Senthil Constructions, Coimbatore V. ACIT, Coimbatore

ITA 3479/CHNY/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2736 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 27-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: N ARJUN RAJ C A SHRI S SRIDHAR
• Keywords: Difference of opinion; Revised return
• Section: 271(1)(c)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.3479/CHNY/2016 / ASSESSMENT YEAR: 2011-12) M/S. SENTHIL CONSTRUCTIONS, NO.25, RATHINASABAPATHY STREET, CO-OPERATIVE A COLONY, K.K. PUDUR, COIMBATORE 641 038. VS THE ACIT, CIRCLE II, COIMBATORE. PAN: AAKFS4992F ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI N. ARJUN RAJ, CA FOR SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 08.01.2019 /DATE OF PRONOUNCEMENT : 21.02.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, COIMBATORE, DATED 24.10.2016 IN ITA NO.277/14-15 FOR THE ASSESSMENT YEAR 2011-12 PASSED U/S.250(6) R.W.S. 271(1)(C) OF THE ACT. AT THE TIME OF HEARING THE LD.COUNSEL FOR THE ASSESSEE FILED AN ADJOURNMENT PETITION DATED 08.01.2019. HOWEVER THE BENCH WAS OF THE VIEW THAT NO FURTHER DETAILS AND INFORMATION WERE REQUIRED FOR 2 ITA NO.3479/CHNY/2016 DECIDING THE CASE OF THE ASSESSEE AND HENCE THE ADJOURNMENT PETITION WAS REJECTED AND THE APPEAL WAS HEARD ON MERITS. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD LEVIED PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO RS.4,03,904/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN CONSTRUCTION BUSINESS. A SURVEY WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 14.06.2012 AND THE CASE WAS REOPENED U/S.148 OF THE ACT. SUBSEQUENTLY THE ASSESSEE FILED REVISED RETURN ON 28.11.2013 ADMITTING TOTAL INCOME OF RS.23,43,710/- AGREEING WITH THE ADDITION PROPOSED BY THE LD.AO. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) R.W.S. 147 OF THE ACT ON 08.03.2014 WHEREIN THE LD.AO ACCEPTED THE REVISED RETURN FILED BY THE ASSESSEE. THE DISCREPANCY IN THE ORIGINAL RETURN FILED BY THE ASSESSEE AND THE REVISED RETURN FILED BY THE ASSESSEE WAS DUE TO NON-DISCLOSURE OF WORKING PROGRESS WITH RESPECT TO COST OF UNSOLD FLAT. THEREAFTER THE LD.AO HAD INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AND LEVIED MINIMUM PENALTY BEING 100% OF TAX 3 ITA NO.3479/CHNY/2016 SOUGHT TO BE EVADED AMOUNTING TO RS.4,03,904/- BY STATING THAT THE ASSESSEE HAD WILLFULLY CONCEDED THE PARTICULARS OF INCOME. ON APPEAL THE LD.CIT(A) CONFIRMED THE PENALTY LEVIED BY THE LD.AO AGREEING WITH THE VIEW OF THE LD.AO AND BY RELYING ON CERTAIN DECISION OF THE HIGHER JUDICIARY. 4. AT THE OUTSET THE LD.AR SUBMITTED BEFORE US THAT, THE LD.AO WAS OF THE VIEW, TO INCLUDE THE UNSOLD FLATS AS WORK-IN- PROGRESS WHILE COMPUTING THE PROFIT OF THE ASSESSEE WHILE AS THE ASSESSEE WAS UNDER THE BELIEF THAT THE PROFIT HAS TO BE COMPUTED ONLY ON THE FLATS SOLD BY THE ASSESSEE. DUE TO SUCH DIFFERENCE OF OPINION THE DISCREPANCY AROSE WITH RESPECT TO THE PROFIT COMPUTED BY THE LD.A.O AND THE PROFIT DECLARED BY THE ASSESSEE. SINCE THE ASSESSEE DID NOT DESIRE TO CONFRONT WITH THE LD.AO IN ORDER TO AVOID PROTRACTED LITIGATION AGREED WITH THE COMPUTATION MADE BY THE LD.AO AND ACCORDINGLY FILED THE REVISED RETURN ON THE BELIEF THAT PENAL PROVISIONS MAY NOT BE INITIATED. THE LD.AR FURTHER ARGUED STATING THAT ADDITION MADE DUE TO DIFFERENCE OF OPINION BETWEEN THE LD.A.O AND THE ASSESSEE PENALTY CANNOT BE LEVIED. THE LD.DR ON THE OTHER HAND STRONGLY OPPOSED TO THE SUBMISSION OF THE LD.A.R AND ARGUED IN SUPPORT OF THE ORDERS OF THE LD.REVENUE AUTHORITIES. 4 ITA NO.3479/CHNY/2016 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE ISSUE IN THE CASE OF THE ASSESSEE IS DEBATABLE AS TO WHETHER PROJECT COMPLETION METHOD OR PERCENTAGE COMPLETION METHOD SHOULD BE ADOPTED FOR COMPUTING THE PROFIT IN JOINT DEVELOPMENT PROJECTS. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE CIT VS. HARSHVARDHAN CHEMICALS AND MINERAL LTD., REPORTED IN 259 ITR 212 HAD HELD AFFIRMING THE DECISION OF THE APPELLATE TRIBUNAL, THAT NO PENALTY WAS LEVIABLE IN VIEW OF THE FINDING OF THE TRIBUNAL THAT WHEN THE ASSESSEE HAD CLAIMED DEDUCTION OF AN AMOUNT THAT WAS DEBATABLE IT COULD NOT BE SAID THAT THE ASSESSEE HAD CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVASION OF TAX, AND, IN VIEW OF THE FINDINGS OF THE TRIBUNAL, NO CASE WAS MADE OUT FOR INTERFERENCE. FURTHER IN THE CASE CIT VS. TEK RAM (HUF) REPORTED IN 300 ITR 354, THE HONBLE PUNJAB AND HARYANA HIGH COURT HAD HELD THAT THE YEAR IN WHICH THE ENHANCED COMPENSATION WAS TAXABLE WAS A HIGHLY DEBATABLE ISSUE IN AS MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID ISSUE AS WAS APPARENT FROM THE DECISIONS OF VARIOUS HIGH COURTS AND THE CLAIM OF THE ASSESSEE ON THIS ISSUE WAS BASED ON ONE POSSIBLE VIEW. THE 5 ITA NO.3479/CHNY/2016 MAKING OF SUCH A CLAIM BONAFIDE ON THE BASIS OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME BY THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME SO AS TO ATTRACT THE PENAL PROVISIONS OF SECTION 271(1)(C). PENALTY COULD NOT BE IMPOSED. 5.1 IN THE CASE OF THE ASSESSEE ALSO THE ISSUE IS DEBATABLE AND THEREFORE FOLLOWING THE RATIO OF THE HIGHER JUDICIARY CITED HEREIN ABOVE, WE ARE OF THE CONSIDERED VIEW THAT PENAL PROVISIONS U/S.271(1)(C) OF THE ACT CANNOT BE INVOKED IN THE CASE OF THE ASSESSEE. MOREOVER THE DECISIONS RELIED BY THE LD.REVENUE AUTHORITIES ARE NOT IDENTICAL TO THE FACT IN THE CASE OF THE ASSESSEE. HENCE WE HEREBY DIRECT THE LD.AO TO DELETE THE PENALTY LEVIED ON THE ASSESSEE FOR RS.4,03,904/- U/S.271(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 21 ST FEBRUARY, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER 6 ITA NO.3479/CHNY/2016 /CHENNAI, /DATED 21 ST FEBRUARY, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF