ACIT 25(2), MUMBAI V. SHREE SWASTIK DEVELOPERS, MUMBAI

ITA 4656/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75571 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: VIPUL JOSHINISHIT GANDHI
• Keywords: Cost of acquisition; Wrong claim; Difference of opinion
• Section: 14A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENC H, MUMBAI .. , %, BEFORE S/SHRI B. R. BASKARAN, AM & AMIT SHUKLA, JM ./ ITA NO. 4656/MUM/2012 ( ' ' ' ' ' ' ' ' / / / / ASSESSMENT YEAR 2008-09) THE ASST COMMR OF INCOME TAX 25(2), MUMBAI / VS. SHREE SWASTIK DEVELOPERS 5 TH FLOOR - SAI SHOPPING MALL S V ROAD, OPP STATION BORIVALI (W) MUMBAI92 ./PAN : AAVFS8876P ( * /APPELLANT ) ( +,* / RESPONDENT ) * - / APPELLANT BY : SHRI ASHOK SURI +,* - / RESPONDENT BY : S/SHRI VIPUL JOSHI/NISHIT GANDHI - / /DATE OF HEARING : 13 TH FEB 2014 - / / DATE OF PRONOUNCEMENT : 19 TH , FEB 2014 / O R D E R PER B R BASKARAN,AM: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30.04.2012 PASSED BY THE LD CIT(A)- 35, MUMBAI AND IT RELATES TO THE AY 2008-09. 2. THE SOLITARY ISSUE URGED IS WHETHER THE LD CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY OF RS.1,39,07,662/- LEVIED BY THE AO U/S 2 71(1)(C) OF THE ACT. 3 THE FACTS THAT LED THE AO TO LEVY PENALTY U/S 271 (1)(C) ARE STATED IN BRIEF: THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN TH E BUSINESS OF BUILDERS AND M/S SHREE SWASTIK DEVELOPERS 2 DEVELOPERS. THE DEPARTMENT CARRIED OUT SURVEY OPERA TIONS IN THE HANDS OF THE ASSESSEE ON 13.9.2007. DURING THE COURSE OF SURVEY OPERATIO NS, THE ASSESSEE DECLARED AN AMOUNT OF RS.2,02,08,000/- AS ITS ADDITIONAL INCOME FROM SALE OF PARKING SPACE AND FLATS IN ITS PROJECT NAMED SADGURU COMPLEX EXECUT ED AT GOREGAON (EAST). SUBSEQUENTLY, IT FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 10.10.2008 DECLARING A TOTAL INCOME OF RS.3,55,4 4,415/-, WHICH INCLUDED THE ADDITIONAL INCOME OFFERED DURING THE COURSE OF SURV EY. 3.1 THE RETURN OF INCOME FILED BY THE ASSESSEE WAS TAKEN UP FOR COMPULSORY SCRUTINY. THE AO NOTICED THAT THE ASSESSEE HAS CLAI MED EXPENSES ON PURCHASE OF TDR AGAINST THE PROJECT COMPLETED DURING THE YEAR. THE TDR WAS PURCHASED FROM A CONCERN M/S AMI CORPORATION FOR A CONSIDERATION OF RS.3,22,29,676/-, VIDE AGREEMENT ENTERED ON 19.5.2008. THE AO NOTICED THAT THE DEVE LOPMENT RIGHT CERTIFICATE (DRC) ITSELF WAS ISSUED TO M/S AMI CORPORATION ON 19.03.2 008 AND THE AGREEMENT BETWEEN M/S AMI CORPORATION AND THE ASSESSEE WAS ENTERED ON 19.05.2008, I.E., DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10. AS PER TH E DRC UTILISATION FORM NO.32007 ISSUED ON 3.5.2008, THE ASSESSEE WAS ALLOWED TO UTI LISE BUILT UP AREA ADMEASURING 1710 SQ. MTS., OUT OF TOTAL BUILT UP AREA AVAILABLE IN DRC CERTIFICATE NO.0000681 DATED 19.3.2008 FOLIO NO. TDR/WS/WARD PS-164 OF 9217.10 S Q. MTS ISSUED TO M/S AMI CORPORATION. IT IS PERTINENT TO NOTE THAT M/S AMI CORPORATION HAD TRANSFERRED TDR RIGHTS OF 3750 SQ. MTS., TO A PARTY NAMED M/S PRANA Y INVESTMENT, VIDE AGREEMENT DATED 14.4.2008. SUBSEQUENTLY, M/S PRANAY INVESTME NT TRANSFERRED 1710 SQ. MTS TO M/S SHREE SWASTIK DEVELOPERS 3 THE ASSESSEE HEREIN, VIDE AGREEMENT DATED 07.05.200 8 OUT OF 3750 SQ. MTS. PURCHASED BY IT FROM M/S AMI CORPORATION. 3.2 IN VIEW OF THE ABOVE SAID FACTS, THE AO TO OK THE VIEW THAT THE ASSESSEE HAS GOT THE TDR RIGHTS ONLY IN THE SUCCEEDING YEAR. THE AS SESSEE ALSO DID NOT OFFER ANY EXPLANATION BEFORE THE AO DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. ACCORDINGLY, THE AO DISALLOWED THE EXPENDITURE OF RS.3,22,29,676 /- RELATING TO THE PURCHASE OF TDR RIGHTS. THE AO ALSO STATED THAT THIS WILL NOT FORM PART OF CLOSING WIP AS ON 31.3.2008 ALSO, SINCE THE TDR WAS PURCHASED BY THE ASSESSEE O NLY IN THE SUCCEEDING FINANCIAL YEAR, I.E. FINANCIAL YEAR 2008-09 RELEVANT TO THE A SSESSMENT YEAR 2009-10. IT IS PERTINENT TO NOTE THAT THE ASSESSEE ACCEPTED THIS D ISALLOWANCE AND HENCE IT DID NOT PREFER ANY APPEAL AGAINST THIS ADDITION. 4.0 THE ASSESSEE HAD ALSO CLAIMED A SUM OF RS.1 ,76,73,149/- TOWARDS THE COST OF LAND. THE AO NOTICED THAT THE NET PLOT AREA DEVELO PED BY THE ASSESSEE WAS 43,641.78 SQ. MTS, WHICH WAS FOUND TO BE SUB DIVIDED AS UNDER :- PLOT A - 21,807.18 SQ. MTS. PLOT B - 4,621.40 SQ. MTS. PLOT D - 17,213.20 SQ. MTS. --------------- 43,641.78 ======== ON PLOT A, BUILDING NO. 2 A & B WINGS WERE FOUND TO HAVE BEEN COMPLETED, WHILE BUILDING NO.4-C & D WINGS WERE PENDING. HENCE, THE AO TOOK THE VIEW THAT 50% OF PLOT A HAS BEEN UTILISED IN COMPLETED PROJECT. ON PLOT B, NO CONSTRUCTION HAD TAKEN M/S SHREE SWASTIK DEVELOPERS 4 PLACE. ON PLOT D, BUILDING NO. 5 A & B WINGS WERE FOUND TO HAVE BEEN COMPLETED, WHILE WING-C WAS INCOMPLETE. HENCE, THE AO TOOK TH E VIEW THAT 2/3 RD OF PLOT D HAS BEEN UTILISED IN THE COMPLETED PROJECT. ACCORDINGL Y, THE AO COMPUTED THE LAND AREA UTILISED IN PLOT A AS 10,903.59 SQ. MTS (50%) AND I N PLOT D AS 11,475.46 SQ. MTS (2/3 RD ). ACCORDINGLY, THE UNUTILISED AREA OF THE LAND WA S WORKED OUT BY THE AO AT 21,262.73 SQ. MTS. ACCORDINGLY, THE COST OF LAND A TTRIBUTABLE TO THE UNUTILISED AREA OF LAND WAS WORKED OUT BY THE AO AS RS.86,10,542/-. T HE AO TOOK THE VIEW THAT THE VALUE OF UNTILISED PORTION OF LAND SHOULD FORM PART OF THE WORK IN PROGRESS AS ON 31.3.2008. THE ASSESSEE SUBMITTED BEFORE THE AO TH AT IT HAS CONSUMED THE BASE LAND FSI IN THE PROJECTS ALREADY COMPLETED AND THE BALAN CE PROJECTS WILL BE COMPLETED ON THE BASIS OF TDR PURCHASED BY IT. ACCORDINGLY, THE ASSESSEE CONTENDED THAT THE ENTIRE COST OF LAND SHOULD BE DEDUCTED AGAINST THE COMPLET ED PROJECTS. THE AO DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND ACCORDIN GLY ADDED THE VALUE OF UTILISED LAND AMOUNTING TO RS.86,10,542/- TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE ACCEPTED THIS ADDITION ALSO AND HENCE IT DID NOT CH ALLENGE THE SAME BY FILING APPEAL. 5. DURING THE COURSE OF SURVEY OPERATIONS, PHYS ICAL CASH OF RS.1,80,000/- WAS FOUND, WHILE THE CASH BALANCE SHOWN IN THE BOOKS OF ACCOUN TS WAS RS.1,03,000/-. THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE OF RS.7 7,000/- AND HENCE THE AO ADDED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. THE AS SESSEE ACCEPTED THIS ADDITION ALSO. M/S SHREE SWASTIK DEVELOPERS 5 6. THE AO, DURING THE COURSE OF PENALTY PROCEED INGS, ASKED THE ASSESSEE TO FURNISH EXPLANATIONS WITH REGARD TO THE PENALTY NOTICE. TH E ASSESSEE FURNISHED FOLLOWING EXPLANATIONS BEFORE THE AO (AS EXTRACTED BY THE AO IN THE PENALTY ORDER): 3. THE TDR WAS ISSUED ON 19.03.2008 TO AMIT CORP ORATION AND THE SAME WAS THEN SOLD TO THE ASSESSEE ON 19.05.2008. THE ASSES SEE WAS OF THE VIEW THAT THE TDR WAS ORIGINALLY ISSUED ON 19.03.2008, THE SAME C AN BE CLAIMED AS DEDUCTION IN A.Y 2008-09. HOWEVER, DURING THE SURVEY PROCEED INGS THE ASSESSEE CAME TO KNOW THE MISTAKE AND UNDISPUTEDLY AGREE TO ADD THE SAME TO THE TOTAL INCOME. 4. IN THE CASE OF LAND, PLEASE NOTE THAT THE ASS ESSEE HAS CONSUMED THE BASE LAND FSI IN THE PROJECTS ALREADY COMPLETELY. THE B ALANCE PROJECTS WILL BE COMPLETED ON THE BASIS OF TDR PURCHASED BY THE ASSE SSEE. RELYING ON THE SAME, THE ASSESSEE CLAIMED THE COMPLETE COST OF LAN D AGAINST COMPLETED PROJECTS. HOWEVER, DURING SCRUTINY PROCEEDINGS, TH E ASSESSEE BECAME AWARE THAT DEDUCTION OF ENTIRE LAND COST ON SUCH BASIS CA NNOT BE MADE AND ACCORDINGLY UNDISPUTEDLY AGREED TO ADD THE SAME TO THE TOTAL IN COME. 5. PLEASE NOTE THAT, IN BOTH THE ABOVE DEDUCTIO NS CLAIMED, THE ASSESSEE HAD NO INTENTION OF MISLEADING. THE SAID EXPENSES WILL HAVE TO BE CLAIMED AS DEDUCTION WHETHER THAT IS CLAIMED IN THIS YEAR OR N EXT YEAR. THE EXPENSES CLAIMED ARE GENUINELY INCURRED. NO DUMMY OR INCOR RECT EXPENSES IS CLAIMED AS DEDUCTION. HOWEVER, WITH REGARD TO THE CASH DIFFERENCE, THE AS SESSEE DID NOT OFFER ANY EXPLANATION. THE AO WAS NOT CONVINCED WITH THE EXPL ANATIONS FURNISHED BY THE ASSESSEE. THE AO NOTICED THAT THE ASSESSEE HAS PUR CHASED TDR RIGHTS ONLY ON 19.5.2008, VIDE AGREEMENT ENTERED WITH M/S AMI CORP ORATION ON 19.05.2008, I.E., IN THE SUCCEEDING YEAR. HENCE THE AO TOOK THE VIEW THA T THE PAYMENTS MADE FOR THE PURCHASE OF TDR CANNOT BE CLAIMED IN THE INSTANT YE AR. IN RESPECT OF LAND, THE AO TOOK THE VIEW THAT THE LAND COST CAN BE ALLOWED ONLY IN THE YEAR IN WHICH THE CONSTRUCTION WAS COMPLETED ON A PARTICULAR AREA OF LAND. THE AO ALSO TOOK NOTE OF THE FACT THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED BY A CHARTERED ACCOUNTANT AND THE M/S SHREE SWASTIK DEVELOPERS 6 RETURN HAS BEEN FILED WITH THE HELP OF/ UNDER THE G UIDANCE OF THE CHARTERED ACCOUNTANT. ACCORDINGLY, THE AO CAME TO THE CONCL USION THAT THE ASSESSEE WAS AWARE THAT THT EXPENSES CLAIMED UNDER TDR AND THE LAND CO ST WERE WRONGLY CLAIMED. ACCORDINGLY, THE AO CONCLUDED THAT THE ASSESSEE HAS CONCEALED INCOME WITH MALAFIDE INTENTION BY FURNISHING INACCURATE PARTICULARS OF I TS CORRECT INCOME. ACCORDINGLY, THE AO LEVIED PENALTY EQUIVALENT TO 100% OF TAX FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. 7. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) PLACED STRONG RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETRO PRODUCTS PVT LTD (322 ITR 158)(SC) AND DELETED THE PENALTY LEVIE D ON DISALLOWANCE OF TDR PURCHASE EXPENSES AND LAND COST. THE RELEVANT OBSERVATIONS MADE BY LD CIT(A) ARE EXTRACTED BELOW:- 11. I HAVE CONSIDERED THE SUBMISSIONS OF THE R EPRESENTATIVE AND THE STAND TAKEN BY THE AO. ALTHOUGH THE AO WAS CORRECT IN DI SALLOWING THE SAID EXPENSES IN THE LIGHT OF FACT THAT THE SAME DOES NOT RELATE TO FINANCIAL YEAR UNDER CONSIDERATION, BUT THE SAME BY ITSELF DOES NOT AMOU NT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. I UNDERSTAND THAT THE APPELLANT HAD MADE WRONG CLAIMS FOR THESE EXPENSES AND ACCORDINGLY WERE DISALLOWED IN ASSESSMENT PROCEEDINGS. HOWEVER, THE IR DISALLOWANCE DOES NOT BY ITSELF MEAN WILLFUL CONCEALMENT OR INACCURATE FURNI SHING OF INCOME. AGGRIEVED BY THE ORDER PASSED BY LD CIT(A), THE REV ENUE HAS FILED THIS APPEAL BEFORE US. IT IS PERTINENT TO NOTE THAT THE ASSESSEE DID NOT CONTEST THE PENALTY LEVIED ON THE CASH BALANCE DIFFERENCE. M/S SHREE SWASTIK DEVELOPERS 7 8. THE LD D.R PLACED RELIANCE ON THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD VS. CIT (2013)(38 TAXMANN.COM 4 48)(SC) AND SUBMITTED THAT THE MERE ACCEPTANCE OF ADDITIONS WOULD NOT RELIEVE THE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS UNDER SECTION 271(1)(C). HE SUBM ITTED THAT THE HONBLE APEX COURT HAS FURTHER OBSERVED THAT THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HA S TO BE ABSOLVED FROM PENALTY. THE LD D.R FURTHER SUBMITTED THAT THE ASSESSEE HAS MADE THE CLAIM OF DEDUCTION FOR TDR PURCHASE EXPENSES AND LAND COST EXPENSES, KNOWING F ULLY WELL THAT THEY CANNOT BE ALLOWED AS DEDUCTION DURING THE YEAR UNDER CONSIDER ATION. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) HAS MISGUIDED HIMSELF IN PLACING RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS ( P) LTD (SUPRA), SINCE THE ASSESSEE IN THE INSTANT CASE HAS CLAIMED DEDUCTION FOR EXPENSES WHICH DO NOT RELATE TO THE YEAR UNDER CONSIDERATION. 9. ON THE CONTRARY, THE LD A.R SUBMITTED THAT T HERE IS DISPUTE THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON PURCHASE OF TDR RIGHTS AND ALSO ON PURCHASE OF LAND. THE AO HAS DISALLOWED BOTH THE ITEMS OF EXPENDITURE ON THE REASONING THAT THEY ARE NOT ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE ASSESSEE PURCHASED TDR RIGHTS THROUGH M/S PRANAY INVESTMENT. THE LD A.R, BY FURNISHING A COPY OF LEDGER ACCOUNT COPY OF THE ACCOUNT TITLED A S PRANAY INVESTMENT TDR, SUBMITTED THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 3,22,29,676/- TO M/S PRANAY M/S SHREE SWASTIK DEVELOPERS 8 INVESTMENT AS DETAILED BELOW DURING THE FINANCIAL Y EAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION:- (1) RS.1,00,00,000/- BY CHEQUE NO. 034406 ON 25. 10.2007 (2) RS.1,00,00,000/- BY CHEQUE NO. 034435 ON 29 .10.2007 (3) RS. 50,00,000/- BY CHEQUE NO. 034458 ON 0 2.11.2007 (4) RS. 40,00,000/- BY CHEQUE NO. 34499 ON 14.11.2007 (5) RS. 10,00,000/- BY CHEQUE NO. 34500 ON 17.11.2007 (6) RS. 22,29,676/- BY CHEQUE NO. 034452 ON 3 0.11.2007 THE LD A.R SUBMITTED THAT THE ABOVE SAID PAYMENT DE TAILS FIND PLACE IN THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND M/S PRANAY INVESTM ENTS. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE, HAVING MADE THE PAYMENTS DURING THE FINANCIAL 2007-08 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, CLAIMED TH E SAME AS DEDUCTION. HE SUBMITTED THAT THE TDR WAS PURCHASED IN CONNECTION WITH THE ON-GOING PROJECT AND HENCE THE ASSESSEE CLAIMED THE SAME AS DEDUCTION. HE SUBMITTED THAT THOUGH THE AMOUNT OF PURCHASE OF TDR WAS DISALLOWED DURING THE YEAR UNDER CONSIDERATION, YET THE AO HAS ALLOWED THE SAME IN THE SUCCEEDING YEAR. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY INACCURATE PARTICU LARS OF INCOME, AS ALLEGED BY THE AO, BUT THE ASSESSING OFFICER HAS ONLY SHIFTED THE DEDU CTION TO THE SUCCEEDING YEAR. SINCE THE SAID ADJUSTMENT WAS REVENUE NEUTRAL, THE ASSESS EE ALSO ACCEPTED TO THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE L D A.R FURTHER SUBMITTED THAT THE ASSESSEE ENTERED INTO THE AGREEMENT WITH M/S PRANAY INVESTMENTS ONLY IN THE SUCCEEDING YEAR TO FORMALLY REDUCE THE TERMS AND CO NDITIONS IN WRITING AND HENCE THE DATE OF AGREEMENT CANNOT BE CONSIDERED AS A DECIDIN G FACTOR. M/S SHREE SWASTIK DEVELOPERS 9 9.1 WITH REGARD TO THE DISALLOWANCE OF LAND CO ST, THE LD A.R SUBMITTED THAT THE ASSESSEE HAD FULLY CONSUMED THE BASE LAND FSI IN TH E PROJECTS ALREADY COMPLETED AND HENCE IT CLAIMED THE ENTIRE AMOUNT OF LAND COST AS DEDUCTION. THE ASSESSEE PROCEEDED TO PURCHASE TDR TO CARRY OUT BALANCE PORTION OF THE PROJECT. HERE AGAIN, THE AO HAS ALLOWED THE COST OF LAND OF RS.86,10,542/- (DISALLO WED PORTION) IN THE SUCCEEDING ASSESSMENT YEARS AS DETAILED BELOW:- ASSESSMENT YEAR AMOUNT CLAIMED AMOUNT ALLO WED BY AO 2009-10 34,44,217 34,44,217 2010-11 34,44,217 34,44,217 2011-12 17,22,108 ASST. PENDING -------------- 86,10,542 ======= THE LD A.R SUBMITTED THAT, IN THIS ITEM OF EXPENDIT URE ALSO, THE QUESTION WAS RELATED TO THE YEAR OF ALLOWANCE OF THE EXPENDITURE ONLY. 9.2 THE LD A.R FURTHER SUBMITTED THAT BOTH THE CLAIM REFERRED ABOVE WERE BONA FIDE CLAIMS AND THERE WAS DIFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE WITH REGARD TO THE YEAR IN WHICH THE SAID DEDUCTIONS ARE ALLOWABLE. BY PLACING RELIANCE ON THE FOLLOWING CASE LAW, THE LD A.R CONTENDED THAT N O PENALTY CAN BE LEVIED, JUST BECAUSE A CLAIM MADE BY THE ASSESSEE WAS DISALLOWED . (A) CIT VS. RELIANCE PETRO PRODUCTS (P) LTD (201 0)(322 ITR 158)(SC) (B) T. ASHOK PAI VS. CIT (2007)(292 ITR 11)(SC). (C) MAKINO ASIA PVT LTD (2013)(40 TAXMANN.COM 16 9)(KAR) (D) ACIT VS. ARISUDANA SPINNING MILLS LTD (2010) (326 ITR 429)(P & H) (E) CIT VS. DALMIA AGENCIES (P) LTD (2010)(186 T AXMANN 155)(DEL) (F) CIT VS. LOTUS TRANS TRAVELS (P) LTD (2009)(17 7 TAXMAN 37)(DEL) (G) CIT VS. MICA WOOD (P) LTD (2008)(170 TAXMAN 2 56)(DEL) (H) BALAJI VEGETABLE PRODUCTS (P) LTD VS. CIT (20 07)(290 ITR 172)(KAR) (I) CIT VS. INTERNATIONAL AUDIO VISUAL CO. (2007) (288 ITR 570)(DEL) M/S SHREE SWASTIK DEVELOPERS 10 (J) CIT VS. CAPLIN POINT LABORATORIES LTD (2007)( 293 ITR 524)(MAD) (K) INDIAN CINE AGENCIES VS. DCIT (2005)(275 ITR 430)(MAD) THE LD A.R HAS ALSO PLACED RELIANCE ON A HOST OF TR IBUNAL DECISIONS, WHICH ARE LISTED IN THE WRITTEN SUBMISSIONS FILED BY HIM, TO SUPPORT HI S CONTENTIONS. THE LD A.R FURTHER SUBMITTED THAT THE AO HAS IMPOSED THE PENALTY BY HO LDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, BUT TH E FACT REMAINS THAT THE ASSESSEE DID NOT FURNISH ANY INACCURATE PARTICULARS OF INCOME. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAR EFULLY PERUSED THE RECORD. ACCORDING TO LD A.R, THE AO HAS IMPOSED THE PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, IT WAS CONTEND ED THAT THE ASSESSEE DID NOT FURNISH ANY INACCURATE PARTICULARS OF INCOME AND THE AO HAD MADE THE IMPUGNED ADDITIONS, AS HE WAS OF THE VIEW THAT BOTH THE CLAIMS ARE NOT ALL OWABLE DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE LD A.R CONTENDED T HAT THE PENALTY CANNOT BE LEVIED WHEN THE AO IS TAKING A DIFFERENT VIEW ABOUT THE YE AR OF ALLOWABILITY. 10.1 HENCE, WE NEED TO EXAMINE AS TO WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR NOT. FURTHER WE NOTICE THAT, UNDER EXPLANATION 1 WHICH READS AS UNDER, ALL THE ADDITIONS ARE DEEMED TO BE THE INCOME IN RESPECT OF WHICH THE PARTICULARS OF INCOME HAVE BEEN CONCEALED :- EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, M/S SHREE SWASTIK DEVELOPERS 11 ( A ) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR ( B ) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE ( C ) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. HENCE, WE NEED TO EXAMINE AS TO WHETHER THE ASSESSE E HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER EXPLANATION 1 TO SEC. 271. 10.2 AS STATED EARLIER, EXPLANATION 1 TO SEC. 2 71 OF THE ACT PLACES THE PRIMARY BURDEN TO OFFER EXPLANATIONS ON THE ASSESSEE. THIS IS SO HELD BY HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD VS. CIT (SUP RA). THE RELEVANT OBSERVATIONS MADE BY THE HONBLE APEX COURT ARE EXTRACTED BELOW FOR THE SAKE OF CONVENIENCE:- 7 THE QUESTION IS WHETHER THE ASSESSEE HAS OFFER ED ANY EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO SEC. 271(1) RAISES A PRESUMP TION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AO, BETWEEN REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, B Y COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPL ANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE. 10.3 IT IS THE CONTENTION OF THE LD A.R THAT TH E ASSESSEE DID NOT FURNISH ANY INACCURATE PARTICULARS OF INCOME, I.E., ACCORDING T O HIM THE QUESTION WAS ABOUT THE YEAR M/S SHREE SWASTIK DEVELOPERS 12 OF ALLOWABILITY OF BOTH THE CLAIMS VIZ., THE COST O F PURCHASE OF TDR AND THE COST OF PURCHASE OF LAND. THE WORDS INACCURATE PARTICULAR S OF INCOME CAME FOR CONSIDERATION BEFORE THE HONBLE SUPREME COURT IN THE CASE OF REL IANCE PETROPRODUCTS PVT LTD (2012)(322 ITR 158)(SC). FOR THE SAKE OF CONVENIEN CE, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY THE HONBLE APEX COURT:- AS PER LAW LEXICON, THE MEANING OF THE WORD PARTICULAR IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE S EPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD PARTICULARS USED IN THE SECT ION 271(1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF HE CLAIM MADE.. WE ARE NOT CONCERNED IN THE PRESENT CAE WITH THE M ENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A M ATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTERS DICTION ARY, THE WORD INACCURATE HAS BEEN DEFINED AS : NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTI CULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION , THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. 10.4 A COMBINED READING OF BOTH THE DECISIONS O F HONBLE APEX COURT, I.E., THE DECISIONS RENDERED IN THE CASE OF MAK DATA (P) LTD (SUPRA) AND RELIANCE PETROPRODUCTS (P) LTD (SUPRA), IT MAY BE NOTICED THAT THE ASSESSE E CAN BE HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME ONLY IF THE DETAIL S SUPPLIED IN THE RETURN, ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS. FURTHER THE ASSESSEE, IN ORDER TO DISCHARGE THE PRESUMPTION OF CONCEALMENT OF PARTICULARS OF INCOME RAISED UPON HIM BY EXPLANATION 1 TO SEC. 271 M/S SHREE SWASTIK DEVELOPERS 13 (A) SHOULD OFFER AN EXPLANATION WHICH IS NOT FOUN D BY THE TAX AUTHORITIES AS NOT FALSE. OR (B) IF HE OFFERS AN EXPLANATION WHICH HE IS NOT AB LE TO SUBSTANTIATE, THEN HE HAS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL I NCOME HAVE BEEN DISCLOSED BY HIM. 11. BY DULY CONSIDERING THE LEGAL POSITION DIS CUSSED ABOVE, WE SHALL EXAMINE THE FACTS PREVAILING IN THE CASE VIS--VIS EXPLANATIONS OFFERED BY THE ASSESSEE. THE FIRST ADDITION RELATES TO THE DISALLOWANCE OF CLAIM OF TD R PURCHASE EXPENSES. IN AN EARLIER PARAGRAPH, WE HAVE ALREADY EXTRACTED THE EXPLANATIO N FURNISHED BY THE ASSESSEE BEFORE THE AO DURING THE COURSE OF PENALTY PROCEEDINGS, I. E., ACCORDING TO THE ASSESSEE, THE TDR WAS ISSUED TO M/S AMIT CORPORATION ON 19.3.2008 AND THE SAME WAS PURCHASED BY THE ASSESSEE ON 19.05.2008. SINCE THE TDR WAS ISSU ED ON 19.3.2008, THE ASSESSEE CLAIMED THAT IT WAS UNDER THE IMPRESSION THAT THE S AME CAN BE CLAIMED AS DEDUCTION DURING THE YEAR UNDER CONSIDERATION. WHEN IT CAME TO KNOW OF THE MISTAKE, IT AGREED FOR THE ADDITION OF THE SAME TO THE TOTAL INCOME. 11.1 HOWEVER, DURING THE COURSE OF HEARING BEFO RE US, THE LD A.R SUBMITTED AS UNDER:- (A) THE ASSESSEE PURCHASED THE TDR RIGHTS THROUG H M/S PRANAY INVESTMENTS AND THE PAYMENTS WERE MADE TO M/S PRANAY INVESTMENT S DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION. (B) THE FORMAL AGREEMENT WAS ENTERED WITH M/S P RANAY INVESTMENTS IN THE SUCCEEDING YEAR. M/S SHREE SWASTIK DEVELOPERS 14 (C) THE TDR WAS PURCHASED AGAINST THE ON-GOING PROJECT ONLY. SINCE THE PAYMENT WAS MADE DURING THE YEAR CONSIDERATION, THE ASSESSEE CLAIMED THE SAME AS DEDUCTION. (D) THE AO HAS ALLOWED THE TDR PURCHASE COST IN THE SUCCEEDING YEAR AND HENCE THE QUESTION WAS ABOUT THE YEAR OF ALLOWABILI TY. IT CAN BE NOTICED THAT THE LD A.R HAS FURNISHED AN ALTOGETHER NEW EXPLANATIONS BEFORE US AND THEY WERE NOT FURNISHED BEFORE THE ASSESSING OFFICER. 11.2 HOWEVER, FROM THE MATERIALS FURNISHED BEFO RE US, FOLLOWING FACTS EMERGE OUT:- (A) IT IS NOT KNOWN WHETHER THERE IS ANY AGREEME NT BETWEEN THE ASSESSEE AND M/S AMIT CORPORATION. IT IS PERTINENT TO NOTE THE TDR RIGHTS WERE PURCHASED BY THE ASSESSEE FROM M/S PRANAY INVESTMENTS ONLY. THE ASSESSEE HAS NOT FILED THE AGREEMENT, IF ANY, ENTERED WITH M/S AMI CORPORATION , THOUGH IT HAS ALL ALONG BEEN CLAIMING THAT IT HAS PURCHASED THE TDR RIGHTS FROM M/S AMIT CORPORATION. (B) IN THE ASSESSMENT ORDER, THE AO REFERS TO AN AGREEMENT DATED 19.05.2008 ENTERED BETWEEN THE ASSESSEE AND M/S AMIT CORPORATI ON. IN THE EXPLANATIONS GIVEN BY THE ASSESSEE DURING THE COURSE OF PENALTY PROCEEDINGS ALSO, THE AGREEMENT DATED 19.5.2008 IS REFERRED TO. AS STATE D EARLIER, THIS AGREEMENT WAS NOT BROUGHT ON RECORD. (C) BEFORE US, THE ASSESSEE FILED AN AGREEMENT DA TED 07-05-2008 ENTERED BETWEEN M/S PRANAY INVESTMENT AND THE ASSESSEE HERE IN. IT APPEARS THAT THIS AGREEMENT WAS NOT FURNISHED BEFORE THE AO, SINCE TH E PENALTY ORDER DOES NOT CONTAIN ANY DISCUSSION ABOUT THIS DOCUMENT. (D) AS PER THE RECITALS MADE IN THE AGREEMENT DAT ED 07-05-2008 ENTERED WITH M/S PRANAY INVESTMENT, THE TDR CERTIFICATE WAS ISSU ED TO M/S AMI CORPORATION ON 19.03.2008 FOR 9217.10 SQ. MTR AND M/S PRANAY IN VESTMENT OBTAINED TDR RIGHTS FOR 3750 SQ. MTS, VIDE AGREEMENT ENTERED BET WEEN BOTH OF THEM ON 14.4.2008. THERE AFTER M/S PRANAY INVESTMENTS HAVE SOLD TDR RIGHTS OF 1710 SQ. MTS TO THE ASSESSEE, VIDE AGREEMENT DATED 07-05 -2008. THESE SEQUENCE OF EVENTS SHOW THAT THERE IS ACTUALLY NO CONNECTION BE TWEEN THE ASSESSEE AND M/S AMI CORPORATION AND HENCE THE EXISTENCE OF AGREEMEN T DATED 19.05.2008 BETWEEN THE ASSESSEE AND M/S AMI CORPORATION IS, IN OUR VIEW, DOUBTFUL. M/S SHREE SWASTIK DEVELOPERS 15 (E) IT APPEARS THAT THE ASSESSEE HAS MADE PAYMEN TS AGGREGATING TO RS.3.22 CRORES TO M/S PRANAY INVESTMENTS DURING OCTOBER AND NOVEMBER, 2007 ON THE STRENGTH OF A LETTER DATED 27.10.2007 ISSUED BY M/S PRANAY INVESTMENTS TO THE ASSESSEE, WHEREIN THE SUBJECT OF THE LETTER IS MENT IONED AS MEMORANDUM OF UNDERSTANDING. THE LD A.R FURNISHED A COPY OF THE SAME BEFORE US AND IT IS NOT KNOWN AS TO WHETHER THE SAID LETTER WAS FURNISH ED TO THE AO OR NOT. HOWEVER, A CAREFUL READING OF THE TERMS AND CONDITI ONS MENTIONED THEREIN, WE NOTICE THAT M/S PRANAY INVESTMENT WOULD BE DELIVERI NG 1710 SQ. MTS OF TDR TO THE ASSESSEE ON OR BEFORE 15 TH MARCH, 2008 AND FURTHER A GRACE PERIOD OF 15 DAYS ARE ALSO REQUIRED TO BE ALLOWED TO THEM. FURT HER IT IS STATED THAT THERE CAN BE QUANTITY VARIATION OF +/- 10%, I.E., THE AREA OF TDR TO BE DELIVERED CAN BE +/- 1710 SQ. MTS. AS PER CLAUSE 3 OF THE LETTER, THE PAYMENT OF RS.3.27 CRORES IS REQUIRED TO BE MADE TO THEM ON COUNTERSIGNING TH E ABOVE SAID LETTER. THESE CLAUSES CLEARLY SHOW THAT M/S PRANAY INVESTMENTS DI D NOT POSSESS THE TDR RIGHTS IN THEIR HANDS AT THE RELEVANT POINT OF TIME , WHEN THE LETTER WAS ISSUED TO THE ASSESSEE. THEY HAVE RECEIVED THE MONEY FROM TH E ASSESSEE ONLY TO IDENTIFY THE PROSPECTIVE SELLER AND MAKE PAYMENT TO THEM. I T IS FURTHER BECOME CLEAR THAT M/S PRANAY INVESTMENT HAS PURCHASED THE TDR RI GHTS OF 3750 SQ. MTS FROM M/S AMI CORPORATION ONLY ON 14.4.2008. SUBSEQUENTL Y, M/S PRANAY INVESTMENTS HAS TRANSFERRED 1710 SQ. MTS TO THE ASSESSEE ON 07. 05.2008. (F) THE FOREGOING DISCUSSIONS WOULD SHOW THAT THE PAYMENTS MADE TO M/S PRANAY INVESTMENTS DURING OCT. AND NOV. 2007 WERE I N THE NATURE OF ADVANCE PAYMENTS AND THE ASSESSEE WOULD HAVE COME TO KNOW A BOUT THE FINALISATION OR PURCHASE OF THE TDR RIGHTS LATEST BY 14.4.2008 ONLY , I.E., THE DAY ON WHICH M/S PRANAY INVESTMENTS OBTAINED RIGHTS FROM M/S AMI COR PORATION. FURTHER, THE ASSESSEE WAS ALLOWED TO USE THE TDR RIGHTS OF 1710 SQ. MTS BY GOVERNMENT AUTHORITIES, VIDE DRC UTILISATION FORM NO.32007 ISS UED ON 3.5.2008. THIS FACT ALSO REINFORCES THE VIEW THAT THE ASSESSEE HAS PAID ONLY ADVANCE DURING THE YEAR UNDER CONSIDERATION. THERE SHOULD NOT BY ANY DISPU TE THAT THE ADVANCE PAID BY THE ASSESSEE CONSTITUTES CAPITAL PAYMENT AND THE SAME CANNOT BE CLAIMED AS DEDUCTION. HENCE, THE CONTENTIONS OF THE ASSESSEE THE DEDUCTION WAS CLAIMED SINCE THE PAYMENTS WERE MADE DURING THE YEAR UNDER CONSIDERATION IS AGAINST THE FACTS. (G) THE LD A.R HAS FURNISHED A STATEMENT CONTAIN ING THE DETAILS OF FSI AND TDR. FROM THE SAID STATEMENT, WE NOTICE THAT THE A SSESSEE HAS UTILISED THE TDR OF 1710 SQ. MTS AGAINST C & D WING OF PLOT A. WE H AVE ALREADY NOTICED THAT THE C & D WING WAS NOT COMPLETED DURING THE YEAR UNDER CONSIDERATION AND HENCE THE AO DISALLOWED THE CLAIM OF LAND COST PERTAINING TO C & D WING. IN VIEW OF THE ABOVE SAID FACT, THE ASSESSEE SHOULD BE ELIGIBL E TO CLAIM THE COST OF TDR, ONLY AGAINST THE REVENUE GENERATED FROM C & D WING. HOWEVER, THE ASSESSEE HAS CLAIMED THE SAME AGAINST THE COMPLETED PROJECTS . THESE FACTS ALSO DEMONSTRATE THAT THE ASSESSEE HAS NOT FURNISHED COR RECT DETAILS BEFORE THE AO, M/S SHREE SWASTIK DEVELOPERS 16 I.E., THE ASSESSEE HAS MADE WRONG CLAIM FOR DEDUCTI ON, WHICH IS NOT ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. 11.3 THE DISCUSSIONS MADE IN THE PRECEDING PARA GRAPH WOULD SHOW THAT THE ASSESSEE HAS MADE INCORRECT OR ERRONEOUS CLAIM OF COST OF TDR AGAINST THE PROJECTS COMPLETED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEES CONTENTION IS THAT THERE IS NO INACCURACY WITH REGARD TO THE PARTICULA RS. HOWEVER, AS HELD BY HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD (SUPRA), FURNISHING OF INCORRECT OR ERRONEOUS DETAILS OR THE DETAILS WHICH ARE NOT IN ACCORDANCE WITH TRUTH, WILL FALL IN THE CATEGORY OF INACCURATE PARTICULARS OF INCOME. FURTHER AS PER EXPLANATION 1 OF SEC. 271, THE ASSESSEE IS REQUIRED TO GIVE EXP LANATIONS WHICH ARE NOT FOUND TO BE FALSE. THE DISCUSSIONS MADE IN THE PRECEDING PARAG RAPH WOULD SHOW THAT THE ASSESSEE HAS NOT GIVEN TRUE EXPLANATIONS, BUT IT HAS ALSO FA ILED TO PROVE THE SAME TO BE A BONAFIDE ONE. FURTHER IT ALSO FAILED TO FURNISH AL L THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF INCOME. HENCE, IN OUR VIEW, THE ASSESSEE HAS ALSO FAILED TO DISCHARGE THE PRIMARY BURDEN PLACED UPON HIM UNDER EXPLANATION 1 TO SEC. 271, IN WHICH CASE, THE ADDITION OF TDR RIGHTS SHAL L BE DEEMED TO BE CONCEALMENT OF PARTICULARS OF INCOME. 11.4 SINCE WE HAVE TAKEN THE ABOVE CITED VIEW O N THE BASIS OF PECULIAR FACTS PREVAILING IN THE INSTANT CASE BY FOLLOWING THE TWO DECISIONS RENDERED BY HONBLE SUPREME COURT (REFERRED ABOVE), WE DO NOT FIND IT N ECESSARY TO CONSIDER ALL OTHER DECISIONS THAT WERE RELIED UPON BY THE ASSESSEE. M/S SHREE SWASTIK DEVELOPERS 17 11.5 WE NOTICE THAT THE LD CIT(A) HAS DELETED THE PENALTY BY PLACING RELIANCE IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD (SUPRA). WE NOTICE THAT THE FACTS PREVAILING THEREIN WAS THAT THE ASSESSEE CLAIMED INTEREST EXPE NSES INCURRED ON THE LOAN TAKEN FOR INVESTING IN PURCHASE OF IPL SHARES, AS PER THE BUS INESS POLICY. THE AO DISALLOWED THE INTEREST CLAIM BY INVOKING PROVISIONS OF SEC. 14A O F THE ACT, SINCE THE ASSESSEE THEREIN DID NOT EARN ANY INCOME BY WAY OF DIVIDEND. THE HO NBLE APEX COURT NOTICED THAT THE ASSESSEE THEREIN HAD FURNISHED ALL THE DETAILS OF I TS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUN D TO BE INACCURATE OR FACTUALLY INCORRECT. FURTHER, THE HONBLE APEX COURT GAVE A SPECIFIC FINDING THAT THE DEPARTMENT DID NOT FIND ANY FAULT WITH THE PARTICULARS SUBMITT ED BY THE ASSESSEE IN ITS RETURN. IN ADDITION TO THE ABOVE, IN OUR VIEW, FOLLOWING OBSER VATIONS MADE BY THE HONBLE SUPREME COURT ARE VERY MUCH RELEVANT:- BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. IN THE ABOVE CITED CASE, THE CLAIM OF INTEREST EXPE NDITURE BECAME INCORRECT, ONLY IN VIEW OF THE PROVISIONS OF SEC. 14A OF THE ACT AND H ENCE THE HONBLE SUPREME COURT OBSERVED THAT MAKING OF AN INCORRECT CLAIM IN LAW C ANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. M/S SHREE SWASTIK DEVELOPERS 18 11.6 HOWEVER, IN THE INSTANT CASE, THE ASSESSEE HAS MADE CLAIM FOR DEDUCTION OF TDR PURCHASE COST, WHICH IS NOT ALLOWABLE DURING TH E YEAR UNDER CONSIDERATION. THE ASSESSEE HAS ALSO ACCEPTED THIS FACT AND HENCE AGRE ED TO THE DISALLOWANCE OF THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE , IN OUR VIEW, THE DISALLOWANCE OF TDR EXPENSES WOULD NOT FALL IN THE CATEGORY OF INC ORRECT CLAIM IN LAW. HENCE, IN OUR VIEW, THE DECISION RENDERED BY HONBLE SUPREME COUR T IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD (SUPRA) CANNOT BE TAKEN SUPPO RT OF BY THE ASSESSEE AND THE LD CIT(A) WAS NOT CORRECT IN PLACING RELIANCE ON THE S AID DECISION TO DELETE THE PENALTY ON THIS ISSUE. ACCORDINGLY, WE REVERSE THE ORDER OF L D CIT(A) ON THIS ISSUE AND RESTORE THE PENALTY LEVIED BY THE AO ON THIS ADDITION. 12. THE AO HAS LEVIED PENALTY ON THE DISALLOWA NCE OF PROPORTIONATE COST INCURRED ON PURCHASE OF LAND. IT IS A SETTLED PRINCIPLE OF COM PUTATION OF INCOME THAT THE INCOME SHOULD BE ASCERTAINED UNDER REVENUE-COST MATCHING PRINCIPLE. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS CLAIMED ENTIRE LAND COST AGAI NST THE COMPLETED PROJECTS, THOUGH THE PART OF LAND COST RELATED TO THE PENDING PROJEC TS. HENCE, THE AO NOTICED THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT IN ACCORDANCE WI TH THE ACCOUNTING PRINCIPLES. HENCE THE AO HAS DISALLOWED A PART OF LAND COST PRO PORTIONATE TO THE UNCOMPLETED PROJECTS, WHICH THE ASSESSEE HAS ALSO AGREED TO. 12.1 THE CONTENTION OF THE ASSESSEE IS THAT IT HAS CONSUMED THE BASE LAND FSI IN THE PROJECTS ALREADY COMPLETED BY IT AND THE BALANCE PO RTION OF THE PROJECT SHALL BE M/S SHREE SWASTIK DEVELOPERS 19 COMPLETED ON THE BASIS OF TDR PURCHASED BY IT. HOW EVER THIS EXPLANATION, IN OUR VIEW, DEFIES THE LOGIC AND ALSO ACCOUNTING PRINCIPLES. WHEN THE ASSESSEE IS COMPUTING INCOME ON THE COMPLETED PROJECTS, IT IS NOT KNOWN A S TO HOW IT COULD CLAIM LAND COST PERTAINING TO UNFINISHED PROJECTS AGAINST THOSE COM PLETED PROJECTS. WHEN IT WAS POINTED OUT TO THE ASSESSEE THAT ITS CLAIM IS NOT C ORRECT, THE ASSESSEE HAS ACCEPTED FOR THE ADDITION OF A PART OF LAND COST PROPORTIONATE T O UNCOMPLETED PROJECT. THUS, IT IS SEEN THAT THE ASSESSEE HAS MADE AN INACCURATE OR ER RONEOUS CLAIM OF LAND COST IN ITS RETURN OF INCOME, WHICH HAS RESULTED IN FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER, THE ASSESSEE HAS OFFERED AN EXPLANATION WI TH REGARD TO THIS CLAIM, BUT HAS FAILED TO SUBSTANTIATE IT BY BRINGING ANY MATERIAL ON RECORD. FURTHER THE ASSESSEE HAS FAILED TO PROVE THAT THE SAID EXPLANATION WAS BONA FIND ONE. IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT THE SAID CLAIM WAS IN ACCORDANCE WITH THE ACCOUNTING PRACTICE REGULARLY FOLLOWED BY IT OR IN THE TRADE CIRCLES. HENCE, IN OUR VIEW, THE ASSESSEE HAS FAILED TO DISCHARGE THE BURDEN PLACED UPON HIM UNDE R EXPLANATION 1 TO SEC. 271 OF THE ACT, IN WHICH CASE, THE ASSESSEE SHALL BE DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME IN RESPECT OF THIS ADDITION. SINCE THIS CLA IM IS AN INCORRECT CLAIM ON FACTS, THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF RELIANCE PETROPRODUCTS PVT LTD (SUPRA) SHALL NOT APPLY. WE HAVE ALREADY NOTIC ED THAT THE LD CIT(A) HAS DELETED THE PENALTY BY PLACING RELIANCE ON THE SAID DECISIO N. HENCE, WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF THIS ADDITION ALSO AND REST ORE THE PENALTY LEVIED BY THE AO ON THIS ADDITION. M/S SHREE SWASTIK DEVELOPERS 20 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED . 2 - - ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH , FEB 2014 . - 8 19TH FEB 2014 - SD/ SD/- ( AMIT SHUKLA ) ( B R BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 8 DATED 19 TH , FEB 2014 .../ RAJ , SR. PS - +> ?> - +> ?> - +> ?> - +> ?>/ COPY OF THE ORDER FORWARDED TO : 1. * / THE APPELLANT 2. +,* / THE RESPONDENT. 3. @() / THE CIT(A)- 4. @ / CIT 5. > +, , / DR, ITAT, MUMBAI 6. ' / GUARD FILE. / BY ORDER, ,> + //TRUE COPY// / // / ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI