ITO 9(1)(2), MUMBAI V. CREST ESTATE DEVELOPERS P. LTD, MUMBAI

ITA 5446/MUM/2011

• Counselvise Citation: 544619914 RSA 2011
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI
• Assessee Lawyers: AJAY R SINGH
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI RAJENDRA (A.M.) ITA NO. 5446/MUM/2011 ASSESSMENT YEAR : 2002-03 I.T.O. 9(1)(2), R. NO. 226, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI. 400 020. VS. M/S CREST ESTATE DEVELOPERS PVT. LTD., J-14, STONE CASTLE, I.C. COLONY, BOROVALI (W), MUMBAI- 400 103. PAN : AAACC 1896K (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M. MURALI ASSESSEE BY : SHRI AJAY R. SINGH DATE OF HEARING 11-06-12 DATE OF PRONOUNCEMENT 15-06-12 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 11-05-2011 PASSED BY THE LD. CIT (A) - 19, MU MBAI FOR THE A.Y. 2002-03. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS AS ESTATE DEVELOPERS AND AL SO PURCHASES AND SALES TDR. THE RETURN WAS FILED DECLARING LOSS OF R S. 410/-. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE A.O. NOTED THA T THE ASSESSEE DID NOT DECLARE ANY INCOME FROM THE SALE OF TDR. THE C ONTENTION OF THE ITA NO. 5446/MUM/2011 2 ASSESSEE BEFORE THE A.O. WAS THAT AS ON 31-3-2002, THE ASSESSEE HAD STILL TO SELL 105 SQ. MTS. WHICH WAS SOLD ONLY IN THE YEA R ENDED ON 31-3-2003, THAT THE PROFIT ON THE SALE OF THE ENTIRE TDR WAS S HOWN IN THE RETURN FOR A.Y. 2003-04 AND IT WAS ALSO ASSESSED BY THE A.O. I N THAT YEAR U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT), THEREF ORE, NO PROFIT FROM THE SALE OF TDR WERE ASSESSABLE IN THE YEAR UNDER CONS IDERATION. HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES CONTENTION. HE WAS OF THE VIEW THAT SALE OF TDR AS SALE OF STOCK-IN-TRADE AND WAS ACCORDINGLY OF THE OPINION THAT THE SALE OF 1300 SQ. FT. DURING THE YE AR UNDER CONSIDERATION, GIVING RISE TO PROFIT OF RS. 19,25,604/- AND ACCOR DINGLY HE ASSESSED THE SAME IN THE YEAR UNDER CONSIDERATION AND COMPLETED THE ASSESSMENT AT RS. 19,25,600/- IN ROUNDED OFF FIGURES VIDE ORDER D TD. 25-2-2005 PASSED U/S 143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) W HILE AGREEING WITH THE VIEWS OF THE A.O. ON THIS ISSUE SUBJECT TO MINOR RE LIEF BEING GRANTED IN RESPECT OF INTEREST EXPENSES INCURRED BY THE ASSESS EE SINCE A.Y. 1998-99, PARTLY ALLOWED THE APPEAL. WHILE MAKING THE ASSESS MENT, THE A.O. ALSO INITIATED PENALTY PROCEEDING U/S 271(1)(C) OF THE A CT. IN RESPONSE TO NOTICE ISSUED U/S 271(1)(C) TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMPOSED, IT WAS INTER ALIA, SUBMITTED BY THE ASS ESSEE THAT THE ASSEESSEE IS FOLLOWING CONTRACT/PROJECT COMPLETION METHOD, HENCE, THE PROVISIONS OF SECTION 28 CANNOT BE IMPOSED IN COMPU TING THE INCOME FOR THE SAID TRANSACTION IN THE CURRENT YEAR AND SINCE THE WHOLE PROJECT WAS COMPLETED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2003-04, THE INCOME ITA NO. 5446/MUM/2011 3 WAS ACCRUED IN THE SAME ASSESSMENT YEAR AND THE ASS ESSEE COMPANY HAS OFFERED THE SAME FOR TAX. THE ASSESSEE AFTER RELYI NG ON CERTAIN DECISIONS SUBMITTED THAT THE PENALTY PROCEEDING INITIATED BE DROPPED. HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES EXPLANATION. HE WAS OF THE VIEW THAT SINCE THE LD. CIT(A) CONFIRMED THE ADDITION MA DE BY THE A.O., HELD THAT THE ASSESSEE HAS COMMITTED A DEFAULT U/S 271(1 )(C) OF THE ACT BY SUBMITTING INACCURATE PARTICULARS OF INCOME, HENCE, IT IS A FIT CASE FOR IMPOSING PENALTY AND ACCORDINGLY HE IMPOSED PENALTY OF RS. 9,93,864/- VIDE ORDER DTD. 15-3-2010 PASSED U/S 271(1)(C) OF T HE ACT. ON APPEAL THE LD. CIT(A) WHILE OBSERVING THAT SINCE THE TRIBUNAL ON THE APPEAL FILED BY THE ASSESSEE VIDE ORDER DTD. 17-3-2010 HAS DELETED THE ADDITION MADE BY THE A.O., THE IMPOSITION OF PENALTY DOES NOT SURVIV E AND, ACCORDINGLY DELETED THE PENALTY. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DELETION OF PENALTY IMPOSED BY THE A.O. 4. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS THE ORDER OF THE A.O. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT SINCE THE TRIBUNAL HAS DELETED THE ADDITION, THE LD. CIT(A) WAS FULLY JUSTIFIED IN DEL ETING THE PENALTY IMPOSED BY THE A.O. ITA NO. 5446/MUM/2011 4 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE TRIBUNAL IN THE QUANTUM APPEAL IN ASSESSEES OWN CASE IN ITA NO. 47 43 AND 5766/MUM/2008 FOR A.Y. 2002-03 ORDER DTD. 17-3-2010 HAS DELETED THE ADDITION OF RS. 19,25,604/- MADE BY THE A.O. AND CO NFIRMED BY THE LD. CIT(A) ON WHICH THE A.O. HAS IMPOSED THE IMPUGNED P ENALTY. SINCE THE ADDITION ITSELF HAS BEEN DELETED BY THE TRIBUNAL VI RTUALLY THE BASIS FOR IMPOSITION AND LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT AVAILABLE. WHEN SUCH IS THE POSITION, THE IMPOSITION OF PENALT Y IS NOT IN ACCORDANCE WITH LAW. ACCORDINGLY, WE ARE INCLINED TO UPHOLD T HE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY IMPOSED BY THE A.O. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 6. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 15.6.2012. SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 15 TH JUNE, 2012. RK ITA NO. 5446/MUM/2011 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 9, MUMBAI 4. COMMISSIONER OF INCOME TAX (A) 19, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI