ACIT, New Delhi V. M/s. Vardhman Properties Ltd., New Delhi

ITA 5089/DEL/2012

• Counselvise Citation: 508920114 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 25-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWANI TANEJA; ROHAN KHARE S
• Assessee Lawyers: R S MEENA
• Keywords: Difference of opinion; Tax effect; Onus to prove; Revised return
• Section: 143(3)

Judgement Text

ITA NO S . 3536&5089 / DEL/ 201 2 & 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A. N OS. 3536 & 5089/DEL/2012 A.Y RS . 2008 - 09 & 2009 - 10 ACIT, CIRCLE - 17(1), ROOM NO. 221, 2 ND FLOOR, CR BUILDING, NEW DELHI VS. M/S VARDHMAN PROPERTIES LIMITED, G - 9, DDA, BUILDING, NEHRU PLACE, NEW DELHI 110 019 (PAN: AAACV2330B) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. ASHWANI TANEJA & ROHAN KHARE, ADVOCATES ASSESSEE BY : SH. RS MEENA, CIT(DR) DATE OF HEARING : 25 - 9 - 2014 DATE OF ORDER : 29 - 9 - 2014 ORDER PER H.S. SIDHU : J M TH ESE APPEAL S BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - X I X, NEW DELHI P ERTAINING TO ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 . SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON, WE ARE THEREFORE, PROCEEDING TO DISPOSE THEM OFF THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE BY ADJUDICATING THE ITA NO. 3536/DEL/2012 (A.Y. 2008 - 09) AS UNDER: - ITA NO S . 3536&5089 / DEL/ 201 2 & 2 2. THE GROUNDS RAISED IN THE ITA NO. 3536/DEL/2012 READ AS UNDER: - 1. LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IS CANCELLING THE PENALTY OF RS. 76,70,966/ - IMPOSED U/S. 271(1)(C) OF THE I.T. ACT 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 3. THE GROUNDS RAISED IN THE ITA NO. 5089/DEL/2012 READ AS UNDER: - 1. LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IS CANCELLING THE PENALTY OF RS. 52,31,497/ - IMPOSED BY THE AO U/S. 271(1)(C) OF THE I.T. ACT BECAUSE THE REVISED RETURN WAS NOT A SUO MOTO RETURN. 2. THE APPELLANT CRAVES LEAVE FOR RESERV ING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 4. BRIEFLY FACTS STATED ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED IN 1986 ENGAGED IN THE BUSINESS OF DEVELOPMENT OF REA L ESTATE. THE RETURN OF INCOME DECLARING INCOME OF RS. 20,06,47,591/ - WAS FILED ON 20.9.2008. THE ASSESSMENT U/S. 143(3) OF THE I.T. ACT ON 31.12.2010 WAS FRAMED AT AN INCOME OF RS. 22,32,15,894/ - . AN ADDITION OF RS. 2,25,68,303/ - WAS MADE TO THE RET URNED INCOME ON ACCOUNT OF APPLICATION OF PERCENTAGE COMPLETION METHOD ESTIMATING THE INCOME IN RESPECT OF THE INCOMPLETE PROJECTS SHOWN AS WORK IN PROGRESS IN THE FINAL ACCOUNTS. THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) IN RESPECT OF THE ADDIT ION OF RS. 2,25,68,303/ - WAS MADE. THE AO ITA NO S . 3536&5089 / DEL/ 201 2 & 3 FINALIZED THE PENALTY PROCEEDINGS U/S. 271(1)(C) BY LEVYING A PENALTY OF RS. 76,70,966/ - AFTER TAKING INTO CONSIDERATION THE ABOVE ADDITION OF RS. 2,25,68,303/ - IN THE IMPUGNED ORDER ON THE GROUND THE ADDITIONS CONSTITUTE CONCEALED INCOME. 5. AGAINST THE ABOVE ORDER OF THE ASSESSING OFFICER, ASSEESSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER 16.4.2012 HAS ALLOWED THE APPEAL OF THE ASSESSEE BY CANCELLING THE PENALTY IMPOSED B Y THE ASSESSING OFFICER. 6. AGGRIEVED BY THE AFORESAID ORDER DATED 16.4.2012, REVENUE IS IN APPEAL BEFORE US. 7. LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER REITERATED ON THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED BY THE REVENUE. 8. LD. COUNSEL OF THE ASSESSEE IN SUPPORT OF HIS CLAIM HAS FILED THREE PAPER BOOKS, THE FIRST ONE IS HAVING PAGES 1 TO 93 HAVING THE DETAILS OF WRITTEN SUBMISSIONS AND PAPER BOOK FILED BEFORE THE LD. CIT(A), THE SECOND IS HAVING PAGES 1 TO 95 CONTAINING THE CASE LAW COMPILATION APPLICABLE FOR THE ASSTT. YEARS 2008 - 09 AND 2009 - 10 OF THE FOLLOWING CASES: - - CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295 (SC) - CIT VS. VISHNU INDUSTRIAL GASES PVT. LTD. ITR 229/1988 (DEL HI HIGH COURT) - CIT & ANR. VS. DINESH KUMAR GOEL 331 ITR 10 (DELHI HIGH COURT) ITA NO S . 3536&5089 / DEL/ 201 2 & 4 - HAWARE CONSTRUCTION (P) LTD. VS. ITO 64 DTR 251 (ITAT, MUMBAI) - ABODE CONSTRUCTION LTD. VS. ITO 95 TTJ 35 (ITAT, MUMBAI) - ACIT VS. RAJESH BUILDERS 3 SOT 917 (ITAT, DELHI ) - ACIT VS. HEERAL CONSTRUCTIONS (P) LTD. 85 TTJ 49 (ITAT, CHENNAI) - NANDI HOUSING P LTD. VS. DCIT 80 TTJ 750 (ITAT, BANGALORE) - AMRUTA ENTERPRISES VS. DCIT 79 TTJ 214 (ITAT, MUMBAI) - DCIT VS. RANKA DEVELOPERS 6 SOT 815 (ITAT, BANGALORE) A ND THE LAST PAPER BOOK ONE IS HAVING 1 - 10 PAGES CONTAINING THE BRIEF OF THE CASE AND SOME REFERENCE OF THE IDENTICAL CASES AND RELIED UPON THE ORDER OF THE LD. CIT(A). 8.1 LD. COUNSEL OF THE ASSESSEE VIDE HIS PAPER BOOK AS CITED ABOVE HAS REFERRED THE CASE LAW OF T HE SUPREME COURT OF INDIA WHICH SUPPORTS HIS CASE IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295, WHEREIN THE HON BLE SUPREME COURT VIDE PARA 32 IT WAS OBSERVED AS UNDER: - 32 THIRDLY, THE REAL QUESTION CONCERNING US IS THE YEAR IN WHICH THE A SSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DISPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR, THE ASSESSEE DID MAKE IMPORTS AND DID DERIVE ITA NO S . 3536&5089 / DEL/ 201 2 & 5 BENEFITS UNDER THE ADVANCE LICENSE AND THE DUTY ENTITLEMENT PASS BOOK AND PAID TAX THEREON. THEREFORE, IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF TAX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEAR. THEREFORE, THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY H AVE A MINOR TAX EFFECT. THERE WAS, THEREFORE, NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WAS QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. 9. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE HAVE ALSO GONE THROUGH ALL THE PAPER BOOKS FILED BY THE ASSESSEE S COUNSEL AND THE CONTENTION RAISED BY THE REVENUE . WE FIND THAT LD. CIT(A) HAS OBSERVED THAT ASSESSEE HAD DISCHARGED ITS BURDEN BY SUBMIT TING THE NECESSARY EXPLANATION AND THE ASSESSING OFFICER HAD NOT FOUND THE EXPLANATION TO BE FALSE. 9.1 WE FIND THAT LD. CIT(A) HAS REFERRED A CASE LAW OF KANBAY SOFTWARE INDIA (P) LTD. VS. DCIT (2009) 31 SOT 153 (PUNE), WHEREIN THE ITAT AFTER CONSIDER ING THE CASE LAW ON THE SUBJECT HAS OBSERVED BROADLY AS UNDER: - - BY NO STRETCH OF LOGIC OR RATIONALE IT CAN BE SAID THAT IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) HAS A CAUSE AND EFFECT RELATIONSHIP WITH ADDITION BEING MADE TO RETURNED INCOME PER S E. ITA NO S . 3536&5089 / DEL/ 201 2 & 6 - JUST BECAUSE PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABILITY IT MUST MEAN PENALTY CAN AUTOMATICALLY BE LEVIED ON THE BASIS OF ANY ADDITION TO INCOME, IS NOT CORRECT. - EVEN EXPLANATION 1 TO SECTION 271(1)(C) RAISES A REBUTTABLE PRESUMPTION AN D SHIFTS ONUS ON ASSESSEE TO ESTABLISH BONA FIDES OF CLAIM. - JUDGMENT IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESSORS DOES NOT MAKE A RADICAL CHANGE IN SCHEME OF SECTION 271(1) BUT IT REEXMPHASIZES PARADIGM SHIFT ON BURDEN OF PROOF AS BROUGHT ABOU T BY EXPLANATION TO SECTION 271(1)(C). - ADMISSION OR REJECTION OF A CLAIM IS A SUBJECTIVE EXERCISE; WHETHER A CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACCURATE PARTICULARS OF INCOME. - RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 9.2 KEEPING IN VIEW THE AFORESAID JUDGMENT OF THE ITAT, LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS EXPLAINED THE REASONS UNDER WHAT CIRCUM STANCES THE INCOME WAS COMPUTED BY FOLLOWING PROJECT COMPLETION METHOD. WE FURTHER FIND THAT LD. CIT(A) HAS ALSO OBSERVED THAT ASSESSEE HAS NOT CONTESTED THE ACTION OF THE AO IN ANY APPELLATE PROCEEDINGS EITHER BEFORE THE CIT(A) OR BEFORE THE ITA NO S . 3536&5089 / DEL/ 201 2 & 7 CIT AND THU S THE ISSUE ATTAINED FINALITY. THE AO LEVIED A PENALTY OF RS. 76,70,966/ - CONSIDERING THE AMOUNT OF RS. 2,25,68,303/ - AS CONCEALED INCOME. WE FIND THAT LD. COUNSEL OF THE ASSESSEE BEFORE THE LD. CIT(A) HAS CONTENDED THAT THAT ALL THE MATERIAL FACTS ARE DEC LARED AND THERE IS DIFFERENCE OF OPINION WITH REGARD TO COMPUTING THE INCOME AND MOREOVER THE ASSESEE HAS BEEN FOLLOWING PROJECT COMPLETION METHOD FOR RECOGNIZING INCOME OVER A PERIOD OF TIME WHICH WAS ACCEPTED BY THE DEPARTMENT AND THE SETTLEMENT COMMISS ION FOR EARLIER YEARS. WE ALSO FIND THAT LD. AR OF THE ASSESSEE HAS CONTENDED BEFORE THE LD. CIT(A) THAT THE FACTS OF THE CASE DO NOT CALL FOR LEVY OF PENALTY AS THERE IS NO INTENTION ON THE PART OF THE ASSESSEE COMPANY EITHER TO SUPPRESS INCOME OR INFLAT E EXPENDITURE. WE ALSO FIND THAT LD. CIT(A) HAS CORRECTLY REFERRED THE CASE OF CIT VS. RELIANCE PETROCHEMICAL P LTD. (322 ITR 158) WHEREIN IT WAS HELD THAT MAKING INCORRECT CLAIM DOES NOT IPSO FACTO AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME. ONLY W HEN THE PARTICULARS IN THE RETURN WOULD BE FOUND INACCURATE, THERE WOULD BE PENALTY LIABILITY. WE FIND THAT THAT LD. CIT(A) HAS OBSERVED THAT IN THE PRESENT CASE, ALL THE MATERIAL FACTS WERE FURNISHED WHICH ARE NOT DISPUTED AND FORMED THE BASIS FOR COMPUT ING THE INCOME BY THE ALTERNATE METHOD OF RECOGNIZING INCOME. THERE IS NEITHER MISREPRESENTATION OF FACTS NOR SUPPRESSION OF FACTS OF MISLEAD AND EVADE TAXES. WE FIND THAT LD. CIT(A) HAS FOUND THAT NO POSITIVE MATERIAL WAS BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS TO REDUCE THE TAXABLE INCOME. HE ALSO FOUND THAT ASSESSEE FURNISHED AN EXPLANATION WHICH IS A BONAFIDE ONE WITH SUFFICIENT REASONS. THE EXPLANATION WAS NEITHER FOUND FALSE NOR UNREASONABLE BY THE AO. WE F URTHER OBSERVED THAT LD. CIT(A) HAS OBSERVED THAT THE AO HAS NOT BROUGHT ON RECORD FURTHER FACTS OVER AND ABOVE TO BRING THE ASSESEE INTO THE FOLD OF PENAL PROVISIONS. LD. CIT(A) ALSO OPINED THAT AFTER GOING THROUGH THE FACTS OF THE CASE AND THE CASE LA WS CITED BY THE LD. COUNSEL OF THE ASSESSEE AND THE PROPOSITIONS ITA NO S . 3536&5089 / DEL/ 201 2 & 8 LAID DOWN BY THE ITAT IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD., (SUPRA) THERE IS NO CASE FOR LEVY OF PENALTY IN RESPECT OF THE ADDITIONS TAKEN IN TO CONSIDERATION FOR LEVY OF PENALTY. HENCE, LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE BY CANCELLING THE PENALTY. 9.3 WE ALSO FIND THAT THE EXPOSITION OF THE HON BLE SUPREME COURT IN THE CASE CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295, AS CITED BY THE LD. COUNSEL OF THE A SSESSEE VIDE HIS PAPER BOOK, SUPPORTS THE CASE OF THE ASSESSEE, WHEREIN THE HON BLE SUPREME COURT VIDE PARA 32 HAS OBSERVED AS UNDER: - 32 THIRDLY, THE REAL QUESTION CONCERNING US IS THE YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DIS PUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR, THE ASSESSEE DID MAKE IMPORTS AND DID DERIVE BENEFITS UNDER THE ADVANCE LICENSE AND THE DUTY ENTITLEMENT PASS BOOK AND PAID TAX THEREON. THEREFORE, IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF TAX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEAR. THEREFORE, THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS, THEREFORE, N O NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WAS QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. ITA NO S . 3536&5089 / DEL/ 201 2 & 9 9.4 IN VIEW OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A), HENCE, WE UPHOLD THE SAME AND DECIDE THE ISSUE AGAINST THE REVENUE. 10. IN THE RESULT, BOTH THE APPEAL S FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 29 / 9 /20 1 4 . SD/ - SD/ - [ J.S. REDDY ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 29 / 9 /201 4 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES