACTED WHEN 4 THERE IS HONEST DIFFERENCE OF OPINION ON THE CORRECTNESS OF THE HEAD OF INCOME. REVENUE HAS NOT BROUGHT ANY NEW EVIDENCE ON RECORD IN THIS YEAR. EVEN, THE FACTS OF THE CASE ARE SIMILAR TO THAT OF AY 2002-2003. CO NSIDERING THE OF THE FACTS OF THE INSTANT CASE AND THE COVERED NATURE OF THE ISSUE BY THE COORDINATE BENCH DECISION OF ITAT FOR THE AY 2002-2003, WE ARE OF THE OPINION, T HIS IS NOT A FIT CASE FOR LEVY OF CONCEALMENT PENALTY. IN OUR OPINION, THE CASE LAWS CITED ABOVE IE RELIANCE PETRO PRODUCTS ( SUPRA ), DURGAKAMAL RICE MILLS ( SUPRA ) AND GLASS LTD ( SUPRA ), SHALL HELP THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESS EE ARE ALLOWED . 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 2 .3 %& 2. , $ 4 . , 5. 67 ORDER PRONOUNCED IN THE OPEN COURT ON 15.5.2013. . #1 , /0' ! 8#&3 15.5.2013 0 , 9 SD/- SD/- (H.L. KARWA) (D. KARUNAKARA RAO ) / PRESIDENT ! '#$ / ACCOUNTANT MEMBAI MUMBAI; 8#& DATED 15/05/2013 . %& . ' ./ OKK , SR. PS #1 #1 #1 #1 , ,, , *%.:; *%.:; *%.:; *%.:; <;'. <;'. <;'. <;'. / COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. *+() / THE RESPONDENT. 3. = ( ) / THE CIT(A)- 4. = / CIT 5. ;>9 *%.%& , , / DR, ITAT, MUMBAI 6. 9 ? / GUARD FILE. 5 '+;. *%. //TRUE COPY// #1& ' #1& ' #1& ' #1& ' / BY ORDER, @ @@ @ / '6 '6 '6 '6 5 5 5 5 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI