HICONS DEVELOPERS, MUMBAI V. DCIT CEN CIR 36, MUMBAI

ITA 2781/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7883 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 23-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ITA NO MUM A Y
• Keywords: Search and seizure; Ignorance of law
• Section: 40A(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , , , $ BEFORE SHRI D.KARUNAKARA.RAO, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO. 2781& I.T.A. 2782/MUM/2014 ( %& '& / ASSESSMENT YEAR:2007-08 & 2008-09 ) M/S. HICONS DEVELOPERS B- 201, LEO APARTMENT, 24 TH ROAD, KOHINOOR CHS, KHAR (W), MUMBAI - 400052 / VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 36 AAYAKAR BHAVAN, MUMBAI ./ ./PAN/GIR NO. : AAEFH3282M ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 12.01.2017 /DATE OF PRONOUNCEMENT: 31.03.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEALS AGAINST THE ORDER DATED 17.02.2014 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS)- 39, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A) ] RELEVANT TO THE A.Y.2007-08 & 2008-09. ITA NO.2781/MUM/2014 (A.Y.2007-08) ASSESSEE BY: NONE REVENUE BY: SHRI M.C.OMI NINGSHEN ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- A) BY WRONGLY HOLDING: 1. THAT THE APPELLANT HAS CONCEALED ITS INCOME BY N OT FILING THE RETURN OF INCOME AND IGNORANCE OF LAW CANNOT BE TAKEN AS A PLEA TO ESCAPE FROM TAX LIABILITY. 2. THAT THE PROVISIONS OF SECTION 271(1)(C) WERE IN VITED BY THE ASSESSEE AT THE INCEPTION ITSELF BY NOT FILING THE RETURN OF INCOME WITHIN THE DUE DATE. 3. THAT PENALTY WAS LEVIED NOT ONLY ON THE ADDITION MADE IN THE ASSESSMENT BUT ALSO ON THE INCOME DECLARED BY T HE ASSESSEE IN ITS RETURN OF INCOME. 4. THAT EVEN IN THE RETURN OF INCOME FILED IN RESPO NSE TO NOTICE UNDER SECTION 153A OF THE I.T.ACT, 1961, THE APPELLANT FIRM DID NOT DISCLOSE THE INCOME IN RESPE CT OF CASH TRANSACTION FOUND DURING THE COURSE OF THE SEA RCH. 5. THAT THE WIP WAS UNDERESTIMATED AND VARIOUS CASH EXPENSES HAVE NOT BEEN INCLUDED IN THE WIP. 6. HOLDING THAT SINCE THE INCOME TAX RETURN IS FILE D AFTER THE SEARCH, THE APPELLANT HAS CONCEALED THE PARTICU LARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF I NCOME WHICH WILL RANK FOR IMPOSITION OF PENALTY UNDER SEC TION 271(1)(C) OF THE INCOME TAX ACT, 1961. B) IN NOT CONSIDERING THE FACT THAT THE APPELLANT F RIM HAD ACTED ON AND RELIED UPON PROFESSIONAL ADVICE GIVEN TO THEM T O DISCLOSE THE INCOME OF THE ENTIRE PROJECT ON COMPLETION METHOD. C) IN NOT CONSIDERING THE FACT THAT THE ENTIRE RECE IPTS WERE DISCLOSED IN THE YEAR THE PROJECT WAS COMPLETED AND THERE IS NO QUESTION OF NON DISCLOSURE OF RECEIPTS IN THIS YEAR AS THE INCO ME OF THE CURRENT YEAR WAS COMPLETED ON THE BASIS OF ADOPTING AN ESTIMATED PERCENTAGE ON THE WORK CARRIED OUT DURING THE YEAR. D) IN NOT CONSIDERING THAT THE ADDITION TO THE INCO ME RETURNED WAS ON ACCOUNT OF ESTIMATING A HIGHER RATE OF PROFIT AN D ON ACCOUNT OF DISALLOWANCE OF EXPENSES UNDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961. ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 3 HENCE, THE PENALTY LEVIED OF RS.23,88,666/- MAY BE PLEASE BE CANCELLED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM WAS FORMED ON 11.11.2005. THE ASSESSEE DID NOT FILE ITS ORIGINAL RETURN OF INCOME FOR THE A.Y.2007-08 U/S.139(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). A SURVEY ACTION U/S.133A OF THE ACT WAS CONDUCTED O N 27.02.2007. DURING THE COURSE OF SURVEY THE ASSESSEE FIRM MADE TOTAL D ECLARATION OF RS.78,85,400/- FOR A.Y.2006-07 AND 2007-08. THE AS SESSEE DECLARED AN AMOUNT OF RS.78,85,400/- DURING THE COURSE OF SURVE Y ACTION OUT OF WHICH RS.12.5 LAKHS WAS OFFERED AS CASH INTRODUCTION FOR A.Y.2006-07 AND BALANCE OF RS.66,35,400/- WAS TO BE OFFERED FOR A.Y .2007-08. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S.132 OF THE AC T IN HICONS AND PRANAY GROUP OF CASES ON 24.02.2009 INCLUDING THE ASSESSEE AND THE CASE OF THE ASSESSEE FIRM WAS CENTRALIZED. IN RESPONSE TO THE NOTICE U/S.153A OF THE ACT DATED 04.01.2010, THE ASSESSEE FILED THE RETURN OF INCOME ON 08.02.2010 DECLARING TOTAL INCOME TO THE TUNE OF RS.54,42,961/ -. IN RESPONSE TO THE NOTICE U/S.153A OF THE ACT, THE WIP OF THE TWO PROJ ECTS OF THE ASSESSEE FIRM NAMELY LAS-FONTE AND LAS-MARQUE WERE SHOWN AT R S.14,72,68,990/- AND RS.10,08,96,264/- RESPECTIVELY. ON ACCOUNT OF SEARCH AND SEIZURE ACTION THE ASSESSING OFFICER ASSESSED THE WIP OF L AS-FONTE AND LAS- MARQUE PROJECTS TO THE TUNE OF RS.18,69,58,138/- & RS.14,98,51,611/- RESPECTIVELY. THE ASSESSING OFFICER ALSO INITIATED THE PENALTY U/S.271(1)(C) OF THE ACT ON THE FACT THAT THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING INCOME TO THE TUNE OF RS.54,42,961/- FOR A.Y.2007-0 8 AFTER DUE DATE AND THAT TOO AFTER SEARCH ACTION. THEREAFTER A SHOW-CA USE NOTICE WAS GIVEN AFTER ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 4 RECEIVING THE REPLY OF THE ASSESSEE THE ASSESSING O FFICER LEVIED THE PENALTY TO THE TUNE OF RS.23,88,666/-. FEELING AGGRIEVED T HE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAID ORD ER, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.(A) TO (D):- 4. ALL THE ISSUES ARE INTERCONNECTED, THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. IN BRIEF IN ALL THE ISS UES THE ASSESSEE HAS CHALLENGED THE PENALTY LEVIED BY THE ASSESSING OFFI CER TO THE TUNE OF RS.23,88,666/-. IT IS A MATTER OF RECORD THAT THE ASSESSEE DID NOT FILE ITS ORIGINAL RETURN OF INCOME FOR THE A.Y.2007-08 U/S.1 39(1) OF THE ACT. A SEARCH AND SEIZURE ACTION WAS TAKEN U/S.132 OF TH E ACT HICONS AND PRANAY GROUP OF CASES ON 24.02.2009 AND ON THE BASI S OF DOCUMENTS ON RECORD THE INCOME OF THE ASSESSEE WAS CENTRALIZED, THEREFORE NOTICE U/S.153A OF THE ACT WAS SERVED UPON THE ASSESSEE ON 04.01.2010. IN RESPONSE TO THE NOTICE U/S.153A OF THE ACT DATED 04 .01.2010 RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 08.02.2010 DECL ARING TOTAL INCOME TO THE TUNE OF RS.54,42,961/-. 5. THEREAFTER, THE NOTICE U/S.153A OF THE ACT WAS I SSUED AND THE WIP OF THE TWO PROJECTS OF THE ASSESSEE FIRM NAMELY LAS-F ONTE AND LAS-MARQUE WERE DETERMINED AT RS.14,72,68,990/- AND RS.10,08,9 6,264/- RESPECTIVELY. THE INCOME WAS ASSESSED TO THE TUNE OF RS.54,42,961 /-. SINCE THE ASSESSEE FILED THE RETURN OF INCOME OF THE A.Y.2007-08 AFTER THE SEARCH AND SEIZURE ACTION SPECIFICALLY IN VIEW OF THE NOTICE U/S.153A OF THE ACT. THEREFORE, THE REVENUE WAS OF THE VIEW THAT THE ASSESSEE CONCEALED THE PARTICULARS OF ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 5 INCOME OF RS.54,42,961/-AND LEVIED THE PENALTY TO T HE TUNE OF RS.23,88,666/-. AT THE TIME OF HEARING THE REVENUE FILED THE LETTER DATED 03.01.2017 IN WHICH IT IS SPECIFICALLY EXPLAINED TH AT THE ASSESSEE DID NOT FILE THE APPEAL AGAINST THE QUANTUM BEFORE THE CIT(A) AN D BEFORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL AVAILABLE ON RECORD. THIS LETTER HAS NOT BEEN CONTROVERTED BY THE REPRESENTATIVE OF THE ASSE SSEE MEANING THEREBY THE FACTS OF NON FURNISHING THE RETURN U/S.139(1) OF TH E ACT WAS ADMITTED AND IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED THE RETUR N OF INCOME AFTER SERVICE OF THE NOTICE U/S.153A OF THE ACT. 6. SINCE THE QUANTUM HAS NOT BEEN CHALLENGED BY THE ASSESSEE AND THE FACTUAL POSITION IS NOT DISPUTED, THEREFORE, IN THE SAID CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER DA TED 17.02.2014 JUDICIOUSLY AND CORRECTLY WHICH IS NOT REQUIRED TO BE INTERFERE WITH AT THIS APPELLATE STAGE. THEREFORE, WE CONFIRMED THE ORDER PASSED BY THE CIT(A) AND DISMISSED THE APPEAL OF THE ASSESSEE. ACCORDIN GLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESS EE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED. ITA NO.2782/MUM/2014 (A.Y.2008-09) 8. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- A) BY WRONGLY HOLDING: 1. THAT THE APPELLANT HAS CONCEALED ITS INCOME BY NOT FILING THE RETURN OF INCOME AND IGNORANCE OF LAW CANNOT BE TAK EN AS A PLEA TO ESCAPE FROM TAX LIABILITY. ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 6 2. THAT THE PROVISIONS OF SECTION OF SECTION 271(1)(C) WERE INVITED BY THE ASSESSEE AT THE INCEPTION ITSELF BY NOT FINDING THE RETURN OF INCOME WITHIN THE DUE DATE. 3. THAT PENALTY WAS LEVIED NOT ONLY ON ADDITION MADE I N THE ASSESSMENT BUT ALSO ON THE INCOME DECLARED BY THE A SSESSEE IN ITS RETURN OF INCOME. 4. THAT EVEN IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE I.T.ACT, 1961, THE APPELL ANT FIRM DID NOT DISCLOSE THE INCOME IN RESPECT OF CASH TRAN SACTIONS FOUND DURING THE COURSE OF THE SEARCH. 5. THAT THE WIP WAS UNDERESTIMATED AND VARIOUS CASH EX PENSES HAVE NOT BEEN INCLUDED IN THE WIP. 6. HOLDING THAT SINCE THE INCOME TAX RETURN IS FILED A FTER THE SEARCH, THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCO ME WHICH WILL RANK FOR IMPOSITION OF PENALTY UNDER SECTION 2 71(1) OF THE INCOME TAX ACT, 1961 B) IN NOT CONSIDERING THE FACT THAT THE APPELLANT F IRM HAD ACTED ON AND RELIED UPON PROFESSIONAL ADVICE GIVEN TO THEM T O DISCLOSE THE INCOME OF THE ENTIRE PROJECT ON COMPLETION METHOD. C) IN NOT CONSIDERING THE FACT THAT THE ENTIRE RECE IPTS WERE DISCLOSED IN THE YEAR THE PROJECT WAS COMPLETED AND THERE IS NO QUESTION OF NON DISCLOSURE OF RECEIPTS IN THIS YEAR AS THE INCO ME OF THE CURRENT YEAR WAS COMPUTED ON THE BASIS OF ADOPTING AN ESTIMATED PERCENTAGE ON THE WORK CARRIED OUT DURING THE YEAR. D) IN NOT CONSIDERING THAT THE ADDITION TO THE INCO ME RETURNED WAS ON ACCOUNT OF ESTIMATING A HIGHER RATE OF PROFIT AN D ON ACCOUNT OF DISALLOWANCE OF EXPENSES UNDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961. HENCE, THE PENALTY LEVIED OF RS.12,68,986/- MAY PL EASE BE CANCELLED. ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 7 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM WAS FORMED ON 11.11.2005. THE ASSESSEE DID NOT FILE THE RETUR N OF INCOME FOR A.Y.2008-09 U/S.139(1) OF THE ACT. A SEARCH AND SE IZURE OPERATION WAS CARRIED OUT U/S.132 OF THE ACT IN HICONS AND PR ANAY GROUP OF CASES INCLUDING THE ASSESSEE FIRM ON 24.02.2009 AND THE CASE OF THE ASSESSEE FIRM WAS CENTRALIZED. IN RESPONSE TO THE NOTICE U/S.153A OF THE ACT DATED 04.01.2010 RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 08.02.2010 DECLARING TOTAL INCOME TO THE TUNE OF RS.20,85,540/-. THE ASSESSEE SHOWN THE WIP OF THE TWO PROJECTS NAME LY LAS-FONTE AND LAS-MARQUE AT RS.27,41,78,220/- AND RS.18,54, 01,263/-. BASED UPON THE FINDINGS OF THE SEARCH ACTION THE ASSESSING OFF ICER ASSESSED THE WIP OF LAS-FONTE AND LAS-MARQUE AT RS.27,41,78,220/- A ND RS.18,54,01,263/- RESPECTIVELY. WHILE MAKING THESE ADDITIONS TO THE WIP, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING U/S.271(1) (C) OF THE ACT. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDING S U/S.271(1)(C) OF THE ACT THAT ASSESSEE HAD FILED RETURN DECLARING INCOME OF RS.20,85,540/- FOR A.Y.2008-09 AFTER DUE DATE AND THAT TOO AFTER SEARC H ACTION. SHOW CAUSE NOTICE DATED 12.05.2011 WAS ISSUED AND AFTER RECEIP T OF REPLY PENALTY TO THE TUNE OF RS.12,68,986/- WAS LEVIED. FEELING AGGRIEV ED THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE PENALTY, THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.(A) TO (D):- 10. ALL THE ISSUES ARE INTERCONNECTED, THEREFORE AR E BEING TAKEN UP TOGETHER FOR ADJUDICATION. IN BRIEF IN ALL THE ISS UES THE ASSESSEE HAS ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 8 CHALLENGED THE PENALTY LEVIED BY THE ASSESSING OFFI CER TO THE TUNE OF RS.12,68,986/-. IT IS A MATTER OF RECORD THAT THE ASSESSEE DID NOT FILE ITS ORIGINAL RETURN OF INCOME FOR THE A.Y.2008-09 U/S.1 39(1) OF THE ACT. A SEARCH AND SEIZURE ACTION WAS TAKEN U/S.132 OF TH E ACT HICONS AND PRANAY GROUP OF CASES ON 24.02.2009 AND ON THE BASI S OF DOCUMENTS ON RECORD THE INCOME OF THE ASSESSE WAS CENTRALIZED ON 02.12.2009, THEREFORE NOTICE U/S.153A OF THE ACT WAS SERVED UPON THE ASSE SSEE ON 04.01.2010. IN RESPONSE TO THE NOTICE U/S.153A OF THE ACT DATED 04 .01.2010 THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 08.02.2010 DECL ARING TOTAL INCOME TO THE TUNE OF RS.20,85,540/-. 11. THEREAFTER, THE NOTICE U/S.153A OF THE ACT WAS ISSUED AND SERVED AND THE WIP OF THE TWO PROJECTS OF THE ASSESSEE FIRM NA MELY LAS-FONTE AND LAS-MARQUE WERE ASSESSED AT RS.23,22,07,515/- AND RS.13,57,85,834/- RESPECTIVELY. THE INCOME WAS ASSESSED TO THE TUNE OF RS.41,06,750/-. SINCE THE ASSESSEE FILED THE RETURN OF INCOME OF TH E A.Y.2008-09 AFTER THE SEARCH AND SEIZURE ACTION SPECIFICALLY IN VIEW OF T HE NOTICE U/S.153A OF THE ACT. THEREFORE, THE REVENUE WAS OF THE VIEW THAT T HE ASSESSEE CONCEALED THE PARTICULARS OF INCOME OF RS.41,06,750/-AND LEVIED T HE PENALTY TO THE TUNE OF RS.12,68,986/-. AT THE TIME OF HEARING THE REVENUE FILED THE LETTER DATED 03.01.2017 IN WHICH IT IS SPECIFICALLY EXPLAINED TH AT THE ASSESSEE DID NOT FILE THE APPEAL AGAINST THE QUANTUM BEFORE THE CIT(A) AN D THE HONBLE INCOME TAX APPELLATE TRIBUNAL AVAILABLE ON RECORD. THIS L ETTER HAS NOT BEEN CONTROVERTED BY THE REPRESENTATIVE OF THE ASSESSEE BEING EX-PARTEE MEANING THEREBY THE FACTS OF NON FURNISHING THE RETURN U/S. 139(1) OF THE ACT WAS ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 9 ADMITTED AND IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED THE RETURN OF INCOME AFTER SERVICE OF THE NOTICE U/S.153A OF THE ACT. 12. SINCE THE QUANTUM HAS NOT BEEN CHALLENGED BY TH E ASSESSEE AND THE FACTUAL POSITION ON RECORD IS NOT IN DISPUTE, THERE FORE, IN THE SAID CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) HA S PASSED THE ORDER DATED 17.02.2014 JUDICIOUSLY AND CORRECTLY WHICH IS NOT REQUIRED TO BE INTERFERE WITH AT THIS APPELLATE STAGE. THEREFORE, WE CONFIRMED THE ORDER PASSED BY THE CIT(A) AND DISMISSED THE APPEAL OF TH E ASSESSEE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017 . SD/- SD/- (D. KARUNAKARA RAO) (AMA RJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 31 ST #$ , 2017 MP ITA NO.2781&2782/M/2014 A.Y.2007-08 & 2008-09 10 )' *'' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. , , , , / DR, ITAT, MUMBAI 6. + -$ / GUARD FILE. / BY ORDER, ! ! //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI