AARTI PROJECTS AND CONSTRUCTIONS, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-5(1), MUMBAI

ITA 6104/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3667 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 04-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE LD
• Assessee Lawyers: PAVAN VED LD AR ABC
• Keywords: Business income; Principle of natural justice; Wrong claim; TDS
• Section: 43B; 143(3); 40(a)(ia); 80IB

Judgement Text

1 ITA NO.6104/MUM/2017 AARTI PROJECTS & CONSTRUCTIONS ASSESSMENT YEAR -2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6104/MUM/2017 ( / ASSESSMENT YEAR: 2013-14) AARTI PROJECTS & CONSTRUCTIONS PLAZA PANCHSEEL, A WING 5 TH FLOOR, 501 HUGHES ROAD BEHIND DHARAM PALACE, GRANT ROAD(W) MUMBAI-400 007. / VS. D CIT - CENTRAL CIRCLE - 5 (1) ROOM NO.1928, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021. => ./ ./PAN/GIR NO. AAEFA-5526-F ( >@ /APPELLANT ) : ( AB>@ / RESPONDENT ) >@C / APPELLANT BY : SHRI PAVAN VED - LD. AR AB>@C / RESPONDENT BY : SHRI SATISH CHANDRA RAJORE LD. DR / DATE OF HEARING : 29/08/2019 / DATE OF PRONOUNCEMENT : 13/11/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2013-14 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME-TAX (APPEALS)-53, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO.CIT(A)- 2 ITA NO.6104/MUM/2017 AARTI PROJECTS & CONSTRUCTIONS ASSESSMENT YEAR -2013-14 53/DCCC-5(1)/IT-302/2016-17 DATED 22/08/2017 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A)-53 HAS ERRED IN CONFIRMING LEVY OF PENALTY U/S 271(L)(C) OF THE ACT AMOUNTING TO RS.21,47,010/- ON THE FOLLOWING ADDIT IONS MADE IN ASSESSMENT PROCEEDINGS U/S 143(3) OF THE AC T; 2. THE ORDER UNDER APPEAL IS NOT ONLY BAD IN LAW AN D INVALID, BUT ALSO AGAINST THE NATURAL LAW OF EQUI TY AND JUSTICE. AS EVIDENT FROM GROUNDS OF APPEAL, THE ASSESSEE IS AGGRIEVED BY CONFIRMATION OF PENALTY OF RS.21.47 LACS LEVIED U/S . 271(1)(C). 2.1 FACTS LEADING TO IMPOSITION OF PENALTY ARE THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED AS BUILDER & PRO PERTY DEVELOPER WAS ASSESSED U/S. 143(3) ON 20/01/2016 WHEREIN RETURNED LOSS OF RS.70.42 LACS E-FILED BY THE ASSESSEE ON 31/07/2013 WAS REDUCED T O RS.0.94 LACS IN VIEW OF FOLLOWING DISALLOWANCES: - S.NO. PARTICULARS AMOUNT (RS.) 1. DISALLOWANCE OF EXPENSES 68,47,479/- 2. DISALLOWANCE U/S 43B 800/- 3. DISALLOWANCE U/S. 40(A)(IA) 1,00,000/- S.N PARTICULARS AMT(RS.) 1. DISALLOWANCE OF EXPENSES WHICH WERE INCURRED IN RELATION TO THE PROJECT FOR WHICH THE FIRM HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT IN EARLIER A.Y.2012-13 68,47,479/- 2. DISALLOWANCE U/S 43B 800/- 3. DISALLOWANCE U/S 40(A)(IA) 1,00,000/- TOTAL 69,48,279/- 3 ITA NO.6104/MUM/2017 AARTI PROJECTS & CONSTRUCTIONS ASSESSMENT YEAR -2013-14 ALL THE DISALLOWANCES WERE ADMITTED ALLOWANCES. DUR ING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSESSEE DID NO T EARN ANY INCOME FROM BUSINESS BUT DEBITED EXPENSES OF RS.72.28 LACS. THE ASSESSEE SUBMITTED THAT IT INCURRED EXPENSES IN RELATION TO PROJECT IN COME THAT WAS OFFERED TO TAX IN AY 2012-13. HOWEVER, IT WAS NOTED THAT THE PROJE CT WAS NOTIFIED PROJECT AND THE INCOME EARNED THEREFROM QUALIFIED FOR EXEMP TION U/S 80IB (10) IN EARLIER YEARS. THE ASSESSEE, WHILE ADMITTING THE SA ME, CONTENDED THAT IT MADE A GENUINE MISTAKE IN RETURN FILED U/S 139. THE MISTAKE WAS BONA-FIDE AND DUE TO HUMAN ERROR. CONSEQUENTLY, PROJECT EXPEN SES OF RS.68.47 LACS CLAIMED BY THE ASSESSEE WERE ADMITTED AND DISALLOWE D. THE SECOND DISALLOWANCE OF RS.800/- WAS U/S 43B ON ACCOUNT OF PROFESSIONAL TAX NOT PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME. PENALTY WAS INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, AGA INST BOTH THESE ADDITIONS. THE LAST DISALLOWANCE OF RS.1 LACS WAS U/S 40(A)(IA ) ON THE GROUND THAT TDS WAS NOT PAID UP TO THE DAY OF FILING OF RETURN. PENALTY WAS INITIATED FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMEN T OF INCOME. 2.2 CONSEQUENTLY, PENALTY PROCEEDINGS WERE INITIATE D AGAINST THE ASSESSEE. DURING PENALTY PROCEEDINGS, THE ASSESSEE CONTENDED THAT THE CLAIM OF EXPENDITURE WAS MADE UNDER BONA-FIDE MISTA KE WHICH WAS REALIZED AT THE TIME OF ASSESSMENT PROCEEDINGS. REALIZING TH E SAID MISTAKE, THE ASSESSEE REVISED ITS RETURN OF INCOME FOR AYS 2014- 15 & 2015-16 TO WITHDRAW THE CLAIM OF CARRY-FORWARD LOSSES BY THE A MOUNT OF DISALLOWANCE EVEN BEFORE THE COMPLETION OF ASSESSMENT PROCEEDING S. IN THE ABOVE BACKGROUND, THE ASSESSEE SUBMITTED THAT THERE WAS N O CONCEALMENT OF 4 ITA NO.6104/MUM/2017 AARTI PROJECTS & CONSTRUCTIONS ASSESSMENT YEAR -2013-14 INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME WITHIN THE MEANING OF SECTION 271(1)(C). RELIANCE WAS PLACED, INTER-ALIA, ON THE DECISION OF HONBLE SUPREME COURT IN RELIANCE PETROPRODUCTS (P) LTD. (2010 322 ITR 158) AND PRICE WATER HOUSE COOPERS (P) LTD. V/S CIT (2102 25 TAXMANN.COM 400). HOWEVER, REJECTING THE SAME, LD. AO LEVIED IMPUGNED PENALTY OF RS.21.47 LACS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2.3 THE LEARNED CIT(A) NOTED THAT THE DECISION OF T RIBUNAL IN AY 2012-13 WITH RESPECT TO ASSESSEES CLAIM U/S 80IB (10) WOUL D HAVE NO RELEVANCE AND A PATENTLY INCORRECT EXPENSES WERE CLAIMED. THE ASS ESSEE CLAIMED HIGHER LOSSES AND HAD THE CASE NOT BEEN SELECTED FOR SCRUT INY, THE ASSESSEE WOULD HAVE ENJOYED EVASION OF TAX ON INCOME THUS SUPPRESS ED. FINALLY, THE PENALTY WAS CONFIRMED BY OBSERVING AS UNDER: - 7. IT IS NOTED THAT THERE IS NO RELEVANCE OF THE DE CISION IN ITS OWN CASE FOR AY 2012-13 WHEREIN HONBLE ITAT ALLOWED ITS CLAIM U/S. 80IB(10 ). IN THE FACTS BEFORE ME A PATENTLY INCORRECT EXPENSE WAS CLAIMED. EVEN IF APPELLANT'S CONTENTION THAT IT FOLLOWED PROJECT COMPLETION METHOD OF ACCOUNTING AND THAT EXPENSES A RE CLAIMED THIS YEAR BUT ARE FOR EARLIER YEARS IS ACCEPTED, THERE IS NO DENYING THE FACT THAT BY CLAIMING IT THIS YEAR A HIGHER LOSS IS CLAIMED AND CORRESPONDINGLY HIGHER C ARRIED FORWARD LOSS IS CLAIMED. IF THE CASE WAS NOT SELECTED UNDER SCRUTINY AND THIS WAS N OT FOUND IN ASSESSMENT PROCEEDINGS, THE APPELLANT WOULD HAVE ENJOYED EVASI ON OF TAX ON INCOME THUS SUPPRESSED. IT DOES NOT MATTER THAT THE APPELLANT R EVISED ITS RETURN FOR SUBSEQUENT YEARS AFTER BEING CONFRONTED AS THIS MAKING A VIRTUE OUT OF AN ERRONEOUS AND FALSE CLAIM ON BEING CAUGHT. AS PER EXPLANATION 4 TO SECTION 271(I )(C) PENALTY IS IMPOSABLE EVEN WHERE THE RETURN IS A LOSS RETURN. THUS PENALTY IN THIS R EGARD IS UPHELD. 8. AS REGARDS THE PENALTY IN RESPECT OF DISALLOWANC E OF RS 800 ON ACCOUNT OF SECTION 43B AND RS 1,00,000 U/S 40(A)(IA), IT IS NOTED THAT THE DISALLOWANCE IS AGAIN NOT DISPUTED. HOW IT WAS AN OVERSIGHT IS NOT SHOWN. THE ASSESSING OFFICER HAS HELD THAT SUCH A CLAIM IS NOT BONAFIDE. I FIND NO REASON TO I NTERFERE. AGGRIEVED, THE ASSESSEE IS UNDER APPEAL BEFORE US. 5 ITA NO.6104/MUM/2017 AARTI PROJECTS & CONSTRUCTIONS ASSESSMENT YEAR -2013-14 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED REL EVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLACED IN THE PAPER-BOOK AND DELIBERATED ON JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US. 4. UPON DUE CONSIDERATION, WE FIND THAT THE ASSESSE E WAS CARRYING OUT CERTAIN PROJECT IN EARLIER YEARS WHICH WAS ELIGIBLE FOR DEDUCTION U/S 80- IB(10). CLEARLY, ONLY THE RESULTANT GAINS EARNED FR OM THE PROJECT, NET OF EXPENDITURE, WERE ELIGIBLE FOR DEDUCTION. THIS DEDU CTION WAS AVAILABLE TO THE ASSESSEE OVER SEVERAL YEARS AND THE ASSESSEE WAS CO NSCIOUS OF THE FACT THAT ITS PROJECT WAS ELIGIBLE FOR DEDUCTION U/S 80- IB(10). THE ASSESSEE HAS NOT EARNED ANY BUSINESS INCOME DURING THE YEAR AND DID NOT CARRY OUT ANY OTHER PROJECT. THE EXPENDITURE, WHICH WERE DISALLOW ED, PERTAINED TO THE ELIGIBLE PROJECT CARRIED OUT IN EARLIER YEARS AND T HEREFORE, THE EXPENSES WERE NOT ALLOWABLE TO THE ASSESSEE AS DEDUCTION IN THE Y EAR UNDER CONSIDERATION. THE ASSESSEE ADMITTED THE SAID FACT DURING ASSESSME NT PROCEEDINGS. THE LD. AR HAS ASSERTED THAT NONE OF THE EXPENDITURE HA S BEEN FOUND TO BE NON-GENUINE OR INADMISSIBLE. HOWEVER, THE SAID ARGU MENT IS NOT GERMANE TO THE ISSUE SINCE THE BASIS OF LEVY OF PENALTY WAS NO T THE FACT THAT THE EXPENDITURE WAS NON-GENUINE / INADMISSIBLE BUT THE BASIS OF DISALLOWANCE WAS THE SAME WAS THE FACT THAT THE EXPENDITURE PERT AINED TO A PROJECT, AGAINST WHICH DEDUCTION U/S 80IB(10) WAS CLAIMED BY THE ASSESSEE IN EARLIER YEARS AND THEREFORE, THE SAME WERE NOT ALLO WABLE TO THE ASSESSEE SEPARATELY. 5. THE LD. AR HAS ALSO ASSERTED THAT THE PENALTY WA S BAD IN LAW, WITH WHICH WE ARE NOT CONVINCED. WE FIND THAT THAT DISAL LOWANCES WERE MADE AS 6 ITA NO.6104/MUM/2017 AARTI PROJECTS & CONSTRUCTIONS ASSESSMENT YEAR -2013-14 PER ASSESSEES OWN ADMISSION. THE PENALTY WAS INITI ATED AS WELL AS LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH IS EVIDENT FROM QUANTUM ASSESSMENT ORDER AS WELL AS PENALTY ORDER. NOTHING ON RECORD SUGGEST ANY INFIRMITY OR VIOLATION OF PRINCIPAL OF NATURAL JUSTICE. THE ASSESSEE WAS PROVIDED WITH ADEQUATE OPPORTUNITY TO DEFEND THE LEVY OF PENALTY. THEREFORE, WE DO NOT FIND ANY SUBSTANCE IN GROUND NO.2 AND THE SAME STAND DISMISSED. 6. AT THE SAME TIME, THE DISALLOWANCES MADE U/S 43B & 40(A)(IA) WERE STATUTORY DISALLOWANCES, NEVERTHELESS, THE EXPENSES WERE NOT FOUND TO BE NON-GENUINE OR INADMISSIBLE. THEREFORE, THE PENALTY ON ACCOUNT OF THESE TWO DISALLOWANCES WOULD NOT BE JUSTIFIED. WE ORDER SO. 7. THE LD. AR HAS RAISED A PLEA OF INADVERTENT ERRO R / BONA-FIND MISTAKE IN MAKING EXPENSE CLAIM OF RS.68.47 LACS. RELIANCE HAS BEEN PLACED ON BINDING JUDICIAL PRONOUNCEMENTS AS CITED ABOVE. AFT ER CONSIDERING THE FACTS & CIRCUMSTANCES, THE BENCH FORMED AN OPINION THAT K EEPING IN VIEW THE SUBMISSIONS MADE, IT WOULD BE IN THE FITNESS OF THI NGS TO AFFORD ANOTHER OPPORTUNITY TO THE ASSESSEE TO ESTABLISH A CASE OF INADVERTENT ERROR / BONA- FIDE MISTAKE AS ASSERTED BY LD. AR BEFORE US. THERE FORE, THE MATTER OF PENALTY ON THIS ISSUE STAND RESTORED BACK TO THE FI LE OF LD. AO TO RECONSIDER THE SAME AFRESH WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE HIS STAND, IN THIS REGARD. 8. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED FO R STATISTICAL PURPOSES. 7 ITA NO.6104/MUM/2017 AARTI PROJECTS & CONSTRUCTIONS ASSESSMENT YEAR -2013-14 ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13/11/2019 SR.PS:-JAISY VARGHESE 78 98 / COPY OF THE ORDER FORWARDED TO : 1. >@ / THE APPELLANT 2. AB>@ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. X Y A Z , Z , / DR, ITAT, MUMBAI 6. Y [\] / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.