ACIT, New Delhi V. M/s. Indirapuram Habitat Centre Pvt. Ltd., New Delhi

ITA 3225/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3047 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: VIJAY AGARWAL
• Section: 271(1)(c); 143(3); 64; 147; 263

Judgement Text

ITA NO.-3225/DEL/2016. INDIRAPURAM HABITAT CENTRE PRIVATE LIMITED. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: B: NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 3225/DEL/2016 ( ASSESSMENT YEAR: 2009-10) ACIT, CENTRAL CIRCLE -17, ROOM NO. 103, FIRST FLOOR, HALL NO. -1, ARA CENTRE, E-2, JHANDEWALAN, NEW DELHI. VS. MS INDIRAPURAM HABITAT CENTRE PVT. LTD., 702-704, D MALL, NETAJI SUBHASH PLACE, PITAMPURA, NEW DELHI. PAN NO: AAGCS4747R APPELLANT RESPONDENT REVENUE BY : MS. ASHIMA NEB, SR. DR ASSESSEE BY : SHRI VIJAY AGARWAL, CA ORDER PER ANADEE NATH MISSHRA, AM THIS APPEAL BY REVENUE IS FILED AGAINST THE ORDER O F LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-27, NEW DELHI, [LD. CIT(A), FOR SHORT] DATED 11.03.2016 FOR ASSESSMENT YEAR 2009-10. THE GROUNDS OF APPEAL AR E AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON THE FACTS IN DELETING THE PENALTY U/S 271(1)(C) OF THE I.T. ACT 1961 OF RS. 1,27,50,670/- IMPOSED BY THE AO. ITA NO.-3225/DEL/2016. INDIRAPURAM HABITAT CENTRE PRIVATE LIMITED. PAGE 2 OF 6 2. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN IGNORING THE FACT THAT THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS. 3,75,13,010/- MADE BY AO IN ASSESSM ENT ORDER DATED 21.12.2011. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN STATING / DECIDING ON ISSUES LIKE THE ASSESSEE IS A DEVELOPER AND NOT CONTRACTOR WITHOUT APPRECIATING THE FACT TH AT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE EARLIER CIT(A) AND THIS ISSUE IS NOT OPEN FOR ADJUDICATION AT CIT(A) LEVEL AGAIN. 4. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND ON LA W IN IGNORING THE FACT THAT THE COMPANIES WHICH HAVE PROVIDED UNSECURED LO AN DONT HAVE THE CAPACITY. 5. (A) THE ORDER OF THE CIT(APPEALS) IS ERRONEOUS A ND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. (2) THE ASSESSMENT ORDER DATED 21.12.2011, U/S 143(3) OF THE INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT) WAS PASSED WHEREIN AN ADDIT ION OF 3,75,13,010/- WAS MADE UNDER PERCENTAGE COMPLETION METHOD, BY APPLYING ACCOUNTIN G STANDARD - 7 (AS-7, FOR SHORT). THIS ADDITION WAS CONFIRMED BY LD. CIT(A). THEREAF TER, PENALTY U/S 271(1)(C) WAS LEVIED BY THE ASSESSING OFFICER (AO, FOR SHORT) VIDE ORD ER DATED 21.03.2014, AMOUNTING TO RS. 1,27,50,670/- WHICH WAS @ 100% OF TAX SOUGHT TO BE EVADED, IN RESPECT OF THE AFORESAID ADDITION OF RS. 3,75,13,010/-. VIDE IMPU GNED ORDER DATED 11.03.2016 OF LD. CIT(A), THIS PENALTY WAS DELETED. THE RELEVANT POR TION OF THE ORDER OF LD. CIT(A) IS REPRODUCED AS UNDER: 5. I HAVE CONSIDERED THE APPELLANTS CONTENTIONS, CAREFULLY GONE THROUGH THE ORDER OF THE ACIT, CENTRAL CIRCLE-09 AND DELIBERATE D ON THE CASE LAWS REFERRED BY THE AR OF THE APPELLANT DURING THE COURSE OF THE HE ARING BEFORE ME. 5.1 THE ADDITION MADE BY AO IS BASED ON AS-7 WHICH IS APPLICABLE ON CONSTRUCTION CONTRACTORS AND NOT ON REAL ESTATE DEV ELOPERS. ITA NO.-3225/DEL/2016. INDIRAPURAM HABITAT CENTRE PRIVATE LIMITED. PAGE 3 OF 6 5.2 FURTHER, THE ADDITION IS MADE ON ESTIMATED BASI S AND PENALTY PROCEEDINGS U/S 271(1)(C) INITIATED IMPOSING THE PENALTY OF RS. 1,27,50,670,00/-. AS THE INCOME HAS BEEN ESTIMATED UNDER DEEMING PROVISIONS, THERE IS NOT MERIT IMPOSING THE PENALTY. IN VIEW OF THE FACT THAT THE APPELLANT IS CONSISTENTLY FOLLOWING THE PRINCIPLES AS-9, THERE CANNOT BE A STANDALONE YEAR WHERE PRINCIPLES AS-7 COULD BE APPLIED. HENCE, IN VIEW OF THE FACTS AND THE CASE LAWS THE PENALTY UNDER SECTION 271(1)(C) OF RS. 1,27,50,670/- DESERVES TO BE DELET ED. THE GROUND RAISED IN APPEAL IS ALLOWED. (2.1) THE PRESENT APPEAL BEFORE INCOME TAX APPELLATE TRI BUNAL (ITAT, FOR SHORT) HAS BEEN FILED BY REVENUE AGAINST THE AFORESAID ORDER D ATED 11.03.2016 WHEREIN THE LD. CIT(A) DELETED THE PENALTY. AT THE TIME OF HEARING BEFORE USE, THE LEARNED AUTHORIZED REPRESENTATIVE (AR, FOR SHORT) SUBMITTED THAT VID E ORDER DATED 27.09.2016, ITAT HAS DELETED THE AFORESAID QUANTUM ADDITION OF RS. 3,75, 13,010/- IN ITA NO. 2416/DEL/2013. HE ALSO FILED A COPY OF THE AFORESAID ORDER DATED 2 7.09.2016 IN ITA NO. 2416/DEL/2013. THE RELEVANT PORTION OF THE ORDER OF ITAT IS REPROD UCED AS UNDER: 4. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT TH E ASSESSEE IS A REAL ESTATE DEVELOPER AND NOT A CONTRACTOR AS HELD BY THE LD.CIT(A). THE ASSESSING OFFICER (A.O.) IN BOTH THE ASSESSMENT YEARS (A.Y.) HAS ACCEPTED THE CLAIM OF THE ASSESSEE THAT IT IS IN TH E CONSTRUCTION BUSINESS. ON THESE FACTS WE RESPECTFULLY FOLLOW THE DECISION OF THE MUMBAI BENCH OF THE ITAT IN THE CASE OF HAWARE CONS TRUCTIONS P. LTD. VS. ITO (2011) 64 DTR 251, WHEREIN IT IS HELD AS FOLLOWS. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND BUILDERS AND DU RING THE A.Y. 2004- 05 THE PROJECT COMPLETION METHOD FOLLOWED BY THE AS SESSEE HAS BEEN ACCEPTED. THE SUBMISSION OF THE COUNSEL FOR THE ASS ESSEE THAT THE REVENUE HAS NOT TAKEN ANY REMEDIAL MEASURE U/S 263 OR 147 OF THE INCOME TAX ACT, 1961 (THE ACT), FOR THE A.Y. 2004-0 5 AND 2006-07 EVEN AFTER THE ORDER OF THE AO AND CIT(A) FOR A.Y. 2005- 06 COULD NOT BE CONTROVERTED BY THE DEPARTMENTAL REPRESENTATIVE. TH E AO, DURING THE ASST. YR. 2006- 07 HAS ALSO ACCEPTED, THE PROJECT C OMPLETION METHOD FOLLOWED BY THE ASSESSEE AND HAS NOT DISTURBED, THE INCOME BY MAKING ANY ESTIMATED INCOME ON THE WORK-IN-PROGRESS. THERE IS ALSO MERIT IN THE SUBMISSION OF THE COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS DECLARED HUGE INCOME IN THE SUBSEQUENT YEAR AFTER C OMPLETION OF THE ITA NO.-3225/DEL/2016. INDIRAPURAM HABITAT CENTRE PRIVATE LIMITED. PAGE 4 OF 6 SAID PROJECT AS AGAINST MEAGRE INCOME ESTIMATED BY THE AO. THE PROJECT COMPLETION METHOD IS AN ACCEPTED METHOD OF ACCOUNTI NG FOR BUILDERS. THE ASSESSEE IS REGULARLY FOLLOWING THIS METHOD OF ACCOUNTING WHICH HAS BEEN ACCEPTED BY THE AO IN THE PRECEDING AS WEL L AS IN THE SUBSEQUENT ASSESSMENT YEAR. FURTHER THE AS-7 AS DIS CUSSED BY THE AO AND THE CIT(A) IS APPLICABLE ONLY FOR CONTRACTORS E NGAGED, IN THE CIVIL CONSTRUCTION BUSINESS AND THE SAME DOES NOT APPLY T O BUILDERS/DEVELOPERS. IT IS AN ESTABLISHED LEGAL PRO POSITION THAT AN ASSESSEE CAN FOLLOW ANY RECOGNIZED METHOD OF ACCOUN TING AND THE CONDITION IS THAT THE SAME METHOD HAS TO BE FOLLOWE D CONSISTENTLY. SINCE THE ASSESSEE IN THE INSTANT CASE WAS REGULARL Y FOLLOWING THE PROJECT COMPLETION METHOD AND HAS OFFERED THE INCOM E IN THE YEAR OF COMPLETION OF PROJECT, THERE IS NO SOUND AS TO WHY THE SAME SHOULD BE REJECTED AND PERCENTAGE COMPLETION METHOD BE FOLLOW ED. AWDESH BUILDERS VS. ITO (2010) 37 SOT 122 (MUMBAI) PRESTIGE ESTATE PROJECTS (P) LTD. VS. DY. CIT (2010 ) 129 TTJ (BANG) 680: (2010) 33, DTR (BANG) (TRIB) 514 FOLLOWED. 5. RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT A. S.-7 DOES NOT APPLY TO THE FACTS OF THE CASE. HENCE THE SYSTEM OF ACCO UNTING FOLLOWED BY THE ASSESSEE CONSISTENTLY OVER THE YEARS HAS TO BE UPHELD. (2.1.1) THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE PENA LTY LEVIED U/S 271(1)(C) OF I.T. ACT SHOULD BE DELETED TOO, AS THE CORRESPON DING QUANTUM ADDITION HAS ALREADY BEEN DELETED BY ITAT. THE LD. AR ALSO RELIED ON SY NOPSIS, RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 11.03.2016 PASSED BY THE LD. CIT(A) FOR THE A/Y 2009-10. 2. IN THIS CASE THE ASSESSEE HAD FILED AN APPEAL BE FORE THE ITAT BEING AGGRIEVED BY THE ORDER OF CIT(A) AGAINST THE QUANTU M ADDITIONS. THE ITAT VIDE ITS ORDER DATED 27.09.2016 PASSED IN ITA NO. 2 416/DEL/2013 HAD ALLOWED THE APPEAL IN FAVOUR OF ASSESSEE. 3. THE TRIBUNAL VIDE ITS ORDER DATED 27.09.2016 HAD DELETED THE ADDITIONS MADE BY ASSESSING OFFICER AND SUSTAINED BY LD. CIT(A). THE COPY OF THE TRIBUNAL ORDER IS ATTACHED HEREWITH FOR YOUR READY REFERENCE AND PERUSAL. 4. THE VERY BASIS OF IMPOSITION OF PENALTY HAS BEEN DELETED BY THE TRIBUNAL, HENCE THERE CANNOT BE ANY CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME AND THEREFORE, THE ORDER OF THE CIT(A) DOES NOT SUFFER FROM ANY INFIRMITY. ITA NO.-3225/DEL/2016. INDIRAPURAM HABITAT CENTRE PRIVATE LIMITED. PAGE 5 OF 6 (2.2) ON THE OTHER SIDE, THE LD. SR. DEPARTMENTAL REPRES ENTATIVE (DR, FOR SHORT) APPEARING FOR REVENUE RELIED ON THE ORDERS OF THE A UTHORITIES BELOW. (3) WE HAVE HEARD BOTH SIDES PATIENTLY AND WE HAVE ALS O CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. WE ARE OF THE VIEW THAT PENALTY U/S 271(1)(C) I.T. ACT OF RS. 1,27,50,670/- LEVIED BY AO, AND ALREADY DELETED BY THE LD. CIT(A); HAS NO LEGS TO STAND WHEN THE CORRESPONDING ADDITIONS MADE BY THE AO HAVE ALREADY BEEN DELETED BY ITAT VIDE ITS AFORESAID ORDER DATED 27.09.2016. WH EN THE QUANTUM ADDITION DOES NOT SURVIVE, THE PENALTY LEVIED U/S 271(1)(C) OF I.T. A CT ON THE CORRESPONDING QUANTUM ADDITION ALSO CANNOT SURVIVE. WE TAKE SUPPORT FROM JUDICIAL PRECEDENT IN THE CASE OF K.C. BUILDERS VS. ACIT 135 TAXMAN 461 (SC), IN WHICH THE HONBLE APEX COURT HELD THAT WHERE THE ADDITIONS MADE IN THE ASSESSMENT ORDER, ON THE BASIS OF WHICH PENALTY FOR CONCEALMENT WAS LEVIED, ARE DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMENT, AND THEREFORE, IN SUCH A CASE, NO SUCH PENALTY CAN SURVIVE AND THE SAME IS LIABLE TO BE CANCELLED. IN VIEW OF THE FOR EGOING, APPEAL FILED BY REVENUE IS HEREBY DISMISSED. (4) DECISION OF THE BENCH, DISMISSING THE APPEAL WAS O RALLY PRONOUNCED IN OPEN COURT ON 05/03/2019 AFTER CONCLUSION OF HEARING. THIS WR ITTEN ORDER IS PRONOUNCED IN THE OPEN COURT ON 06/03/2019. SD/- SD/- (DIVA SINGH) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06.03.2019 ITA NO.-3225/DEL/2016. INDIRAPURAM HABITAT CENTRE PRIVATE LIMITED. PAGE 6 OF 6 (POOJA) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER