ACIT 27(3), NAVI MUMBAI V. RAJESH BUILDERS, MUMBAI

ITA 978/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3042 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT PAL SINGH DIA
• Keywords: Business income; Difference of opinion; Tax effect; Revised return
• Section: 271(1)(c); 45(2); 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAVISH SOOD, JM ITA NO. 978 /MUM/ 2017 (ASSESSMENT YEAR: 2007 - 08 ) ACIT - 27(3) 4 TH FLOOR, TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI VS. SHRI RAJESH BUILDERS 1/1 GHANSHYAM BAUG, CAMA LANE, HANSOTI LANE, GHATKOPAR (W), MUMBAI - 400 086 PAN/GIR NO. AAEFR 6687 G ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI AJIT PAL SINGH DIA RESPONDENT BY : SHRI MANI JAIN DATE OF HEARING : 01.02.2019 DATE OF PRONOUNCEMENT : 28.02 .2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 25, MUMBAI (LD.CIT(A) FOR SHORT) DATED 11.11.2016 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2007 - 08. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING TO CANCEL THE PENALTY U/S.271(1)(C) OF THE IT. ACT, 1961 ON ONE OF THE I SSUES OF NET PROFIT OF RS.2,42,51,035 / - FROM MANISH GARDEN BY HOLDING THAT THE SAME WAS DECLARED BY THE ASSESSEE IN THE A.Y. 2008 - 09 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD INCORRECTLY CLAIMED THE ENTIRE PROFIT FROM THIS PROJECT AS DEDUCTION U/ S. 80IB AND CONSEQUENTLY NO INCOME WAS OFFERED AND IN REALITY THE ASSESSEE WAS NOT ENTITLED FOR SUCH DEDUCTION AS HELD BY THE AO AND THE LD.CIT(A). 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. BRIEF FACTS OF THE CASE AS NOTED IN THE ASSESSMENT ORDER ARE AS UNDER: THE ASSESSEE IS A BUILDER AND DEVELOPER. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 31.10.2007 DECLARING TOTAL INCOME OF 2 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS RS.1,33,71,620/ - . THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 29 - 12 - 2009 DETERMINING THE TOTAL INCOME AT RS.23,93,32,030/ - , AFTER MAKING THE FOLLOWING ADDITIONS: - SR. NO. ADDITION AMOUNT 1) BUSINESS INCOME ON ACCOUNT OF SALE OF FLATS OF 'MANISH GARDENS PROJECT 2,42,51,035/ - 2) BUSINESS INCOME ON ACCOUNT OF SALE OF LAND (DEVELOPMENT RIGHTS)HELD AS STOCK - IN - TRADE TO M/S KUBIX REALTIES PVT LTD. 11,04,54,860/ - 3) LONG TERM CAPITAL GAINS 9,09,29,507/ - 4) INTEREST ON FIXED DEPOSIT 3,25,000/ - THE ADDITIONS WERE PRIMARILY MADE ON 1. DISALLOWANCE OF B ENEFIT OF CLAIM U/S.80IB(10 ) OF THE INCOME TAX ACT,1961 WHICH AMOUNTED TO RS. 2 , 42 , 51 ,035/ - . 2. RS.11 , 04 , 54 , 860 / - BEING A BUSINESS INCOME 3 . RS.9, 09,29,507/ - BEING TREATED AS LONG TERM CAPITAL GAIN AND 4. RS.3 , 25 ,000 / - BEING INTEREST ON FIXED DEPOSIT. 4. AS REGARDS ADDITION OF RS.2,42,51,035/ - IS CONCERNED, THE ASSESSING OFFICER (A.O) HAS OBSERVED THAT THE ASSESSEE IS A BUILDER AND WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING FOR ITS PROJECT CALLED MANISH GARDEN, PUNE. THE A.O ALSO OBSERV ED THAT THE REVENUE IN RESPECT OF THE AFORESAID PROJECT WAS RECOGNIZED ON THE BASIS OF SALES FOR WHICH POSSESSIONS WERE GIVEN TO THE P UR CHASER. HOWEVER, IT WAS ALSO OBSERVED THAT ASSESSEE HAD GIVEN POSSESSIONS TO VARIOUS FLAT OWNERS DURING THE YEAR BUT HAD NOT OFFERED SUCH SALES AS INCOME DURING THE YEAR UNDER CONSIDERATION BUT SAME WAS OFFERED TO TAX IN THE SUBSEQUENT YEAR I.E. ASSESSMENT YEAR 2008 - 09 AND AGAINST WHICH THE ASSESSEE HAD ALSO CLAIMED DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT, 1961. HOWEVER, ACCORDING TO THE AO SINCE THE POSSESSION WAS GIVEN, THE ASSESSEE SHOULD HAVE OFFERED THE INCOME IN THE CURRENT YEAR AS AGAINST SUBSEQUENT YEAR, AND ACCORDINGLY, HE ASSESSED THE INCOME IN THE 3 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS CURRENT YEAR AS ALSO HE HAS DENIED THE BENEFIT OF DEDUCT ION UNDER SECTION 80IB OF THE INCOME TAX ACT. 5. AS REGARDS AN ADDITION OF RS. 11,04,54,860 / - BEING A BUSINESS INCOME AND RS.9,09,29,507/ - BEING LONG TERM CAPITAL GAIN (LTCG), IT IS OBSERVED THAT THE ASSESSEE WAS THE OWNER OF LAND AND WAS SOLD AS PER AGREEMENT DATED 27.04.2006 AND THE ASSESSEE HAD RECEIVED SUBSTANTIAL PAYMENT. THIS PLOT OF LAND WAS INITIALLY HELD AS INVESTMENT AND LATER ON IN THE FINANCIAL YEAR 2003 - 2004 IT WAS CONVERTED AS STOCK IN TRADE. THI S PLOT WAS SINCE CONVERTED INTO STOCK IN TRADE, THE INCOME ON SALE OF THE SAME HAS BEEN ASSESSED PARTLY AS BUSINESS INCOME AND - PARTIY AS - UFGG CONSIDERING THE PROVISIONS OF SECTION 45(2) OF THE INCOME TAX ACT. THE ASSESSEE HAD OFFERED THIS INCOME IN THE SUB SEQUENT YEAR PERTAINING TO A.Y. 2008 - 09 WHEREAS ACCORDING TO THE AO SINCE THE ASSESSEE HAD RECEIVED SUBSTANTIAL AMOUNT IN THE YEAR UNDER CONSIDERATION, AND ACCORDING TO HIM THE POSSESSION WAS ALSO PARTED, THE INCOME WAS TO BE OFFERED TO TAX IN THE YEAR UND ER CONSIDERATION AS AGAINST A.Y. 2008 - 09 IN WHICH THE ASSESSEE HAD OFFERED THE INCOME WHICH ACCORDING TO THE ASSESSEE WAS CORRECTLY OFFERED SINCE THE ASSESSEE HAD NOT RECEIVED FULL PAYMENT IN THE PRECEDING PREVIOUS YEAR. 6. THE ASSESSEE HAD CARRIED THE MA TTER OF SUCH ADDITION TO THE LD. CIT(A) BUT DID NOT SUCCEED. THE LD, CIT(A) HAS GIVEN THE FOLLOWING FINDINGS IN HER ORDER DATED 31.01.2011 - (I) IN VIEW OF HON BLE ITAT DECISION IN APPELLANT'S OWN CASE FOR A.Y. 2004 - 05, PERCENTAGE COMPLETION METHOD WILL BE APPLICABLE WITH RESPECT TO PROFIT FROM THE MANISH GARDEN PROJECT FOR A.Y. 2007 - 08. (II) (II) THE APPELLANT IS NOT ENTITLED FOR DEDUCTION U/S 80 IB(10) ON THE BASIS OF THE FACTS HIGHLIGHTED BY THE AO FOR A.Y. 2007 - 08. (III) FOLLOWING THE DECISION OF HON BLE ITAT FOR A.Y. 2005 - 06, THE INCOME FROM SALE OF LAND TO M/S KUBIX REALITIES PVT. LTD. I.E., RS.11,04,54,860/ - 4 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS WILL BE TREATED AS BUSINESS INCOME. THE SAME WILL BE TAXED IN A.Y. 2007 - 08 SINCE POSSESSION OF LAND WAS GIVEN IN THE RELEVANT F.Y. (IV) SIMILARLY , LONG TERM CAPITAL GAIN ON THE LAND SOLD TO M/S KUBIX REALITIES PVT. LTD. I.E., RS. 9,09,29,507/ - WILL BE TAXED IN A.Y. 2007 - 08 SINCE REGISTRATION AND POSSESSIONS WERE GIVEN DURING THE PERIOD RELEVANT TO A.Y. 2007 - 08. (V ) FINALLY, INTEREST OF RS. 3,25 ,009/ - WILL ALSO BE TAXED IN A.Y. 2007 - 08 SINCE EVEN AUDITORS HAVE POINTED OUT THAT IT PERTAINS TO F.Y.RELEVANT TO A.Y. 2007 - 08 AND NOT A.Y. 2008 - 09. 7 . IN THE PENALTY PROCEEDINGS, THE ASSESSEE IN R ESPONSE TO THE SHOW CAUSE NOTICE SUBMITTED THAT THE PENALTIES ARE PRIMARILY ON ALL THE ISSUES DUE TO DIFFERENCE OF OPINION BETWEEN THE DEPARTMENT AND THE ASSESSEE. THAT H OWEVER ALL THE REQUISITE PARTICULARS WERE FURNISHED AND ASSESSEE HAD NOT CONCEALED ANY INCOME. THAT S INCE THE ASSESSEE HAS ALREADY DISCLOSED ALL THE MATERIAL FACTS AND IT IS ONLY THE DIFFERENCE OF OPINION WHICH HAS LED TO THE ASSESSMENT OF SAID AMOUNT IN THE CURRENT YEAR AND THEREFORE IT COULD NOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE INCOME O R FILED INACCURATE PARTICULARS. THAT R ELIANCE IS PLACED IN THE CASE OF JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (P) LTD . 322 ITR 158 , WHEREIN IT IS HELD THAT MERE DISALLOWANCE OF CLAIM DOES NOT TA ANTAMOUNT TO CONCEALM ENT AND NO PENALTY IS LEVIABLE. 8 . HOW EVER, THE A.O. WAS NOT CONVINCED. HE HELD THAT THE A.O. HAS MADE THE DISALLOWANCE AND THE LD. CIT(A) HAS CONFIRMED. HE OBSERVED THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AS ABOVE HAS GIVEN A DETAILED FINDING FOR THE ADDITION . HENCE, THE A.O. LEVIED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AMOUNTING TO RS.6,63,91,160/ - . 9 . UPON THE ASSESSEES APPEAL, THE LD. CIT(A) NOTED THE SUBMISSIONS OF THE ASSESSEE. HE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE APEX COURT IN THE C ASE OF CIT VS. 5 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS EXCEL INDUSTRIES (358 ITR 295) , HON'BLE DELHI HIGH COURT IN THE CASE OF DEVSONS PRIVATE LIMITED VS. CIT (329 ITR 483) AND ITAT, MUMBAI IN THE CASE OF PARINEE DEVELOPERS PVT. LTD. VS. ACIT (IN ITA NO. 6772/MUM/2013) A ND PROCEEDED TO DELETE TH E PENALTY ON THE GROUND THAT IT WAS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BUT ONLY OF YEAR OF CHARGEABILITY OF INCOME. 1 0 . THE ORDER OF THE LD. CIT(A) MAY BE GAINFULLY REFERRED AS UNDER: 13. ON CAREFUL C ONSIDERATION, I FIND THAT HON'BLE APEX COURT IN CASE OF CIT V. EXCEL INDUSTRIES LIMITED, CIVIL APPEAL NO.125 OF 2013, REPORTED IN 38 TAXMAN.COM 100 HAS CATEGORICALLY OBSERVED IN PARAS 32 & 33 AS UNDER: - '32. THIRDLY, THE REAL QUESTION CONCERNING US IS THE YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DISPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR, THE ASSESSEE DID MAKE IMPORTS AND DID DERIVE BENEFITS UNDER THE ADVANCE LICENCE AND THE DUTY ENTITLEMENT PASS BOOK AND PAID TAX THEREON. THEREFOR E, IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF TAX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEAR. THEREFORE, THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC O R AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS, THEREFORE, NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WAS QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS . 33. FOR THE AFORESAID REASONS, WE DISMISS THE CIVIL APPEALS WITH NO ORDER AS TO COSTS, BUT WITH THE HOPE THAT THE REVENUE IMPLEMENTS ITS, LITIGATION POLICY A LITTLE MORE PRACTICAL LY AND A LITTLE MORE SERIOUSLY. 14. IN THE FACTS OF THE CASE, I FIND THAT AS REGARDS ADDITIONS OF RS. 2,42,51,035/ - AND ALSO RS . 11,04,54,860 / - BEING A BUSINESS INCOME AND RS . 9,09,29,507/ - BEING TREATED AS LONG TERM CAPITAL GAIN, IT IS NOT IN DISPUTE THAT THE APPELLANT HAD ALREADY OFFERED THE AFORESAID INCOME IN THE SUBSEQUENT YE AR PERTAINING TO ASSESSMENT YEAR 2008 - 0 9. IT IS ALSO NOT IN DISPUTE THAT THE RETURN FOR ASSESSMENT YEAR 2008 - 09 WAS FILED ON 30.09.2008 WHERE THE APPELLANT HAD ALREADY OFFERED THE AFORESAID INCOME EVEN PRIOR TO ASSESSMENT WAS COMPLETED AND, THEREFORE, IT I S NOT A CASE WHERE THE INCOME ASSESSED WAS NOT BROUGHT TO THE KNOWLEDGE OF THE DEPARTMENT BY THE APPELLANT BUT IT IS ONLY ABOUT AN ISSUE AS TO WHEN THE INCOME SHOULD BE BROUGHT TO TAX I.E. WHETHER IN THE ASSESSMENT YEAR 2007 - 08 AS ASSESSED BY THE AO OR IN ASSESSMENT YEAR 2008 - 09 AS OFFERED BY THE APPELLANT. UNDER THE CIRCUMSTANCES, WHAT TRANSPIRES IS THAT THE INSTANT CASE IS NOT FOR CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS BUT THE YEAR OF CHARGEABILITY OF THE INCOME OF THE ASSESSEE. ACCORDI NG TO THE A.O THE INCOME OFFERED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2008 - 09 WAS CHARGEABLE TO TAX IN THE YEAR UNDER CONSIDERATION, BUT SO FAR AS THE QUANTUM OF INCOME SO CHARGED TO TAX IN THE YEAR UNDER CONSIDERATION IS NOT DIFFERENT THAN WHAT WAS OFFE RED IN THE SUBSEQUENT YEAR, AND, THEREFORE MERELY BECAUSE THE INCOME OFFERED IN THE ASSESSMENT YEAR 2008 - 09 IS BROUGHT TO TAX IN THE CURRENT YEAR WOULD NOT TANTAMOUNT TO CONCEALMENT OF INCOME OR FOR THAT MATTER FILING OF INACCURATE PARTICULARS OF THE INCOM E. IT IS NOW SETTLED LAW THAT MERE DISALLOWANCE OR ADDITION TO INCOME DOES NOT BY ITSELF BECOME 6 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS A CAUSE FOR LEVYING THE PENALTY AND, THEREFORE, CONSIDERING THE FACTS OF THE CASE AND LAID DOWN LAW, PENALTY SHOULD NOT BE LEVIED ON THE AMOUNT OF INCOME WHICH IS BROUGHT TO TAX IN THE YEAR UNDER CONSIDERATION WHICH WAS ALREADY OFFERED TO TAX IN THE SUBSEQUENT YEAR WELL BEFORE THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS UNDERWAY. IN THIS REGARD, IT WOULD BE APT TO REFER TO THE JUDGMENT OF DELHI HIGH COURT IN CASE OF DEVSONS PRIVATE LIMITED V CIT REPORTED IN 329 ITR 483 WHERE THEIR LORDSHIP HAS HELD AS UNDER: - . SECTION 271(L)(C) OF THE INCOME TAX ACT,1961 - PENALTY - FOR CONCEALMENT OF INCOME - ASSESSMENT YEAR 1 995 - 96 - WHETHER IT IS INCUMBENT UPON TRIBUNAL I N PENALTY PROCEEDINGS TO INDEPENDENTLY EXAMINE EVIDENCE AND MATERIAL ON RECORD FOR PURPOSE OF JUDGING WHETHER . PENALTY PROCEEDINGS ARE JUSTIFIED ON ACCOUNT OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF - HELD, YES - WHETHER IF ASS ESSEE HAS DISCLOSED EACH AND EVERY FACT TO DEPARTMENTAL AUTHORITIES OR TO COURT CONCERNED, THEN MERELY BECAUSE DEPARTMENTAL AUTHORITIES CONCERNED OR HIGH COURT CONCERNED DOES NOT CONCUR WITH LEGAL STAND ADOPTED BY ASSESSEE, IT WILL NOT BE ENOUGH REASON TO HOLD THAT ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR OF FURNISHING INACCURATE DETAILS - HELD, YES - WHETHER ON FACTS STATED UNDER HEADINGS 'METHOD OF ACCOUNTING - CHANGE OF AND LLNEXPLAINED EXPENDITURE* ASSESSEE COULD BE HELD TO HAVE CONCEALED INCOME AND/O R FURNISHED INACCURATE PARTICULARS OF INCOME AND, THEREFORE, TO BE LIABLE FOR PENALTY UN DER SECTION 271(L)(C) - HELD, NO. 15. IT IS ALSO OBSERVED THAT THE DECISION OF THE HON BLE MUMBAI ITAT IN THE CASE OF 'PARINEE DEVELOPERS PVT. LTD VS ACIT (SUPRA) IS APP LICABLE TO THE FACTS OF THE INSTANT CASE. THUS, CONSIDERING THE OVERALL FACT AND CIRCUMSTANCES OF THE ISSUE INVOLVED, PENALTY LEVIED ON SUM OF RS .2,42,51,035/ - , RS. 11,04,54,860/ - AND RS . 9,09,29,507/ - IS HEREBY DELETED. 1 1 . AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US ONLY WITH REGARD TO THE DELETION OF PENALTY WITH REGARD TO ADDITION OF RS.2,42,51,035/ - . THE REVENUE HAS NOT APPEALED AGAINST THE DELETION OF PENALTY QUA THE ADDITION OF RS.11,04,54,860/ - AND RS.9,09,29,507/ - . 1 2 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) SUBMITTED THAT THIS IS CLEARLY A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THE A.O. HAS CORRECTLY LEVIED THE PENALTY. HE SUBMITT ED THAT THE ADDITION HAVE BEEN SUSTAINED BY THE LD. CIT(A). HENCE, PENALTY LEVIED IS JUSTIFIED. 13. PER CONTRA, THE LD. COUNSEL OF THE ASSESSEE MADE ELABORATE S UBMISSIONS. THESE ARE SUMMARIZED AS UNDER: 7 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS '4. IN THE ORDER DATED 11.11.2016, ID, CIT(A) D ELETED THE PENALTY ON THE FOLLOWING GROUNDS: - A) RS.2,42,51,035/ - BEING THE PROFIT ASCERTAINED BY THE LD. A.O . FROM MANISH GARDEN PROJECT. B) RS. 11,04,54,860Y - BEING PROFIT ON SALE OF LAND C) RS.9,09,29,507/ - BEING LONG TERM CAPITAL GAINS ' 5. AGAINST THE ABOVE RELIEF, THE REVENUE HAS PREFERRED AN APPEAL ONLY AGAINST THE DELETION OF PENALTY ON RS.2,42,51,035/ - BEING PROFIT ON MANISH GARDEN. THE RELEVANT GROUND OF APPEAL IS REPRODUCED HEREUNDER: - 'ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED IN DIRECTING TO CANCEL THE PENALTY U/S 27L(L)(C) OF THE I.T. ACT, 1961 ON ONE OF THE ISSUED OF NET PROFIT OF RS.2,42,51,035/ - FROM MANISH GARDEN BY HOLDING THAT THE SAME WAS DECLARED BY THE ASSESSEE IN THE AY 2008 - 09 WITHOUT APPRECI ATING THE FACT THAT ASSESSEE HAS INCORRECTLY CLAIMED THE ENTIRE PROFIT FORM (HIS PROJECT AS DEDUCTION U/S 80IB(10) AND CONSEQUENTLY NO INCOME WAS OFFERED AND IN REALITY THE ASSESSEE WAS NOT ENTITLED FOR SUCH DEDUCTION AS HELD BY THE AO AND THE LD. CIT(A) ' . 6. THUS, THE CONTENTION OF THE DEPARTMENT IS THAT THE ASSESSEE HAS IN - FACT OFFERED NO PROFIT IN RESPECT OF MANISH GARDEN FOR AY 2008 - 09 SINCE IT HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT ON THE PROFITS. 7. AT THE OUTSET, IT IS SUBMITTED THAT THE A BOVE AMOUNT OF RS.2,42,51,035/ - WAS DULY OFFERED BY THE APPELLANT FOR THE SUCCEEDING ASSESSMENT YEAR I.E. AY 2008 - 09. THIS FACT HAS VERY WELL ACCEPTED BY ID. CIT(A) IN HIS APPELLATE ORDER AS WELL AS AO AS APPARENT FROM THE GROUNDS OF APPEAL. THUS, IT IS A MERE CASE OF PRE - PONMENT IN THE TAXATION OF INCOME FROM AY 2008 - 09 TO AY 2007 - 08 AND NOT AN INSTANCE OF CONCEALMENT OF INCOME. 8. IN THIS REGARDS, RELIANCE IS PLACED ON THE DECISION OF THE HONORABLE MUMBAI ITAT IN THE CASE OF 'PARINEE DEVELOPERS PVT LTD VS. ACIT' IN ITA NO: 6772/M/2013 WHEREIN IT HAS BEEN HELD THAT PENALTY IS NOT LEVIABLE ON IDENTICAL FACTS. THE RELEVANT EXTRACT OF THE SAID JUDGMENT IS REPRODUCED: 'B. LEVY OF PENALTY OF RS. 179.03 CRS REGARDING PRE - PONMENT OF SALES OFFERED IN NEXT YEAR; B RIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE SOLD 1,51,520 SQ FT OF COMMERCIAL AREA FOR A SUM OF RS. 736.55 CRS, BUT THE SAID AREA WAS NOT COMPLETED BY THE TIME RELEVANT TO THE AY UNDER CONSIDERATION. BASING ON THE METHOD OF ACCOUNTING FO LLOWED I.E. PERCENTAGE COMPLETION METHOD, THE ASSESSEE OFFERED SUM OF RS. 239.27 CRS (IE AROUND 43% OF THE TOTAL SALES BASED ON THE PROJECT) FOR THE YEAR UNDER CONSIDERATION AS THE COMPLETED AREA WORKS OUT TO 42,92%. HOWEVER, ASSESSEE REVERSED THE SALE TO T HE EXTENT OF 36,038 SQFT AMOUNTING TO RS. 179.03 CRS FOR SOME REASONS / DEVELOPMENTS. THIS AMOUNT OF SALES WAS NOT SHOWN BY THE ASSESSEE IN THE AY 2009 - 2010 BASING ON THE PERCENTAGE COMPLETION METHOD. HOWEVER, THE SAID AMOUNT WAS REFLECTED IN THE RETURN FO R THE AY 2010 - 2011 BASED ON THE PRINCIPLE OF,,PAY AS YOU EARN'. DURING THE FIRST APPELLATE PROCEEDINGS IE ENHANCEMENT OF ASSESSMENT, THE WHOLE OF THE SALES MADE TO THE STANDARD CHARTERED BANK WAS OFFERED AS RECOGNISING THE INCOME BY FILING THE REVISED RETU RN OF INCOME PREPONING THE COMPLETION OF THE PROJECT FROM 2012 - 2013 TO 2009 - 2010, THE A Y UNDER CONSIDERATION. CIT (A) LEVIED THE PENALTY ON THIS SUM OF SALES OF RS. 179.03 CRS WHICH IS OTHERWISE OFFERED TO TAX IN THE AY 2010 - 201 1 8. DURING THE PROCEEDIN GS BEFORE US, ON THE ABOVE FACTS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS THE CASE OF PREPONEMENT OF INCOME, WHICH IS OTHERWISE UNDISPUTEDLY OFFERED TO TAX IN THE LATER YEAR IN ORDER TO END LITIGATION WITH THE DEPARTMENT. SINCE, IT IS ALREADY OF FERED IN THE RETURN OF INCOME FOR THE A Y 2010 - 2011, THERE IS NEITHER FAILURE ON THE PART OF THE ASSESSEE IN MATTER OF DISCLOSURE OF PARTICULARS NOR FURNISHING OF ANY 8 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS INACCURATE PARTICULARS. ASSESSEE HAS FOLLOWED THE PRINCIPLE OF ,,PAY AS YOU EARN' IE PER CENTAGE COMPLETION METHOD, WHEREAS THE CIT (A) THRUST ON THE ASSESSEE HIS METHOD, WHICH INVOLVED THE PREPONEMENT OF LATER YEARS INCOME TO THE A Y UNDER CONSIDERATION. HE HAS ALSO SUBMITTED THAT THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF ANY I NACCURATE PARTICULARS IN THIS CASE, ASSESSEE HAS FOLLOWED A FIXED METHOD OF ACCOUNTING. HE ALSO DEMONSTRATED THAT THE ESTIMATED CONCEALMENT OF RS. 20.52 CRS ON ACCOUNT OF THE ABOVE ADDITION OF RS. 179.03 CRS IS MERE ESTIMATION AND NOT BASED ON ANY FACTS. F URTHER, HE SUBMITTED THAT THE WHOLE ISSUE REVOLVES AROUND THE PREPONEMENT AND THE DEBATABILITY OF THE CIT (A). HE ALSO SUBMITTED THAT WITH THE STANDARD CHARTERED BANK, THOUGHT THE AGREEMENTS WERE ENTERED THE SALES WERE COMPLETED AS THE CONSTRUCTION WORK IS INCOMPLETE AND THE RELATABLE MONEY OF RS. 179.03 CRS WAS NEVER RECEIVED AT THIS POINT OF TIME. THEREFORE, IT IS THE CASE OF THE ASSESSEE THAT THE PREPONEMENT OF SUCH INCOME, WHICH IS NOT AGREED TO THE ASSESSEE IS UNSUSTAINABLE IN LAW. CONSEQUENTLY, THE LE VY OF PENALTY ON SUCH UNSUSTAINABLE ADDITION IS UNJUSTIFIED. HE ALSO SUBMITTED THAT THE REVISED RETURN OF INCOME WAS FILED, IN ORDER TO SATISFY REVENUE AUTHORITIES AS THERE IS NO ADVERSE TAX IMPLICATIONS, TO THE ASSESSEE, THE PENALTY IS UNSUSTAINABLE. RELY ING ON THE JUDGMENT OF THE LION 'BLE APEX COURT IN THE CASE OF EXCEL INDUSTRIES (358 ITR 295), COPY OF WHICH IS PLACED IN PAGE 304 OF THE PAPER BOOK, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THERE IS NO TAX LOSS TO THE DEPARTMENT AND THE ONLY ISSUE IS YEAR OF TAXABILITY BUT WHEN THE TAX RATES ARE THE SAME ON FACTS, IT IS A SETTLED PROPOSITION IN LAW THAT THE DEPARTMENT SHOULD NOT DISTURB THE ASSESSMENT OF INCOME OFFERED IN THE SUBSEQUENT ASSESSMENT YEARS. IN THIS CASE, RS. 179.03 CRS WAS OFFERED AS I NCOME OF THE ASSESSEE IN THE AY 2010 - 2011 AND THE CIT (A) BROUGHT THE SAME TO TAX IN THE CURRENT YEAR WHERE THE TAX RATES ARE SAME IN BOTH THE AYS. THEREFORE, ON MERITS, SUCH ADDITIONS ARE UNSUSTAINABLE IN LAW CONSIDERING THE ABOVE REFERRED JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES (SUPRA). 9. PER CONTRA, LD DR FOR THE REVENUE SUBMITTED THAT THE ASSESSEE DID NOT OFFER THE SAID INCOME IN THE YEAR UNDER CONSIDERATION INITIALLY, BUT FOR THE DECISION OF THE CIT (A) TO TAX THE WHOLE OF THE SALE PROCEEDS IN THE YEAR UNDER CONSIDERATION. HOWEVER, ON SUSTAINABILITY OF THE SAID ADDITION LD DR HAS NOTHING TO STATE EXCEPT THAT THE ABOVE ADDITION WAS ACCEPTED BY THE ASSESSEE AND THE SAME HAS REACHED FINALITY. 10. ON HEARING BOTH THE PARTIES , WE FIND THERE IS NO DISPUTE ON THE FACTS THAT THE SAID SUM OFRS. 179.03 CRS IS UNDISPUTEDLY OFFERED IN THE A Y 2010 - 2011 AND THE SAME IS NOW TAXED IN THE YEAR UNDER CONSIDERATION, WHERE THE TAX RATES ARE IDENTICAL IN BOTH THE YEARS. THEREFORE, THE LEGAL QUESTION WILL ARISES FROM THE ABOVE FACTS IS SHOULD THE ADDITION BY WAY OF PREPONEMENT OF THE ALREADY DISCLOSED INCOME ATTRACTS SUCH LEVY OF PENALTY U/S 271(L)(C) OF THE ACT OR NOT. THE ASSESSEE OFFERED THE SAID INCOME IN THE LATER ASSESSMENT YEAR BASING O N THE PRINCIPLE 'PAY AS YOU EARN'. THIS PRINCIPLE IS UPHELD BY THE HON'BLE SUPREME COURT IN THE CASE OF EXCEL INDUSTIRES (SUPRA) WHEREIN IT IS HELD THAT THE INCOME TAX CANNOT BE LEVIED ON HYPOTHETICAL INCOME. INCOME ACCRUED WHEN IT BECOMES DUE AT THE SAME TIME, IT MUST ALSO BE ACCOMPANIED BY CORRESPONDING LIABILITY OF OTHER PARTY TO PAY THE AMOUNT. ONLY THEN, IT CAN BE SAID FOR THE PURPOSE OF TAXABILITY THAT THE INCOME IS NOT HYPOTHETICAL AND IT HAS REALLY ACCRUED TO THE ASSESSEE. IN THE INSTANT CASE, THE L IABILITY TO PAY BY THE OTHER PARTIES IS CRYSTALLIZED IN THE A Y 2010 - 2011 NOT IN THE A Y 2009 - 2010. BUT THE CIT (A) INSISTS THE SAME WOULD BE TAXABLE IN THE YEAR UNDER CONSIDERATION. IN OUR OPINION, SUCH ADDITIONS, IN PRINCIPLE, ARE UNSUSTAINABLE IN LAW CO NSIDERING THE SAID BINDING JUDGMENT. IF SOME OF THE REASONS, SUCH ADDITIONS ARE ACCEPTED BY THE ASSESSEE, THE SAME WILL NOT ATTRACT PENALTY U/S 27](L)(C) OF THE ACT AS THE SAID AMOUNT WAS ALREADY OFFERED TO TAX BY THE ASSESSEE. IN OUR OPINION, THERE IS NEI THER CONCEALMENT OF INCOME NOR FURNISHING OF ANY INACCURATE PARTICULARS IN SUCH MATTERS. THE DECISIONS RELIED UPON BY THE 9 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS LD COUNSEL FOR THE ASSESSEE INCLUDES THE ORDER OF THE TRIBUNAL IN THE CASE OFSIDDHRAJ DEVELOPERS PVT LTD (ITA NO.L85/AHD/2008), DATED 11.5.2010 (AHD); GOUTAM ENTERPRISE (ITA NO.5847/MUM/2010) DATED 10.12.2012 (AHD); JAIN BUILDERS (VASAL) (41 CCH 031) (MUM) AND GURUCHARAN SINGH & CO (72 TTJ 774) (CHD). THESE ARE RELEVANT FOR THE PROPOSITION THAT NO PENALTY SHOULD BE LEVIED ON A DECLARED I NCOME IRRESPECTIVE OF THE YEAR OF DISCLOSURE. THEREFORE, WE ARE OF THE OPINION THAT THIS ADDITION DOES NOT ATTRACT PENALTY U/S 271(L)(C) OF THE ACT. ACCORDINGLY WE ORDER THE DELETION OF PENALTY ON THIS ISSUE.' 9. IDENTICALLY, IN THE FACTS OF THE APPELLAN T'S CASE, THE APPELLANT HAS FOLLOWED THE METHOD OF OFFERING SALES WHICH IS NOT ACCEPTED BY THE A.O. AS SUCH, THE ONLY ISSUE IS OF THE YEAR IN WHICH THE TAXABILITY OF THE ABOVE TRANSACTION SHOULD BE TAXED. ACCORDINGLY, IT CAN BE SAFELY CONCLUDED THAT THERE IS NO CONCEALMENT ON THE PART OF THE APPELLANT. 10. IT IS MORE PERTINENT TO NOTE HERE THAT ID. A.O. HAS PREFERRED NOT TO APPEAL AGAINST THE OTHER TWO GROUNDS WHICH ALSO RELATED TO PRE - PONMENT OF INCOME FROM AY 2008 - 09 TO THE CURRENT YEAR I.E. AY 2007 - 08. THEREFORE, THIS ONLY GOES ON TO SHOW THAT AO ACCEPTS THAT CHANGE OF YEAR CANNOT LEAD TO LEVY OF PENALTY. 11. NOW, COMING TO THE CONTENTION OF THE DEPARTMENT TAKEN IN THE GROUNDS OF APPEAL, IT IS SUBMITTED THAT DEPARTMENT HAS STRESSED UPON THE FACT THAT NO INCOME HAS BEEN REALLY OFFERED IN AY 2008 - 09 SINCE ASSESSEE HAS INCORRECTLY CLAIMED DEDUCTION U/S 80IB(10). ACCORDINGLY, DEPARTMENT HAS CONTENDED THAT THE CONTENTION OF THE ASSESSEE THAT INCOME HAS BEEN OFFERED IN AY 2008 - 09 IS INCORRECT. 12. NOW, COMING TO THE OBJECTION OF THE DEPARTMENT THAT DEDUCTION CLAIMED BY THE DEPARTMENT IS INCORRECT, IT IS SUBMITTED THAT THE DEDUCTION U/S 80IB(10) WAS ORIGINALLY DISALLOWED BY THE AO IN THE ASSESSMENT ORDER. AGAINST THE SAID ORDER, AN APPEAL WAS FILED BEFORE CIT(A ) AND FINALLY BEFORE HON'BLE ITAT. AGAINST THE SAID APPEAL, THE DEDUCTION U/S 80IB(10) ON PROFIT FROM PROJECT MANISH GARDEN HAS BEEN ALLOWED BY ITAT VIDE ITS ORDER DATED 31.05.2017 BEARING ITA NO.2955/MUM/2012, AFTER APPRECIATING THE FACTS OF THE CASE AT P ARA 28. THE COPY OF THE ORDER IS ENCLOSED HEREWITH. ' 13. THEREFORE, THE CONTENTION OF THE DEPARTMENT THAT THE DEDUCTION CLAIMED BY THE ASSESSEE IS INCORRECT IS INCORRECT AND NULLIFIED BY THE ITAT OWN ORDER. 14. THUS, IT IS SUBMITTED THAT THE CONTENTION OF THE DEPARTMENT IS INCORRECT AND THERE IS NO OCCASION ON THE PART OF THE ASSESSEE OF CONCEALING OR FURNISHING ANY INACCURATE PARTICULARS. IT IS THEREFORE, SUBMITTED THAT THE PENALTY DELETED BY THE CIT(A) IS CORRECT AND THE SAME MAY KINDLY BE UPHELD. 14. UPON CAREFUL CONSIDERATION, WE FIND THAT IN THE ASSESSMENT ORDER, THERE WERE 3 ADDITIONS MADE WHICH READ AS UNDER: SR. NO. ADDITION AMOUNT 1) BUSINESS INCOME ON ACCOUNT OF SALE OF FLATS OF 'MANISH GARDENS PROJECT 2,42,51,035/ - 2) BUSINESS INCOME ON ACCOUNT OF SALE OF LAND (DEVELOPMENT RIGHTS)HELD AS STOCK - IN - TRADE TO M/S KUBIX REALTIES PVT LTD. 11,04,54,860/ - 3) LONG TERM CAPITAL GAINS 9,09,29,507/ - 10 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS ALL WERE CLAIMED TO HAVE BEEN OFFERED TO TAXATION BY THE ASSESSEE IN THE NEXT YEAR, HOWEVER, THE A.O. ADDED IT IN THE PRESENT ASSESSMENT YEAR. THE PENALTY LEVIED WITH REFERENCE TO ALL THE ADDITIONS, WERE DELETED BY THE LD. CIT(A), AS HE AGREED THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT. FURTHER, HE NOTED THAT ALL THE PARTICULARS WE RE DISCLOSED. TH AT TH E ISSUE WAS MERELY OF THE YEAR IN WHICH THE AMOUNT WAS TO BE TAXED. THE LD. CIT(A) HAS REFERRED TO HON'BLE APEX COURT DECISION IN THE CASE OF CIT V/S. EXCEL INDUSTRIES LTD [(2013) 358 ITR 295 (SC)] AN D DELETED THE PENALTY QUA ALL THE THREE ADDITIONS. 15. NOW THE REVENUE HAS ACCEPTED THE DELETION OF PENALTY QUA TWO OF THE ADDITIONS AND APPEALED TO THE ITAT QUA ONE OF THE ADDITIONS. NO REASON FOR THIS DIFFERENTIATION HAS BEEN BROUGHT ON RECORD. THE REVENUE IN GROUNDS RAISED ITSELF A DMITS THAT THE IMPUGNED AMOUNT WAS OFFERED FOR TAXA TION IN NEXT ASSESSMENT YEAR ALTHOUGH WITH A C L AIM OF INCORRECT DEDUCTION U/S. 80IB. IN THIS REGARD, WE NOT E THAT AS IN THE CASE WITH OTHER TWO ADDITIONS, THIS ADDITION BEING BUSINESS INCOME ON ACCOUNT OF MANISH GARDEN PROJECT WAS ALSO OFFERED FOR TAXATION IN NEXT ASSESSMENT YEAR. HENCE, NO CASE OF FURNISHING OF INACCURATE PARTICULARS IS MADE OUT AS IN OTHER TWO ADDITIONS . THE ASSESSEE AND THE LD. CIT(A) ARE CORRECT IN TH IS PROPOSITION THAT IT IS ONLY A MATTER OF OPINION. THE A.O. IS OF A DIFFERENT OPINION . W HEN ALL THE FACTS ARE AVAILABLE, THAT CANNOT BE TERMED AS FURNISHING OF INACCURATE PARTI CULARS OF I NCOME LEADING TO INVOKING THE RIGOURS OF PENALTY U/S. 271(1)(C) . THE DECISION OF HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA) IS GERMANE AS IT HAS EXPOUNDED THAT IF A CLAIM OF THE ASSESSEE IS REJECTED, THE SAME MAY BY ITSELF CAN LEAD TO LEVY OF PENALTY U/S. 271(1)(C) . FURTHERMORE, IN IDENTICAL FACT, THE 11 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS ITAT IN CASE OF PARINEE DEVELOPERS PVT. LTD. (SUPRA) REFERRED ABOVE DELETED THE PENALTY WITH REFERENCE TO PREP ON MENT OF SALE OFFERED IN THE NEXT YEAR. 16. FURTHERMORE, JUST BECAUSE THE ASSESSEE HAS NOT APPEALED AGAINST THE ADDITION , T HE SAME CANNOT LEAD TO A INFERENCE OF CONTUMACIOUS CONDUCT OF THE ASSESSEE. AS R IGHTLY NOTED BY THE LD. C IT(A) THE ISSUE WAS ONLY YEAR O F TAXABILITY AND IN THIS REGARD, THE LD. C IT(A) HAS RIGHTLY RELIED UPON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES (SUPRA) WHEREIN THE HONBLE APEX COURT HAD EXPOUNDED THAT THE REVENUE SHOULD NOT BE AGGRIEVED IF IT WAS ONLY A MATTER OF DIFFEREN CE IN THE YEAR OF TAXABILITY. IT WAS HELD THAT THE RATE OF TAX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEAR. THEREFORE, IT WAS HELD THAT THE DISPUTE RAISED BY THE REVENUE WAS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THEREFORE, IT WAS HELD THAT THERE WAS NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WAS QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. THOUGH THE A SSESSEE HAS NOT CHALLENGED THE ADDITION, WE NOTE THAT WHEN THE ADDITIONS ITSELF IS ON WEAK FOOT ING, THE D E L E T I O N O F LEVY OF PENALTY QUA THAT ADDITION BY THE LD. C IT(A) CANNOT BE FAULTED. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY LEVIED WITH REFERENCE TO THE IMPUGNED ADDITION, WHICH IN FACT IS OF A MUCH S M A L L E R VALUE AS COMPARED TO THE DELETION OF PENALTY WITH REFERENCE TO OT HER TWO ADDITIONS, WHICH HAS NOT BEEN APPEALED AGAINST BY THE REVENUE, DESPITE ALL BEING ON THE SAME PROPOSITION. 12 ITA NO. 978/MUM/2017 SHRI RAJESH BUILDERS 17. IN THE RESULT, THIS APPEAL BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 . 0 2 . 2 0 1 9 S D / - S D / - ( RAVISH SOO D ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 8 . 0 2 . 2 0 1 9 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI