S.P. BUILDERS, MUMBAI V. ACIT 12(3), MUMBAI

ITA 5362/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2382 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 17-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE SRDR
• Assessee Lawyers: ASHOK J PATIL
• Keywords: Reason to believe
• Section: 271(1)(c); 143(3); 148

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 5362/MUM/2017 (ASSESSMENT YEAR 2007-08 ) S.P. BUILDERS 309, GUNDECHA CHAMBERS, N.M. ROAD, FORT, MUMBAI-400023 . PAN: AABFS0338Q VS. ACIT-12(3) AAYAKAR BHAVAN, R. NO.112, M.K. MARG, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI ASHOK J. PATIL -ADVOCATE RESPONDENT BY : SHRI SATISH CHANDRA RAJORE (SR-DR) DATE OF HEARING : 11.03.2019 DATE OF PRONOUNCEMEN T : 11.03.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)- 28, HEREINAFTER REFERRED AS LD CIT (A), MUMBAI DATE D 03.05.2017. IN THE IMPUGNED ORDER THE LD. CIT (A) CONFIRMED THE PENALT Y UNDER SECTION 271(1)(C) OF THE ACT DATED 19.03.2014 BY ASSESSING OFFICER. THE CASE RELATES TO ASSESSMENT YEAR 2007-08. THOUGH, THE ASS ESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, HOWEVER, THE SUBSTANTIA L GROUND OF APPEAL IS IN THE PRESENT APPEAL IS WHETHER THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT . ITA NO. 5362 MUM 2017-S.P. BUILDERS 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A BUILDER AND DEVELOPER, FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ( AY) 2007-08 ON 21.05.2009 DECLARING TOTAL INCOME OF RS. 48,17,388/ -. THE RETURN WAS FILED AFTER DUE DATE. THE DUE DATE FOR FILING OF THE RETU RN FOR RELEVANT AY WAS 31.03.2009. THE RETURN OF INCOME WAS TREATED AS INV ALID. THEREFORE, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 D ATED 23.12.2009 TO THE ASSESSEE. IN RESPONSE TO THE NOTICE UNDER SECTION 148, THE ASSESSEE FILED RETURN OF INCOME ON 20.01.2010 DECLARING TOTAL INCO ME OF RS. 48,17,388/-. THE ASSESSMENT WAS COMPLETED ON 24.12.2010. THE ASS ESSING OFFICER (AO) WHILE FRAMING THE ASSESSMENT ORDER MADE THE ADDITIO N OF TOTAL INCOME OF RS. 2,77,00,000/-, DISALLOWED AUDIT AND INTERNAL AU DIT FEES OF RS. 78,000/-. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF AO F OR RE-OPENING AS WELL AS ADDITION OF RS. RS. 2,77,00,000/- WAS SUSTAINED. IN THE MEAN TIME THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF RS.1.44 CRORE VIDE ORDER DATED 19.03.2014. ON APPEAL BEFORE CIT(A) THE PENALTY WAS SUSTAINED. THUS, FURTHER AGGRIEVED BY THE ORD ER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSIONS OF THE LD AR FOR THE ASSESSEE AND LD DR FOR THE REVENUE AND PERUSED THE RECORD. AT THE OUTSET O F HEARING, THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE SUBM ITS THAT THE GROUNDS OF APPEAL RAISED IN THE PRESENT APPEAL IS COVERED BY T HE DECISION OF TRIBUNAL IN ITA NO. 3023/MUM/2013 DATED 08.11.2017, WHEREIN THE ASSESSMENT ORDER ITA NO. 5362 MUM 2017-S.P. BUILDERS 3 PASSED UNDER SECTION 143(3) R.W.S. 147 DATED 24.12. 2010 WAS HELD AS INVALID. CONSEQUENT UPON THE ADDITION IN THE ASSESS MENT WAS DELETED. THE LD. AR OF THE ASSESSEE SUBMITS THAT ONCE THE ASSESS MENT ORDER 143(3) R.W.S. 147 DATED 24.12.2010, IS SET-ASIDE, NO PENALTY ORDE R, ON THE BASIS OF WHICH PENALTY WAS LEVIED, WOULD SURVIVE. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE AFTER GOING THROUGH THE ORDER OF TRIBUNAL I N ITA NO. 3023/MUM/2013 DATED 08.11.2017 AGREED THAT THE ASSE SSMENT ORDER UNDER SECTION 143(3) DATED 24.12.2010 WAS HELD AS BAD-IN- LAW. 5. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE SEEN THAT THE TRIBUNAL IN APPEAL ON QUANTUM ASSESSMENT PASSED THE FOLLOWING ORDER: 5.WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO WHILE ISSUING NOTICE UNDER SECTION 148 DATED 23.12.2009 NOTED THAT THAT THE LD. CIT(A) WHILE PAS SING THE ORDER FOR AY 2005-06 ON 30.07.2008 HELD THAT INCOME ON ACCOUNT OF SALE O F LAND ACCRUED TO THE ASSESSEE ONLY DURING THE AY 2007-08 AND NOT IN AY 2005-06 AN D THEREFORE, INCOME OF RS. RS. 2,77,00,000/- IS TAXABLE DURING AY 2007-08 ONLY . WE HAVE NOTED THAT WHILE PASSING THE ASSESSMENT ORDER, THE AO RECORDED AS P ER HONBLE HIGH COURT ORDER A SOME OF RS. RS. 2,77,00,000/- HELD TO BE TAXABLE IN AY 2005-06. ADMITTEDLY, NO ADDITION ON ACCOUNT OF SALE OF LAND FOR WHICH THE A SSESSMENT WAS RE-OPENED WAS MADE IN THE ASSESSMENT ORDER. THE AO MADE THE ADDIT ION ON ACCOUNT OF CERTAIN EXPENSES. THE HONBLE BOMBAY HIGH COURT IN CIT VS. JET AIRWAY (I) LTD. (SUPRA) WHILE CONSIDERING THE EXPLANATION-3 TO SECTION 147 HELD THAT THE CONDITION PRECEDENT TO THE EXERCISE OF JURISDICTION UNDER SEC TION 147 IS THE FORMATION OF REASON TO BELIEVE BY ASSESSEE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT. THE AO IS EMPOWER TO ASSESS OR RE-ASSES S, AND ALSO ANY OTHER ITA NO. 5362 MUM 2017-S.P. BUILDERS 4 INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH CAME TO HIS NOTICE SUBSEQUENTLY. THE EFFECT OF EXPLANATION-3 IS THAT EVEN THOUGH THE NOTICE ISSUED UNDER SECTION 148 CONTAINED THE REASONS FOR RE-OPENING OF THE ASSESSMENT, THUS, NOT CONTAINED A REFERENCE TO A PARTICULAR ISS UE WITH REFERENCE TO WHICH INCOME HAS ESCAPED ASSESSMENT. CONSIDERING THE DECISION OF JURISDICTIONAL HIGH COU RT, THE AO IS NOT EMPOWER TO ASSES OR RE-ASSESS THE INCOME IN RESPECT OF ANY OTH ER ISSUE WHICH HAS ESCAPED ASSESSMENT AND WHICH CAME TO HIS NOTICE SUBSEQUENTL Y IN THE COURSE OF THE PROCEEDING UNDER THE SECTION. THE AO DESPITE COMING TO HIS NOTICE, THE INCOME WHICH ESCAPED ASSESSMENT, WHICH WAS ADDED BY WAY OF DISALLOWANCE WHILE PASSING THE ASSESSMENT ORDER, FOR WHICH NO FRESH NO TICE UNDER SECTION 148 WAS ISSUE. THUS, RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT, WE HOLD THAT THE ADDITION MADE BY AO OTHER THAN THE RE ASON RECORDED IS INVALID AND CANNOT BE ADDED IN THE INCOME OF ASSESSEE. WITH DUE REGARD TO THE DECISION OF PUNJAB & HARYANA HIGH COURT IN CIT VS. MEHAK FINVES T P. LTD. (SUPRA), NO RELIANCE CAN BE MADE AS THE DECISION OF JURISDICTIO NAL HIGH COURT IS A BINDING PRECEDING ON US. THUS, GROUND NO. 1 & 2 OF THE APPE AL IS ALLOWED AND THE ASSESSMENT ORDER IS HELD BAD-IN-LAW. 6. CONSIDERING THE DECISION OF TRIBUNAL IN APPEAL FOR QUANTUM ASSESSMENT IN ITA NO. 3023/M/2013, WHEREIN THE ASSESSMENT ORDER O N THE BASIS OF WHICH THE ADDITION WAS MADE AND PENALTY LEVIED HAS ALREAD Y BEEN HELD AS BAD-IN- LAW. THEREFORE, NO PENALTY ORDER UNDER SECTION 271( 1) (C) SURVIVES. THEREFORE, THE PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) IS HEREBY DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 11/03/2019. SD/ SD/ - N.K. PRADHAN, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 11.03.2019 ITA NO. 5362 MUM 2017-S.P. BUILDERS 5 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI