Om Developers, Pune V. Deputy Commissioner of Income-tax,

ITA 313/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1170 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 19-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: NIKHIL PATHK SHRI SUHAS BORA
• Keywords: Bonafide belief
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 313/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2005-06 OM DEVELOPERS, PLOT NO. 35, LAXMI PARK SOCIETY, ABOVE HOTEL SANGAM, NAVI PETH, PUNE-411030 PAN : AAAFO2068A ....... / APPELLANT ' / V/S. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3, PUNE / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHK SHRI SUHAS BORA REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 02-06-2016 / DATE OF PRONOUNCEMENT : 01-08-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 28-11 -2013 FOR THE ASSESSMENT YEAR 2005-06 IN CONFIRMING THE LEVY OF PEN ALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). 2 ITA NO. 313/PN/2014, A.Y. 2005-06 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPERS. THE ASSESSEE IS CONSISTENTLY FOLLOWING PROJECT COMPLETION METHOD TO ACCOUNT FOR ITS REVENUE FROM THE CONSTRUCTIO N PROJECTS. THE ASSESSEE HAD DEVELOPED A HOUSING PROJECT MEGHSPARSHA AT BIBEWADI, PUNE. IN THE SAID PROJECT THE ASSESSEE CONSTRUCTED T HREE BUILDINGS VIZ. WING A, B AND C. IN THE RETURN OF INCOME FOR THE ASSESS MENT YEAR 2005-06 THE ASSESSEE DISCLOSED THE INCOME FROM SALE OF FLA TS IN WING B OF THE PROJECT MEGHSPARSHA. THE ASSESSEE FILED ITS RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 31-10-2005 DECLARING T OTAL INCOME OF ` 26,17,220/-. THE ASSESSING OFFICER DURING THE COURSE OF SCR UTINY ASSESSMENT PROCEEDINGS CARRIED OUT INVESTIGATION AT THE OFFICE PREMISES OF THE ASSESSEE AND FOUND THAT THE ASSESSEE HAD GIVEN THE POSSESSION OF FLATS TO THE PURCHASERS IN WING A AND C OF THE PROJECT M EGHSPARSHA AS WELL. THE ASSESSING OFFICER HELD THAT WING A AND C OF THE PR OJECT ARE ALSO COMPLETE. SINCE, THE ASSESSEE IS FOLLOWING PROJECT CO MPLETION METHOD THE PROFIT/INCOME FROM WING A AND C IS TAXABLE IN AS SESSMENT YEAR 2005-06. HENCE, THE ASSESSING OFFICER MADE ADDITION OF THE PRO FITS FROM SALE OF FLATS IN WING A AND C OF PROJECT MEGHSPARSHA . THE ASSESSING OFFICER APPLIED GP RATIO OF 18.30% ON THE SALE OF FLAT S AND MADE ADDITION OF ` 1,07,48,442/-. 2.1 AGGRIEVED BY THE ASSESSMENT ORDER DATED 31-12-200 7, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD TH E FINDINGS OF ASSESSING OFFICER AND REJECTED THE APPEAL OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN SECOND APPEAL BEFORE THE TRIBUNAL IN ITA NO. 206/PN/2011. THE TRIBUNAL VIDE ORDER DATED 31-0 3-2015 CONFIRMED THE FINDINGS OF AUTHORITIES BELOW IN PRINCIPLE. HOWEV ER, THE 3 ITA NO. 313/PN/2014, A.Y. 2005-06 ADDITION WAS RESTRICTED TO 20 FLATS QUA WHICH THE ASSESSIN G OFFICER HAD CARRIED OUT THE INVESTIGATIONS. 2.2 THE ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) OF THE A CT IN RESPECT OF ADDITIONS CONFIRMED BY THE COMMISSIONER OF INCOM E TAX (APPEALS). THE ORDER LEVYING PENALTY OF ` 52,27,549/- U/S. 271(1)(C) WAS PASSED ON 27-03-2012 FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE ASSESSEE FILED APPEAL BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE ORDER LEVY ING PENALTY U/S. 271(1)(C). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY. NOW, THE ASSESSEE IS IN SECOND APPE AL BEFORE THE TRIBUNAL IMPUGNING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI NIKHIL PATHK AND SHRI SUHAS BORA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD OFFERED THE IN COME FROM SALE OF FLATS IN WING B OF THE PROJECT MEGHSPARSHA IN THE ASSES SMENT YEAR 2005-06. THE WORK OF WING A AND C WAS IN PROGRESS TILL TH E END OF THE FINANCIAL YEAR 2004-05. THE ASSESSEE HAD INCURRED CONSIDE RABLE EXPENDITURE IN THE SUBSEQUENT YEAR I.E. FINANCIAL YEAR 2005- 06. THE OWNERSHIP OF THE FLATS IN WING A AND C WAS TRANSFERRED TO THE BUYERS IN THE FINANCIAL YEAR 2005-06 I.E. THE PERIOD RELEVANT TO THE A SSESSMENT YEAR 2006-07. THERE WERE 23 RESIDENTIAL UNITS IN WING A A ND 13 RESIDENTIAL UNITS IN WING C. THE ASSESSING OFFICER INCLUDED THE INCOME FROM SALE OF FLATS IN WING A AND C IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2005-06, WHEREAS THE ASSESSEE HAD OFFERED THE INCO ME FROM SALE OF FLATS IN WING A AND C IN THE ASSESSMENT YEAR 2006-07. TH E ASSESSING OFFICER MADE ADDITION OF ` 1,07,48,442/- ON ACCOUNT OF PROFIT OF SALE OF 4 ITA NO. 313/PN/2014, A.Y. 2005-06 FLATS IN WING A AND C BY APPLYING GROSS PROFIT RATIO OF 18.3 0%. THE ASSESSEE HAD RECEIVED NOTICE DATED 30-06-2004 FROM PUN E MUNICIPAL CORPORATION (PMC) TO IMMEDIATELY STOP THE WORK ON WING A AND C O F THE PROJECT MEGHSPARSHA. THE LD. AR REFERRED TO THE TRANSLATED COPY OF PMC NOTICE AT PAGE 25 OF THE PAPER BOOK. THE LD. AR POINTED THAT THE PMC IN NOTICE HAS OBSERVED THAT CONSTRUCTION OF WING A, B AN D C IS IN COMPLETION STAGE AND WING A AND C ARE NOT IN USE. THE LD . AR SUBMITTED THAT ALTHOUGH THE COMPLETION CERTIFICATE FROM PMC IN RESPECT OF PROJECT MEGHSPARSHA WAS RECEIVED FROM PMC ON 17-03- 2005 BUT THE ACTUAL POSSESSION OF THE FLATS WERE GIVEN TO THE ALLOTTEES AFTER APRIL, 2005. THE WATER CONNECTION TO THE WING A AND C WAS RE LEASED BY CONCERNED AUTHORITY ON 05-04-2005. IT WAS ONLY AFTER THE WATER CONNECTION WAS MADE AVAILABLE, THE POSSESSION OF FLATS WAS G IVEN TO THE PURCHASERS. THE LD. AR FAIRLY ADMITTED THAT IN CASE OF CER TAIN FLATS TEMPORARY POSSESSION WAS GIVEN TO THE ALLOTTEES PRIOR TO 31-03-2005 SO THAT THEY CAN CARRY OUT WOOD WORK, FIXTURES AND FITTING S IN THE FLATS ACCORDING TO THEIR REQUIREMENTS. IT IS ON THE BASIS OF T EMPORARY POSSESSION THAT THE ASSESSING OFFICER HAS ASSESSED THE I NCOME FROM SALE OF FLATS IN WING A AND C IN THE ASSESSMENT YEAR 2005- 06. THE MATTER TRAVELLED UP TO THE TRIBUNAL. THE TRIBUNAL UPHELD T HE FINDINGS OF AUTHORITIES BELOW IN ASSESSING THE INCOME FROM SALE OF FLATS IN WING A AND C IN ASSESSMENT YEAR 2005-06. HOWEVER, THE TRIBUNA L RESTRICTED THE ADDITION TO THE PROFITS FROM SALE OF 20 FLATS IN RESPECT OF WHICH THE LD. AR HAS CARRIED OUT INVESTIGATION. THE LD. AR REFERRED TO PARAS 8, 9 AND 10 OF THE TRIBUNAL ORDER IN ITA NO. 206/PN/2011 DATE D 31-03-2015. 3.1 THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSES SING OFFICER HAS ERRED IN LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT. T HE ASSESSEE 5 ITA NO. 313/PN/2014, A.Y. 2005-06 HAD DECLARED THE INCOME FROM SALE OF FLATS FROM WING A AND C IN THE SUBSEQUENT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2006- 07 UNDER BONAFIDE BELIEF. THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 31-10-2006 I.E. MUCH BEFORE PASSING OF THE ASSESSMENT ORDER U/S. 143(3) FOR ASSESSMENT YEAR 20 05-06 ON 31-12-2007. IT IS NOT A CASE WHERE THE ASSESSEE HAS NOT OFFERED THE INCOME FROM SALE OF FLATS IN WING A AND C. THE ONLY DISPUTE IS THE YEAR OF TAXABILITY. THE LD. AR FURTHER REFERRED TO THE AFFIDAVITS FILED BY THE VARIOUS ALLOTTEES AT PAGES 83 TO 116 OF THE PAPER BOOK TO SHOW THAT FINAL POSSESSION OF THE FLATS WAS DELIVERED BY THE ASSESSEE TO THE ALLOTTEES IN THE MONTH OF APRIL-MAY, 2005. 3.2 THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT IN P ENALTY ORDER THE COMPUTATION OF PENALTY LEVIED IS ERRONEOUS. THE LD. AR POINTED THAT PENALTY HAS BEEN LEVIED ON THE ENTIRE ASSESSED INCOME O F ` 1,33,65,663/- INSTEAD OF LEVYING PENALTY ON THE ADDITION MADE DURING ASSESSMENT PROCEEDINGS. FURTHER, THE PENALTY HAS BEEN LEVIED ON THE ADDITION CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEA LS), WHEREAS THE TRIBUNAL IN APPEAL BY THE ASSESSEE HAS REST RICTED THE ADDITION TO PROFIT FROM SALE OF 20 FLATS ONLY. 3.3 THE LD. AR OF THE ASSESSEE SUBMITTED THAT IT IS NOT A CASE WHERE THE ASSESSEE HAS SUPPRESSED THE FACTS OR HAS FURNISHED INACCURATE PARTICULARS. THE ASSESSEE HAD DISCLOSED THE ENTIRE INCOME FROM SALE OF FLATS IN WING A AND C IN SUBSEQUENT ASSESSMENT YEAR. THE DISPUTE IS WITH REGARD TO THE YEAR OF THE TAXABILITY. THE LD. AR PLACE D RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PV T. LTD. REPORTED AS 322 ITR 158 (SC). THE LD. AR FURTHER PLACED RELIANCE ON THE 6 ITA NO. 313/PN/2014, A.Y. 2005-06 DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. PARINEE DEVELOPERS PVT. LTD. VS. ACIT IN ITA NO. 6772/M/2013 FOR ASSESSMENT YEAR 2009-10 DECIDED ON 11-09-2015. THE LD. AR POINTED THAT IN THE SAID CASE, THE ASSESSEE OFFERED THE AMOUNT TO TAX IN THE SUBSEQUENT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2010-11 BASED ON THE PRINCIPLE OF PAY AS YOU EARN. SINCE, THE ASSESSEE WAS FOLLOWING PROJ ECT COMPLETION METHOD, THE ASSESSING OFFICER INCLUDE THE INCOME FROM SALE OF COMMERCIAL AREA IN ASSESSMENT YEAR 2009-10 AND LEVIED PE NALTY. THE MATTER TRAVELLED UP TO THE TRIBUNAL. THE TRIBUNAL DELETED THE PENALTY UNDER SIMILAR CIRCUMSTANCES. 4. PER CONTRA SHRI HITENDRA NINAWE REPRESENTING THE DEP ARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF TH E ACT. THE LD. DR SUBMITTED THAT IN QUANTUM APPEAL THE TRIBUNAL HAS U PHELD THE FINDINGS OF AUTHORITIES BELOW THAT THE INCOME FROM SALE OF FLA TS IN WING A AND C ARE SUBJECT TO TAX IN THE ASSESSMENT YEAR 20 05-06. THE LD. DR REFERRED TO THE REPLY GIVEN BY ASSESSEE IN RESPONSE TO THE NOTICE GIVEN BY PMC TO STOP THE WORK AT PAGES 13 TO 19 OF THE PAP ER BOOK. THE LD. DR CONTENDED THAT THE ASSESSEE HAS ADMITTED IN THE RE PLY TO NOTICE THAT THE CONSTRUCTION OF ALL THE THREE BUILDINGS I.E. BUILDING A, B AN D C IS COMPLETE IN ALL RESPECT. THE APPLICATION FOR GRANT OF COMPLE TION CERTIFICATE FOR BUILDING B WAS SUBMITTED TO THE PMC ON 28- 01-2004 AND FOR BUILDING A AND C THE APPLICATION WAS MADE FOR ISSUING COM PLETION CERTIFICATE ON 14-05-2004. THE PMC HAD ISSUED THE COMPLE TION CERTIFICATE FOR BUILDING B ON 30-04-2004 AND AS PER ASSESS EES OWN ADMISSION THE COMPLETION CERTIFICATE FOR BUILDING A AND C WAS RECEIVED BY ASSESSEE ON 17-03-2005. FOR ACCOUNTING AND INCOME RECOGNIZATION PURPOSE, THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHO D. ONCE, 7 ITA NO. 313/PN/2014, A.Y. 2005-06 THE ASSESSEE HAS RECEIVED COMPLETION CERTIFICATE FROM PMC IN RESPECT OF ALL THE THREE BUILDINGS DURING THE PERIOD RELEVANT TO ASSES SMENT YEAR 2005-06, THE PROFITS FROM SALE OF FLATS IN ALL THE THREE BUIL DINGS WAS LIABLE TO BE ASSESSED TO TAX IN ASSESSMENT YEAR 2005-06 . THE ASSESSEE HAD RECEIVED SUBSTANTIAL AMOUNT FROM ALL THE ALLOTTEES OF WIN G A AND C AND THE PROJECT WAS COMPLETE IN EVERY RESPECT, THEREFOR E, THE INCOME FROM SALE OF FLATS IN WING A AND C WAS ASSESSABLE IN THE ASS ESSMENT YEAR 2005-06. THE LD. DR FURTHER SUBMITTED THAT THE ASS ESSEE HAS ADMITTED THE FACT THAT POSSESSION WAS GIVEN TO ALLOTTEES IN MARCH, 2005 ITSELF. THE CONTENTION OF THE ASSESSEE THAT FINAL POSSESSIO N WAS GIVEN AFTER 31-03-2005 IS WITHOUT ANY MERIT AND THE AFFIDAVITS OF THE VARIOUS ALLOTTEES PLACED ON RECORD BY THE ASSESSEE ARE ALSO NOT RELIABLE. REFERRING TO THE AFFIDAVITS AT PAGES 83 ONWARDS IN THE PAP ER BOOK, THE LD. DR ASSERTED THAT ALL THE AFFIDAVITS ARE IDENTICALLY WORDED . THIS CLEARLY SHOWS THAT THE ASSESSEE HAD TUTORED THE ALLOTT EES. THE CASE LAWS ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIAN CE HAVE NO APPLICATION IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE AND THUS, THE PENA LTY HAS BEEN RIGHTLY IMPOSED. THE LD. DR PRAYED FOR DISMISSING THE APPEA L OF THE ASSESSEE. 5. CONTROVERTING THE SUBMISSIONS OF THE LD. DR, THE LD. AR CONTENDED THAT THE ASSESSEE HAD GIVEN ACTUAL POSSESSIO N OF THE FLATS IN APRIL-MAY, 2005. THE LD. AR PLACED ON RECORD PHOTOCOPIES OF THE POSSESSION NOTICE AT PAGES 1 TO 59 OF THE PAPER BOOK-I I. THE LD. AR ADMITTED THAT THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD, HOWEVER, THE INCOME FROM WING A AND C IS OFFERED TO TAX WH EN THE FLATS ARE FINALLY HANDED OVER TO THE ALLOTTEES. 8 ITA NO. 313/PN/2014, A.Y. 2005-06 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE PENALTY HAS BEEN LEVIED U/S. 271(1)(C) IN RESPECT OF INCOME/PR OFITS FROM SALE OF FLATS IN WING A AND C OF PROJECT MEGHSPARSHA DEV ELOPED BY THE ASSESSEE. THE ASSESSEE HAS OFFERED THE INCOME FROM SALE OF FLATS IN WING A AND B OF THE AFORESAID PROJECT IN RETURN OF INCOM E FOR ASSESSMENT YEAR 2006-07, WHEREAS, THE REVENUE HAS INCLU DED THE INCOME FROM SALE OF FLATS IN ASSESSMENT YEAR 2005-06. THUS , THE ONLY DISPUTE WAS THE YEAR OF TAXABILITY OF THE PROFITS/INCOME FROM SALE OF FLATS IN WING A AND C. THE TRIBUNAL UPHELD THE FINDINGS OF AS SESSING OFFICER IN RECOGNIZING THE INCOME FROM FLATS IN THE ASSESSMEN T YEAR 2005-06. A PERUSAL OF THE DOCUMENTS ON RECORD SHOW TH AT THE COMPLETION CERTIFICATE IN RESPECT OF WING A AND C WAS RECE IVED BY THE ASSESSEE ON 17-03-2005 I.E. IN THE PERIOD RELEVANT TO ASS ESSMENT YEAR 2005-06. THE ASSESSEE IN COMMUNICATION TO PMC DATED 09 -07-2004 HAD MENTIONED THAT APPLICATION FOR ISSUANCE OF COMPLETION CE RTIFICATE IN RESPECT OF BUILDING A AND C WAS MADE ON 14-05-2004. FUR THER, THE ASSESSEE HAD ADMITTED THE FACT THAT SOME OF THE ALLOTTEE S WERE GIVEN TEMPORARY POSSESSION OF THE FLATS BEFORE 31-03-2005. ALL THESE FACTS CLEARLY SHOW THAT THE FLATS IN BUILDING A AND C WERE COMPLE TE IN EVERY RESPECT AND WERE READY FOR POSSESSION BEFORE 31-03-2005. OSTENSIBLY, THE ASSESSEE HAS DECLARED THE INCOME FROM SA LE OF FLATS IN THE ASSESSMENT YEAR 2006-07 AS FORMAL POSSESSIO N OF FLATS ACCORDING TO ASSESSEE WERE HANDED OVER TO THE ALLOTTEE S AFTER 31-03-2005. IN SUPPORT OF HIS STAND THE ASSESSEE HAS PLACED ON RECORD POSSESSION NOTICE/LETTERS TO VARIOUS ALLOTTEES AT PAGES 1 TO 59 OF THE PAPER BOOK. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS DISCLOSED INCOME FROM SALE OF FLATS IN BUILDING A AND C IN RETURN OF INCOM E FOR 9 ITA NO. 313/PN/2014, A.Y. 2005-06 ASSESSMENT YEAR 2006-07. THE ASSESSEE HAD FILED INCOME TAX RETURN FOR ASSESSMENT YEAR 2006-07 ON 31-10-2006, WHEREAS THE A SSESSMENT U/S. 143(3) FOR IMPUGNED ASSESSMENT YEAR WAS FRAMED ON 31-12- 2007. THIS SHOWS THAT THE ASSESSEE HAD NO INTENTION TO SUPPRESS THE INCOME FROM SALE OF FLATS. THE ASSESSEE HAD DISCLOSED THE INCOME FROM FLA TS AND HAS PAID TAX LIABILITY ON THE SAID INCOME AS WELL. AT THE MOST IT CAN BE CONSIDERED AS POSTPONEMENT OF TAX LIABILITY. IN SUCH CIRCUM STANCES PENALTY U/S. 271(1)(C) CANNOT BE LEVIED. 7. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. PA RINEE DEVELOPERS PVT. LTD. VS. ACIT (SUPRA) DELETED THE PENALTY UNDER SIMILAR CIRCUMSTANCES. THE ASSESSEE OFFERED THE INCOME FROM SALE OF LAND IN THE ASSESSMENT YEAR 2010-11. THE COMMISSIONER OF INCOM E TAX (APPEALS) HELD THE INCOME TO BE ASSESSABLE IN ASSESSMENT YEAR 2009 -10. PENALTY U/S. 271(1)(C) WAS LEVIED BY COMMISSIONER OF INCOME T AX (APPEALS) FOR NOT DISCLOSING THE INCOME FROM SALE OF LAND IN AS SESSMENT YEAR 2009-10. THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE TRIBUNAL. THE TRIBUNAL HELD AS UNDER : 10. ON HEARING BOTH THE PARTIES, WE FIND THERE IS NO DISPUTE ON THE FACTS THAT THE SAID SUM OF RS. 179.03 CRS IS UNDISPUTEDLY OFFERED IN THE AY 2010-2011 AND THE SAME IS NOW TAXED IN THE YEAR UND ER CONSIDERATION, WHERE THE TAX RATES ARE IDENTICAL IN BOTH THE YEARS . THEREFORE, THE LEGAL QUESTION WILL ARISES FROM THE ABOVE FACTS IS SHOULD THE ADDITION BY WAY OF PREPONEMENT OF THE ALREADY DISCLOSED INCOME ATTRACT S SUCH LEVY OF PENALTY U/S 271(1)(C) OF THE ACT OR NOT. THE ASSESS EE OFFERED THE SAID INCOME IN THE LATER ASSESSMENT YEAR BASING ON THE P RINCIPLE PAY AS YOU EARN . THIS PRINCIPLE IS UPHELD BY THE HON BLE SUPREME COURT IN THE CASE OF EXCEL INDUSTIRES (SUPRA) WHEREIN IT IS HELD THAT THE INCOME TAX CANNOT BE LEVIED ON HYPOTHETICAL INCOME. INCOME ACCRUED WH EN IT BECOMES DUE AT THE SAME TIME, IT MUST ALSO BE ACCOMPANIED BY COR RESPONDING LIABILITY OF OTHER PARTY TO PAY THE AMOUNT. ONLY THEN, IT CAN BE SAID FOR THE PURPOSE OF TAXABILITY THAT THE INCOME IS NOT HYPOTH ETICAL AND IT HAS REALLY 10 ITA NO. 313/PN/2014, A.Y. 2005-06 ACCRUED TO THE ASSESSEE. IN THE INSTANT CASE, THE L IABILITY TO PAY BY THE OTHER PARTIES IS CRYSTALLIZED IN THE AY 2010-2011 N OT IN THE AY 2009- 2010. BUT THE CIT (A) INSISTS THE SAME WOULD BE TAX ABLE IN THE YEAR UNDER CONSIDERATION. IN OUR OPINION, SUCH ADDITIONS , IN PRINCIPLE, ARE UNSUSTAINABLE IN LAW CONSIDERING THE SAID BINDING J UDGMENT. IF SOME OF THE REASONS, SUCH ADDITIONS ARE ACCEPTED BY THE ASS ESSEE, THE SAME WILL NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT AS THE SAID AMOUNT WAS ALREADY OFFERED TO TAX BY THE ASSESSEE. IN OUR OPIN ION, THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF ANY INACCUR ATE PARTICULARS IN SUCH MATTERS. THE DECISIONS RELIED UPON BY THE LD C OUNSEL FOR THE ASSESSEE INCLUDES THE ORDER OF THE TRIBUNAL IN THE CASE OF SIDDHRAJ DEVELOPERS PVT LTD (ITA NO.185/AHD/2008), DATED 11. 5.2010 (AHD); GOUTAM ENTERPRISE (ITA NO.5847/MUM/2010) DATED 10.1 2.2012 (AHD); JAIN BUILDERS (VASAI) (41 CCH 031) (MUM) AND GURUCH ARAN SINGH & CO (72 TTJ 774) (CHD). THESE ARE RELEVANT FOR THE PROP OSITION THAT NO PENALTY SHOLD BE LEVIED ON A DECLARED INCOME IRRESPECTIVE O F THE YEAR OF DISCLOSURE. THEREFORE, WE ARE OF THE OPINION THAT T HIS ADDITION DOES NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. ACCORDING LY WE ORDER THE DELETION OF PENALTY ON THIS ISSUE. 8. IT IS A WELL SETTLED LAW THAT FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS CANNOT BE CONSIDERED AS CONCLUSIVE AND FINAL FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCO ME TAX AND ANOTHER VS. ANWAR ALI REPORTED AS 76 ITR 696 HAS OBSER VED THAT THE FINDINGS IN THE ASSESSMENT PROCEEDINGS MAY CONSTITUTE GOOD EVIDENCE IN THE PENALTY PROCEEDINGS BUT IT DOES NOT FOLLOW THAT PENALT Y FOR CONCEALMENT U/S. 271(1)(C) IS MANDATORY WHENEVER A ADDITION OR DISALLOWANCE IS MADE. PENALTY U/S. 271(1)(C) IS TO BE IMPOSED W HERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. FOR LEVY OF PENALTY ONE OF THE IM PORTANT FACTORS TO BE CONSIDERED IS THE BONAFIDE OF ASSESSEE. IN THE PRE SENT CASE WE FIND THAT THE ASSESSEE HAD DISCLOSED THE INCOME/PROFITS FR OM SALE OF FLATS IN WING A AND C IN THE SUBSEQUENT ASSESSMENT YEAR. THE 11 ITA NO. 313/PN/2014, A.Y. 2005-06 ASSESSEE HAD FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2 006-07 DECLARING INCOME FROM SALE OF FLATS IN WING A AND C ALMOST ONE YEAR PRIOR TO THE COMPLETION OF ASSESSMENT FOR ASSESSMENT YEA R 2005-06. THUS, THERE WAS NO INTENTION ON THE PART OF THE ASSESSE E TO WITHHOLD SUCH INCOME AND NOT TO PAY TAX THEREON, THEREFORE BON AFIDE OF ASSESSEE IS PROVED. IN SUCH CIRCUMSTANCES WE ARE OF THE CONSIDER ED VIEW THAT NO PENALTY U/S. 271(1)(C) IS LEVIABLE. ACCORDINGLY, THE IMPUGNED OR DER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 01 ST DAY OF AUGUST, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 01 ST AUGUST, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, PUNE 4. ' / THE CIT-II, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE