TMI Blog2013 (6) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... r property by explaining that the same shall be offered to tax once all the plots are transferred. If the above proposition of the assessee is accepted then in that case an assessee can indefinitely shift his tax burden say by not transferring one plot out of 1000 plots where 999 plots have been sold and commission income is received. Therefore, assessee was supposed to have declared commission income of plots which were sold after due registration. By not offering the commission income the assessee has furnished inaccurate particulars of income for which penalty u/s.271(1)(c) is leviable. Minimum penalty being 100% of the tax sought to be evaded on account of non-disclosure of commission income on account of sale of the above plots should be levied. AO shall verify the above details including any left over item and compute the commission income relatable to sale of these plots, calculate the tax on that and levy the penalty u/s.271(1)(c). So far as the balance plots are concerned they all relate to F.Y. 2007-08, 2008-09 and 2009-10 and do not relate to any of the years under appeal. Therefore, merely because the assessee has received the commission income in the preceding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the sale and purchase of some of the plots for which he was to receive commission from M/s. Lunkad Realty. The payments to the assessee Sri Atul Bhagat has been made from A.Y. 2001-02 onwards. The firm M/s. Lunkad Realty came into existence on 10- 07-2005. Prior to this date the negotiations for purchase were made by M/s. Lunkad Developers, a proprietary concern of Sri Kantilal Lunkad (HUF). Upon analysing the seized documents the Assessing Officer noted that Lunkad Group, i.e. Lunkad Housing, Lunkad Developers and Lunkad Realty have paid an amount of Rs.71,50,000/- by cheque to the assessee from time to time. This is on account of assessee's commission for facilitating sale of 25 plots at Survey No. 208/1/1, Lohegaon, Pune, the details of such payments are as under :- Date Cheque No. Amount (Rs.) Relevant A.Y. 17-01-2001 100060 1,00,000/- 2001-02 05-09-2001 109661 1,00,000/- 2002-03 19-09-2001 108698 1,40,000/- 2002-03 18-02-2004 164095 20,00,000/- 2004-05 24-11-2004 164681 8,00,000/- 2005-06 14-12-2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- 2002-03 Rs.2,40,000/- 2004-05 Rs.20,00,000/- 2005-06 Rs.23,10,000/- 2007-08 Rs.25,00,000/- TOTAL Rs.71,50,000/- 6. The assessee did not challenge the addition made by the Assessing Officer. Thereafter the Assessing Officer initiated penalty proceedings u/s.271(1)(c) of the Income Tax Act. The assessee reiterated the same submissions as made during assessment proceedings and submitted that since the work was not completed in respect of all the plots the assessee had treated the amount as advance in the balance sheet. It was submitted that the entire amount will be taxable as commission in the year in which it becomes final. It was submitted that the only dispute is regarding the year of taxability. Relying on a number of decisions it was submitted that when 2 views are possible on the addition made by the Assessing Officer no penalty u/s.271(1)(c) of the Income Tax Act is leviable. The decision of the Hon'ble Supreme Court in the case of Vegetable Produces reported in 88 ITR 192 was relied upon by the assessee for this purpose. 7. However, the Assessing Officer was not satisfied with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson who was not searched. As the documents found and seized do not belong to the appellant the assessment framed u/s.143(3) r.w.s. 153C is bad in law. Since the assessment is bad in law consequently the levy of penalty u/s.271(1)(c) is illegal and bad in law. The appellant hereby request your Honour to kindly quash the penalty order and obliged" 10. After hearing both the sides the additional ground raised by the assessee being a legal one is admitted for adjudication in view of the decision of Hon'ble Supreme Court in the case of National Thermal Power Corporation reported in 229 ITR 383. 11. Before proceeding further we deem it proper to adjudicate the legal ground first. From the Paper Book furnished by the assessee at Page Nos. 59 to 61 and 64 to 66 we find the documents seized from Sri Chandrakant Kankaria's premises contain the details of Plot No., Name of the Owner, Area, Rate, Amount, Amount received and balance amount receivable. Similarly, the seized documents also contain the amount paid and payable to Sri Atul Bhagat. 12. The provisions of section 153(C) read as under :- "153C. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned with Bank of India, Wanowrie Branch, Pune. He submitted that the entire amount received by the assessee on account of advance received for land transactions have been deposited in the said bank and the entire amount has been received by cheque. He submitted that since the formalities for transfer of the entire area was not completed, therefore, the assessee had shown the same as advance. 15. Referring to the decision of the Hon'ble Bombay High Court in the case of Metal Rolling Works Ltd. Vs. CIT reported in 339 ITR 373 he submitted that when the assessee has shown the amount received on account of commission as advance and the department assessed the same as income then in that case penalty u/s.271(1)(c) is not justified. Referring to the decision of Hon'ble Supreme Court in the case of CIT VS. Reliance Petro Products Pvt. Ltd. reported in 322 ITR 158 he submitted that mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. He submitted that since the entire amount has been received by cheque and deposited in the disclosed bank account and since the amount was reflecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission received in respective assessment years to tax, has concealed the particulars of income and furnished inaccurate particulars and therefore penalty u/s.271(1)(c) of the Income Tax Act is leviable. It is the case of the assessee that since the transfer of all the plots are yet to be completed, therefore, the assessee has treated the amount received under the head 'Commission" as advance and the same will be offered to tax in the year when all the plots are transferred and therefore no penalty is leviable. 18.1 We find from the details furnished by the assessee at Paper Book Page Nos.62 and 63 that the assessee has done work as facilitator for the following plots :- Details of plots at S. No. 208/1/1, Vimannagar, Pune. Sr. No. Plot No. Name of the Party Area Date of Registration 1 7 Poona Grafikon Unit III 3902 13.09.2006 2 13 Choice 4037 13.09.2006 3 20 Rosary Grafikon 5288 13.09.2006 4 70 Angles 3714 13.09.2006 5 72 Goodwill Developers 3165 13.09.2006 6 76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-09-2006 3 20 Rosary Grafikon 5288 13-09-2006 4 70 Angles 3714 13-09-2006 5 72 Goodwill Developers 3165 13-09-2006 6 76 Goodwill Promoters 3824 13-09-2006 7 10 Grafikon United 3902 13-09-2006 18.3 Page 64 of the paper Book which was seized from the residence of Sri Chandrakant Kankaria shows the following noting :- "15717 X 190 = 29,86,230/- to be paid to Bhagat after deal formation transfer of plots from SMT+CMT". 18.4 Since the assessee was due to receive commission on the basis of sale of plots and since 7 plots have been sold during the F.Y. 2006-07 relevant to A.Y. 2007-08, therefore, the assessee was supposed to offer commission income on account of sale of the above plots. Therefore, by not offering the commission income on account of sale of the above plots during A.Y. 2007-08 there is concealment of particulars of income and penalty is leviable on account of commission relatable to sale of the above plots. The argument of the Ld. Counsel for the assessee that the same shall be shown once ..... X X X X Extracts X X X X X X X X Extracts X X X X
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