ITA NOS.3536&5089/Del/2012 &
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "H", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI J.S. REDDY, ACCOUNTANT MEMBER
I.T.A. Nos. 3536 &
5089/DEL/2012
A.Yrs. 2008-09 & 2009-10
ACIT, Circle-17(1), VS. M/s Vardhman Properties
Room No. 221, 2nd floor, Limited,
CR Building, New Delhi G-9, DDA, Building,
Nehru Place,
New Delhi 110 019
(PAN: AAACV2330B)
(APPELLANT) (RESPONDENT)
Department by : Sh. Ashwani Taneja & Rohan Khare,
Advocates
Assessee by : Sh. RS Meena, CIT(DR)
Date of Hearing : 25-9-2014
Date of Order : 29-9-2014
ORDER
PER H.S. SIDHU : JM
These appeals by the Revenue are directed against the separate orders
of the Ld. Commissioner of Income Tax (Appeals)-XIX, New Delhi pertaining to
assessment years 2008-09 and 2009-10. Since the issues involved in these
appeals are common, we are therefore, proceeding to dispose them off these
appeals by this consolidated order for the sake of convenience by adjudicating
the ITA No. 3536/Del/2012 (A.Y. 2008-09) as under:-
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ITA NOS.3536&5089/Del/2012 &
2. The grounds raised in the ITA No. 3536/Del/2012 read as under:-
"1. Ld. CIT(A) erred in law and on the facts of the case is
cancelling the penalty of Rs. 76,70,966/- imposed u/s.
271(1)(c) of the I.T. Act"
2. The appellant craves leave for reserving the right to amend,
modify, alter, add or forego any ground(s) of appeal at any
time before or during the hearing of appeal."
3. The grounds raised in the ITA No. 5089/Del/2012 read as under:-
"1. Ld. CIT(A) erred in law and on the facts of the case is
cancelling the penalty of Rs. 52,31,497/- imposed by the
AO u/s. 271(1)(c) of the I.T. Act because the revised return
was not a suo moto return."
2. The appellant craves leave for reserving the right to amend,
modify, alter, add or forego any ground(s) of appeal at any
time before or during the hearing of appeal."
4. Briefly facts stated are that the assessee is a company incorporated in
1986 engaged in the business of development of real estate. The return of
income declaring income of Rs. 20,06,47,591/- was filed on 20.9.2008. The
assessment u/s. 143(3) of the I.T. Act on 31.12.2010 was framed at an income of
Rs. 22,32,15,894/-. An addition of Rs. 2,25,68,303/- was made to the
returned income on account of application of percentage completion method
estimating the income in respect of the incomplete projects shown as work in
progress in the final accounts. The AO initiated penalty proceedings u/s.
271(1)(c) in respect of the addition of Rs. 2,25,68,303/- was made. The AO
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ITA NOS.3536&5089/Del/2012 &
finalized the penalty proceedings u/s. 271(1)(c) by levying a penalty of Rs.
76,70,966/- after taking into consideration the above addition of Rs.
2,25,68,303/- in the impugned order on the ground the additions constitute
concealed income.
5. Against the above order of the Assessing Officer, Asseessee appealed
before the Ld. First Appellate Authority, who vide impugned order 16.4.2012 has
allowed the appeal of the assessee by cancelling the penalty imposed by the
Assessing Officer.
6. Aggrieved by the aforesaid order dated 16.4.2012, Revenue is in appeal
before us.
7. Ld. Departmental Representative has relied upon the order of the
Assessing Officer reiterated on the contentions raised in the grounds of appeal
filed by the Revenue.
8. Ld. Counsel of the assessee in support of his claim has filed three Paper
Books, the first one is having pages 1 to 93 having the details of written
submissions and paper book filed before the Ld. CIT(A), the second is having
pages 1 to 95 containing the case law compilation applicable for the asstt.
years 2008-09 and 2009-10 of the following cases:-
- CIT vs. Excel Industries Ltd. 358 ITR 295 (SC)
- CIT vs. Vishnu Industrial Gases Pvt. Ltd. ITR 229/1988
(Delhi High Court)
- CIT & Anr. Vs. Dinesh Kumar Goel 331 ITR 10 (Delhi
High Court)
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ITA NOS.3536&5089/Del/2012 &
- Haware Construction (P) Ltd. Vs. ITO 64 DTR 251
(ITAT, Mumbai)
- Abode Construction Ltd. Vs. ITO 95 TTJ 35 (ITAT,
Mumbai)
- ACIT vs. Rajesh Builders 3 SOT 917 (ITAT, Delhi)
- ACIT vs. Heeral Constructions (P) Ltd. 85 TTJ 49 (ITAT,
Chennai)
- Nandi Housing P Ltd. Vs. DCIT 80 TTJ 750 (ITAT,
Bangalore)
- Amruta Enterprises vs. DCIT 79 TTJ 214 (ITAT,
Mumbai)
- DCIT vs. Ranka Developers 6 SOT 815 (ITAT,
Bangalore)
And the last Paper Book one is having 1-10 pages containing the
brief of the case and some reference of the identical cases and relied
upon the order of the Ld. CIT(A).
8.1 Ld. Counsel of the assessee vide his Paper Book as cited above has
referred the case law of the Supreme Court of India which supports his case in
the case of CIT vs. Excel Industries Ltd. 358 ITR 295, wherein the Hon'ble
Supreme Court vide para 32 it was observed 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
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ITA NOS.3536&5089/Del/2012 &
benefits under the advance license and the duty
entitlement pass book and paid tax thereon. Therefore,
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 or 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."
9. We have heard both the counsel and perused the records. We have also
gone through all the paper books filed by the assessee's counsel and the
contention raised by the Revenue. We find that Ld. CIT(A) has observed that
assessee had discharged its burden by submitting the necessary Explanation and
the Assessing Officer had not found the explanation to be false.
9.1 We find that Ld. CIT(A) has referred a case law of Kanbay Software India
(P) Ltd. Vs. DCIT (2009) 31 SOT 153 (Pune), wherein the ITAT after considering
the case law on the subject has observed broadly as under:-
- By no stretch of logic or rationale it can be said that
imposition of penalty under section 271(1)(c) has a
cause and effect relationship with addition being made
to returned income per se.
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ITA NOS.3536&5089/Del/2012 &
- Just because penalty under section 271(1)(c) is a civil
liability it must mean penalty can automatically be
levied on the basis of any addition to income, is not
correct.
- Even Explanation 1 to section 271(1)(c) raises a
rebuttable presumption and shifts onus on assessee to
establish bona fides of claim.
- Judgment in the case of UOI vs. Dharmendra Textile
Processors does not make a radical change in scheme
of section 271(1)© but it reexmphasizes paradigm shift
on burden of proof as brought about by Explanation
to section 271(1)(c).
- Admission or rejection of a claim is a subjective
exercise; whether a claim is accepted or rejected has
nothing to do with furnishing of inaccurate particulars
of income.
- Raising a legal claim, even if it is ultimately found to be
legally unacceptable, cannot amount to furnishing of
inaccurate particulars of income.
9.2 Keeping in view the aforesaid judgment of the ITAT, Ld. CIT(A) has
observed that the assessee has explained the reasons under what circumstances
the income was computed by following project completion method. We further
find that Ld. CIT(A) has also observed that Assessee has not contested the action
of the AO in any appellate proceedings either before the CIT(A) or before the
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ITA NOS.3536&5089/Del/2012 &
CIT and thus the issue attained finality. The AO levied a penalty of Rs.
76,70,966/- considering the amount of Rs. 2,25,68,303/- as concealed
income. We find that ld. Counsel of the assessee before the Ld. CIT(A) has
contended that that all the material facts are declared and there is difference of
opinion with regard to computing the income and moreover the assesee has
been following project completion method for recognizing income over a period
of time which was accepted by the Department and the Settlement Commission
for earlier years. We also find that Ld. AR of the assessee has contended before
the Ld. CIT(A) that the facts of the case do not call for levy of penalty as there is
no intention on the part of the assessee company either to suppress income or
inflate expenditure. We also find that Ld. CIT(A) has correctly referred the case
of CIT vs. Reliance Petrochemical P Ltd. (322 ITR 158) wherein it was held that
making incorrect claim does not ipso facto amount to concealment of particulars
of income. Only when the particulars in the return would be found inaccurate,
there would be penalty liability. We find that that Ld. CIT(A) has observed that in
the present case, all the material facts were furnished which are not disputed
and formed the basis for computing the income by the alternate method of
recognizing income. There is neither misrepresentation of facts nor suppression of
facts of mislead and evade taxes. We find that Ld. CIT(A) has found that no
positive material was brought on record to prove that the assessee has furnished
inaccurate particulars to reduce the taxable income. He also found that assessee
furnished an explanation which is a bonafide one with sufficient reasons. The
explanation was neither found false nor unreasonable by the AO. We further
observed that ld. CIT(A) has observed that the AO has not brought on record
further facts over and above to bring the assesee into the fold of penal
provisions. Ld. CIT(A) also opined that after going through the facts of the case
and the case laws cited by the ld. Counsel of the assessee and the propositions
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ITA NOS.3536&5089/Del/2012 &
laid down by the ITAT in the case of Kanbay Software India (P) Ltd., (Supra) there
is no case for levy of penalty in respect of the additions taken in to
consideration for levy of penalty. Hence, Ld. CIT(A) has rightly allowed the
appeal of the assessee by cancelling the penalty.
9.3 We also find that the exposition of the Hon'ble Supreme Court in the case
CIT vs. Excel Industries Ltd. 358 ITR 295, as cited by the Ld. Counsel of the
assessee vide his paper book, supports the case of the assessee, wherein the
Hon'ble Supreme Court vide para 32 has observed 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 license and the duty
entitlement pass book and paid tax thereon. Therefore,
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 or 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."
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ITA NOS.3536&5089/Del/2012 &
9.4 In view of the aforesaid discussions and precedents, we do not see any
reason to interfere with the order of the Ld. CIT(A), hence, we uphold the same
and decide the issue against the Revenue.
10. In the result, both the appeals filed by the Revenue stand dismissed.
Order pronounced in the Open Court on 29/9/2014.
Sd/- Sd/-
[J.S. REDDY] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 29/9/2014
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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