DCIT 24(3), MUMBAI V. SHEKHAR S. DADARKAR, MUMBAI

ITA 3911/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9021 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Difference of opinion
• Section: 2

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL EBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER ./I.T.A./3911/MUM/2014 , /ASSESSMENT YEAR: 2005-06 DCIT-24(3) ROOM NO.701, C-11, 7 TH FLOOR BKC , BANDRA (E) MUMBAI-400 051. VS. MR. SHEKHAR S. DADARKAR 19-B, RAVI KIRAN ESTATE OPP. MONGINIS FACTORY, NEW LINK RD. MUMBAI-400 058. PAN:ADAPD 8694 G ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: MS. BEENA SANTOSH -DR ASSESSEE BY: NONE / DATE OF HEARING: 10.01.2017 / DATE OF PRONOUNCEMENT: 10.01.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 31/03/2014, OF THE CIT (A)-34,MUMBAI THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL.ASSESSEE, AN INDIVIDUAL, FILED ITS RETURN OF INCOME ON 30/10/2005, DECLARING TOTAL INCOME AT RS. 65.41 LAK HS. THE AO COMPLETED THE ASSESSMENT U/S. 143 (3) OF THE ACT,ON 28/12/2007, DETERMINING HIS I NCOME AT RS. 2.94 CRORES.WHILE FINALISING THE ASSESSMENT, THE AO MADE CERTAIN DISALLOWANCES/A DDITIONS.AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST A PPELLATE AUTHORITY (FAA) WHO CONFIRMED THE ADDITION ON ACCOUNT OF SALE, AMOUNTING TWO RS. 27.49 LAKHS MADE BY THE ASSESSEE DURING THE YEAR BUT NOT ACCOUNTED FOR BY HIM IN THE BOOKS OF ACCOUNTS. THE FAA ALSO CONFIRMED THE ADDITION ON ACCOUNT OF SALE OF SHOPS AMOUNTING RS. 65.40 LAKHS WHICH WERE NOT DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. 2. THE AO ISSUED A NOTICE TO THE ASSESSEE FOR LIVING P ENALTY U/S. 271(1)(C) OF THE ACT.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, HE HELD THAT EXPLANATION FILED BY THE ASSESSEE WAS NEITHER CONVINCING NOT ACCEPTABLE, THAT THE ADDITIO NS WERE CONFIRMED BY THE FAA,THAT THERE WAS NO DIFFERENCE OF OPINION WITH REGARD TO TAXABIL ITY OF THE INCOME IN THE YEAR UNDER CONSIDERATION, THAT THE SALE OF FOUR OF THE FLATS/S HOPS WAS AFFECTED IN THE AY. 2005-06,THAT THE INCOME RELATING TO SUCH SALE WAS NOT OFFERED TO TAX BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION BUT IN THE NEXT AY., THAT THERE WAS N O OBVIOUS AND ACCEPTABLE REASON FOR POSTPONEMENT OF INCOME OF THE CURRENT YEAR TO THE N EXT YEAR, THAT SAME WAS THE CASE IN RESPECT 3911/M/14-SHEKHAR S. DADARKAR 2 OF THE SALE OF SHOPS, THAT THE REGISTRATION TOOK PL ACE ON 12/07/2004, THAT THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THAT THERE WAS NO JUSTIFICATION FOR NOT OFFERING THE SALES FOR THE AY. 2005-06,THAT THE ASSESSEE HAD UNDERSTATED THE PARTICULARS OF THE INCOME FOR THE YEAR UNDER CONSIDERATION, THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AND HAD FURNISHED INACCURATE PARTICULARS. FINALLY, THE AO LEVIED A PENALTY OF RS. 31.37 LAKHS INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 3. AGGRIEVED BY THE PENALTY ORDER OF THE AO, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE FAA AND MADE ELABORATE SUBMISSIONS. HE ALSO REFERRED TO CERTAIN CASE LAWS BEFORE THE FAA.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,PENALTY ORDER AND THE ASSESSMENT ORDER, THE FAA HELD THAT THE AO HAD MADE ADDITION IN RESPECT OF TH E AGREEMENTS FOR SALE OF FLAT/SHOPS WHICH WERE REGISTERED WITH THE SUB REGISTRAR DURING THE P REVIOUS YEAR CORRESPONDING TO THE SUBJECT AY., THAT HE HAD NOT RECORDED THESE TRANSACTIONS IN THE BOOKS OF ACCOUNTS FOR THE YEAR UNDER APPEAL, THAT THE ASSESSEE RECORDED THE SALES IN SUB SEQUENT AY. ON THE BASIS OF EDUCATION OF AGREEMENTS, THAT IN THE QUANTUM APPEAL THE FAA HAD CONFIRMED THE ADDITION ON THE GROUND THAT AS PER THE PROVISIONS OF TRANSFER OF IMMOVABLE PROPERTIES ACT THE SALES TOOK PLACE IN THE YEAR UNDER CONSIDERATION, THAT THE THEN FAA HAD ALL OWED THE DEDUCTION IN THE SUBSEQUENT AY. I.E. AY. 2006-07 IN WHICH THE ASSESSEE HAD RECORDED THE SALES, THAT THE OBSERVATION OF THE THEN FAA SHOWED THAT THERE WAS NO CONCEALMENT OF INCOME BY THE ASSESSEE,THAT IF THE BUSINESS ACTIVITIES OF THE ASSESSEE WERE PROPERLY UNDERSTOOD IT WOULD BE CLEAR THAT PARTING OF THE POSSESSION WAS THE BASIS FOR SHOWING THE INCOME,THA T AT TIMES THE AGREEMENT WITH THE BUYER FOR SALE OF FLAT WAS MADE IN REGISTERED AT THE INIT IAL STAGE WHEN THE CONSTRUCTION OF BUILDING WOULD BEGAN THAT IN SUCH CIRCUMSTANCES THE PROPERTY WOULD NOT COME INTO EXISTENCE AND WOULD NOT BE TRANSFERRED MERELY BY MAKING AGREEMENT .HE REFERRED TO THE CASE OF KC BUILDERS (265 ITR 562) AND DELETED THE PENALTY LEVIED BY THE AO. 4. DURING THE COURSE OF HEARING BEFORE US THE DEPARTME NTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO AND STATED THAT ASSESSEE HAD NOT DI SCLOSED THE INCOME ARISING OUT OF THE SALE OF FLAT/SHOPS DURING THE YEAR UNDER CONSIDERATION,T HAT HE HAD CONCEALED THE PARTICULARS OF INCOME, THAT THE AO WAS JUSTIFIED IN LIVING PENALTY U/S. 271(1)(C) OF THE ACT. AS STATED EARLIER, NONE APPEARED ON BEHALF OF THE ASSESSEE. NO APPLICA TION WAS FILED BY THE ASSESSEE FOR ADJOURNING THE CASE. THEREFORE, WE ARE DECIDING THE MATTER ON THE BASIS OF AVAILABLE MATERIAL. 3911/M/14-SHEKHAR S. DADARKAR 3 5. WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE AO HAD MADE CERTAIN DISALLOWANCES/ ADDITIONS AND OUT OF THE TOTAL SIX ITEMS THE FAA HA D CONFIRMED TWO ADDITIONS, THAT THE AO HAD LEVIED A PENALTY U/S. 271(1)(C) FOR THE SAID ADDITI ONS,THAT THE FAA HAD DELETED THE PENALTY IMPOSED BY THE AO. IN OUR OPINION,ADDITIONS MADE IN THE QUANTUM PROCEEDINGS SHOULD NOT AND CANNOT LEAD TO AUTOMATIC LEVY OF PENALTY U/S. 2 71(1)(C) OF THE ACT. PENALTY PROCEEDINGS ARE TOTALLY DIFFERENT FROM THE ASSESSMENT PROCEEDIN GS AND THE EXPLANATION FILED BY THE ASSESSEE DURING THE PENALTY PROCEEDINGS HAVE TO BE CONSIDERED.THE ASSESSEE HAD EXPLAINED THAT HE HAD SHOWN THE INCOME IN THE SUBSEQUENT YEAR AS THE POSSESSION OF THE PROPERTY WAS PARTED WITH IN THAT YEAR. WE FIND THAT THE THEN FAA HAD ACCEPTED THE EXPLANATION OF THE ASSESSEE AND HAD GIVEN RELIEF TO THE ASSESSEE WHILE DECIDING THE APPEAL FOR THE SUBSEQUENT AY.THE ASSESSEE WAS FOLLOWING A PARTICULAR METHOD O F ACCOUNTING AND HAD SHOWN THE INCOME ACCORDINGLY. IN OUR THE OPINION, IT IS NOT A FIT CA SE FOR LIVING PENALTY FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FILING INACCURATE PART ICULARS.THE FAA HAD OBSERVED THAT IN CERTAIN CASES PAYMENT WOULD BE RECEIVED BEFORE THE CONSTRUC TION OF THE PROPERTY IS COMPLETE.CONSIDERING THE FACT THAT ASSESSEE HAD SHO WN THE INCOME THE SUBSEQUENT YEAR AND THE THEN FAA HAD ACCEPTED THE VERSION OF THE ASSESS EE, WE ARE OF THE OPINION THAT THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE PRESENT FAA ,WHO HAD DELETED THE PENALTY. AFTER TAKING INTO CONSIDERATION THE PARTICULAR FACTS AND CIRCUMS TANCES OF THE CASE, WE ARE DISMISSING THE EFFECTIVE GROUND OF APPEAL,RAISED BY THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2017. 10 , 2017 SD/- SD/- ( ( ( ( /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 10.01.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.