BHUMIRAJ CONSTRUCTIONS, NAVI MUMBAI V. ASST CIT 15(1), MUMBAI

ITA 5267/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9582 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 20-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Reasonable cause
• Section: 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5267 / MUM/ 20 1 4 ( / ASSESSMENT YEAR: 2007 - 08 ) BHUMIRAJ CONSTRUCTIONS D/5 - 6 BIG SPLASH, SECTOR - 7, VASH I NAVI MUMBAI PIN:400705 / VS. ASST CIT 15(1) MUMBAI . PIN: ./ ./ PAN/GIR NO. : AAFFB 3546 H ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 1 5 .0 6 .2017 / DATE OF PRONOUNCEMENT : 13 .0 9 .2017 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER DATED 16.07 .201 4 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 26 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2007 - 08 WHEREIN THE PENALTY LEVIED BY THE AO TO THE TUNE OF RS. 27,08,241/ - HAS BEEN CONFIRMED. 2 . THE ASSE SSEE HAS RAISED THE FOLLOWING GROUNDS: - 1 GROUND NO 1: LEVY OF PENALTY NOT TENABLE IN MW A) THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE A.0. IN LEVYING PENALTY OF RS. 27,08,241/ - . U/S. 271(T)(C) OF THE INCOME TAX ACT, 1961 AND IN PARTICULAR ERRED IN ASSESSEE BY : SHRI PRADIP KAPASI REVENUE BY: SHRI SUMAN KUM AR (DR) ITA. NO.5267/M/201 4 A.Y. 2007 - 08 2 LAW AND ON FACTS IN IGNORING ALL OF THE SUBMISSIONS MADE IN SUPPORT OF THE CASE OF THE APPELLANT IN WRITING AND THEREFORE WITHOUT APPLICATION OF MIND CONFIRMING THE ACTION OF THE LD. A.G. I) IN LEVYING THE PENALTY U/S 271(1)(C) O F RS. 2708,241/ - ON UNSUBSTANTIATED OBSERVATIONS THAT YOUR APPELLANTS HAD SUPPRESSED THE PROFIT BY INFLATING THE COST OF CONSTRUCTION AND SUPPRESSING SALES AND BY ALLEGING THAT THE BOOKS OF ACCOUNT DID NOT DISCLOSE THE CORRECT PROFIT IT) IN REJECTING THE E XPLANATION FURNISHED BY THE APPELLANT IN GOOD FAITH, VIDE LETTER DATED 25.03.3013, ON UNREASONABLE GROUNDS. III) IN LEVYING THE PENALTY @ 100% OF RS. 27.08241 WHEN THERE HAS BEEN NO CONCEALMENT OF INCOME BY TARNISHING OF INACCURATE PARTICULARS OF INCOME AS HAS BEEN ALLEGED IN THE ORDER DATED 28.03.2013. IV] IN LEVYING THE PENALTY IGNORING THE FACT THAT THE MATERIAL PARTICULARS WERE ACCURATELY DISCLOSED BEFORE THE CIT(A). V) IN IGNORING THE FACT THAT THE PROFITS FROM EACH PROJECT WERE COMPUTED AS PER THE PRO VISIONS OF THE INCOME TAX ACT, THE APPLICABLE ACCOUNTING STANDARDS, AND THE GUIDANCE NOTES AS APPLICABLE TO THE REAL ESTATE DEVELOPERS. VI) IN LEVYING THE PENALTY WITHOUT APPRECIATING THE FACT THAT THE APPELLANTS BOOKS OF ACCOUNT WERE CORRECT AND COMPLETE AND WERE AUDITED AS PER THE LAW AND THAT ALL INCOMES PERTAINING TO THE ASSESSMENT YEAR WERE TAXED AS PE R THE PROVISIONS OF THE INCOME T AX ACT. VII)LN PASSING AN ORDER U/S 271C J[C) DIALECTS BARRED BY TIME PRESCRIBED U/S 275 OF THE ACT VIII) IN LEVYING PENA LTY KNOWING FULLY THAT THE APPELLANT WAS AGGRIEVED BY THE WRONGFUL ADDITION, AND THAT THE SAID ADDITION IS DISPUTED AND AN APPEAL BEFORE THE ID. ITAT HAS BEEN PREFERRED FOR THE SAME. B) YOUR APPELLANTS STRONGLY SUBMIT THAT THERE WAS NO INFLATION OF COST NO R WAS THERE ANY SUPPRESSION OF SALES AND THEREFORE NO CONCEALMENT OF INCOME AND FURTHER SUBMIT THAT THE FIRM HAD MAINTAINED CORRECT BOOKS OF ACCOUNT WHICH WERE COMPLETE AND ITS CORRECTNESS WAS CERTIFIED BY THE INDEPENDENT AUDITORS AND THAT THE MATERIAL INF ORMATION WAS ACCURATELY FURNISHED BY YOUR APPELLANTS. C) YOUR APPELLANTS PRAY THAT PENALT Y LEVIED U/S 271(1)(C) OF THE ACT OF RS. 27,08,241/ BE DELETED. GROUND NO 2: ITA. NO.5267/M/201 4 A.Y. 2007 - 08 3 THE CIT(A) ERRED IN LAW & ON FACTS IN IGNORING SEVERAL PROPOSALS MADE IN WRITING BEFORE HI M AND NOT ADJUDICATING UPON EACH OF THESE PROPOSALS IN PASSING THE ORDER UPHOLDING THE PENALTY & IN PARTICULAR ERRED IN PASSING THE ORDER UPHOLDING THE PENALTY & IN PARTICULAR ERRED IN IGNORING THE FOLLOWING IMPORTANT PROPOSITIONS CONTENDING THAT NO PENALT Y U/S. 271(1)(C) WAS LEVIABLE; A) ORDER OF PENALTY WAS BAD IN LAW AS PENALTY PROCEEDINGS WERE INITIATED FOR ADDITIONS THAT WERE DELETED BY CIT(A), B) UNCERTAINTY OF ELSE BASIC OFFENCE FOR WHICH PENALTY WAS LEVIED) C) NO INACCURATE PARTICULARS WERE FURNISHE D - DISCLOSURE OF ALL MATERIAL FACTS, D) CLAIM WAS BASED ON BONA TIDE BELIEF AND REASONABLE CAUSE, E) SATISFACTION FOR LEVY OF PENALTY WAS NOT REACHED AND NO RECORDING OF SATISFACTION BY THE LD AO. F) BASIS OF SATISFACTION IF ANY, WAS ALTERED SUBSEQUENTLY, G) ORDER PASSED BEYOND PERMISSIBLE TIME UNDER FIRST PROVISO TO CLAUSE (A) OF SECTION 275(1), H) INCOME OF HERMITAGE PROJECT DECLARED BY APPELLANT ACCEPTED BY LD. AO AND CIT(A) FOR ALL OTHER ASSESSMENT YEARS, I) EXPLANATION FURNISHED WAS NOT PROVED TO BE N OT BONA FIDE BY THE AO. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT OF THE ASSES SEE WAS COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 ON 29.12.2009 DETERMINING THE TOTAL INCOME TO THE TUNE OF RS.31,06,77,740/ - FOR THE A.Y. 2007 - 08 AS AGAINST THE RETURNED INCOME TO THE TUNE OF RS.92,94,335/ - . W HILE PASSING THE ORDER , THE AO HAS MADE AN ADDITION OF RS.14,15,08,355/ - TO THE TOTAL INCOME OF THE ASSESSEE BY APPLYING THE PROVISION OF SECTION145(3) OF THE I.T. ACT ON ACCOUNT OF INFLATED THE COST OF CONS TRUCTION AND SUPERSESSION OF SALE. THE PENALTY PROCEEDING WAS INITIATED FOR FURNISHING THE INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) - 26, MUMBAI WHO UPHELD THE ORDER OF THE ITA. NO.5267/M/201 4 A.Y. 2007 - 08 4 AO AND DIRECTED THE AO TO COMPUTE THE PROFIT IN ACCORDANCE WITH HERMITAGE PROJECT @ 48% INSTEAD OF 34% ASSESSED BY THE AO . THEREAFTER, THE AFRESH NOTICE WAS GIVEN AND AFTER GETTING THE REPLY THE PENALTY TO THE TUNE OF R S. 27,08,241/ - WAS LEVIED. AN A PPEAL WAS FILED BY THE CIT(A) WH O CONFIRM ED THE PENALTY ORDER , THEREFORE, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE A SSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER IN VIEW OF THE PROVISION U/S 145(3) OF THE ACT BY THE DECLINING THE CLAIM OF THE ASSESSEE AND ASSESSING THE GROSS PROFIT ON THE BASIS OF THE ANOTHER HOUSING PROJECT OF THE ASSESSEE NAMELY HERMITAGE HOSING PR OJECT @ 34% AND THE SAID ADDITION WAS ENHANCED BY THE CIT(A) @ 48% WRONGLY AND ILLEGALLY AN D WITHOUT INITIATION OF PENALTY, T HEREFORE, IN THE SAID CIRCUMSTANCES, NO PENALTY IS LEVIABLE IN THE INTEREST OF JUSTICE. IN SUPPORT OF THIS CONTENTION THE LD. REPR ESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN HARIGOPAL SINGH VS. CIT (2002) , 125 TAXMAN 242 PUNJAB HARYANA HIGH COURT . ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. ON APPRAISAL OF T HE ASSESSMENT ORDER, WE NOTICED THAT THE CLAIM OF THE ASSESSEE WAS REJECTED BECAUSE THE ASSESSEE HAS INFLATED THE REVENUE OF THE PROJECT. THE ASSESSEE HAS SHOWN THE LESS ITA. NO.5267/M/201 4 A.Y. 2007 - 08 5 CONSTRUCTION COST IN COMPARISON TO THE OTHER PROJECT. BY GOING THROUGH THE BOOKS OF ACCOUNTS AND CONSTRUCTION OF THE OTHER PROJECT THE AO REJECTED THE BOOKS OF ACCOUNTS AND ASSESSED THE INCOME IN VIEW OF THE PROVISION U/S 145(3) OF THE ACT. THE CONSTRUCTION COST WAS ASSESSED ON THE BASIS OF THE ONE OF THE PROJECT OF THE ASSESSEE NAMELY H ERMITAGE PROJECT. THE ASSESSING OFFICER COMPUTED PROFIT FROM HERITAGE PROJECT @ 34% WHICH WAS ENHANCED BY THE CIT(A) @ 48%. HOWEVER, THE FINDING OF THE CIT(A) HAS BEEN CONFIRMED BY THE HONBLE ITAT IN ITA. NO. 3379/M/2012 & 3685/M/2012 DATED 23.09.2015. IT IS NOT A CASE OF DISALLOWANCE ON THE BASIS OF ESTIMATION BUT IT IS A CASE IN WHICH THE BOOKS OF THE ACCOUNTS OF THE ASSESSEE HAS BEEN REJECTED FOR VALID REASONS AND THE PROFIT WAS ASSESSED ON THE BASIS OF THE OTHER PROJECT OF THE ASSESSEE I.E., ON THE B ASIS OF HERMITAGE PROJECT @ 34% G.P. THE SAID PROFIT WAS ENHANCED BY THE CIT(A) TO THE EXTENT OF 48% WHICH WAS CONFIRMED BY THE HONBLE ITAT IN ITA. NO. 3379/M/2012 & 3685/M/2012 DATED 23.09.2015 . IT IS A CASE OF SUPPRESSION OF COST AND CONCEALMENT OF INCO ME. ASSESSING OFFICER INITIATED THE PENALTY ON THE BASIS OF CONCEALMENT OF INCOME AND ACCORDINGLY THE NOTICE WAS GIVEN TO THE EXTENT OF 34% GROSS PROFIT ESTIMATED ON THE BASIS OF HERMITAGE PROJECT. IT IS NOT A CASE WHERE THE CLAIM OF THE ASSESSEE WAS DECLI NED ON ACCOUNT OF NON FURNISHING OF ANY DOCUMENT OR ON ACCOUNT OF REJECTION OF ANY CLAIM. THE LAW RELIED BY THE ASSESSEE SPEAKS ABOUT THE ASSESSMENT IN WHICH ANY ADDITION WAS MADE ON ACCOUNT OF ESTIMATION WHERE THE ASSESSEE FAILED TO ITA. NO.5267/M/201 4 A.Y. 2007 - 08 6 SUBSTANTIATE HIS CLAIM . FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IS QUITE DIFFERENT. T AK ING INTO ACCOUNT OF ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER PASSED BY THE AO TO LEVY THE PENALTY IN QUESTION. ACCORDINGLY, WE C ONFIRM THE FINDING OF THE CIT(A) ON THIS ISSUE AND DISMISSED THE APPEAL OF THE ASSESSEE. 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 13 . 0 9 . 2017 SD/ - SD/ - ( B.R. BASKARAN ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 13 .09 . 2017 V.P.SINGH / 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