SAROJ SALES ORGANISATION, MUMBAI V. ASST CIT 25(2), MUMBAI

ITA 4658/MUM/2012

• Counselvise Citation: 465819914 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 11-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: ARATI VISSANJI
• Keywords: Business income; Depreciation; Difference of opinion
• Section: 143(3); 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , , BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBE R . / ITA NO. 4658 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 06 07 ) M/S. SAROJ SALES ORGANISATION B/202, THE BREEZY CORNER 90 FT. ROAD, MAHAVIR NAGAR OPP. UTI BANK, KANDIVALI (W) MUMBAI 400 067 .. / APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 25(2), PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAMFS5193A / ASSES SEE BY : MS. ARATI VISSANJI / REVENUE BY : MR. PITAMBAR DAS / DATE OF HEARING 06.02.2014 / DATE OF ORDER 12.02.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 10 TH MAY 2012 , PASSED BY THE COMMISSIONER (APPEALS) X XX V , MUMBAI, FOR THE ASSESSMENT YEAR 20 06 07. THE SOLE DISPUTE IN THIS APPEAL IS, WHETHER OR NOT THE LEARNE D COMMISSIONER (APPEALS) WAS JUSTIFIED IN CONFIRMING THE PENALTY OF ` M/S. SAROJ SALES ORGANISATION 2 24,42,190 UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) LEVIED BY THE ASSESSING OFFICER. 2 . FACTS IN BRIEF : THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED AS DEVEL OPER AND THE CONSTRUCTION OF PROJECTS. DURING THE RELEVANT FINANCIAL YEAR, THE ASSESSEE WAS ENGAGED IN THE CONSTRUCTION OF BUILDINGS NAMELY BREEZY CORNER AND PROFIT CEN T RE BORIVALI. THE ASSESSEE HAS BEEN FOLLOWING PROJECT COMPLETION METHOD FOR OFFERING THE PROFIT FROM CONSTRUCTION BUSINESS. A SURVEY OPERATION U/S 133A WAS CONDUCTED AT THE PREMISE OF THE ASSESSEE ON 6 TH JANUARY 2006. DURING THE COURSE OF SUCH SURVEY OPERATION, A STATEMENT ON OATH OF THE PARTNER MR. SHYAM SUNDER CHANDAK WAS RECORDED WHERE IN HE STATED THAT THE ESTIMATED GROSS RECEIPTS FROM THE SAID PROJECTS WOULD BE AROUND ` 50 CRORES AND ESTIMATED PROFIT WOULD BE AT ` 12 CRORES. THE SAID PROJECT WAS LIKELY TO BE COMPLETED BY 31 ST MARCH 2006. HE ALSO DECLARED ON MONEY OF ` 3 CRORES RECEIVED ON THE SALE OF UNITS IN THE ASSESSMENT YEAR 2006 07. BASED ON SUCH STATEMENT, THE ASSESSEE FILED HIS REGULAR RETURN OF INCOME UNDER SECTION 139(1) , ON 30 TH OCTOBER 2006 AT AN INCOME OF ` 11,12,91,740. IN THE COMPUTATION ATTACHED TO THE RETURN OF INCOME, T HE ASSESSEE HAD SHOWN THE PROFIT IN THE FOLLOWING MANNER: AMOUNT ( ` ) AMOUNT ( ` ) INCOME FROM BUSINESS ESTIMATED PROJECT RECEIPTS OF THE PROJECT ` 48,00,00,000 LESS: COST INCURRED IN DEVELOPMENT AND CONSTRUCTION OF THE PROJECT UPTO 31 ST MARCH 2006 REFLECTED IN THE AUDITED BALANCE SHEET FOR THE YEAR UNDER REFERENCE UNDER THE HEAD PROJECT WORK IN PROGRESS. ` 34,47,88,896 M/S. SAROJ SALES ORGANISATION 3 ESTIMATED COST TO BE INCURRED AFTER 31 ST MARCH 2006 FOR COMPLETING THE PROJECT ` 2,45,00,000 ` 36,92,88,896 TOTAL ESTIMATED PROFITS EXPECTED TO BE EARNED ON COMPLETION OF THE PROJECT OFFERED AS INCOME FOR THE YEAR ` 11,07,11,104 ALONG WITH THE COMPUTATION OF INCOME, THE ASSESSEE ANNEXED NOTES WHEREIN IT WAS STATED AS UNDER: NOTES ANNEXED TO THE COMPUTATION 1 . RE: RECOGNI TION / OFFERING OF ESTIMATED PROFIT OF THE PROJECT. 1.1 THE ASSESSEE FIRM HAS UNDERTAKEN DEVELOPMENT AND CONSTRUCTION OF THE PROJECT IN THE CAPACITY AS A DEVELOPER KNOWN AS BREEZY CORNER AND PROFIT CENTRE, SITUATED AT MAHAVIR NAGAR, KANDIVLI (W), MUMBAI ( THE PRJECT). 1.2 AS OF 31 ST MARCH 2006, THE DEVELOPMENT AND CONSTRUCTION OF THE PROJECT IS NOT COMPLETE AND THE ENTIRE SALEABLE AREA OF THE SAID PROJECT IS NOT SOLD. 1.3 IN ACCORDANCE WITH AND IN CONSONANCE WITH THE ACCOUNTING POLICY FOLLOWED BY THE ASSE SSEE FIRM OF RECOGNIZING THE PROFITS IN THE ACCOUNTS ON COMPLETION OF THE PROJECT, IN THE ACCOUNTS FOR THE YEAR ENDED 31 ST MARCH 2006, PROFITS OF THE PROJECTS HAVE NOT BEEN RECOGNIZED. 1.4 KEEPING IN VIEW THE STATEMENT RECORDED OF MR. S.S. CHANDAK, A PART NER OF THE ASSESSEE FIRM, IN JANUARY 2006, AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM, IN THE RETURN OF INCOME FOR THE YEAR ENDED 31 ST MARCH 2006, RELEVANT TO ASSESSMENT YEAR 2006 07, THE INCOME OF THE PROJECT IS OFFERED TO TAX REPRESENTING THE ESTIMATE D PROFITS EXPECTED TO BE EARNED ON COMPLETION OF THE PROJECT. THE FINALITY TO THE QUANTUM OF PROFITS EXPECTED TO BE EARNED ON COMPLETION OF THE PROJECT IS EXPECTED TO BE REACHED DURING THE FINANCIAL YEAR ENDING 31 ST MARCH 2007. ACCORDINGLY, IF REQUIRED THE ESTIMATED PROFITS QUANTIFIED IN THE RETURN WILL BE MODIFIED. 1.5 THE ESTIMATED PROJECT RECEIPTS AS QUANTIFIED HEREIN ABOVE MEANS, AGGREGATED OF THE FOLLOWING: (A) THE AMOUNT RECEIVED FROM ALLOTTE E S UPTO 31 ST MARCH 2006 PURSUANT TO THE AGREEMENTS EXECUT ED WITH EACH OF THEM. (B) THE RECEIPTS UPTO 31 ST MARCH 2006 TOWARDS SALES CONSIDERATION IN CASH WHICH WAS AGREED TO BE DECLARED AS PART OF INCOME OF THE PROJECT IN THE STATEMENT RECORDED IN THE COURSE OF SURVEY PROCEEDINGS. M/S. SAROJ SALES ORGANISATION 4 (C) BALANCE CONSIDERATION REC EIVABLE FROM ALLOTTEE IN RESPECT OF SALES UPTO 31 ST MARCH 2006. (D) THE ESTIMATED TOTAL SALES CONSIDERATION OF THE UNSOLD AREA AS ON 31 ST MARCH 2006. 1.6 ESTIMATED COST REQUIRED TO BE INCURRED AFTER 31 ST MARCH 2006, REPRESENTS COST REQUIRED TO BE INCURR ED IN COMPLETING THE PROJECT IS INCLUSIVE OF THE FOLLOWING COSTS: ( A ) DIRECT COSTS; AND ( B ) INDIRECT COSTS. 1.7 THE REQUISITE PARTICULARS INCLUSIVE OF HEADWISE AND PARTYWISE EXPENDITURE INCURRED AFTER 31 ST MARCH 2006 UPTO THE DATE OF COMPLETION OF PROJECT UPON COMPLETION OF THE PROJECT SHALL BE SUBMITTED UPON DEMAND. 2. THE PROJECT IS EXPECTED TO BE COMPLETED BY THE END OF MARCH 2007. 3 . THUS, IT WAS SUBMITTED THAT THE PROJECT COULD NOT BE COMPLETED AS ON 31 ST MARCH 2006 AND THE SALE RECEIPTS AND THE INCOME WHICH H AS OFFERED IN THE RETURN OF INCOME WAS PURELY BASED ON ESTIMATE BASIS AS THE ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD. THE ESTIMATED RECEIPT OF ` 48 CRORES ALSO INCLUDED THE AMOUNT OF ON MONEY OF ` 3 CRORES. THE ASSESSING OFFICER HELD THAT FIRST OF ALL THE ASSESSEE HAS REDUCED THE ESTIMATED TOTAL SALE VALUE AT ` 48 CRORES WHICH WAS STATED DURING THE COURSE OF SURVEY TO BE AT ` 50 CRORES. FURTHER, THE ASSESSEE HAS DECLARED PROFIT OF ` 12 CRORES IN THE STATEMENT GIVEN AT THE TIME OF SURVEY, WHEREAS IN THE RETURN OF INCOME THE ASSESSEE HAD SHOWN PROFIT OF ` 11,12,91,744. HE ALSO ADDED THE ON MONEY OF ` 3 CRORES. THUS, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF ` 15 CRORES. 4 . THE LEARNED COMMISSIONER (APPEALS), IN THE QUANTUM PROCEEDINGS, ON THE BASIS OF RECORDS, FIRST OF ALL, HELD THAT THE SAID PROJECT WAS NOT COMPLETED UP TO 31 ST MARCH 2006 AND THE ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD. BASED ON THE AUDITED ACCOUNTS M/S. SAROJ SALES ORGANISATION 5 FOR THE SUBSEQUENT ASSESSMENT YEARS, SHE WORKED OUT THE POSITION OF RECEIP TS FROM TWO PROJECTS NAMELY BREEZY CORNER AND PROFIT CENTRE FOR THE ASSESSMENT YEAR 2006 07 IN THE FOLLOWING MANNER: I) TOTAL BUILD UP AREA OF PROJECT 152349 SQ.FT. II) SOLD UPTO 31 ST MARCH 2007 119129 SQ.FT. III) BALANCE UNSOLD AS ON 31.03.2007 3322 0 SQ.FT. ` 35,10,08,451 ACTUAL RECEIPTS FROM SALE OF 119129 SQ.FT. AREA UPTO 31.03.2007 ` 10,62,47,015 AVERAGE SALE CONSIDERATION FOR UNSOLD AREA OF 33220 SQ.FT ` 30,00,00,000 O N MONEY ` 48,72,55,466 5 . THEREAFTER, SHE VERIFIED AUDITED BOOKS OF ACC OUNT AND THE RETURN OF INCOME FILED FOR THE A.Y. 2007 08 TO WORK OUT THE INCOME OF THE PROJECT FOR THE A.Y. 2006 07 IN THE FOLLOWING MANNER: ACTUAL RECEIPTS UP TO 31.03.2007 INCLUDING OWN MONEY OF ` 3 CRORES (SOLD 119129 SQ.FT. AREA) ` 38,10,08,451 CLOS ING STOCK OF UNSOLD AREA BASED ON AVERAGE SALE CONSIDERATION AS DISCUSSED ABOVE (33220 SQ.FT. AREA) ` 48,72,55,466 ` 48,72,55,466 ( ) CONSTRUCTION COST, ADMINISTRATIVE EXPENSES, SELLING EXPENSES, INTEREST AND DEPRECIATION COST ` 36,92,88,896 INCOME FRO M PROJECT ` 11,79,66,570 6 . THUS, THE DIFFERENCE OF THE RETURN OF INCOME OF ` 11,07,11,104 AND 11,79,66,570 AS CALCULATED BY H ER WAS CONFIRMED. ACCORDINGLY, ADDITION OF ` 72,55,466 WAS MADE IN THE QUANTUM PROCEEDINGS. AS REGARDS THE ADDITION ON ACCOUNT OF O N MONEY OF ` 3 CRORES, THE LEARNED M/S. SAROJ SALES ORGANISATION 6 COMMISSIONER (APPEALS) HELD THAT THIS AMOUNT ALREADY STANDS INCLUDED IN THE RECEIPT OF ` 48,72,55,466 AND NO SEPARATE ADDITION CAN BE MADE FOR THIS AMOUNT. AGAINST THE SAID APPELLATE ORDER, NEITHER THE DEPARTMENT NOR THE ASSESSEE HAS PREFERRED ANY SECOND APPEAL. 7 . ON THIS ADDITION, THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER @ 100% TAX SOUGHT TO BE EVADED WHICH WORKED OUT TO BE ` 24,42,190. 8 . BEFORE THE ASSESSING OFFICER, IN THE COURSE OF PENALTY PROCEEDINGS, THE A SSESSEE SUBMITTED THAT THE DIFFERENCE BETWEEN THE RETURNED INCOME AND FINALLY ASSESSED INCOME WAS BASED ON ESTIMATE AND DIFFERENCE OF OPINION WITH REGARD TO THE QUANTIFICATION OF PROFIT. THE ASSESSEE HAS FULLY QUANTIFIED THE INCOME OF ` 11,07,11,104 WHICH INCLUDED EVEN THE PROFIT OF UNSOLD PREMISES. THUS, SUCH AN ADDITION DOES NOT WARRANT ANY LEVY OF PENALTY EITHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 9 . BEFORE THE LEARNED COMMISSIONER (APPEALS), VERY EXHAUSTIVE SUB MISSIONS WERE MADE AND IT WAS SUBMITTED THAT THE PROJECT ACTUALLY GOT COMPLETED IN THE ASSESSMENT YEAR 20 1 1 12 AND THE ACTUAL PROFIT OF THE ASSESSEE WHICH HAS BEEN ARRIVED AT IN THE ASSESSMENT YEAR 2011 012 IS ONLY ` 10,34,26,674 WHEREAS THE ASSESSEE HAD A LREADY SHOW N MUCH HIGHER PROFIT FROM THE ENTIRE PROJECT IN THE ASSESSMENT YEAR 2006 07. THE SUM AND SUBSTANCE OF THE ASSESSEES SUBMISSIONS WERE AS UNDER: (A) PROJECT COMPLETION METHOD WAS FOLLOWED UP TO 31.3.2006. (B) ESTIMATED INCOME OF THE PROJECTS UPON ITS COMPLETION WAS STATED IN THE STATEMENT RECORDED IN THE COURSE OF THE SURVEY ACTION BASED ON THE PREMISE THAT PROJECTS WOULD BE COMPLETED BY AND ALL THE PREMISES WOULD BE SOLD BY 3L.3.2007. SAID ACTION WAS TO BUY PEACE AND AVOID LITIGATION. M/S. SAROJ SALES ORGANISATION 7 (C) PROJECTS WERE COMPLETED IN F.Y. 2006 07. UNSOLD PREMISES HAVE BEEN SOLD DURING THE F.Y. 2007 08 TO 2010 11. (D) INCOME RETURNED IN RELATION WAS ON ESTIMATION BILLS, WITH FULL DISCLOSURE OF BASIS OF ESTIMATION AND APPLICABLE FACTS. (E) AO ASSESSED INCOM E REFERABLE TO PROJECTS AT RS. 15 CRORES REPRESENTING ESTIMATED INCOME OF RS. 12 CRORES AS STATED IN THE STATEMENT IN ANSWER TO QUESTION NO. 16 AS WELL AS AMOUNT STATED IN ANSWER TO QUESTION NO. 14. AO HAS NOT MENTIONED ANY OTHER MATERIAL OR BASIS FOR ASSE SSMENT OF SAID AMOUNT EXCEPT AMOUNT STATED IN THE STATEMENT RECORDED. (F) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) QUANTIFIED INCOME AT RS.11,79,66,570/ - . IN THE PROCESS UNSOLD PREMISES WERE VALUED AT AVERAGE SALES REALISATION, RESULTING INTO PRE - PONEMENT OF INCOME AS AGAINST REQUIRED TO BE VALUED AT COST BEING ACCEPTED VALUATION . (G) INCOME FINALLY EARNED - RS. 10,34,26,674/ - . (H) THE AO HAS INITIATED PENALTY PROCEEDINGS IN RELATION TO FILING OF INACCURATE PARTICULARS OF INCOME. (I) DIFFERE NCE BETWEEN 'RETURNED ESTIMATED INCOME' AND 'ASSESSED ESTIMATED INCOME' REFERABLE TO PROJECTS REPRESENTS: (A) DIFFERENCE OF OPINION REFERABLE TO VALUE TO BE ASSIGNED TO UNSOLD PREMISES, PENDING COMPLETION. (B) DIFFERENCE OF OPINION REFERABLE TO QUANTUM OF E STIMATED INCOME WHICH CAN BE ASSESSED PENDING COMPLETION OF THE PROJECTS. (J) 'SUCH DIFFERENCE' CANNOT BE EQUATED EITHER TO FILING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. (K) HENCE, PENALTY LEVIED U/S. 271(1)(C) OF THE ACT, IN TERMS OF ORDER UNDER APPEAL REQUIRED TO BE DELETE . 10 . RELIANCE WAS ALSO PLACED ON CATENA OF DECISIONS WHICH HAVE BEEN INCORPORATED BY THE LEARNED COMMISSIONER (APPEALS) FROM PAGE 9 TO 20 OF THE APPELLATE ORDER. THE LEARNED COMMISSIONER (APPEALS), AFTER REF ERRING AND RELYING UPON CERTAIN DECISIONS UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER. M/S. SAROJ SALES ORGANISATION 8 11 . BEFORE US, THE LEARNED COUNSEL, MS. ARATI VISSANJI, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT DURING THE COURSE OF SURVEY, THE ASSESSEE HAD CATEGORICALLY STATED THAT THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD AND THE RECEIPTS WOULD BE ` 50 CRORES AND ESTIMATED PROFIT WOULD BE ` 12 CRORES. ALL THESE WERE BASED ON ESTIMATE ONLY. LATER ON, THE ASSESSEE FILED THE RETURN OF INCOME SHOWING ESTIMATED PROJECT REC EIPTS OF ` 48 CRORES AND OFFERED PROFIT OF ` 11.07 CRORES. SHE SUBMITTED THAT WHILE WORKING OUT THE RECEIPTS , THE LEARNED COMMISSIONER (APPEALS) HAS TAKEN THE ENTIRE RECEIPTS ON THE BASIS OF ACTUAL RECEIPTS OF 31 ST MARCH 2007 AND THE CLOSING STOCK (UNSOLD AREA) WAS VALUED AT AVERAGE SALE PRICE INSTEAD OF COST PRICE , WHICH HAS RESULTED INTO ENHANCEMENT OF PROFIT AS PER THE WORKING OF THE LEARNED COMMISSIONER (APPEALS). SINCE TH E RECEIPTS AND THE PROFITS HAVE BEEN ESTIMATED, IT CANNOT BE HELD THAT IT IS A CAS E OF LEVY OF PENALTY UNDER SECTION 271(1)(C). SHE FURT HER SUBMITTED THAT THE ASSESSEE AT THE TIME OF PENALTY PROCEEDINGS HAD SUBMITTED THE ACTUAL WORKING OF THE PROFIT WHICH HAS BEEN ARRIVED AT AFTER SALE OF ALL THE UNITS OF THE SAID PROJECT IN THE ASSESSM ENT YEAR 2011 12, AT ` 10.34 CRORES. SHE DREW OUR ATTENTION TO THE AUDITED STATEMENT OF ACCOUNTS FOR SUBSEQUENT ASSESSMENT YEAR AND ALSO THE SOME OF THE ASSESSMENTS WHICH WERE COMPLETED UNDER SECTION 143(3) TO SHOW THAT THE ACTUAL INCOME WAS ONLY ` 10.34 C RORES , WHEREAS THE ASSESSEE HAS DECLARED MUCH MORE PROFIT / INCOME IN THE ASSESSMENT YEAR 2006 07. THUS, IN VIEW OF THIS FACT, WHICH IS NOT BEING REBUTTED BY THE REVENUE, THE ADDITION OF ` 72,55,466, WHICH IS BASICALLY MADE ON THE BASIS OF ESTIMATED RECEIP T AND PROFIT, DOES NOT WARRANT THE LEVY OF PENALTY UNDER SECTION 271(1)(C). ALTERNATIVELY, SHE SUBMITTED THAT THE PENALTY UNDER SECTION 271(1)(C) WAS INITIATED BY THE ASSESSING OFFICER ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS WHEREAS THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF CONCEALMENT OF INCOME. THUS, ON THIS GROUND ALSO, THE PENALTY IS NOT SUSTAINABLE. M/S. SAROJ SALES ORGANISATION 9 12 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT IT IS NOT A CASE OF PURE ESTIMATION BUT DETERMINATION OF PROFIT BY T HE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE ENTIRE MATERIAL PLACED ON RECORD. ONCE THE DIFFERENCE AMOUNT WHICH HAS BEEN ADDED BY THE LEARNED COMMISSIONER (APPEALS) IS ON ACCOUNT OF DETERMINATION OF PROFIT DERIVED BY THE ASSESSEE FROM THE SAID P ROJECT, THEN THE DIFFERENCE BETWEEN THE RETURNED INCOME AND THE ADDITION CONFIRMED AMOUNTS TO CONCEALMENT OF INCOME. IN THIS CASE, A SURVEY UNDER SECTION 133A WAS CONDUCTED WHEREIN THE ASSESSEE HAD SURRENDERED ITS PROFIT AT ` 12 CRORES WHICH HAS BEEN REDUC ED WHILE FILING THE RETURN OF INCOME. THE LEARNED COMMISSIONER (APPEALS), AFTER WORKING OUT THE RECEIPTS HAS DETERMINED THE CORRECT PROFITS WHICH IS FAR MORE THAN THE PROFITS SHOWN BY THE ASSESSEE. THE DIFFERENCE IS NOTHING BUT ACTUAL CONCEALMENT OF INCOME AND, THEREFORE, THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) SHOULD BE CONFIRMED. 13 . WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AS WELL AS THE MATERIAL AVAILABLE ON RECORD. THE FACTS, WHICH HAVE BEE N NARRATED ABOVE, ARE UNDISPUTED. THE ASSESSEE, ADMITTEDLY, HAS BEEN FOLLOWING PROJECT COMPLETION METHOD AND THE SAID TWO PROJECTS WERE COMPLETED IN THE SUBSEQUENT YEARS AND THE SALE WAS MADE UP TO THE ASSESSMENT YEAR 2011 12. AT THE TIME OF SURVEY, THE AS SESSEE HAS STATED THE ESTIMATED RECEIPTS OF THE ON GOING PROJECT AND THE ESTIMATED PROFIT THEREON. AT THE TIME OF SURVEY, THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 07 WAS NOT DUE AND EVEN THE FINANCIAL YEAR HAD NOT ENDED. AT THE TIME OF FILING OF T HE RETURN OF INCOME, ON 31 ST OCTOBER 2006, THE SAID PROJECT WAS NOT COMPLETED, THEREFORE, THE ASSESSEE ESTIMATED ITS GROSS RECEIPTS AT ` 48 CRORES AND THE ESTIMATED PROFIT WAS SHOWN AT ` 11.07 CRORES. THE ENTIRE PARTICULARS AND THE REASONS FOR SUCH ESTIMAT ION WAS GIVEN IN THE NOTES ANNEXED TO THE COMPUTATION OF INCOME WHICH HAS BEEN REPRODUCED BY M/S. SAROJ SALES ORGANISATION 10 US IN THE FORGOING PARAGRAPHS. IN THE QUANTUM PROCEEDINGS, THE LEARNED COMMISSIONER (APPEALS), FIRST OF ALL, WORKED OUT THE QUANTUM OF RECEIPTS ON THE BASIS OF ACT UAL RECEIPTS UP TO 31 ST MARCH 2007. THE CLOSING STOCK WAS ALSO VALUED AT THE MARKET PRICE. IF SUCH AN ESTIMATION AND VALUATION OF CLOSING STOCK IS DONE ON MARKET PRICE, THEN DEFINITELY THERE WOULD BE SOME DIFFERENCE IN RESULTANT AMOUNT OF PROFIT. ONCE THE RECEIPTS ARE BASED ON ESTIMATE BASIS AND PROFIT IS ALSO BASED ON ESTIMATE BASIS, THEN IT CANNOT BE HELD THAT IT IS A CASE OF CONCEALMENT OF INCOME. THE FACT THAT ALL THE FLATS / UNITS OF THE SAID PROJECTS HAVE BEEN SOLD UP TO THE ASSESSMENT YEAR 2011 12 AN D THE ACTUAL PROFIT DERIVED FROM THESE TWO PROJECTS IS ` 10.34 CRORES HAS NOT BEEN REBUTTED BY THE REVENUE. THUS, THE PROFITS WHICH WERE SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AS PER THE ACTUAL STATE OF AFFAIRS CAN BE SAID TO BE BASED ON REASONABLE BASIS AS THE ASSESSEE HAD SHOWN MUCH HIGHER PROFIT AT ` 11,07,11,104 IN COMPARISON TO THE ACTUAL PROFITS WHICH HAS BEEN DERIVED FROM THE SAID PROJECTS. UNDER THESE FACTS, IT CANNOT BE HELD THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING OF INACCURATE PART ICULARS OR CONCEALMENT OF INCOME. EVEN IF THE ADDITION OF ` 72,55,466 HAS ATTAINED FINALITY IN THE QUANTUM PROCEEDINGS, BUT THAT ALONE MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN THIS CASE. IN THE PENALTY PROCEEDINGS, THE ASSESSEE MAY RELY UPON THE SAME M ATERIAL AND FACTS TO PROVE THAT IT HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. THE EXPLANATION GIVEN BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER (APPEALS) HAS NEITHER BEEN FOUND TO B E FALSE NOR HAS BEEN REBUTTED ON THE BASIS OF MATERIAL ON RECORD. IT IS A CASE OF MORE OF A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ESTIMATION OF PROFIT BY THE LEARNED COMMISSIONER (APPEALS), THEREFORE, IT CANNOT BE A CASE OF CONCEALMENT OF INCO ME. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) THE PENALTY OF ` 2,44,21,920 LEVIED UNDER SECTION 271(1)(C) M/S. SAROJ SALES ORGANISATION 11 BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) IS NOT TENABLE IN THE E YES OF LAW. THUS, THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED. 14 . 14. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED. 12 TH FEBRUARY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY 2014 SD / - . . N.K. SAINI ACCOU NTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 12 TH FEBRUARY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT( A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI