DY.C.I.T.-22(2), NAVI MUMBAI V. M/S. RAJESH BUILDERS, MUMBAI

ITA 2940/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2665 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-12-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 30-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MOHAMED USMAN
• Keywords: Business income; Capital Gains
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI A.L. GEHLOT, A.M. AND SMT. P. MADHAVI D EVI, J.M. ITA NO. 2940/M/08 ASSESSMENT YEAR: 2004-05 DY. COMMISSIONER OF INCOME-TAX, APPELLANT 22(2), 4 TH FLOOR, TOWER 6, VASHI RAILWAY STATION BLDG., VASHI, NAVI MUMBAI 703. VS. M/S RAJESH BUILDERS, RESPONDENT 1/1, GHANSHYAM BAUG, CAMA LANE, HANSOTI ROAD, GHATKOPAR (WEST), MUMBAI 86. APPELLANT BY : MR. GAURAV BANSAL RESPONDENT BY : MR. MOHAMED USMAN ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF TH E ORDER PASSED BY THE CIT(A)-XXII, MUMBAI, ON 14.03.2008 FOR TH E ASSESSMENT YEAR 2004-05 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED BY THE AO OF RS. 4,62,48,231/- U/S 271(1)(C) OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE FURNI SHED INACCURATE PARTICULARS OF INCOME BY WRONGLY CLAIMING THE PROCE EDS AS CAPITAL GAINS INSTEAD OF BUSINESS INCOME. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE AO BE RESTORED. 2. THE AO HAS LEVIED THE PENALTY OF RS. 4,62,48,231 /- U/S 271(1)(C) OF THE ACT, AGAINST THE ADDITION MADE BY HIM TREATI NG THE INCOME OF THE ASSESSEE AS BUSINESS INCOME INSTEAD OF CAPITAL GAIN, CLAIMED BY ITA NO. 2940/M/08 M/S RAJESH BUILDERS 2 THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(A). AG AINST THE PENALTY, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). THE CIT(A) AFTER EXAMINING THE ISSUE AT LENGTH ELABORATELY WITH CASE LAWS, DELETED THE PENALTY LEVIED BY THE AO BY OBSERVING AS UNDER:- 2.9 AFTER GOING THROUGH THE FACTUAL POSITION THAT T HE APPELLANT HAS DECLARED THIS PLOT IN THE BALANCE SHEET SINCE I TS PURCHASE FROM 1987 AND HAD NOT CONCEALED ANY PARTICULARS REL ATING TO THIS PURCHASE AND SALE OF PLOT. THE ABOVE CITED DECISION S OF VARIOUS HONBLE COURTS HAVE ESTABLISHED THAT THE PENALTY PR OCEEDINGS ARE INDEPENDENT AND SEPARATE THOUGH THE REASONING GIVEN IN THE ASSESSMENT ORDER CONSTITUTES EVIDENCES AND BASE FOR LEVY OF PENALTY U/S 271(1)(C). IT IS ALSO HELD THAT WHEN TW O VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE C AN BE DRAWN, PENALTY CANNOT BE IMPOSED. FINALLY, IT IS CONCLUDED THAT THE ISSUE INVOLVED IN THIS CASE IS DEBATABLE WHETHER THE INCO ME IS TO BE ASSESSED AS INCOME FROM CAPITAL GAIN OR BUSINESS IN COME. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, BASED ON THE FACTUAL POSITION AND LEGAL POSITION OF THE CASE, I AM OF THE VIEW THAT THE PENALTY U/S 271(1)(C) IS NOT LEVIABLE, HEN CE, DELETED. 3. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 4. AT THE OUTSET, THE LEARNED AR CANVASSED THAT IN THE QUANTUM APPEAL, THE ITAT VIDE ITS ORDER DATED 26 TH NOVEMBER, 2009 IN ITA NO. 5262/MUM/07 DELETED THE ADDITION BY HOLDING THAT TH E PROFIT ARISING OUT OF SALE CONSIDERATION ON ACCOUNT OF SALE OF PLO T IS LIABLE FOR CAPITAL GAIN AND NOT UNDER THE BUSINESS HEAD. THEREFORE, HE CONTENDED THAT SINCE THE ADDITION ITSELF IS NOT IN EXISTENCE, ON S UCH NON EXISTENT ADDITION, THE PENALTY LEVIED BY THE AO DOES NOT HAV E LEGS TO STAND IN THE EYE OF LAW. THE LEARNED DR RELIED ON THE ORDER OF THE AO BUT DID NOT CONTROVERT THE FACTS ON RECORD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDER OF THE ITAT. WE ARE OF THE VIEW THAT SINCE THERE IS NO EXISTENCE OF THE QUANTUM ADDITION , LEVY OF PENALTY U/S 271(1)(C) ON SUCH NON EXISTENT ADDITION, DOES N OT ARISE AT ALL. ITA NO. 2940/M/08 M/S RAJESH BUILDERS 3 THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE PENAL TY OF RS. 4,62,48,231/- LEVIED BY THE AO U/S 271(1)(C) AND WE HEREBY CONFIRM THE ORDER OF THE CIT(A) ON THIS COUNT. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED ON THIS 16 TH DAY OF DECEMBER, 2009. SD/- SD/- (P. MADHAVI DEVI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 16 TH DECEMBER, 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV