ACIT CC 47, MUMBAI V. JUHU CONSTRUCITON CO., MUMBAI

ITA 419/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78648 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2002-2003
• Appeal Filed On: 14-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J , MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 419 & 420 /M/2013 ASSESSMENT YEAR: 2002 - 03 & 2003 - 04 ACIT, CC - 47, R.NO.658, 6 TH FLOOR, AAYAKAR B HAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. JUHU CONSTRUCTION CO. 16 TH FLOOR MITTAL TOWER, 210, NARIMAN POINT, MUMBAI 400 021 PAN: AAAFJ1774A (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE B Y : SHRI MAURYA PRATAP DATE OF HEARING : 01.04 .201 4 DATE OF PRONOUNCEMENT : 01.04.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE NOTED APPEALS HAVE BEEN PREFERRED BY THE REVENUE AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2002 - 03 AND ASSESSMENT YEAR 2003 - 04 RESPECTIVELY. SINCE THE GROUNDS PREFERRED IN BOTH THE ABOVE NOTED APPEALS ARE IDENTICAL, SO THESE ARE TAKEN TOGETHER FOR DISPOSAL WITH T HIS COMMON ORDER. 2. THE REVENUE THROUGH ITS GROUNDS OF APPEAL HAS AGITATED THE DELETION OF THE PENALTY OF RS.20,41,627/ - FOR THE ASSESSMENT YEAR 2003 - 04 AND RS.10,71,601/ - FOR THE ASSESSMENT YEAR 2002 - 03 WHICH WERE LEVIED BY THE ASSESSING OFFICER (HERE INAFTER REFERRED TO AS THE AO) UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT (HERE INAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF THE ITA NO S. 419 & 420/M/2013 M/S. JUHU CONSTRUCTION CO. 2 INCOMES ESTIMATED FROM THE RESIDENTIAL PROJECTS UNDER PROGRESS ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FOLLOW THE CONS ISTENT METHOD OF ACCOUNTING. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SSESSEE IS A PARTNERSHIP FIRM ESTABLISHED ON 20 TH MARCH 1987, ENGAGED IN THE CONSTRUCTION AND SALE OF FLATS. THE ASSESSEE FI LED ITS RETURNS OF INCOME ON 31 ST OCTOBER 2002 DECLARING LO SS OF RS.8,26,050 / - FOR A.Y.2002 - 03 AND ON 27.11.2003 DECLARING LOSS OF RS.7,44,260 / - FOR A.Y.2003 - 04. IN THE ASSESSMENTS COMPLETED U/S.143(3) R.W.S. 147 OF THE ACT DATED 14.02.2006 FOR A.Y.2002 - 03 AND U/ S.143(3) DATED 14.02.2006 FOR A. Y.2003 - 04, PROFIT F ROM PROJECTS AT MITTAL PARK AND MEGH APARTMENT WAS ESTIMATED AT 20% OF RECOVERIES AND IN RESPECT OF PROJECT AT OCEAN VIEW, PROFIT WAS ESTIMATED AT 5% OF RECOVERIES AS AGAINST 0 % ESTIMATED BY THE A SSESS EE IN RESPECT OF ALL THE THREE PROJECTS. A.O DETERMINED TOTAL INCOME AT RS.64,24,350 / - THUS MAKING AN ADDITION OF RS.72,50,400 / - TO THE RETURNED LOSS OF RS.8,26,050 / - IN RESPECT OF A.Y.2002 - 03 AND TOTAL INCOME AT RS.68,36,200 / - THUS MAKING AN ADDITION OF RS.75,80,460 / - TO THE RETURNED LOSS OF RS.7,44 ,2 60 / - IN RESPECT OF A.Y.2003 - 04. IN APPEAL , L D. CIT(A) UPHELD THE ORDERS OF THE ASSESSING OFFICER FOLLOWING HIS P REDECESSOR S ORDER FOR A.Y.2001 - 02. SUBSEQUENTLY, A SSESSEE FILED APPEALS TO THE ITAT. THERE AFTER , C ONSEQUENT TO A SEARCH ACTION, NOTICES U/S.153A OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES U/S.153A DATED 22.01.2009, THE A SSESSEE FILED RETURNS OF INCOME DECLARING LOSS OF RS.8,26,050 / - AND RS.7,44,260 / - FOR A.YRS.20 02 - 03 AND 2003 - 04 RESPECTIVELY. IN THE MEANWHILE ITAT DECIDED THE APPEALS FOR A.Y.200 2 - 03 AND 2003 - 04 VIDE ORDER DATED 30.07.2009 AND HELD THAT THE PROFIT BE ESTIMATED @ 5% OF RECOVERIES MADE IN RESPECT OF ALL THE THREE PROJECTS SUBJECT TO THE REDUCTION OF INCOME OFFERED AT THE TIME OF COMPLETION OF THESE PROJECTS. CONSEQUENTLY, THE ASSESS EE FILED REVISED COMPUTATIONS OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE BASIS OF IT AT'S ITA NO S. 419 & 420/M/2013 M/S. JUHU CONSTRUCTION CO. 3 DECISION THAT PROFIT SHOULD BE ESTIMATED @ 5% OF THE RECOVERIES MADE AND ACCORDINGLY COMPUTED INCOMES AT RS.21,75,630 / - AND RS.48,1 1 ,190 / - FOR A.YRS. 2 002 - 03 AND 2003 - 04 RESPECTIVELY. THE COMPUTATIONS OF INCOME SUBMITTED BY THE A SSESSEE WERE ACCEPTED BY THE AO AND ASSESSMENTS WERE COMPLETED U / S.153A R.W.S. 143(3) ASSESSING THE TOTAL INCOMES AT RS.21,75,630 / - AND RS.48,1 1 ,190 / - FOR A.YRS.2002 - 03 AND 2003 - 04 RESPECTIVELY. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE ALSO INITIATED. DURING THE PENALTY PROCEEDINGS, THE AO ASKED THE ASSESSEE TO EXPLAN AS TO WHY THE PENALTIES U/S.271(1)(C) OF THE ACT SHOULD NOT BE LEVIED , SINCE THE ASSESSEE HAD FAILED TO FURNISH THE TRUE AND CORRECT INCOME AT THE TIME OF FILING RETURNS OF INCOME U / S.153A OF THE ACT. IN REPLY, ASSESSEE SUBMITTED THAT THE ITAT DECIDED ASSESSEE'S APPEALS ON 30.07.2009 I.E. SUBSEQUENT TO THE RETURNS OF INCOME FILED BY THE ASSESSEE ON 17.02.2 009 PURSUANT TO NOTICES U/S.153A OF THE ACT AND THEREFORE, WHEN THE RETURNS OF INCOME WERE FILED ON 17.02.2009, ASSESSEE DID NOT ACCEPT THE ESTIMATION MADE BY THE A.O AND ITS APPEALS BEFORE ITAT WERE PENDING. THEREFORE, IT COULD NOT BE HELD THAT THE ASSES SEE OUGHT TO HAVE DECLARED INCOMES BASED ON 5% OF THE RECOVERIES MADE AS TAXABLE INCOMES. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT, THE ASSESSEE SUBMITTED REVISED COMPUTATIONS OF INCOME ON THE BASIS OF ITAT'S DIRECTION AND REQUESTED TO ACCEPT THE INCOMES AT RS.21,75,630 / - AND RS.48,11,190 / - FOR A.YRS.2002 - 03 AND 2003 - 04 RESPECTIVELY; IT I S APPARENT FROM THE ASSE SSMENT ORDERS THAT NO ADDITIONS/ DISALLOWANCES HAVE BEEN MADE IN THE ASSESSMENT AND INCOMES AS PER REVISED COMPUTATIONS OF INCOM E FILED BY THE ASSESSEE HAD BEEN ACCEPTED. IT WAS CONTENDED THAT THE CASE OF THE ASSESSEE D ID NOT CALL FOR LEVY OF PENALTY U/S.271 (1)( C) OF THE ACT AS NO INACCURATE PARTICULARS OF INCOME HA D BEEN FILED BY THE ASSESSEE. 4. HOWEVER, THE AO WAS NOT SATISFI ED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE THEREFORE LEVIED THE PENALTY IN QUESTION. ITA NO S. 419 & 420/M/2013 M/S. JUHU CONSTRUCTION CO. 4 IN APPEAL , THE LD. CIT(A) DELETED THE PENALTY SO LEVIED BY THE AO OBSERVING THAT IT WAS A CASE OF ESTIMATION OF INCOME ONLY AND THE ASSESSEE HAD ADOPTED THE ESTI MATED INCOME @ 5% OF THE RECOVERIES BY FOLLOWING THE DIRECTIONS OF THE ITAT. HE THEREFORE HELD THAT IT WAS NOT A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, HENCE DELETED THE PENALTY IN QUESTION. 5. NONE APPEARED ON BE HALF OF THE ASSESSEE. ACCORDINGLY, W E HAVE HEARD THE LD. D.R. AND ALSO HAVE GONE THROUGH THE RECORDS. FROM THE RECORDS IT IS ESTABLISHED THAT THOUGH THE ASSESSEE HAD ESTIMATED THE INCOME FROM THE PROJECTS UNDER PROGRESS IN LOSSES. HOWEVER, THE AO ESTIMAT ED THE SAME @ 20% WHICH WAS FURTHER CONFIRMED BY THE LD. CIT(A). THE ASSESSEE WENT IN APPEAL AND THE ITAT DIRECTED FOR ESTIMATION OF THE INCOME @5% OF THE RECOVERIES. THE ASSESSEE ACCORDINGLY FILED REVISED COMPUTATION OF INCOME AND ASSESSED THE SAME @ 5% OF THE RECOVERIES AS PER DIRECTION OF THE ITAT. IT WAS A PURE CASE OF ESTIMATION OF INCOME AND NOT A CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. THE LD. CIT(A) THUS RIGHTLY DELETED THE PENALTY IN RELATION TO ABOVE NOTED ASSESSMENT YEARS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD ACCORDINGLY. 6. IN THE RESULT, THE APPEALS OF THE REVENUE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.04. 201 4 . SD/ - SD/ - ( D. KARUNAKARA RAO ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 01.04. 201 4 . * KISHORE ITA NO S. 419 & 420/M/2013 M/S. JUHU CONSTRUCTION CO. 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.