Deputy Commissioner of Income-tax, V. M/s. Vaishnavi Associates, Pune

ITA 901/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9191 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 10-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: N O N E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 901 /P U N/201 5 / ASSESSMENT YEAR : 20 1 0 - 11 DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE ....... / APPELLANT / V/S. M/S. VAISHNAVI ASSOCIATES, SAI COMPLEX, NEAR JYOTIBA MANGAL KARYALAYA, NADHE NAGAR, KALEWADI, PIMPRI, PUNE 411017 PAN : AAFFV5652E / RESPONDENT ASSESSEE BY : NO N E REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 10 - 07 - 2017 / DATE OF PRONOUNCEMENT : 12 - 0 7 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 6, PUNE DATED 13 - 03 - 2015 FOR THE ASSESSMENT YEAR 2010 - 11. 2 ITA NO . 901/PUN/2015, A.Y. 2010 - 11 2. IN APPEAL, THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY OF RS.12,61,751/ - LEVIED U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 3. THE BRIEF FACTS OF THE CASE AS EMAN ATING FROM RECORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT. THE ASSESSEE DEVELOPED A HOUSING PROJECT SAI GRACE , ON WHICH THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION U/S. 80IB(10) OF THE ACT. SIMULTANEOUSLY, THE ASSESSEE WAS ALSO DEVELOPING HOUSING PROJECT SIMRAN CORNER ON WHICH THE BENEFIT OF DEDUCTION U/S. 80IB(10) WAS NOT AVAILABLE. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TWO BILLS ISSUED BY TIRUPATI AGENCIES FOR RS.25,53,120/ - AND UNITED ENTERPRISES FOR RS.16,52,737/ - , B OTH DATED 21 - 11 - 2009 PERTAINING TO EXPENDITURE IN RESPECT OF SAI GRACE WERE CLAIMED AS EXPENDITURE IN THE ACCOUNTS OF SIMRAN CORNER. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS SUPPR ESSED TAXABLE PROFIT OF SIMRAN CORNER BY INFLATING EXPENSES TO THE TUNE OF RS.42,05,857/ - AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. THE ASSESSEE ACCEPTED THE ADDITION IN QUANTUM PROCEEDINGS. THE ASSESSING OFFICER FURTHER INITIATED PENALTY PROCEEDINGS IN RESPECT OF AFORESAID ADDITIONS U/S. 271(1)(C) ON ACCOUNT OF CONCEALMENT OF PARTICULARS OF INCOME. THE ASSESSING OFFICER VIDE ORDER DATED 19 - 09 - 2013 LEVIED PENALTY OF RS.12,61,751/ - U/S. 271(1)(C) OF THE ACT. AGAINST THE LEVY OF PENALTY, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER DELETED THE PENALTY. NOW, THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDINGS OF COMMISSIONER OF INCO ME TAX (APPEALS) IN DELETING THE PENALTY. 3 ITA NO . 901/PUN/2015, A.Y. 2010 - 11 4. SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ORDER OF ASSESSING OFFICER IN LEVY OF PENALTY U/S. 271(1)(C) IN RESPECT OF ADDITIONS MADE. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS DIVE RTED HIS INCOME FROM TAXABLE PROJECT TO NON - TAXABLE PROJECT BY DIVERSION OF EXPENDITURE OF NON - TAXABLE PROJECT TO TAXABLE PROJECT. THE ASSESSEE HAS FAILED TO GIVE THE CONFIRMATION OF PARTIES FROM WHOM PURCHASES WERE MADE. IT IS EVIDENT FROM THE RECORD TH AT THE ASSESSEE HAS SUPPRESSED TAXABLE PROFITS OF HOUSING PROJECT SIMRAN CORNER BY INFLATING THE EXPEN DITURE TO THE TUNE OF RS. 42,05,857/ - WITH THE INTENTION TO EVADE TAX. THE ASSESSING OFFICER RIGHTLY LEVIED PENALTY U/S. 271(1)(C) FOR CONCEALMENT OF PA RTICULARS OF INCOME. 5. THE NOTICE OF APPEAL WAS SENT TO THE ASSESSEE ON THE ADDRESS GIVEN IN FORM NO. 36. HOWEVER, THE NOTICE WAS RETURNED UN - SERVED WITH POSTAL REMARKS INCOMPLETE ADDRESS. IN THE ABSENCE OF ANY ALTERNATE ADDRESS OF THE ASSESSEE , TH E APPEAL OF THE DEPARTMENT IS DECIDE ON THE BASIS OF SUBMISSIONS MADE BY THE LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 6. A PERUSAL OF DOCUMENTS ON RECORD REVEAL THAT THE ASSESSEE SIMULTANEOUSLY DEVELOPED TWO HOUSING PROJECTS I.E. SAI GRACE AND S IMRAN CORNER. THE HOUSING PROJECT SAI GRACE IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10). THE ASSESSEE IS MAINTAINING SEPARATE PROFIT AND LOSS ACCOUNT FOR BOTH THE PROJECTS. HOWEVER, THE OFFICE OF BOTH THE PROJECTS IS IN THE SAME PREMISES AND THE A CCOUNTS DEPARTMENT FOR BOTH THE PROJECTS IS SAME AND THE ACCOUNTS OF BOTH THE PROJECTS ARE HANDLED BY THE SAME PERSON. TO IDENTIFY THE BILLS FOR THE RESPECTIVE PROJECTS STAMPING IS DONE AT RECEIPT LEVEL OF THE BILLS WITH THE REMARK S SAI GRACE - 80IB. THE SORT ING OF THE BILLS TAKES PLACE AT THE LEVEL OF RECEIPT ITSELF AND ACCORDINGLY PROJECT - WISE BOOKS OF ACCOUNT ARE PREPARED. IN RESPECT OF TWO BILLS ; (I) TIRUPATI AGENCIES 4 ITA NO . 901/PUN/2015, A.Y. 2010 - 11 RS.25,53,120/ - , AND (II) UNITED ENTERPRISES FOR RS.16,52,737/ - PERTAINING TO SAI GRACE PROJECT D UE TO OVERSIGHT NO STAMPING WAS DONE AND THE BILLS WERE CLAIMED IN THE PROJECT SIMRAN CORNER. THE ADDITION WAS MADE IN RESPECT OF AFORESAID TWO BILLS IN THE RETURN OF INCOME. THE ASSESSEE ADMITTED THE MISTAKE, ACCEPT ED THE ADDITION AND PAID TAXES THEREON. 7. PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED IN RESPECT OF THE AFORESAID ADDITION AND PENALTY OF RS.12,61,751/ - WAS LEVIED . IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY BY OBSERVING AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, IT IS SEEN THAT THE APPELLANT WAS HAVING TWO PROJECTS NAMELY 'S IMRAN CORNER' AND 'SAI GRACE' DURING THE YEAR UNDER CONSIDERATION WHILE 'SIMRAN CORNER' WAS NON 80IB(10) PROJECT, 'SAI GRACE' WAS ENTITLED TO DEDUCTION U/S. 80IB(10) OF INCOME - TAX ACT. IT IS SEEN THAT THE APPELLANT IS MAINTAINING SEPARATE PROFIT & LOSS A/C FOR BOTH THE PROJECTS. THE APPELLANT CLAIMS THAT OFFICE OF BOT H THE PROJECTS IS THE SAME AND WORK OF ACCOUNTS DEPARTMENT IS ALSO HANDLED BY THE SAME PERSON. HOWEVER, TO IDENTIFY THE BILLS, STAMPING IS DONE AT THE RECEIPT LEVEL OF THE BILL WITH THE REMARK 'SA I GRACE' - 80IB'. DUE TO FOLLOWING OF THE ABOVE SYSTEM PROJECT - WISE SORTING OF THE BILL TAKES PLACE AT THE LEVEL OF RECEIPT ITSELF AND ACCORDINGLY, PROJECT WISE BOOKS OF ACCOUNT IS PREPARED. HOWEVER, IN RESPECT OF TWO BILLS PERTAINING TO UNITED ENTERPR ISES (R S. 25,53,120/ - DATED 16.11.2009 AND TIRUPATI AGENCIES (RS.1 6,52,737/ - ) DATED 21.11.200 9, THE ABOVE STAMPING WAS NOT DONE BY THE CONCERNED STAFF DUE TO OVERSIGHT AND THEREFORE, THE BILLS WERE CLAIMED SIMRAN CORNER' PROJECT INSTEAD OF 'SAI GRACE' PROJECT. T H ERE IS NO DOUBT THAT THE APPELLANT SHOULD HAVE BEEN MORE CAREFUL IN THIS REGARD AND DUE DILIGENCE SHOULD HAVE BEEN ADOPTED BY THE APPELLANT IN ORDER TO HAVE SANCTITY OF THE BOOKS OF ACCOUNT MAINTAINED FOR BOTH THE PROJECTS. IT MAY BE QUITE POSSIBLE THA T THE A CT MAY BE DRIVEN BY INTENTION TO HAVE HIGHER DEDUCTION U/S. 8018(10) OF INCOME - TAX ACT BUT AT THE SAME TIME IT ALSO NEEDS TO BE APPRECIATED THAT IN NORMAL CLRCURNSTAR.CES SUCH MISTAKES CAN ALSO HAPPEN CONSIDERING TILE FACT THAT BOOKS OF ACCOUNT AR E KEPT AND MAINTAINED AT COMMON PREMISES AND THE STAFF ALSO IS COMMON FOR BOTH THE PROJECT. THERE IS NO DOUBT THAT IT REQUIRED DETAILED SCRUTINY AND ANALYSIS BY THE ASSESSING OFFICER TO FIND OUT THE ABOVE DISCREPANCY BUT AT THE SAME TIME IT MUST BE APPR ECIATED THAT SUCH AN EVENTUALITY CAN HAPPEN IN NORMAL CIRCUMSTANCES PARTICULARLY KEEPING IN MIND THE FACT THAT BOOKS OF ACCOUNTS FOR BOTH THE PROJECTS ARE KEPT AND MAINTAINED AT THE SAME PREMJ1SES AND BY THE SAME SET OF PEOPLE. THEREFORE, CONS IDERING THE TOTALITY O F CIRCUMSTANCES, BENEFIT OF DOUBT MUST BE GIVEN TO THE APPELLANT . A CCORDINGLY, IT IS HELD THAT THE APPELLANT DESERVES TO SUCCE E D . THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY U/S. 271(1)(C) OF INCOME - TAX ACT AMOUNTING TO R S. 12,61,751/ - . THUS , THE G ROUND IS ALLOWED. 5 ITA NO . 901/PUN/2015, A.Y. 2010 - 11 THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITIONS. WE FIND THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) WELL REASONED AND WE CONCUR WITH THE SAME. ACCORDINGLY, THE FINDINGS OF FIRST APPELLATE AUTHORITY ARE CONFIRMED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED BEING DEVOID OF ANY MERIT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDN ESDAY, THE 12 TH DAY OF JULY, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 12 TH JULY, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 6, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 5, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE