ACIT 25(2), MUMBAI V. SAHAKAR DEVELOPERS, MUMBAI

ITA 6235/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8484 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-05-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 11-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Revision of order
• Section: 143(3); 133A; 148; 263; 63

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6235/MUM/2012 FOR A Y : 2003-04 ACIT-CENTRAL CIRCLE - 25(2), C-11, PRATYAKSHAKAR BHAVAN, R. NO. 108, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400051. V S. M/S SAHAKAR DEVELOPERS, 5, SAI SADAN, ROSHAN NAGAR, BORIVALI(W), MUMBAI -92 PAN: AANFS1752N (APPELLANT) (RESPONDENT) C.O. NO.265/MUM/2013 IN ITA NO.6235/MUM/2012 FOR A Y: 2003-04 M/S SAHAKAR DEVELOPERS, 5, SAI SADAN, ROSHAN NAGAR, BORIVALI(W), MUMBAI -92 PAN: AANFS1752N VS. ACIT-CENTRAL CIRCLE - 25(2), C-11, PRATYAKSHAKAR BHAVAN, R. NO. 108, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400051. (APPELLANT) (RESPONDENT) ITA NO.6236/MUM/2012 FOR A Y : 2006-07 ACIT-CENTRAL CIRCLE - 25(2), C-11, PRATYAKSHAKAR BHAVAN, R. NO. 108, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400051. VS. M/S SAHAKAR DEVELOPERS, 5, SAI SADAN, ROSHAN NAGAR, BORIVALI(W), MUMBAI -92 PAN: AANFS1752N (APPELLANT) (RESPONDENT) C.O. NO.266/MUM/2013 IN ITA NO.6236/MUM/2012 FOR A Y: 2006-07 M/S SAHAKAR DEVELOPERS, 5, SAI SADAN, ROSHAN NAGAR, BORIVALI(W), MUMBAI -92 PAN: AANFS1752N VS. ACIT-CENTRAL CIRCLE - 25(2), C-11, PRATYAKSHAKAR BHAVAN, R. NO. 108, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400051. (APPELLANT) (RESPONDENT) ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 2 ITA NO.7529/MUM/2013 FOR A Y : 2004-05 M/S SAHAKAR DEVELOPERS, 5, SAI SADAN, ROSHAN NAGAR, BORIVALI(W), MUMBAI - 92 PAN: AANFS1752N VS. ACIT-CENTRAL CIRCLE - 25(2), C-11, PRATYAKSHAKAR BHAVAN, R. NO. 108, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400051. (APPELLANT) (RESPONDENT) REVENUE BY SHRI JAYANT KUMAR (CIT- DR) ASSESSEE BY SHRI AKHILENDRA YADAV (DR) DATE OF HEARING 23.01.2017 DATE OF PRONOUNCEMENT 30.01.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER BENCH; THE APPEALS FILED BY THE REVENUE AND THE CROSS OBJE CTIONS FILED BY THE ASSESSEE ARE RELATED TO AY 2003-04 AND 2006-07. TH EY ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A)-35 IN THE QUANTUM ASSESS MENT PROCEEDINGS. THE ASSESSEE HAS FILED APPEAL FOR AY 2004-05 CHALLENGIN G THE REVISION ORDER PASSED BY LD CIT-25, MUMBAI U/S 263 OF THE ACT. ALL THESE APPEALS WERE HEARD TOGETHER AND HENCE THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. WE SHALL FIRST TAKE UP THE APPEAL OF REVENU E AND CROSS OBJECTION OF THE ASSESSEE FILED FOR AY 2003-04. THE ASSESSEE HEREIN BELONGS TO GANGAR GROUP. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. A SURVEY OPERATION U/S 133A OF THE ACT WAS CONDUCTED IN THE PREMISES OF GANGAR GROUP. DURING THE COURSE OF SURVEY PROCEEDINGS, INCRIMINAT ING DOCUMENTS REFLECTING DETAILS OF CASH TRANSACTIONS OF VARIOUS CONCERNS, D ETAILS OF ON-MONEY RECEIPTS AGAINST SALE OF FLATS & SHOPS IN VARIOUS PROJECTS E XECUTED BY THE ASSESSEES GROUP WERE FOUND. AT THE CONCLUSION OF SURVEY, THE GROUP AGREED TO OFFER ADDITIONAL INCOME OF RS.5.00 CRORES IN THE HANDS OF VARIOUS CO NCERNS OF THE GROUP. ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 3 3. SUBSEQUENTLY THE ASSESSEES GROUP INCLUDING THE ASSESSEE HEREIN FILED SETTLEMENT APPLICATION U/S 245C OF THE ACT BEFORE T HE SETTLEMENT COMMISSION. THE ASSESSEE FILED SETTLEMENT APPLICATION FOR AY 20 05-06. THE ASSESSEE ALSO FILED PETITIONS U/S 245E OF THE ACT WITH A REQUEST TO THE SETTLEMENT COMMISSION TO REOPEN THE ASSESSMENT OF AY 2003-04 AND 2006-07 ALSO. THE SETTLEMENT COMMISSION ADMITTED THE APPLICATION FILED FOR AY 20 05-06 AND REJECTED THE APPLICATION FILED U/S 245E OF THE ACT FOR OTHER YEA RS. FOR AY 2003-04, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME OF RS.20,00, 000/-. 4. BASED ON THE INFORMATION OBTAINED FROM THE S ETTLEMENT APPLICATION FILED BY THE ASSESSEE, THE AO REOPENED THE ASSESSMENT OF AY 2003-04. THE AO ASSESSED THE ABOVE SAID SUM OF RS.20.00 LAKHS DECLARED IN TH E SETTLEMENT APPLICATION AS INCOME OF THE ASSESSEE. THE AO ALSO NOTICED THAT T HE MATERIALS IMPOUNDED DURING THE COURSE OF SURVEY OPERATIONS DISCLOSED TH AT THE ASSESSEE HAS MADE PAYMENTS BY WAY OF CASH TO CERTAIN SUPPLIERS. THE PAYMENTS SO MADE AGGREGATED TO RS.41,95,100/-. THE ASSESSEE EXPLAINED THAT THE CASH PAYMENTS REFLECT MONEY PAID TO THE SUPPLIERS TO ENABLE THEM TO SUPPLY MATE RIALS WITHOUT ANY INTERRUPTION. IT WAS SUBMITTED THAT THE ASSESSEE WOULD PAY THE CH EQUE SUBSEQUENTLY, UPON RECEIPT OF SUFFICIENT BANK BALANCE, TO THE SUPPLIER S AND WOULD RECEIVE BACK THE CASH. IT WAS SUBMITTED THAT BOOK BALANCE OF CASH A VAILABLE IN VARIOUS CONCERNS WERE USED FOR SUCH KIND OF ROTATION ON SHORT TERM B ASIS. THE AO DID NOT ACCEPT THE SAID EXPLANATIONS AND ASSESSED THE ABOVE SAID A MOUNT OF RS.41,95,100/- ALSO. 5. THE LD CIT(A) CONFIRMED THE ADDITION OF RS.2 0.00 LAKHS AND DELETED THE ADDITION OF RS.41,95,100/-. THE REVENUE IS AGGRIEV ED BY THE DECISION OF LD CIT(A) IN GRANTING RELIEF TO THE ASSESSEE. THE ASS ESSEE HAS FILED CROSS OBJECTION TO SUPPORT THE ORDER PASSED BY LD CIT(A). 6. WE HAVE HEARD THE PARTIES AND PERUSED THE RE CORD. WE NOTICE THAT THE LD CIT(A) HAS DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS:- SECONDLY, AS EXPLAINED BY THE LD A.R, THE ANNEXURE A/1 IS NOT COMPLETE. IT IS ONLY A LEDGER EXTRACT OF SOME OF T HE PARTIES FOR 2 YEARS OF ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 4 GANGAR GROUP OF CONCERNS. THE PAYMENTS SHOWN IN TH E ANNEXURES ARE TEMPORARY PAYMENTS SINCE THE APPELLANT HAD NO SUFFI CIENT BANK BALANCE. HENCE INSTEAD OF ISSUING CHEQUES CASH WAS GIVEN, WH ICH WAS REVERSED AFTER SOMETIME ON MAKING CHEQUE PAYMENTS. THIS IS A BUSINESS STRATEGY TO KEEP THE SUPPLIERS COMFORTABLE. AFTER MAKING CHEQU E PAYMENTS CASH RECEIVED FROM THE SUPPLIERS IS USED AGAIN AND SO ON . HENCE THE INITIAL CASH PAYMENT WAS ROTATED MANY TIMES. THIS IS EVIDENT FR OM OFFICIAL LEDGER ACCOUNTS SUBMITTED. HENCE THERE ARE NO UNEXPLAINED PAYMENTS AND AMOUNT DECLARED BY THE APPELLANT IS REASONABLE. 7. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS BE EN FOLLOWING PROJECT COMPLETION METHOD FOR OFFERING INCOME. HE SUBMITTED THAT THE SALE OF FLATS HAS STARTED ONLY IN AY 2005-06. INVITING OUR ATTENTION TO THE ORDER PASSED BY SETTLEMENT COMMISSION FOR AY 2005-06, THE LD A.R SU BMITTED THAT THE SETTLEMENT COMMISSION HAS TAKEN NOTE OF ON-MONEY RE CEIPTS AND AGREED WITH THE CONTENTION OF THE ASSESSEE THAT THERE IS NO CASE FO R TAXING ENTIRE ON-MONEY. ACCORDINGLY THE SETTLEMENT COMMISSION HAS ESTIMATED INCOME OUT OF THE ON- MONEY RECEIPTS, MEANING THEREBY, THE DEDUCTION FOR UNACCOUNTED EXPENDITURE, IF ANY, HAS ALREADY BEEN GRANTED BY THE SETTLEMENT COM MISSION. HE SUBMITTED THAT INCOME ESTIMATED BY THE SETTLEMENT COMMISSION FOR A Y 2005-06 INCLUDES THE EXPENDITURE INCURRED ON THE PROJECT TILL THAT YEAR WHICH WOULD COVER IMPUGNED PAYMENTS ALSO. THE LD A.R SUBMITTED THAT THE LD CI T(A), UPON EXAMINATION OF LEDGER ACCOUNTS, HAS ACCEPTED THE EXPLANATIONS OF T HE ASSESSEE THAT IT WAS CONSTRAINED TO ROTATE THE CASH BALANCE AVAILABLE WI TH THE GROUP OUT OF BUSINESS EXPEDIENCY. HOWEVER THE PAYMENTS HAVE ACTUALLY BEE N MADE BY WAY OF CHEQUES SUBSEQUENTLY. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.41,95,100/- MADE BY THE AO. 8. ON THE CONTRARY, THE LD D.R SUPPORTED THE OR DER PASSED BY THE ASSESSING OFFICER. 9. HAVING HEARD RIVAL SUBMISSIONS, WE ARE OF TH E VIEW THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A). WE N OTICE THAT THE LD CIT(A) HAS GIVEN FINDING THAT THE EXPLANATIONS OF THE ASSESSEE ABOUT TEMPORARY ROTATION OF ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 5 FUNDS ARE SUPPORTED BY THE LEDGER ACCOUNTS. FURTHE R, THE LD A.R HAS SUBMITTED THAT THE INCOME FROM THE PROJECT IN RESPECT OF ON-M ONEY RECEIPTS HAS BEEN ESTIMATED BY THE HONBLE SETTLEMENT COMMISSION, WHI CH WOULD COVER, THE UNACCOUNTED EXPENDITURE, IF ANY. THE LD A.R ALSO S UBMITTED THAT THE SALE OF FLATS HAS COMMENCED ONLY IN AY 2005-06 AND THE SETTLEMENT COMMISSION HAS ESTIMATED THE INCOME OF THAT YEAR. ACCORDINGLY WE CONFIRM THE ORDER PASSED BY LD CIT(A) AND REJECT THE APPEAL FILED BY THE REVENU E. 10. THE ASSESSEE HAS FILED C.O ONLY TO SUPPORT TH E ORDER PASSED BY LD CIT(A). HENCE THE SAME DOES NOT REQUIRE ADJUDICATION. 11. WE SHALL NOW TAKE UP THE APPEAL FILED BY TH E REVENUE FOR AY 2006-07. THE ASSESSEE DID NOT RESPOND TO THE NOTICES ISSUED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE ABOVE SAID YEAR. SIN CE THE ASSESSEE HAD ACCEPTED RECEIPT OF ON-MONEY TO BE IN THE RANGE OF 40% 55% BEFORE THE SETTLEMENT COMMISSION, THE AO ESTIMATED THE ON-MONEY RECEIPTS AT RS.1,19,87,810/- AND ASSESSED THE SAME AS INCOME OF THE ASSESSEE. 12. THE LD CIT(A) NOTICED THAT THE ISSUE RELATIN G TO RECEIPT OF ON-MONEY WAS ADJUDICATED BY THE SETTLEMENT COMMISSION IN AY 2005 -06 IN THE HANDS OF THE ASSESSEE AND THE SETTLEMENT COMMISSION HAS WORKED O UT NET PROFIT @ 17% OF THE ON-MONEY RECEIPTS. IT IS PERTINENT TO NOTE THAT TH E SETTLEMENT COMMISSION HAD AGREED WITH THE CONTENTIONS OF THE ASSESSEE THAT ON LY THE INCOME ELEMENT INCLUDED IN THE ON-MONEY RECEIPTS CAN BE ASSESSED T O TAX. ACCORDINGLY THE ASSESSEE PLEADED BEFORE LD CIT(A) THAT THE ENTIRE A MOUNT OF ON-MONEY RECEIPTS CANNOT BE ASSESSED, BUT ONLY THE INCOME INCLUDED TH EREIN CAN BE ASSESSED. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION RENDE RED BY THE CO-ORDINATE BENCH IN THE CASE OF PRANAV CONSTRUCTION CO. VS. ACIT (1 998)(96 TAXMAN 323)(MUM). ACCORDINGLY THE LD CIT(A) HELD THAT THE INCOME SHOULD BE ESTIMATED AS PER THE DECISION RENDERED BY THE SETTL EMENT COMMISSION FOR AY 2005-06. ACCORDINGLY HE DETERMINED THE INCOME FROM ON-MONEY RECEIPTS AT RS.44,46,333/- AND SUSTAINED THE ADDITION TO THAT E XTENT. ACCORDINGLY HE GRANTED ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 6 RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.75,41,47 7/-. THE REVENUE IS AGGRIEVED BY THAT DECISION. THE ASSESSEE HAS FILED CROSS OBJ ECTION TO SUPPORT THE ORDER PASSED BY LD CIT(A). 13. WE HEARD THE PARTIES AND PERUSED THE RECORD . WE NOTICE THAT THE ASSESSING OFFICER HAS DETERMINED THE ON-MONEY RECEIPTS AS PER THE DISCLOSURE MADE BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. THERE I S NO DISPUTE THAT THE SETTLEMENT COMMISSION HAS AGREED WITH THE CONTENTIO NS OF THE ASSESSEE THAT THE ENTIRE AMOUNT OF ON-MONEY RECEIPTS CANNOT BE CONSID ERED AS INCOME OF THE ASSESSEE. ACCORDINGLY THE SETTLEMENT COMMISSION HA S ESTIMATED THE INCOME FROM ON-MONEY RECEIPTS @ 17% IN AY 2005-06. SINCE THE ASSESSING OFFICER HAS ESTIMATED THE ON-MONEY RECEIPTS AS PER THE DISCLOSU RE MADE BEFORE SETTLEMENT COMMISSION, WE ARE OF THE VIEW THAT THE LD CIT(A) W AS JUSTIFIED IN ESTIMATING THE INCOME FROM THE ON-MONEY RECEIPTS @ 17% FOR THI S YEAR ALSO BY FOLLOWING THE ORDER PASSED BY THE SETTLEMENT COMMISSION. ACC ORDINGLY WE CONFIRM THE ORDER PASSED BY LD CIT(A). ACCORDINGLY WE REJECT T HE APPEAL FILED BY THE REVENUE. 14. SINCE THE ASSESSEE HAS FILED THE CROSS OBJECT ION FOR AY 2006-07 ONLY TO SUPPORT THE ORDER PASSED BY LD CIT(A), THE SAME DOE S NOT REQUIRE ADJUDICATION. 15. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR AY 2004-05 CHALLENGING THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT. THE ASSESSMENT OF AY 2004-05 WAS COMPLETED IN THE HANDS OF THE ASSESSEE U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.2,14, 500/-. THE AO NOTICED FROM THE SETTLEMENT APPLICATION FILED BY THE ASSESSEE TH AT THE ASSESSEE HAS OFFERED A SUM OF RS.24,00,000/- OVER AND ABOVE THE ASSESSED I NCOME FOR AY 2004-05 BEFORE THE SETTLEMENT COMMISSION U/S 245E OF THE AC T. AS NOTICED EARLIER THE SETTLEMENT COMMISSION DID NOT ADMIT THE APPLICATION OF THE ASSESSEE FILED FOR AY 2004-05. HENCE THE AO REOPENED THE ASSESSMENT A ND ASSESSED THE ABOVE SAID AMOUNT OF RS.24.00 LAKHS AS INCOME OF THE ASSE SSEE. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE ASSESSEE FILED REPLIES ON ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 7 22.12.2011. 24.04.2012 AND 15-05-2012 (LETTER DATED 12.5.2012). ACCORDINGLY THE ASSESSING OFFICER DROPPED THE PENALTY PROCEEDIN GS. 16. THE LD CIT NOTICED THAT THE AO HAS DROPPED T HE PENALTY PROCEEDINGS WITHOUT ASSIGNING ANY REASON. THE LD CIT TOOK THE VIEW THAT THE SAID ACTION OF THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY HE INITIATED REVISION PROCEEDINGS U/S 2 63 OF THE ACT. THE ASSESSEE PLEADED THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND ON THE SUBMISSIONS MADE BY THE ASSESSEE AND ACCORDINGLY TAKEN THE DECISION TO DROP THE PENALTY PROCEEDINGS. ACCORDINGLY THE ASSESSEE CONTENDED TH AT THE REVISION PROCEEDING WAS NOT VALID AND IN THAT REGARD, THE ASSESSEE PLAC ED RELIANCE ON VARIOUS CASE LAWS. 17. HOWEVER THE LD CIT WAS NOT CONVINCED WITH TH E CONTENTIONS OF THE ASSESSEE. THE LD CIT TOOK THE VIEW THAT THE ASSESS EE DID NOT DISCLOSE THE INCOME OF RS.24.00 LAKHS IN THE RETURN FILED IN RESPONSE T O THE NOTICE U/S 148 OF THE ACT. HE ALSO TOOK THE VIEW THAT THE DISCLOSURE OF RS.24. 00 LAKHS BEFORE THE SETTLEMENT COMMISSION WILL NOT ABSOLVE THE ASSESSEE FROM LEVY OF PENALTY. THE LD CIT ALSO EXPRESSED THE VIEW THAT THE VARIOUS CASE LAWS RELIE D UPON BY THE ASSESSEE ARE DISTINGUISHABLE. THE LD CIT ALSO TOOK SUPPORT OF T HE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF MAK DATA P LTD VS. CIT (ORDER DATED 31-10-2013) TO OBSERVE THAT THE SURRENDER OF INCOME U/S 133A IN ORDER TO BUY PEACE AND AVOID LITIGATION WITHOUT OFFERING ANY EXP LANATION WILL NOT ABSOLVE THE ASSESSEE FROM PENALTY. ACCORDINGLY HE DIRECTED TH E AO TO LEVY A PENALTY OF RS.7,20,000/- ON THE CONCEALED INCOME OF RS.24.00,0 00/-. AGGRIEVED BY THE ORDER PASSED BY LD CIT, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 18. THE LD A.R SUBMITTED THAT THE REVENUE HAS NOT IMPOUNDED ANY INCRIMINATING MATERIAL CONCERNING THE ASSESSMENT YE AR 2004-05 DURING THE COURSE OF SURVEY OPERATIONS. HE SUBMITTED THAT THE ASSESS EE HAS BEEN FOLLOWING PROJECT COMPLETION METHOD FOR OFFERING INCOME. HE SUBMITTE D THAT THE ASSESSEE HAS NOT SOLD ANY OF THE FLATS DURING THE YEAR RELEVANT TO A Y 2004-05. HE SUBMITTED THAT ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 8 THE ASSESSEE HAS BEEN RECEIVING ONLY BOOKING ADVANC ES ONLY UP TO AY 2004-05 AND THE SALE OF FLATS HAVE STARTED FROM AY 2005-06 ONWARDS ONLY. ACCORDINGLY HE SUBMITTED THAT THE ASSESSING OFFICER DID NOT HAV E ANY MATERIAL TO SHOW THAT THE INCOME OF RS.24.00 LAKHS HAS ACCRUED TO THE ASSESSE E. THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.24.00 LAKHS ONLY ON THE BASIS OF APPLICATION FILED BEFORE THE SETTLEMENT CO MMISSION. 19. THE LD A.R FURTHER SUBMITTED THAT THE ASSES SING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS WITHOUT SPECIFYING THE CHARGE P RESCRIBED IN SEC. 274 OF THE ACT. HE FURTHER SUBMITTED THAT THE LD CIT HAS DIRE CTED THE AO TO LEVY PENALTY FOR CONCEALMENT OF INCOME. HE SUBMITTED THAT THE D IRECTION OF THE LD CIT IS AGAINST THE FACTS AVAILABLE ON RECORD AS DISCUSSED ABOVE, I.E., THE SALE OF FLAT HAS STARTED ONLY IN THE SUCCEEDING YEAR AND HENCE THE I NCOME SHALL ACCRUE TO THE ASSESSEE ONLY IN THE SUCCEEDING YEAR. ACCORDINGLY HE SUBMITTED THAT THE ORDER OF LD CIT GOT VITIATED ON THIS COUNT ALONE. HE SUBMIT TED THAT, MERELY BECAUSE THE ASSESSEE HAS ACCEPTED THE ADDITION OF RS.24.00 LAKH S, IT CANNOT BE SAID THAT THE INCOME HAS ACCRUED TO THE ASSESSEE. 20. HE FURTHER SUBMITTED THAT THE ASSESSEE HA S OFFERED DETAILED EXPLANATIONS TO THE ASSESSING OFFICER; VIDE LETTERS FILED ON 22.12. 2011, 24.12.2012 AND 15.05.2012 AGAINST THE PENALTY NOTICE ISSUED BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE ASSESSING OFFICER HAS DROPPED THE PENALTY PROCEEDIN G AFTER DULY CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, I.E., HE HAS TAKE N A POSSIBLE VIEW BY DULY APPLYING HIS MIND. BY PLACING RELIANCE ON THE DECI SION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF MALABAR INDUSTRIAL CO MPANY (243 ITR 83), THE LD A.R SUBMITTED THAT THE INITIATION OF REVISION PROCE EDINGS WAS NOT JUSTIFIED IF THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIE W OF THE MATTER. HE SUBMITTED THAT THE LD CIT, NO WHERE ALLEGES IN HIS ORDER THAT THERE WAS NON-APPLICATION OF MIND ON THE PART OF THE AO. ACCORDINGLY THE LD A.R SUBMITTED THAT THE LD CIT HAS TAKEN A PARTICULAR VIEW IN THIS MATTER AND HAS THRUST THE SAME ON THE ASSESSING OFFICER BY DIRECTING HIM TO IMPOSE THE PENALTY OF R S.7,20,000/-. ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 9 21. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE ASSESSEE DID NOT OFFER THE IMPUGNED AMOUNT OF RS.24.00 LAKHS IN THE RETURN FIL ED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, EVEN THOUGH THE ASSESSEE HAS OF FERED THE SAME BEFORE THE SETTLEMENT COMMISSION. HE SUBMITTED THAT THE AGREE D ADDITIONS ARE ALSO SUSCEPTIBLE TO PENALTY U/S 271(1)(C) OF THE ACT AS PER THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF MAK DATA P LT D (SUPRA). HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER DID NOT GIVE A NY REASON FOR DROPPING PENALTY PROCEEDINGS AND HENCE THE LD CIT WAS JUSTIFIED IN R EVISING THE PENALTY ORDER. 22. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. IT IS A WELL SETTLED PROPOSITION OF LAW THAT AN ORDER PASSED BY THE ASSE SSING OFFICER CAN BE REVISED BY LD CIT U/S 263 OF THE ACT IF IT IS FOUND TO BE ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, I.E., BOTH THE CONDITIONS HAVE TO BE SATISFIED. THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF MALAB AR INDUSTRIAL COMPANY (SUPRA) THAT AN ORDER CANNOT BE HELD TO BE PREJUDIC IAL TO THE INTERESTS OF THE REVENUE, IF THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS. 23. IN THE INSTANT CASE, WE NOTICE THAT THE ASSE SSEE HAS FURNISHED EXPLANATIONS BEFORE THE ASSESSING OFFICER DURING THE COURSE OF P ENALTY PROCEEDINGS THREE TIMES, VIZ., ON 22.12.2011, 24.12.2011 AND 15.05.2012. IT IS NOT THE CASE OF LD CIT THAT THE ASSESSING OFFICER HAS DROPPED THE PENALTY PROCE EDINGS WITHOUT CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, MEANING THEREBY, THE AO WAS CONVINCED WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND ACCORDINGL Y DROPPED THE PENALTY PROCEEDINGS. IT IS PERTINENT TO NOTE THAT THE LD C IT DID NOT DISCUSS ANYTHING ABOUT THE EXPLANATIONS FURNISHED BY THE ASSESSEE BE FORE THE AO AND DID NOT SHOW THAT THE SAID EXPLANATIONS ARE NOT ACCEPTABLE IN LA W. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTI ONS OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIEW OF THE MATTER AND HENCE THE ORDER PASSED BY THE AO DROPPING THE PENALTY PROCEEDINGS C ANNOT BE CONSIDERED TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA N0.6235, 6236/M/12 & 7529/M/13 & C.O. 265 & 266/M/13 MS. SAHAKAR DEVELOPERS. 10 24. THE LD A.R FURTHER DEMONSTRATED THAT THE ASS ESSEE HAS BEEN RECEIVING ONLY BOOKING ADVANCES DURING THE YEAR UNDER CONSIDERATIO N AND THE FIRST SALE HAS TAKEN PLACE ONLY IN THE SUCCEEDING YEAR. HE FURTHER SUBM ITTED THAT THE REVENUE DID NOT UNEARTH ANY INCRIMINATING MATERIAL RELATING TO AY 2 004-05 DURING THE COURSE OF SURVEY OPERATIONS. ACCORDINGLY THE LD A.R SUBMITTE D THAT THERE WAS NO NECESSITY FOR THE ASSESSEE TO DECLARE ANY INCOME FO R THE AY 2004-05, BUT THE ASSESSEE HAS ACCEPTED THE ADDITION MADE BY THE AO O N THE BASIS OF SETTLEMENT APPLICATION FILED BY THE ASSESSEE. THIS EXPLANATIO N OF THE ASSESSEE IS ALSO A PLAUSIBLE EXPLANATION AND HENCE, ON THIS COUNT ALSO , THE PENALTY U/S 271(1)(C) OF THE ACT WILL NOT LIE ON THE ADDITION OF RS.24.00 LA KHS. 25. IN VIEW OF THE FOREGOING DISCUSSIONS, WE AR E OF THE VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE REVISIO N ORDER PASSED BY LD CIT U/S 263 OF THE ACT FOR AY 2004-05 IS NOT VALID. ACCORD INGLY WE SET ASIDE THE SAME. 26. IN THE RESULT, BOTH THE APPEALS OF THE REVE NUE AND BOTH THE CROSS OBJECTIONS OF THE ASSESSEE FILED FOR AY 2003-04 AND 2006-07 AR E DISMISSED. THE APPEAL OF THE ASSESSEE FILED FOR AY 2004-05 IS ALLOWED. ORDER ANNOUNCED IN OPEN COURT ON THIS 30 TH DAY OF JANUARY 2017. SD/- SD/- (PAWAN SINGH) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 30/01/2017 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/