Assistant Commissioner of Income-tax, V. Munot Exhibitors and Hotels Pvt. Ltd., Ahmednagar

ITA 70/PUN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89057 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-03-2015
• Assessment Year: 1989-1990
• Appeal Filed On: 13-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Difference of opinion; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 70/PN/2014 (ASSESSMENT YEAR 1989-1990) ACIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR .. APPELLANT VS. MUNOT EXHIBITORS AND HOTELS PVT. LTD., MAHESH MANDIR (THEATER), NAGAR AURANGABAD ROAD, AHMEDABAD PAN NO.AABCM5716F .. RESPONDENT ASSESSEE BY : SHRI SHARAD SHAH REVENUE BY : SHRI B.C, MALAKAR DATE OF HEARING : 17-03-2015 DATE OF PRONOUNCEMENT : 25-03-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 07-10-2013 OF THE CIT(A)-IT/TP, PUNE RE LATING TO ASSESSMENT YEAR 1989-90. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY AND DERIVES INCOME FROM RUNNING OF LODGING AND RESTAURANT UNDER THE NAME AND STYLE OF HOTEL N ATARAJ AT AHMEDNAGAR. IT FILED ITS RETURN OF INCOME ON 18-03 -1992 DECLARING TOTAL LOSS AT RS.19,95,940/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE COMPA NY WAS CONSTRUCTING A THEATER BUILDING, THE CONSTRUCTION O F WHICH WAS 2 COMPLETED DURING THE PREVIOUS YEAR RELEVANT TO ASSE SSMENT YEAR 1989-90. THE THEATER WAS STARTED ON 19-02-1989. T HE ASSESSEE WAS SHOWING INCOME FROM THIS THEATER IN THE NAME OF BRANCH MAHESH MANDIR. THE ASSESSEE HAD DECLARED COST OF C ONSTRUCTION OF THE THEATER AT RS.46,23,324/-. SINCE THE COST OF C ONSTRUCTION OF THEATER WAS NOT VALUED BY ANY APPROVED VALUER, THE AO REFERRED THE MATTER TO THE DVO. HOWEVER, THE VALUATION REPO RT WAS NOT RECEIVED BY THE AO TILL COMPLETION OF THE ASSESSMEN T ALTHOUGH THE DVO HAD INSPECTED THE THEATER. AFTER CONSIDERING T HE RATE OF CONSTRUCTION IN THE AREA AND THE NATURE AND QUALITY OF THE CONSTRUCTION OF THE THEATER, THE AO ESTIMATED THE V ALUATION OF THE THEATER BUILDING AT RS.60 LAKHS SUBJECT TO RECTIFIC ATION AFTER RECEIPT OF THE DVOS REPORT. ACCORDINGLY, THE AO MADE ADDI TION OF RS.13,76,676/- TO THE TOTAL INCOME RETURNED BEING T HE DIFFERENCE OF RS.60,00,000/- AND RS.46,23,324/-. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) WHO VIDE ORDER DATED 19-03-2001 DELETED THE ADDITION. ON FURTHER APPEAL BY THE REVENUE, THE TRIBUNAL VIDE ORDER DATE D 27-09-2005 IN ITA NO.838/PN/2001 SET-ASIDE THE MATTER TO THE F ILE OF THE CIT(A) FOR FRESH ADJUDICATION. IN THE MEANTIME, TH E AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE AO L EVIED PENALTY OF RS.5 LAKHS U/S. U/S.271(1)(C) OF THE I.T. ACT. IN APPEAL THE LD.CIT(A) DELETED THE PENALTY SO LEVIED ON THE GROU ND THAT THE AO MADE THE ADDITION ON ESTIMATE BASIS TOWARDS CONSTRU CTION OF THE THEATER. HE ACCEPTED THE CONTENTION OF THE ASSESSE E THAT IT HAS 3 MAINTAINED FULL ACCOUNTS AND DETAILS OF THE CONSTRU CTION EXPENSES OF RS.46,23,324/- SUBMITTED DURING THE COURSE OF AS SESSMENT PROCEEDINGS. ACCORDING TO THE LD.CIT(A) ADDITION I N THE ASSESSMENT ORDER ITSELF DOES NOT AUTOMATICALLY RESU LT INTO LEVYING OF PENALTY. ACCORDING TO HIM, DIFFERENCE IN VALUAT ION OF BUILDING MAY JUSTIFY ADDITION BUT FOR LEVY OF PENALTY THE CA SE HAS TO BE ESTABLISHED EITHER OF CONCEALMENT OF INCOME OR OF F URNISHING OF INACCURATE PARTICULARS OF INCOME ACCORDING TO THE P ROVISIONS OF EXPLANATION 1 OR EXPLANATION 2 OF SECTION U/S.271(1 )(C). ACCORDING TO HIM, THIS IS NEITHER A CASE OF CONCEAL MENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E ASSESSEE ACCORDING TO HIM HAS OFFERED EXPLANATION THAT INVE STMENT MADE IN BUILDING IS IN ACCORDANCE WITH THE BOOKS OF ACCOUNT . THE AO HAS NOT BROUGHT ANY EVIDENCE AGAINST THE ASSESSEE WHICH COULD PROVE THAT THE EXPLANATION OF THE ASSESSEE WAS EITHER FAL SE OR WAS NOT BONAFIDE. THE AO HAS NOT PROVED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE HIS EXPLANATION AND THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL FACTS MATERIAL TO COMPUTAT ION OF TOTAL INCOME. HE ACCORDINGLY DELETED THE PENALTY SO LEVI ED U/S.271(1)(C) OF THE I.T. ACT. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE PENALTY U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 O F RS.5,00,000/-. 4 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. COMMISSIONER OF INCOME -TAX (APPEALS) ERRED, ILL HOLDI NG THAT DIFFERENCE IN VALUATION OF A BUILDING DID NOT JUSTIF Y LEVY OF PENALTY IGNORING THE FACT THAT THE ASSESSEE ITSELF AGREED THAT T HE VALUATION MAY BE TAKEN AT 60 LAKHS (LATER ON CORROBORATED BY T HE DVO AT RS.59.77 LAKHS) INSTEAD OF RS.46,43,000/-, DEBITED TO T HE BOOKS OF ACCOUNTS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. COMMISSIONER OF INCOME -TAX (APPEALS) ERRED IN IGNORIN G THE FACT THAT THERE WAS NO DIFFERENCE OF OPINION BETWEEN TWO TECHNICAL PERSONS AS NO VALUATION REPORT WAS FILED BY THE ASSESSEE. 4 THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE AGAINST THE ADDITION MADE BY THE AO IN THE QUANTUM PROCEEDINGS THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO VIDE HIS ORDER DATED 19-03-2001 DELETED THE ADD ITION MADE BY THE AO ON ACCOUNT OF ESTIMATED ADDITION. ON FURTHE R APPEAL BY THE DEPARTMENT, THE TRIBUNAL VIDE ORDER DATED 27-09-200 5 RESTORED THE MATTER BACK TO THE FILE OF THE LD.CIT(A) FOR FRESH ADJUDICATION. ALTHOUGH THE ORDER WAS PASSED BY THE TRIBUNAL SETTI NG ASIDE THE MATTER TO THE FILE OF THE CIT(A) IN THE MONTH OF SE PTEMBER, 2005, HOWEVER, WE FIND NO ORDER HAS BEEN PASSED BY THE LD .CIT(A) TILL TODAY, A STATEMENT MADE BY THE LD. COUNSEL FOR THE ASSESSEE AT THE BAR AND NOT CONTROVERTED BY THE LD. DEPARTMENTAL RE PRESENTATIVE. THEREFORE, WHEN THE QUANTUM PROCEEDINGS ARE STILL P ENDING AND HAVE NOT ATTAINED FINALITY, THEREFORE, DECIDING THE PENALTY APPEAL AT THIS JUNCTURE IN OUR OPINION IS NOT PROPER. CONSID ERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUS TICE, WE RESTORE THE 5 MATTER TO THE FILE OF THE LD.CIT(A) WITH A DIRECTIO N TO DECIDE THE ISSUE AFTER DECIDING THE QUANTUM ADDITION. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES PRONOUNCED IN THE OPEN COURT ON 25-03-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED: 25 TH MARCH, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-IT/TP, PUNE 4. THE CIT-IT/TP, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE