M/s. Sai Venkata Associates, Pune V. Asst. CIT, Circle-9, Pune

ITA 992/PUN/2013

• Counselvise Citation: 99224514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: PRAYAG JHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#$ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS. 992 & 993/PN/2013 #% & '& / ASSESSMENT YEAR : 2008-09 M/S. SAI VEN KATA ASSOCIATES, S. NO. 24, PLOT NO. 280, PRADHIKARAN, NIGDI, PUNE-411044 . / APPELLANT PAN : ABEFS2500G (% V/S. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE . / RESPONDENT / APPELLANT BY : SHRI PRAYAG JHA / DEPARTMENT BY : SHRI B.C. MALAKAR ) DATE OF HEARING :15-05-2015 / DATE OF PRONOUNCEMENT :10-07-2015 ! ORDER PER VIKAS AWASTHY, JM : THESE TWO APPEALS BY THE ASSESSEE ARE AGAINST THE ORD ERS OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 12-02- 2013 FOR THE ASSESSMENT YEAR 2008-09 IN QUANTUM AND PENALTY PROCEE DINGS. IN ITA NO. 993/PN/2013, THE ASSESSEE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING DISALLOWANCE OF RS.50,02,425 /- ON ACCOUNT OF DEVELOPMENT EXPENSES. IN ITA NO. 992/PN/2013, THE ASS ESSEE HAS IMPUGNED THE ORDER OF COMMISSIONER OF INCOME TAX (APP EALS) IN 2 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 CONFIRMING LEVY OF PENALTY OF RS.17,00,324/- U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN SALE AND PURCHASE OF LAND. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSES SMENT YEAR 2008-09 ON 13-10-2008 DECLARING TOTAL INCOME OF RS.18,70,1 83/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTIC E U/S. 143(2) WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF SCRUTINY A SSESSMENT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHA SED A PLOT OF LAND COMPRISING IN GUT NO. 73 & 74, VILLAGE-KARLA, TAL.-MAVAL, DISTT.- PUNE VIDE PURCHASE DEED DATED 15-05-2007 FOR RS.2,25,00,000/-. THE SAID LAND WAS THEREAFTER SOLD BY THE ASSESSEE AFTER FIVE MONTHS FOR RS.3,17,00,000/- VIDE SALE DEED DATED 24-10-2007. WHILE COMPUTING TOTAL INC OME, THE ASSESSEE CLAIMED PLOT DEVELOPMENT EXPENSES OF RS.71,53,380 /-. OUT OF THE SAID DEVELOPMENT EXPENSES, THE ASSESSEE WAS NOT AB LE TO SUBSTANTIATE EXPENSES TO THE TUNE OF RS.50,02,425/-. THE ASSESSING O FFICER DISALLOWED THE SAME. THE ASSESSING OFFICER FURTHER RECOMMENDED FOR INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) AGAINST THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFER RED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). T HE COMMISSIONER OF INCOME TAX (APPEALS) VIDE ORDER DATED 12-0 2-2013 DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE ADDITION. IN PENALTY PROCEEDINGS THE ASSESSING OFFICER LEVIED PENALTY OF RS.17,00,324/- U/S. 271(1)(C) VIDE ORDER DATED 27-05-2011. A GAINST THE ORDER LEVYING PENALTY THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF IN COME TAX (APPEALS) VIDE IMPUGNED ORDER DATED 12-02-2013 CONFIRMED T HE LEVY OF 3 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 PENALTY. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL IMP UGNING THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE DISALLOWANCE, AS WELL AS, LEVY OF PENALTY. ITA NO. 993/PN/2013 3. FIRST WE WILL TAKE UP THE QUANTUM APPEAL OF THE ASSESSEE. 4. SHRI PRAYAG JHA APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT, THE ASSESSEE HAD PURCHASED A PIECE OF LAND ON 15- 05-2007 FOR RS.2,25,00,000/- AND SOLD THE SAME VIDE SALE DEED DATED 24 -10-2007 FOR RS.3,17,00,000/-. THE ASSESSEE HAD INCURRED EXPENDITURE T O THE TUNE OF RS.71,53,380/- FOR THE DEVELOPMENT OF AFORESAID LAND. THE AS SESSEE HAD PRODUCED ALL THE BILLS/VOUCHERS IN RESPECT OF DEVELOPMENT EXPENDITURE INCURRED. HOWEVER, THE ASSESSING OFFICER REJECTED THE SA ME BY TREATING THEM AS BOGUS. IN ORDER TO BUY PIECE THE ASSESSEE OF FERED AN AMOUNT OF RS.50,02,425/- FOR TAX. 5. ON THE OTHER HAND SHRI B.C. MALAKAR REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE IMPUGNED ORDER. THE LD. DR SU BMITTED THAT THE ASSESSEE HAD CLAIMED HUGE DEVELOPMENT EXPENSES OF RS.71,53,380/-. THE ASSESSING OFFICER AFTER EXAMINING THE RECORDS, ALLOWED DE VELOPMENT EXPENSES OF OVER RS.21.50 LACS. HOWEVER, THE ASSESSING OFFICER FOUND T HAT THE EXPENSES TO THE TUNE OF RS.50,02,425/- WERE NOT GEN UINE. MOST OF THE BILLS RAISED FOR CLAIMING EXPENSES WERE HAND WRITTEN ON PLA IN PAPER. IN MOST OF THE BILLS HAND WRITING WAS SAME AND WERE DATED BE TWEEN 25 TH AND 31 ST OCTOBER, 2007 I.E. AFTER THE SALE OF LAND. THE ASSESSING OFFIC ER HIMSELF VISITED THE SITE TO HAVE FIRST HAND INFORMATION. THE A SSESSEE HAD CLAIMED EXPENSES TO THE TUNE OF RS.3,26,500/- ON ELECTRICAL FITTINGS. WHEREAS, THERE WAS NO BUILDING/STRUCTURE EXCEPT A SMALL T IN SHED, WHERE 4 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 THE ELECTRICAL FITTINGS COULD HAVE BEEN INSTALLED. THE ASSESS EE HAD FURTHER CLAIMED EXPENDITURE ON CONSTRUCTION OF COMPOUND WALL. HOW EVER, ON ENQUIRY ITS TRANSPIRED THAT THE COMPOUND WALL WAS CONST RUCTED IN THE YEAR 2006 BY THE PREVIOUS OWNER SHRI DHIREN DALAL. SINCE, THE CLAIM COULD NOT BE SUBSTANTIATED, BOTH THE PARTNERS OF ASSESS EE FIRM OFFERED THE AMOUNT OF RS.50,02,425/- FOR TAX. THE LD. DR PRAYED FOR DISM ISSING THE APPEAL OF THE ASSESSEE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW. WE HAVE ALSO EXAMINED THE DOCUMENTS PLACED BEFORE US IN THE FORM OF P APER BOOK. THE ASSESSEE HAS PURCHASED A PLOT OF LAND ON 15-05-2007 FOR RS.2,25,00,000/- AND SOLD THE SAME ON 24-10-2007 FOR RS.3,1 7,00,000/-. THE ASSESSEE CLAIMED PLOT DEVELOPMENT EXPENSES OF RS.71,5 3,380/-. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE EXPENDITURE TO THE TUNE OF RS.50,02,425/-. A CCORDINGLY, THE SAME WAS OFFERED TO TAX. THE CONTENTION OF THE LD. AR OF A SSESSEE IS THAT THE EXPENDITURE WAS TOWARDS CONSTRUCTION OF COMPOUND W ALL, ELECTRICAL FITTINGS, PAINTING ETC. THE ASSESSING OFFICER DURING THE COURS E OF ASSESSMENT PROCEEDINGS FOUND DISCREPANCIES IN THE BILLS SUB MITTED BY THE ASSESSEE. MOST OF THE BILLS WERE HAND WRITTEN ON PLAIN PA PER AND WERE IN SAME HAND WRITING. THE BILLS WERE DATED BETWEEN 25-10-2 007 AND 31-10-2007. THE CONTENTION OF THE REVENUE IS THAT THE BILLS WERE PROCURED BY THE ASSESSEE SUBSEQUENTLY. IT WAS POINT ED OUT THAT THE LAND WAS SOLD ON 24-10-2007, WHEREAS, THE BILLS WERE DATED BET WEEN 25-10-2007 AND 31-10-2007. THE PAPER BOOK FILED BEFORE US CONTAINS DEED OF CONVEYANCE DATED 24-10-2007 VIDE WHICH THE LAND WAS SOLD. THE DESCRIPTION OF PROPERTY SOLD IS GIVEN IN SCHEDULE TO CONVEY ANCE DEED, WHICH IS AS UNDER: 5 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 THE SCHEDULE ABOVE REFERRED TO: FIRSTLY: ALL THAT PIECE AND PARCEL OF NON AGRICULTURAL LAND LYING, BEING AND SITUATED AT VILLAGE KARLA WITHIN THE LIMITS OF THE REGISTRATION DISTRICT OF PUNE AND REGISTRATION SUB DISTRICT OF MAVAL AND WITHIN THE LOCAL LIMITS OF ZILLA PARISHAD PUNE, MAVAL TALUKA PANCHAYAT SAMITI AND WITHIN THE LIMITS OF GR OUP GRAM PANCHYAT KARLA BEARING GAT NO. 73 AND ADMEASURING 99 ARES OR THERE ABOUTS ASSESSED AT RS.2653:47P AND BOUNDED AS FOLLOWS, I.E. ON OR TOWARDS THE EAST BY : GAT NO. 70 & 72 ON OR TOWARDS THE WEST BY : GAT NO. 74 ON OR TOWARDS THE SOUTH BY : INDRAYANI RIVER ON OR TOWARDS THE NORTH BY : GAT NO. 76 SECONDLY: ALL THAT PIECE AND PARCEL OF NON AGRICULTURAL LAND LYING, BEING AND SITUATE AT VILLAGE KARLA WITHIN THE LIMITS OF THE REGISTRATION DISTRICT OF PUNE AND REGISTRATION SUB DISTRICT OF MAVAL AND WITHIN THE LOCAL LIMITS OF ZILLA PARISHAD PUNE, MAVAL TALUKA PANCHAYAT SAMITI AND WITHIN THE LIMITS OF GR OUP GRAM PANCHYAT KARLA BEARING GAT NO. 74 AND ADMEASURING 1 HECTARE 1.8 AR ES AND ASSESSED AT RS.2728:53P AND BOUNDED AS FOLLOWS, I.E. ON OR TOWARDS THE EAST BY : GAT NO. 73 ON OR TOWARDS THE WEST BY : GAT NO. 75 AND 230 ON OR TOWARDS THE SOUTH BY : INDRAYANI RIVER ON OR TOWARDS THE NORTH BY : ROAD THE ASSESSEE HAS ALSO PLACED ON RECORD DEVELOPMENT AGR EEMENT DATED 15-05-2007 IN RESPECT OF SAME PROPERTY. THE DET AILS OF THE PROPERTY ARE ALSO GIVEN IN THE SAID DEVELOPMENT AGREEMENT. THE SA ME ARE AS UNDER: SCHEDULE OF THE PROPERTY (A) ALL THAT PIECE AND PARCEL OF NON AGRI LAND BEAR ING GUT NO. 73, ADMEASURING 00 H. 99 ARES (9900 SQ. MTRS.) AREA AND GUT NO. 74, ADMEASURING 01 H. 01.8 ARES, (10180 SQ. MTRS) TOTAL 20080 SQ. MTRS LAND SITUATED AT VILLAGE KARLA, TALUKA KAVAL, DIST PUNE AND WITHIN THE LIMITS OF ZILLA PARI SHAD PUNE GRAMPANCHYAT KARLA AND ALONG WITH COMPOUND WALL, WELL AND TREES, AND I T BOUNDED AS UNDER:- ON OR TOWARDS THE EAST : GUT NO. 72 ON OR TOWARDS THE WEST : GUT NO. 75 AND 230 ON OR TOWARDS THE NORTH : 30 MTS WIDE ROAD ON OR TOWARDS THE SOUTH : INDRAYANI RIVER IN WITNESS WHEREOF THE PARTIES HAVE SET THEIR RESP ECTIVE HANDS AND SIGNED ON DAY AND DATE ABOVE MENTIONED. 6 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 7. A PERUSAL OF DETAILS OF PROPERTY SHOW THE EXISTE NCE OF COMPOUND WALL IN MAY, 2007. THUS, IT IS EVIDENT FR OM RECORDS THAT THE COMPOUND WALL WAS ALREADY IN EXISTENCE AND THER E IS NO PERMANENT STRUCTURE OR BUILDING ON THE LAND. THE A SSESSING OFFICER VISITED THE SITE TO HAVE FIRST HAND INFORMATION AND FOUND THAT THERE IS ONLY A COMPOUND WALL AND SMALL TIN SHED ON THE L AND UNDER QUESTION. THUS, THE CLAIM OF RS.3,26,500/- FOR FIX ING 30 LIGHT POINT, 15 PLUG POINT AND 4 FAN POINT ETC. IS NOT TENABLE. EVEN THE ENQUIRIES MADE BY ASSESSING OFFICER FROM THE PERSONS WHO HAVE ALLEGEDLY WORKED ON THE LAND DOES NOT INFUSE CONFIDENCE, THER EFORE, THE SAME WERE DISBELIEVED. FURTHER, THE ASSESSING OFFICER O BSERVED THAT MOST OF THE PARTIES WHO HAD ALLEGEDLY CARRIED OUT DEVELO PMENT WORK WERE SHOWN AS SUNDRY CREDITORS OUTSTANDING AS ON 31-03-2 008. THE ASSESSEE HAD ALLEGEDLY MADE PAYMENTS TO THE SAID PE RSON IN ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12 THROU GH CHEQUES DRAWN ON, THE THANE JANATA SAHAKARI BANK, NIGADI BR ANCH. THE ENQUIRY MADE BY THE ASSESSING OFFICER REVEALED THAT MOST OF THE OUTSTANDING SUNDRY CREDITORS WERE PAID BY BEARER CH EQUES AND IN MAJORITY OF THE CASES AMOUNT WAS WITHDRAWN BY ONE S HRI JAGANAN THORAT WHO IS STATED TO BE A CLOSE RELATIVE OF ONE OF THE PARTNERS OF THE ASSESSEE FIRM. SINCE, THE ASSESSEE WAS NOT ABL E TO SUBSTANTIATE THE CLAIM, THE AMOUNT OF RS.50,02,425/- WAS OFFERED FOR TAX. 8. IN THE LIGHT OF ABOVE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CO NFIRMING DISALLOWANCE. ACCORDINGLY, THE APPEAL OF THE ASSES SEE IS DISMISSED BEING DEVOID OF MERIT. 7 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 ITA NO. 992/PN/2013 9. THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) AMOUNTING TO RS.17,00,324/-. IT IS A WELL SETTLED LAW THAT WHERE DISALLOWANCES/ADDITIONS ARE MADE, LEVY OF PENALTY IS NOT AUTOMATIC. THE QUANTUM AND PENALTY PROCEEDINGS ARE TWO SEPARATE AND INDEPENDENT AND STAND ON DIFFE RENT FOOTING. MERITS IN QUANTUM APPEAL AND IN PENALTY PROCEEDINGS HAVE TO BE APPRECIATED WITH DIFFERENT APPROACH. THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE CONSIDERED AS CONC LUSIVE AND FINAL FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT. ASSESSMENT PROCEEDINGS ARE PRIMARILY CONCERNE D WITH THE QUANTIFICATION AND COMPUTATION OF TOTAL INCOME IN A CCORDANCE WITH THE PROVISIONS OF THE ACT. PENALTY PROCEEDINGS ON THE OTHER HAND, ARE PRIMARILY CONCERNED WITH THE CONDUCT OF THE ASS ESSEE. PENALTY IS IMPOSED NOT BECAUSE ADDITION IS MADE BUT BECAUSE TH ERE IS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. NEW HOLLAND TRACTORS (INDIA) (P) LTD. VS. CIT : 275 CTR 291 (DELHI). THE PENALTY CAN BE LEVIED WHERE MALAFIDE IS PROVE D BEYOND DOUBT. IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED U/S. 2 71(1)(C) AS THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE DEVELOPME NT EXPENDITURE OF RS.50,02,425/-. THE ASSESSEE HAD SUBMITTED BILL S IN SUPPORT OF THE EXPENDITURE CLAIMED. HOWEVER, THE SAME WERE RE JECTED BY THE ASSESSING OFFICER BY TREATING THEM AS NOT GENUINE. IN COMING TO SUCH A CONCLUSION, THE ASSESSING OFFICER HAD MADE P ERSONAL ORAL 8 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 ENQUIRIES AND ALSO CONTACTED THE PERSONS WHO HAD IS SUED BILLS. NONE OF THE PERSONS WHO HAD ISSUED THE BILLS EVER D ENIED THE ISSUANCE OF SUCH BILLS. IT IS AN UNDISPUTED FACT T HAT THE ASSESSEE HAD CLAIMED TOTAL EXPENDITURE OF RS.71,53,380/- OUT OF WHICH THE ASSESSING OFFICER HAS DISALLOWED RS.50,02,425/-. T HUS, THE REVENUE HAS ADMITTED THAT SOME AMOUNT OF EXPENDITUR E HAS BEEN INCURRED TOWARDS THE DEVELOPMENT OF LAND. IT IS A CASE WHERE THE ASSESSEE HAS NOT BEEN ABLE TO FULLY SUBSTANTIATE TH E EXPENDITURE. THE REVENUE HAS ACCEPTED PART CLAIM OF ASSESSEE. 10. CLAUSE (B) TO EXPLANATION 1 TO SECTION 271(1)(C ) PROVIDES THAT WHERE THE ASSESSEE OFFERED AN EXPLANATION, BUT THE SAME REMAINED UNSUBSTANTIATED, PENALTY SHOULD NOT BE IMPOSED, IF THE EXPLANATION IS BONAFIDE AND ALL MATERIAL FACTS FOR COMPUTATION OF INCOME ARE DISCLOSED. IN THE INSTANT CASE, ADMITTEDLY EXPLANATION HAS BEEN OFFERED. WHETHER IT IS BONAFIDE OR NOT THAT HAS TO BE SEEN. THE ASSESSEE HAS PLACED ON RECORD THE AGREEMENTS AND OT HER DOCUMENTS TO SHOW SALE TRANSACTIONS OF LAND. THE ASSESSEE HA S ALSO PLACED ON RECORD BILLS TO SHOW THE EXPENDITURE ON DEVELOPMENT OF LAND. SOME OF THE BILLS/INVOICES HAVE BEEN REJECTED BY TREATIN G THEM AS NOT GENUINE BY REVENUE, HOWEVER, THE PERSONS WHO HAVE I SSUED THE BILLS HAVE NOT DENIED THE ISSUANCE OF BILLS. THE ASSESSI NG OFFICER HAS REJECTED THE BILLS ON CERTAIN PRESUMPTIONS. THUS, IN OUR VIEW, THERE IS NO CONCEALMENT OF ANY INFORMATION BY THE ASSESSE E. IN VIEW OF THE TOTALITY OF FACTS AND THE EXPLAN ATIONS OFFERED BY THE ASSESSEE, IT IS NOT A FIT CASE FOR LEVY OF P ENALTY FOR 9 ITA NOS. 992 & 993/PN/2013, A.Y. 2008-09 CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, WE DELETE THE PENALTY LEVIED U/S. 271(1)(C) AND ALLOW THE APPEAL OF THE ASSESSEE. 11. IN THE RESULT, THE APPEAL IN ITA NO. 992/PN/201 3 IS ALLOWED AND ITA NO. 993/PN/2013 IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 10 TH DAY OF JULY, 2015 AT PUNE SD/- SD/- ( ' ' #$ / R.K. PANDA) ( % & / VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER ! PUNE; '# /DATED : 10 TH JULY, 2015 RK/PS *+,#-. / '- ! COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) * / THE CIT(A)-V, PUNE 4. ( /THE CIT-V, PUNE 5. %+, --./ 0 ./ 0 1 2 34 0 ! 560 78980 1:2 :;<=>0 ?@<; 6. ,$A B ! GUARD FILE. % - //TRUE COPY// //TRUE COPY// *% / BY ORDER, #%0 1) PRIVATE SECRETARY, ' /ITAT, PUNE