ACIT 17(2), MUMBAI V. DILIP S. HATE, MUMBAI

ITA 5597/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79575 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 01-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS KUMAR AGARWAL
• Assessee Lawyers: M P SHARMA
• Keywords: Business income
• Section: 27

Judgement Text

I.T.A. NO.5597/MUM/2011& CO 114 1 , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./I.T.A. NO.5597/MUM/2011 ( ! ' # / ASSESSMENT YEAR : 2004-05) DY. COMMISSIONER OF INCOME TAX, 17(2), ROOM NO.217, 2 ND FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400012 / VS. MR.DILIP S HATE, 101, SHREE SAI SHRADDHA CHS, 114, BHAVANI SHANKAR ROAD, DADAR(W), MUMBAI-400028. ( $% / APPELLANT) .. ( &'$% / RESPONDENT) CROSS OBJECTION/ &' NO.114/MUM/2012 IN ./I.T.A. NO.5597/MUM/2011 ( ! ' # / ASSESSMENT YEAR : 2004-05) MR.DILIP S HATE, MUMBAI / VS. DY. COMMISSIONER OF INCOME TAX, 17(2), ( $% / APPELLANT) .. ( &'$% / RESPONDENT) $ ./ ( ./PAN/GIR NO. : AAAPH4943F $% ) / REVENUE BY : SHRI VIKAS KUMAR AGARWAL &'$% * ) /ASSESSEE BY : SHRI M P SHARMA + , * - . / DATE OF HEARING : 15.7.2014 /0#' * - . /DATE OF PRONOUNCEMENT : 31.7.2014 I.T.A. NO.5597/MUM/2011& CO 114 2 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJ ECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 1 3-05-2011 PASSED BY LD CIT(A)-29, MUMBAI AND THEY RELATE TO THE ASSESSM ENT YEAR 2004-05. 2. THE REVENUE IS CHALLENGING THE DECISION OF L D CIT(A) IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. IN CROSS OBJECTION, THE ASSESSEE IS SUPPORTING THE ORDER OF LD CIT(A). 3. THE FACTS THAT LED TO LEVY OF PENALTY U/S 27 1(1)(C) OF THE ACT IS STATED IN BRIEF. THE ASSESSEE HAD UNDERTAKEN DEVELOPMENT OF A PLOT LOCATED IN GHATKOPAR UNDER THE SLUM REHABILITATION SCHEME. AC CORDING TO THE ASSESSEE, HE HAD SPENT A SUM OF RS.23,63,549/- TOWA RDS DEVELOPMENT EXPENSES BY 17.04.2003. HE HAD ALSO UNDERTAKING ST EPS TO OBTAIN NECESSARY PERMISSION, FORMATION OF TENANT ASSOCIATI ON AND ACCORDINGLY OBTAINED THE RIGHTS. THE AO NOTICED THAT THE ASSESS EE HAS ENTERED INTO A PARTNERSHIP WITH THREE OTHER PERSONS NAMELY SHRI MO HAN JETHALAL SINGHANI, SHRI CHANDU JETHALAL SINGHANI AND SHRI PURUSHOTTAM JETHALAL SINGHANI. THE PARTNERSHIP WAS ENTERED ON 17.04.2003. THE RIG HTS ACQUIRED BY THE ASSESSEE WAS VALUED BY THE PARTNERSHIP FIRM AT RS.3 0.00 LAKHS AND THE SAME WAS TREATED AS ASSESSEES CAPITAL IN THE FIRM. HOWEVER, THE ASSESSEE RETIRED FROM THE PARTNERSHIP FIRM ON 28.04 .2003 (WITHIN 11 DAYS OF FORMATION OF PARTNERSHIP) AND RECEIVED CAPITAL A MOUNT OF RS.30.00 LAKHS. THE PARTNERSHIP FIRM ALSO REIMBURSED A SUM OF RS.24.25 LAKHS I.T.A. NO.5597/MUM/2011& CO 114 3 TOWARDS THE DEVELOPMENT EXPENSES INCURRED BY THE AS SESSEE. THE AO NOTICED FROM THE RETIREMENT DEED THAT THE ASSESSEE WAS ALSO ALLOTTED 10000 SQ. FT. OF THE CONSTRUCTION AREA AT FREE OF C OST IN THE PREMISES GOING TO BE CONSTRUCTED. HOWEVER, SUBSEQUENTLY A SUPPLEM ENTARY AGREEMENT DATED 25.4.2006 WAS ENTERED BETWEEN THE PARTIES, AC CORDING TO WHICH THE ASSESSEE HEREIN WAS AGREED TO BE GIVEN 7707 SQ. FT. IN THE PLACE OF 10,000 SQ. FT. STATED EARLIER. 4. THE ASSESSEE DID NOT OFFER THE VALUE RELATIN G TO 10,000 SQ. FT. OR AS THE CASE MAY BE 7707 SQ. FT. AS HIS INCOME. THE AO TOOK THE VIEW THAT THE ASSESSEE HAS TRANSFERRED THE DEVELOPMENT RIGHTS , WHICH IS A BUSINESS ASSET, THROUGH THE ROUTE OF FORMING PARTNERSHIP AND SUBSEQUENT RETIREMENT THEREFROM. WHEN CALLED FOR EXPLANATIONS , THE ASSESSEE SUBMITTED THAT THE PROJECT BEING A SLUM DEVELOPMENT SCHEME, HE WAS NOT SURE AS TO WHEN THE PROJECT WILL BE COMPLETED. THE ASSESSEE FURTHER SUBMITTED THAT SINCE THERE IS NO CERTAINTY OF COMPL ETION OF ENTIRE PROJECT, HE WAS NOT SURE OF THE VALUATION OF THE ALLOTTED AR EA. THE ASSESSEE ALSO POINTED OUT THE FACT THAT THE ALLOTTED AREA WAS RED UCED FROM 10000 SQ. FT. TO 7707 SQ.FT. HOWEVER, THE ASSESSEE CAME FORWARD TO OFFER THE AMOUNT CALCULATED AT THE RATE OF RS.500/- PER SQ.FT. THE AO, HOWEVER, TOOK THE VIEW THAT THE VALUATION SHOULD BE ARRIVED AT ON THE BASIS OF THE COST INCURRED BY THE CONTINUING PARTNERS. THE AO TOOK A STATEMENT FROM ONE OF THE CONTINUING PARTNERS NAMED SHRI MOHAN SINGHAN I AND IN THE ANSWER TO Q. NO.8, HE STATED THAT THEY ARE EXPECTING A BOO KING RATE OF RS.2,500/- PER SQ.FT. TAKING THE SAME AS THE BASIS AND AFTER REDUCING 10% THEREOF I.T.A. NO.5597/MUM/2011& CO 114 4 AS PROFIT MARGIN, THE AO ESTIMATED THE COST OF CONS TRUCTION AT RS.2,250/-. ACCORDINGLY, THE AO VALUED THE COST OF ALLOTTED ARE A OF 7707 SQ.FT. AT RS.1,73,45,250/- AND ASSESSED THE SAME AS THE INCOM E OF THE ASSESSEE. THOUGH THE SAID ADDITION WAS DELETED BY LD CIT(A), YET THE TRIBUNAL RESTORED THE ADDITION IN THE APPEAL PREFERRED BY TH E REVENUE. SUBSEQUENTLY, THE AO LEVIED A PENALTY OF RS.57,23, 931/-, BEING 100% OF THE TAX SOUGHT TO BE EVADED AGAINST THE ABOVE SAID ADDITION. IN THE APPEAL PREFERRED BY THE ASSESSEE, THE LD CIT(A) DEL ETED THE PENALTY AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 5. LD D.R PLACED HEAVY RELIANCE ON THE ORDER PA SSED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS AND SUBMITTED THAT THE TRIB UNAL HAS GIVEN A FINDING THAT THE ASSESSEE HAS ADOPTED A CIRCUITOUS ROUTE OF FORMING A PARTNERSHIP AND THEN RETIRED THEREFROM WITH A VIEW WITH THE OBJECTIVE OF TRANSFERRING THE DEVELOPMENT RIGHTS. HE FURTHER SU BMITTED THAT THE TRIBUNAL HAS HELD THAT THE RIGHT TO RECEIVE THE CON SIDERATION ON TRANSFER OF DEVELOPMENT RIGHT HAS ACCRUED TO THE ASSESSEE DURIN G THE YEAR UNDER CONSIDERATION. ACCORDINGLY HE SUBMITTED THAT THERE IS CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE BY NOT DISCLOSIN G THE TRANSFER VALUE OF DEVELOPMENT RIGHTS. HE FURTHER SUBMITTED THAT THE LD CIT(A) HAS DELETED THE PENALTY ON THE REASONING THAT THERE ARE TWO VIE WS WITH REGARD TO THE YEAR IN WHICH THE TRANSFER VALUE OF DEVELOPMENT RIG HT IS TAXABLE. HE SUBMITTED THAT THE TRIBUNAL HAS GIVEN A CLEAR VERDI CT REGARDING THE YEAR OF TAXABILITY AND HENCE THE POSSIBILITY OF HAVING TWO VIEWS DOES NOT ARISE. ACCORDINGLY HE SUBMITTED THAT THE ORDER OF LD CIT(A ) SHOULD BE REVERSED. I.T.A. NO.5597/MUM/2011& CO 114 5 6. ON THE CONTRARY, THE LD A.R SUBMITTED THAT T HE ASSESSEE STARTED THE DEVELOPMENT OF PROJECT IN 1994 AND HE COULD NOT COM PLETE THE SAME. HENCE HE ENTERED INTO A PARTNERSHIP IN 17.4.2003 AN D OBTAINED A SUM OF RS.54.25 LAKHS ON TRANSFER OF THE PROJECT. HE SUBM ITTED THAT THE ASSESSEE HAS DULY OFFERED THE ABOVE SAID AMOUNT FOR TAXATION . REFERRING TO THE CLAUSE 2 OF THE SUPPLEMENTARY DEED DATED 25-04-2006 (PAGE 45 OF PAPER BOOK), HE SUBMITTED THAT THE ASSESSEE WAS AGREED T O BE ALLOTTED SHOPS/RESIDENTIAL UNITS/FLATS AS AND WHEN THEY ARE COMPLETED. HE SUBMITTED THAT THE ASSESSEE DID NOT RECEIVE ANY POR TION OF THE CONSTRUCTED AREA DURING THE YEAR UNDER CONSIDERATION AND HENCE HE DID NOT ACCOUNT FOR THE SAME. REFERRING TO THE METHOD OF REVENUE RECOGNITION ADOPTED BY THE ASSESSEE (PAGE 27 OF PAPER BOOK), THE LD A.R SUBMITTED THAT THE ASSESSEE HAS BEEN RECOGNIZING THE REVENUE IN RESPEC T OF SALE OF FLATS ONLY COMPLETION OF CONSTRUCTION OF BUILDING. ACCORDINGLY , THE ASSESSEE HAD TAKEN THE VIEW THAT THE INCOME ARISING ON ALLOTMENT OF CONSTRUCTION AREA SHOULD BE OFFERED IN THE YEAR OF RECEIPT OF THE SAM E. HE FURTHER SUBMITTED THAT THE IMPUGNED PROJECT WAS GETTING DELAYED DUE T O VARIOUS TYPES OF OBSTACLES (INCLUDING THE FACT THAT THE PLOT WAS FUL LY ENCUMBERED BY THE SLUM DWELLERS) AND HENCE THERE WAS UNCERTAINTY OVER THE RECEIPT OF THE SAME. HE FURTHER SUBMITTED THAT THE ADDITION MADE IN THE ASSESSMENT PROCEEDINGS WOULD NOT GIVE RISE TO PENALTY AUTOMATI CALLY. HE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS RELATING THERETO AND THERE IS NO ALLEGATION THAT THE ASSESSEE HAS CONCEA LED ANY PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT THE IMPUGNED ADD ITION HAS BEEN MADE, SINCE THE AO TOOK THE VIEW THAT IT IS ASSESSABLE DU RING THE INSTANT YEAR, I.T.A. NO.5597/MUM/2011& CO 114 6 WHILE THE ASSESSEE HAD TAKEN THE VIEW THAT THE SAME IS ASSESSABLE IN THE YEAR OF RECEIPT OF CONSTRUCTED AREA. HE SUBMITTED THAT THE ASSESSEE HIMSELF HAS OFFERED THE INCOME IN THE SUBSEQUENT YE ARS WHEN THE SAID FLATS WERE SOLD. ACCORDINGLY HE SUBMITTED THAT THE DISPUTE IS ALSO RELATED TO THE YEAR OF ASSESSABILITY. SINCE THERE WAS UNCE RTAINTY ABOUT THE YEAR OF RECEIPT AND FURTHER ULTIMATELY, THE DISPUTE IS WITH REGARD TO THE YEAR OF ASSESSABILITY, THE LD A.R CONTENDED THAT THE LD CIT (A) WAS JUSTIFIED IN DELETING THE PENALTY. THE LD A.R ALSO PLACED RELIA NCE ON THE FOLLOWING CASE LAW IN SUPPORT OF HIS CONTENTIONS:- (A) CIT VS. CHOLAMANDALAM INVESTMENT AND FINANCE CO . LTD (364 ITR 680)(MAD), WHEREIN THE HONBLE MADRAS HIGH COUR T HAD HELD THAT THE NON-ACCEPTANCE OF EXPLANATION GIVEN BY THE ASSESSEE WOULD NOT LEAD TO PENALTY. (B) CIT VS. EXCEL INDUSTRIES LTD (358 ITR 295)(SC) , WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT THE ACCRUAL OF INCOME SHOULD BE VIEWED FROM PRACTICAL POINT OF VIEW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. WE AGREE WITH THE CONTENTIONS OF THE ASSES SEE THE ADDITION MADE IN THE ASSESSMENT PROCEEDING WOULD NOT GIVE RISE TO PENALTY AUTOMATICALLY. IT IS A WELL SETTLED PROPOSITION THAT THE ASSESSING OFFICER, DURING THE COURSE OF PENALTY PROCEEDINGS, SHOULD EXAMINE THE NATURE O F ADDITION AFRESH IN TERMS OF SEC. 271(1)(C) OF THE ACT. IN THE INSTANT CASE, IT IS FACT THAT THE ASSESSEE WAS ENTITLED TO RECEIVE 7707 SQ. FT. LAND AS PER THE RETIREMENT DEED R.W. SUPPLEMENTARY DEED. ACCORDING TO THE ASS ESSEE, HE DID NOT OFFER THE VALUE OF THE SAME FOR THE FOLLOWING REASO NS:- (A) AS PER THE ACCOUNTING SYSTEM FOLLOWED BY IT, H E WAS RECOGNIZING REVENUE ON SALE OF FLATS ONLY ON COMPLE TION OF BUILDING CONSTRUCTION. EXTENDING THE SAME ANALOGY, THE ASSE SSEE SUBMITTED I.T.A. NO.5597/MUM/2011& CO 114 7 THAT HE HAS TAKEN THE VIEW THAT THE INCOME RELATING TO 7707 SQ.FT. IS ASSESSABLE IN THE YEAR OF COMPLETION OF CONSTRUC TION. (B) EVEN OTHERWISE, THERE WAS NO UNCERTAINTY ABOUT THE COMPLETION OF CONSTRUCTION DUE TO VARIOUS OBSTACLES FACED IN T HE EXECUTION OF THE PROJECT. IT IS ALSO A FACT THAT THE ASSESSEE W AS ORIGINALLY ALLOTTED 10000 SQ.FT OF CONSTRUCTED AREA, WHICH WAS LATER REDUCED TO 7707 SQ.FT. THUS, THERE WAS UNCERTAINTY ABOUT T HE AREA ALSO. IT IS ALSO AN ADMITTED FACT THAT THE EXPLANATION O F THE ASSESSEE DID NOT FIND FAVOUR BEFORE THE TRIBUNAL IN THE QUANTUM ASSE SSMENT PROCEEDINGS. THE TRIBUNAL HAD TAKEN THE VIEW THAT THE RIGHT TO T HE ASSESSEE HAS ACCRUED DURING THE YEAR UNDER CONSIDERATION AND ACC ORDINGLY HELD THAT THE INCOME ARISING THEREON IS ASSESSABLE IN THE INSTANT YEAR. 8. NOW THE QUESTION THAT ARISES IS WHETHER THE SA ID ADDITION WOULD GIVE RISE TO PENALTY U/S 271(1)(C) OF THE ACT. FRO M THE EXAMINATION OF THE RECORD, WE NOTICE THAT THE DISPUTE WAS ULTIMATELY R ELATED TO THE YEAR OF ASSESSMENT OF THE INCOME ARISING FROM THE RIGHT TO GET CONSTRUCTED AREA. IN THE PENALTY PROCEEDINGS, IT IS REQUIRED TO BE SE EN AS TO WHETHER THE ASSESSEE HAS CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WE NOTICE THAT THE LD CIT(A ) HAS EXAMINED THE ISSUE IN DETAIL AND FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE DECISION RENDERED BY LD CIT(A):- 5. I HAVE CONSIDERED THE FACTS OF THE CASE THE AR GUMENTS OF THE ASSESSING AO AND SUBMISSIONS MADE BY THE APPELLANT . I FIND THAT PENALTY UNDER SECTION 271(1)(C ) CANNOT BE IMPOSED IN THIS CASE FOR THE FOLLOWING REASONS. THIS IS INDEPENDENT TAXABILI TY OF THE INCOME. 1. FIRST OF ALL THE ISSUE IS WHETHER THE APPELLANT DISCLOSED ALL THE PARTICULARS OF INCOME. ADMITTEDLY APPELLAN T HAD OFFERED TO TAX THE AMOUNT RECEIVED OF RETIREMENT FR OM PARTNERSHIP FIRM. THIS AMOUNT WAS OF RS.30 LACKS. T HE I.T.A. NO.5597/MUM/2011& CO 114 8 APPELLANT HAD ALSO OFFERED TO TAX AN AMOUNT OF RS.24,25,000/- RECEIVED REIMBURSEMENT OF EXPENSES A S INCOME DURING THE YEAR UNDER CONSIDERATION. THE OT HER PART OF THE RETIREMENT DEED ENABLING THE APPELLANT RECEI VE CONSTRUCTED AREA HAD NOT ACCRUED AS INCOME TO THE A PPELLANT AND THEREFORE NOT OFFERED TO TAX IN THE RETURN OF INCOME. 2. EVEN ASSUMING THAT THE INCOME IS TO BE OFFERED TO TAX, IT HAS BEEN THE ACCEPTED POLICY OF THE APPELL ANT TO OFFER BUSINESS INCOME AS AND WHEN THE PROJECT IS COMPLETE D. THE INCOME UNDER EXAMINATION IS BUSINESS INCOME. HENCE APPELLANT HAS OFFERED THIS INCOME WHEN THE PROJECT HAS BEEN COMPLETED AND POSSESSION GIVEN TO HIM. AS PER CLAUS E 1(B) OF NOTES TO ACCOUNTS OF THE AUDIT REPORT FILED ALO NGWITH THE RETURN OF INCOME REVENUE RECOGNITION WILL BE ON COM PLETION OF THE PROJECT OR ON THE COMPLETION OF THE BUILDING . 3. THE MOST IMPORTANT POINT IS THAT CIT(A) HAS ALR EADY DELETED THE ADDITION IN THIS YEAR. ALTHOUGH TRIBUN AL HAS REVERSED HIS DECISION, STILL IT CAN BE SEEN THAT CL EARLY TWO VIEWS ARE POSSIBLE IN THE MATTER. THE ASSESSEE HAD NOT CONCEALED THE RELEVANT FACTS. HIS CLAIM COULD BE A N INNOCENT ONE, EVEN IF NOT CORRECT. THE WORD CONCEALMENT IN S UCH A CASE IN ITS ORDINARY SENSE CANNOT BE APPLY TO SUCH A SITUATION. IT WAS IN THIS CONTEXT, PENALTY WAS CANC ELLED IN THE CASE OF INDIA CINE AGENCIES V/S DCIT (2005) 275 ITR 430 (MAD). WHERE FACTS ARE DISCLOSED, BUT INFERENCE IS DIFFERENCE, THEE IS NO CASE FOR PENALTY AS HELD IN CIT V. ME HTA ENGINEERS LT. (2008) 300 ITR 308 (P & H). 4. AS REGARDS OFFERING THE INCOME TO TAX, THE APPEL LANT HAS OFFERED THE INCOME TO TAX IN THE ASSESSMENT YEA R 2010- 11. IN THIS ASSESSMENT YEAR HE HAS RECEIVED THE CON STRUCTED AREA AND ACCORDINGLY INCOME HAS FINALLY ACCRUED TO HIM. IT IS NOT THE CASE OF THE APPELLANT THAT INCOME NEVER ACC RUED. THE DISPUTE IS ONLY THE YEAR OF ACCRUAL AND TAXABIL ITY. AS CAN BE SEEN, EVEN THE QUANTIFICATION OF INCOME CANNOT B E PROPERLY MADE IN ASSESSMENT YEAR 2004-05 THE VALUE OF THE CONSTRUCTED AREA HAS TO BE TAKEN ON THE DATE OF DEL IVERY TO THE APPELLANT. THE AO HAS AGAIN ESTIMATED THE COST OF CONSTRUCTION. WHERE THERE IS DISPUTE AS TO THE YEAR OF ASSESSMENT, PENALTY WILL NOT BE EXIGIBLE MERELY BEC AUSE THE ASSESSEE HAS OFFERED THE INCOME FOR A DIFFERENT YEA R. IT WAS SO HELD IN CIT V/S MANILAL TARACHANCL (2002) 254 I TR 630(GUJ). IN SUCH CASE THE INFERENCE OF CONCEALMENT , IT WAS HELD, WOULD NOT LIE. 5. IT CAN BE SEEN THAT THE INCOME ITSELF WAS CONTI NGENT. THE FLATS WERE NOT AT ALL IN EXISTENCE. THE ACCRUAL OF INCOME 1 I.T.A. NO.5597/MUM/2011& CO 114 9 IS CONTINGENT UPON HAPPENING OF AN EVENT I.E , CONS TRUCTION OF THE BUILDING AND COMPLETION THEREOF. THE PROPERT Y WAS FULLY ENCUMBERED BY THE SLUM DWELLERS AS THE PROJEC T WAS DELAYED. THE AREA TO BE RECEIVED WAS REDUCED TO 7,7 00 SQ.FT. FROM 10,000 SQ.FT. THERE WAS NO CERTAINTY OF COMPLE TION OF ENTIRE PROJECT AS IT WAS UNDER SLUM DEVELOPMENT SC HEME AND IT TAKES TIME TO OBTAIN BMC SANCTIONS. EVEN IF IT HAS TO BE TREATED AS A TRANSFER, THE INCOME WOULD ACCRUE I N THE YEAR WHEN THE CONSTRUCTION IS COMPLETED, PROJECT CO MPLETION CERTIFICATE IS OBTAINED AND THE POSSESSION IS HANDE D OVER TO THE ASSESSEE. IT IS NOT IN EVERY WHERE AN ADDITIO N IS UPHELD THAT PENALTY BECOMES EXIGIBLE EVEN IN THE LIGHT OF EXPLANATION TO SECTION 271(1)(C), WHICH INFERS PRIM A FACIE CONCEALMENT WHEREVER THERE IS A DIFFERENCE BETWEEN REPORTED AND ASSESSED INCOME. IN CIT V/S KERALA SP INNERS LTD. (2001) 247 ITR 541 (KER), THE HIGH COURT POINT ED OUT THAT THE EXPLANATION ITSELF PROVIDES, THAT WHERE AL L THE FACTS RELATING TO THE ADDITION HAD BEEN DISCLOSED BY THE ASSESSEE AND THE EXPLANATION IN RESPECT OF ENTRIES IN THE BO OKS ARE BONA FIDE, IT IS ONLY A CASE OF ASSESSEE'S FAILURE TO ESTABLISH HIS CASE, IT IS NOT A CASE FOR PENALTY, FOLLOWING T HE RATIONALE OF THE DECISION IN CIT V/S MUSSADILAL RAM BHAROSE (1987) 165 ITR 14 (SC) FOR ITS CONCLUSION. 6. THE LAW REGARDING PENALTY IS ALSO FAIRLY SETTLE D. A WRONG OR PATENTLY INADMISSIBLE CLAIM CANNOT LEAD TO PENALTY AS IS HELD BY THE APEX COURT IN THE CASE OF CIT V/S RELIANCE RETROPR ODUCTS PVT. LTD. (2010) 322 ITR 158 (SC). PENALTY ALSO CANNOT BE LEVIED WHEN THERE WERE TWO VIEWS POSSIBLE ON THE SAME SET OF F ACTS. IN THIS CASE CIT(A) AND ITAT HAVE HELD TWO DIAMETRICALLY OPPOSITE VIEWS. IN VIEW OF THE ABOVE, PENALTY CANNOT BE LEVIED IN T HIS CASE IRRESPECTIVE OF ASSESSMENT OF THE INCOME IN THIS AS SESSMENT YEAR. PENALTY LEVIED U/S 271(1)( C ) AMOUNTING TO RS.5723 931/- IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 9. THUS IT IS SEEN THAT THE ASSESSEE FURNISHED ALL THE MATERIALS RELATING TO THE ADDITION AND ALSO OFFERED EXPLANATIONS AS TO WHY HE DID NOT OFFER THE SAME DURING THE YEAR UNDER CONSIDERATION. THE SAID EXPLANATION WAS NOT FOUND TO BE NOT BONAFIDE. THOUGH THE TRIBUNAL HAS EXPRESSED THE VIEW THAT THE SCHEME OF ENTERING INTO A PARTNERSHIP AND THEREAFTER RETIREMENT THEREFROM IS A PLOY ADOPTED TO TRANSFER THE DEVELOPMENT RIGHTS, I.T.A. NO.5597/MUM/2011& CO 114 10 YET THE QUESTION IS WHETHER THE INCOME ARISING THER EFROM IS ASSESSABLE IN THIS YEAR OR NOT. IN THAT REGARD, IN OUR VIEW, TWO VIEWS ARE POSSIBLE PARTICULARLY IN VIEW OF THE ACCOUNTING SYSTEM FOLLO WED BY THE ASSESSEE AND ALSO DUE TO THE UNCERTAINTY OF EXECUTION OF THE PRO JECT. HENCE, IN OUR VIEW, THE EXPLANATIONS FURNISHED BY THE ASSESSEE CA NNOT BE FOUND FAULT WITH IT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY. 10. THE ASSESSEE HAS FILED CROSS-OBJECTION ONLY TO SUPPORT THE ORDER OF LD CIT(A). SINCE WE HAVE DISMISSED THE APPEAL OF T HE REVENUE, THE SAME BECOMES INFRUCTUOUS AND HENCE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AN D THE CROSS-OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 31 ST JULY , 2014. /0#' + 1 2 3 31ST JULY, 2014 0 * , 4 SD S D ( /SANJAY GARG) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + , MUMBAI: 31ST JULY,2014. . . ./ SRL , SR. PS I.T.A. NO.5597/MUM/2011& CO 114 11 ! / COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &'$% / THE RESPONDENT. 3. + 6- ( ) / THE CIT(A)- CONCERNED 4. + 6- / CIT CONCERNED 5. 78 &-9! , . 9! ' , + , / DR, ITAT, MUMBAI CONCERNED 6. : , / GUARD FILE. ; + / BY ORDER, TRUE COPY < (ASSTT. REGISTRAR) . 9! ' , + , /ITAT, MUMBAI