ACIT - 13(3)(1), MUMBAI V. RIZVI ESTATES AND HOTELS PVT. LTD., MUMBAI

ITA 6461/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8782 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 09-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MOHANTALE
• Assessee Lawyers: KAMAL MANGAL
• Keywords: Tax effect
• Section: 271(1)(c); 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M. BALAGANESH , ACCOUNTANT MEMBER ITA NO. 6461 / MUM . /201 8 ( ASSESSMENT YEAR : 20 1 0 1 1 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 13(3)(1), MUMBAI . APPELLANT V/S RIZVI ESTATES AND HOTELS PVT. LTD. FIRST FLOOR, RIZVI HOUSE, HILL ROAD BANDRA (W), MUMBAI 400 050 PAN AAACR5021K . RESPONDENT REVENUE BY : SHRI VISHWAS MOHANTALE ASSESSEE BY : SHRI KAMAL MANGAL DATE OF HEARING 13.01.2020 DATE OF ORDER 17.01.2020 O R D E R PER SAKTIJIT DEY. J.M. THE CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 25 TH JULY 2018, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 21 , MUMBAI, DELETING THE PENALTY OF ` 8,50,000, IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) PERTAINING TO THE ASSESSMENT YEAR 20 10 1 1. 2. BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDING. FOR THE ASSESSMENT YEAR UNDER 2 RIZVI ESTATES AND HOTELS PVT. LTD. CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME ON 14 TH OCTOBER 2010, DECLARING TOTAL INCOME OF ` 1,13,34,984. THE ASSESSMENT IN CASE OF THE ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 17 TH DECEMBER 2012, DETERMINING THE TOTAL INCOME OF ` 1,17,48,350. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SA LES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THROUGH THE OFFICE OF THE DGIT (INV.), MUMBAI, THAT PURCHASES WORTH ` 27,32,475, CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM THE FOUR PARTIES ARE NON GENUINE, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE PURCHASES. FURTHER , TO VERIFY THE GENUINENESS OF SUCH PURCHASES INDEPENDENTLY, THE ASSESSING OFFICER ISSUED NOTICE S UNDER SECTION 1 33(6) OF THE ACT TO THE CONCERNED PARTIES WHICH , AS ALLEGED BY THE ASSESSING OFFICER , RETURNED BACK UN SERVED. ONLY IN RESPECT OF ONE PARTY , THOUGH , THE NOTICE WAS SERVED, HOWEVER, THE CONCERNED PARTY DENIED OF HAVING MADE ANY SALES TO THE ASSESSEE. THUS, ON THE BASIS OF SUCH FACTS AND MATERIAL ON RECORD, THE ASSESSING OFFICER HELD SUCH PURCHASES TO BE NON GENUINE. HOWEVER, SINCE SUCH PURCHASES WERE NOT DEBITED TO THE PROFIT & LOSS ACCOUNT AS EXPENDITURE, THE ASSESSING OFFICER REDUCED THEM FROM WORK IN PROG RESS (WIP). AS IT APPEARS, AGAINST THE ASSESSMENT ORDER SO PASSED, REDUCING THE NON GENUINE 3 RIZVI ESTATES AND HOTELS PVT. LTD. PURCHASES FROM WIP, THE ASSESSEE DID NOT PREFER ANY APPEAL . O N THE BASIS OF SUCH REDUCTION OF WIP, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ULTIMATELY PASSED ORDER DATED 27 TH MARCH 2017, IMPOSING PENALTY OF ` 8,50,000, UNDER SECTION 271(1)(C) OF THE ACT. AGAINST THE PENALTY ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. UPON CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF F ACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY IMPOSED UND ER SECTION 271(1)(C) OF THE ACT. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS HAS BEEN OBSERVED BY LEARNED COMMISSIONER (APPEALS) IN THE IMPUGNED ORDER, THE AMOUNT OF ` 27,69,102, HAS NOT BEEN CLAIMED AS EXPENDITURE BY DEBITING IT TO THE PROFIT & LOSS ACCOUNT . RATHER, SUCH AMOUNT WAS DEBITED TO THE WOR K IN PROGRESS ACCOUNT OF THE NEW BUILDING PROJECT FOR WHICH INCOME WAS OFFERED ON PROJECT COMPLETION METHOD. THUS, AS RIGHTLY OBSERVED BY THE LEARNED COMMISSIONER (APPEALS), THE TRANSFER OF THE AMOUNT OF ` 27,69, 102, TO THE WIP ACCOUNT HAS NOT AFFECTED THE COMPUTATION OF TOTAL INCOME FOR THE IMPUGNED ASSESSMENT YEAR. IT IS FURTHER RELEVANT TO OBSERVE , LEARNED 4 RIZVI ESTATES AND HOTELS PVT. LTD. COMMISSIONER (APPEALS) HAS ALSO TAKEN NOTE OF THE FACT THAT THE AS SESSEE HAS ALREADY REDUCED THE WIP ACCOU NT IN THE ASSESSMENT YEAR 2011 12 BY THE AMOUNT OF ` 27,69,102. FROM THE AFORESAID FACTS, NOT ONLY THE BONA FIDE OF THE ASSESSEE IS PROVED, BUT IT HAS TO BE CONCLUDED THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME SO AS TO BE VISI TED WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THEREFORE, IN OUR VIEW, LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. EVEN , OTHERWISE ALSO THE PRESENT APPEAL OF THE REVENUE WOULD NOT B E MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT AS THE TAX EFFECT ON THE AMOUNT DISPUTE D IN THE PRESENT APPEAL IS BELOW THE MONETARY LIMIT OF ` 20 LAKH. FOR THE AFORESAID REASONS, WE DO NOT FIND MERIT IN THE GROUNDS RAISED. 5. IN THE RESULT, APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 17.01.2020 SD/ - M. BALAGANESH ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 17.01.2020 5 RIZVI ESTATES AND HOTELS PVT. LTD. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI