ACIT, New Delhi V. M/s. D.D. Resorts PVt. Ltd., New Delhi

ITA 5461/DEL/2013

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6156 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: R N POONIA
• Keywords: Search and seizure; Procedural lapse
• Section: 271(1)(c); 13; 153C; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.5461/DEL/2013 ASSESSMENT YEAR: 2009-10 ACIT, CENTRAL CIRCLE-12, VS. D.D. RESORTS PVT. LT D., NEW DELHI. 12, RANG ROAD, LAJPAT NAGAR NEW DELHI. PAN : AAACD 4557A C.O. NO. 95/DEL/2014 (IN ITA NO.5461/DEL/2013) ASSESSMENT YEAR: 2009-10 D.D. RESORTS PVT. LTD., VS. ACIT, CENTRAL CIRCLE- 12, 12, RANG ROAD, LAJPAT NAGAR NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : MS. NIDHI SRIVASTAVA, CIT/DR ASSESSEE BY : SH. R.N. POONIA, A.R. DATE OF HEARING: 22/01/2020 DATE OF ORDER : 13/02/2020 ORDER PER K. NARASIMHA CHARY, J.M. CHALLENGING THE ORDER DATED 29/07/2013 IN APPEAL NO . 490/13-14 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-XXXI, NEW DELHI (LD. CIT(A)), FOR ASSESSMENT YEAR 2009-10, IN THE CASE OF M/S. D.D. RESORTS PVT. LTD. (THE ASSESSEE), DELETING THE PE NALTY OF RS.8,50,02,420/- 2 LEVIED BY THE ASSESSING OFFICER ON THE GROUND OF CO NCEALMENT OF INCOME, REVENUE PREFERRED THIS APPEAL. THE ASSESSEE HAS AL SO FILED CROSS-OBJECTIONS SUPPORTING THE ORDER OF THE LD. CIT(A). 2. BRIEF FACTS OF THE CASE ARE THAT PURSUANT TO THE SEARCH AND SEIZURE OPERATION U/S. 132 OF THE INCOME TAX ACT, 1961 (TH E ACT) CARRIED OUT IN THE CASE OF RAJ DARBAR GROUP ON 31.07.2008, PROCEEDINGS U/S. 153C OF THE ACT WERE INITIATED AGAINST THE ASSESSEE. THE ASSESSEE F ILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.09.2009 DECLARING INCOME OF RS.4,51,81,260/-. BY ORDER DATED 27.12.2010, THE AS SESSING OFFICER MADE ADDITION OF RS.1,56,80,432/- IN RESPECT OF THE ASSE SSMENT YEAR 2009-10 BY DISALLOWING A PORTION OF INTEREST DEBITED BY THE AS SESSEE AS COST OF THE PROJECT AND CONCLUDED THE ASSESSMENT AT RS.23,35,65 ,290/-. THE ASSESSING OFFICER SIMULTANEOUSLY INITIATED PENALTY PROCEEDING S U/S. 271(1)(C) ON THE CHARGE OF CONCEALMENT OF INCOME AND FURNISHING INAC CURATE PARTICULARS AND BY ORDER DATED 28.03.2013 LEVIED A PENALTY OF RS.8, 50,02,420/-. 3. AGGRIEVED BY SUCH LEVY OF PENALTY, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND CONTENDED THAT THE ALLEGE D ADDITION WAS MADE BY THE ASSESSING OFFICER BY CHANGING THE METHOD OF ACC OUNTING FOLLOWED BY THE ASSESSEE FROM PROJECT COMPLETION METHOD TO PERCENTA GE COMPLETION METHOD AND SUCH A COURSE IS NOT OPEN TO THE ASSESSI NG OFFICER, SINCE THE ASSESSEE IS ENTITLED TO ADOPT ANY ONE OF THE METHOD S OF ACCOUNTING IN THE REAL ESTATE BUSINESS. THE LD. CIT(A) ANALYSED THE C ONTENTION OF THE ASSESSEE IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT IN T HE CASE OF RELIANCE PETROPRODUCTS (P) LTD. (2010) 230 CTR (SC) 320 AND REACHED A CONCLUSION THAT NO PENALTY COULD BE LEVIED ON THE INCOME ADDED TO T HE TOTAL INCOME OF THE 3 ASSESSEE BY CHANGING THE METHOD OF ACCOUNTING. THE REVENUE IS, THEREFORE, AGGRIEVED AND PREFERRED THIS APPEAL. 4. THE LD. DR PLACED RELIANCE ON THE PENALTY ORDER AND SUBMITTED THAT IN RESPECT OF CONSTRUCTION CONTRACTS, THE PRESCRIBED S TANDARD WAS AS-7(REVISED) AND ALL THE BUILDERS, DEVELOPERS, CONTRACTORS HAVE TO FOLLOW PERCENTAGE COMPLETION METHOD OF ACCOUNTING IN RESPECT OF ALL T HE REVENUES RECEIVED ON OR AFTER 01.04.2003. SINCE THE ASSESSEE HAS NOT DEC LARED THE PROFIT AS PER PERCENTAGE COMPLETION METHOD, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON THE BASIS OF THE SAME AND AS SUCH THE ASSESSEE HAD CONCEALED THE INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. IT WAS ALSO HER SUBMISSION THAT THE ASSESSEE DID NOT FILE ANY REPLY TO SHOW CAUSE NOTICE AND THEREFORE, THE PENALTY IMPOSED HAS WRONGLY BEEN DEL ETED BY THE LD. CIT(A). 5. THE LD. AR, AT THE OUTSET, SUBMITTED BEFORE US T HAT THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED BY THE LD. CIT(A) AGAINST WHICH THE REVENUE PREFERRED AN APPEAL TO THE TRIBUN AL IN ITA NO. 248/AGRA/2016 FOR THE ASSESSMENT YEAR 2009-10 AND S UCH AN APPEAL OF THE REVENUE WAS DISMISSED BY THE TRIBUNAL BY ORDER DATE D 21.01.2020. HE FURTHER SUBMITTED THAT APART FROM SUCH FACT, NO PEN ALTY COULD BE LEVIED ON THE ADDITIONS MADE BY CHANGING THE METHOD OF ACCOUN TANCY, BUT NOT AS A RESULT OF EITHER CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS THEREOF. 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF SUBMISSIONS MADE ON EITHER SIDE. THE ASSESSMENT ORDER CLEARLY SHOWS THA T THE ASSESSING OFFICER ESTIMATED THE PROFIT OF THE ASSESSEE AND ENHANCED T HE SAME BY RS.93,62,92,990/- AND DETERMINED THE PROJECT INCOME AT RS.122.18 CRORES INSTEAD OF 28.55 CRORES AS ADMITTED BY THE ASSESSEE . THE ASSESSMENT ORDER 4 FURTHER READS THAT THE ASSESSING OFFICER TOOK THE T OTAL EXPECTED PROFIT FROM THE PROJECT AT RS.122.18 CRORES WHILE WORKING OUT T HE PROFIT OF THE ASSESSEE ON THE BASIS OF PERCENTAGE COMPLETION METHOD, WHERE AS THE ASSESSEE ADOPTED PROJECT COMPLETION METHOD. 7. IT IS, THEREFORE, CLEAR THAT THE ADDITION IS MAD E BY ADOPTING A DIFFERENT ACCOUNTING METHOD FROM THE ONE FOLLOWED BY THE ASSE SSEE AND BY RESORTING TO THE ESTIMATE. APART FROM THE ASSESSEE CHOOSING O NE OF THE TWO METHODS IN THEIR ACCOUNTS, THERE IS NO SPECIFIC ALLEGATION FRO M THE REVENUE THAT THE ASSESSEE HAS EITHER CONCEALED THE PARTICULARS OF IN COME OR FURNISHED INACCURATE OF PARTICULARS THEREOF. THE LD. CIT(A), THEREFORE, WAS RIGHT IN APPLYING THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. (SUPRA) TO REACH A CONCLUSION TH AT THE PENALTY CANNOT BE SUSTAINED. 8. APART FROM THAT, THE QUANTUM ADDITION WAS DELETE D BY THE FIRST APPELLATE AUTHORITY AND THE SAID ORDER OF LD. CIT(A ) WAS CONFIRMED BY THE TRIBUNAL IN ITA NO. 248/AGRA/2016 (SUPRA). THE CIT( A) QUASHED THE ASSESSMENT PROCEEDINGS ON THE GROUND THAT AS ON THE DATE OF ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER IN RESPECT OF A PERSON OTHER THAN A SEARCHED PERSON ON 10.03.2010, THE ASSESSMENT PROCE EDINGS FOR THE ASSESSMENT YEAR 2009-10 WERE PENDING AND STOOD ABAT ED. SUCH A FINDING OF THE CIT(A) WAS UPHELD BY THE TRIBUNAL HOLDING THAT FOR THE ASSESSMENT YEAR 2009-10 ALSO THE ASSESSING OFFICER SHOULD HAVE RECO RDED SATISFACTION AND AFTER ISSUING THE NOTICE U/S. 153C OF THE ACT, ASSE SSMENT SHOULD HAVE BEEN FRAMED AND BECAUSE OF SUCH PROCEDURAL LAPSE, THE AS SESSMENT ORDER STOOD VITIATED. 5 9. VIEWING FROM ANY ANGLE, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY COULD NOT BE SUSTAINED AND THE APPEAL OF TH E REVENUE IS FOUND DEVOID OF MERITS. THE SAME IS ACCORDINGLY DISMISSED . 10. COMING TO THE CROSS OBJECTIONS, SINCE THE IMPUG NED ORDER OF LD. CIT(A) STANDS UPHELD, THE CROSS OBJECTIONS OF THE ASSESSEE WHICH ARE SUPPORTIVE OF IMPUGNED ORDER, ARE RENDERED TO BE INFRUCTUOUS AND ARE, ACCORDINGLY, DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AND CR OSS-OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13/02/2019 AKS