TMI Blog2014 (2) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... t the claim was in accordance with the accounting practice regularly followed by it or in the trade circles – thus, the assessee has failed to discharge the burden placed upon him under Explanation 1 to sec. 271 of the Act - the assessee shall be deemed to have concealed particulars of income in respect of this addition – the order of CIT(A) set aside in respect of the addition also and the penalty levied by the AO is restored – Decided in favour of Revenue. - ITA No. 4656/Mum/2012 - - - Dated:- 19-2-2014 - Shri B. R. Baskaran, AM And Amit Shukla, JM,JJ. For the Appellant : Shri Ashok Suri For the Respondent : Shri Vipul Joshi/Nishit Gandhi ORDER Per B. R. Baskaran,AM: The appeal filed by the revenue is directed against the order dated 30.04.2012 passed by the ld CIT(A)- 35, Mumbai and it relates to the AY 2008-09. 2. The solitary issue urged is whether the Ld CIT(A) was justified in deleting the penalty of Rs.1,39,07,662/- levied by the AO u/s 271(1)(c) of the Act. 3 The facts that led the AO to levy penalty u/s 271(1)(c) are stated in brief: The assessee is a partnership firm and is engaged in the business of builders and developers. The department carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this disallowance and hence it did not prefer any appeal against this addition. 4.0 The assessee had also claimed a sum of Rs.1,76,73,149/- towards the cost of land. The AO noticed that the net plot area developed by the assessee was 43,641.78 Sq. mts, which was found to be sub divided as under:- Plot A - 21,807.18 Sq. mts. Plot B - 4,621.40 Sq. mts. Plot D - 17,213.20 Sq. mts. 43,641.78 On plot A, building no. 2 A B Wings were found to have been completed, while building No.4-C D wings were pending. Hence, the AO took the view that 50% of Plot A has been utilised in completed project. On Plot B, no construction had taken place. On Plot D, building no. 5 A B wings were found to have been completed, while Wing-C was incomplete. Hence, the AO took the view that 2/3rd of Plot D has been utilised in the completed project. Accordingly, the AO computed the land area utilised in Plot A as 10,903.59 Sq. mts (50%) and in Plot D as 11,475.46 Sq. mts (2/3rd). Accordingly, the unutilised area of the land was worked out by the AO at 21,262.73 Sq. mts. Accordingly, the cost of land attributable to the unutilised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed in this year or next year. The expenses claimed are genuinely incurred. No dummy or incorrect expenses is claimed as deduction." However, with regard to the cash difference, the assessee did not offer any explanation. The AO was not convinced with the explanations furnished by the assessee. The AO noticed that the assessee has purchased TDR rights only on 19.5.2008, vide agreement entered with M/s Ami Corporation on 19.05.2008, i.e., in the succeeding year. Hence the AO took the view that the payments made for the purchase of TDR cannot be claimed in the instant year. In respect of land, the AO took the view that the land cost can be allowed only in the year in which the construction was completed on a particular area of land. The AO also took note of the fact that the books of accounts of the assessee were audited by a Chartered Accountant and the return has been filed with the help of/ under the guidance of the Chartered Accountant. Accordingly, the AO came to the conclusion that the assessee was aware that tht expenses claimed under TDR and the land cost were wrongly claimed. Accordingly, the AO concluded that the assessee has concealed income with malafide intention by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is dispute that the assessee has incurred expenditure on purchase of TDR rights and also on purchase of land. The AO has disallowed both the items of expenditure on the reasoning that they are not allowable during the year under consideration. He submitted that the assessee purchased TDR rights through M/s Pranay Investment. The Ld A.R, by furnishing a copy of Ledger account copy of the account titled as "Pranay Investment - TDR", submitted that the assessee had made payment of Rs.3,22,29,676/- to M/s Pranay Investment as detailed below during the financial year relevant to the assessment year under consideration:- (1) Rs.1,00,00,000/- by Cheque No. 034406 on 25.10.2007 (2) Rs.1,00,00,000/- by Cheque No. 034435 on 29.10.2007 (3) Rs. 50,00,000/- by Cheque No. 034458 on 02.11.2007 (4) Rs. 40,00,000/- by Cheque No. 34499 on 14.11.2007 (5) Rs. 10,00,000/- by Cheque No. 34500 on 17.11.2007 (6) Rs. 22,29,676/- by Cheque No. 034452 on 30.11.2007 The Ld A.R submitted that the above said payment details find place in the agreement entered between the assessee and M/s Pranay Investments. Accordingly he submitted that the assessee, having made the payments during the financial 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inning Mills Ltd (2010)(326 ITR 429)(P H) (e) CIT Vs. Dalmia Agencies (P) Ltd (2010)(186 Taxmann 155)(Del) (f) CIT Vs. Lotus trans travels (P) Ltd (2009)(177 Taxman 37)(Del) (g) CIT Vs. Mica Wood (P) Ltd (2008)(170 Taxman 256)(Del) (h) Balaji Vegetable Products (P) Ltd Vs. CIT (2007)(290 ITR 172)(Kar) (i) CIT Vs. International Audio Visual Co. (2007)(288 ITR 570)(Del) (j) CIT Vs. Caplin Point Laboratories Ltd (2007)(293 ITR 524)(Mad) (k) Indian Cine Agencies Vs. DCIT (2005)(275 ITR 430)(Mad) The Ld A.R has also placed reliance on a host of Tribunal decisions, which are listed in the written submissions filed by him, to support his contentions. The Ld A.R further submitted that the AO has imposed the penalty by holding that the assessee has furnished inaccurate particulars of income, but the fact remains that the assessee did not furnish any inaccurate particulars of income. Accordingly he submitted that the Ld CIT(A) was justified in deleting the penalty levied u/s 271(1)(c) of the Act. 10. We have heard the rival contentions and carefully perused the record. According to Ld A.R, the AO has imposed the penalty for furnishing of inaccurate particulars of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ischarged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise." 10.3 It is the contention of the Ld A.R that the assessee did not furnish any inaccurate particulars of income, i.e., according to him the question was about the year of allowability of both the claims viz., the cost of purchase of TDR and the cost of purchase of land. The words "inaccurate particulars of income" came for consideration before the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt Ltd (2012)(322 ITR 158)(SC). For the sake of convenience, we extract below the relevant observations made by the Hon'ble Apex Court:- "As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the section 271(1)(c) would embrace the meaning of the details of he claim made..... "We are not concerned in the present cae with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. (b) The formal agreement was entered with M/s Pranay Investments in the succeeding year. (c) The TDR was purchased against the on-going project only. Since the payment was made during the year consideration, the assessee claimed the same as deduction. (d) The AO has allowed the TDR purchase cost in the succeeding year and hence the question was about the year of allowability. It can be noticed that the Ld A.R has furnished an altogether new explanations before us and they were not furnished before the assessing officer. 11.2 However, from the materials furnished before us, following facts emerge out:- (a) It is not known whether there is any agreement between the assessee and M/s Amit Corporation. It is pertinent to note the TDR rights were purchased by the assessee from M/s Pranay Investments only. The assessee has not filed the agreement, if any, entered with M/s Ami Corporation, though it has all along been claiming that it has purchased the TDR rights from M/s Amit Corporation. (b) In the assessment order, the AO refers to an agreement dated 19.05.2008 entered between the assessee and M/s Amit Corporation. In the explanations given by the assessee duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that M/s Pranay Investment has purchased the TDR rights of 3750 Sq. mts from M/s Ami Corporation only on 14.4.2008. Subsequently, M/s Pranay Investments has transferred 1710 Sq. mts to the assessee on 07.05.2008. (f) The foregoing discussions would show that the payments made to M/s Pranay Investments during Oct. and Nov. 2007 were in the nature of advance payments and the assessee would have come to know about the finalisation or purchase of the TDR rights latest by 14.4.2008 only, i.e., the day on which M/s Pranay Investments obtained rights from M/s Ami Corporation. Further, the assessee was allowed to use the TDR rights of 1710 Sq. mts by Government authorities, vide DRC Utilisation form No.32007 issued on 3.5.2008. This fact also reinforces the view that the assessee has paid only advance during the year under consideration. There should not by any dispute that the "advance" paid by the assessee constitutes Capital payment and the same cannot be claimed as deduction. Hence, the contentions of the assessee the deduction was claimed since the payments were made during the year under consideration is against the facts. (g) The Ld A.R has furnished a statement containing the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng therein was that the assessee claimed interest expenses incurred on the loan taken for investing in purchase of IPL shares, as per the business policy. The AO disallowed the interest claim by invoking provisions of sec. 14A of the Act, since the assessee therein did not earn any income by way of dividend. The Hon'ble Apex Court noticed that the assessee therein had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate or factually incorrect. Further, the Hon'ble Apex Court gave a specific finding that the department did not find any fault with the particulars submitted by the assessee in its return. In addition to the above, in our view, following observations made by the Hon'ble Supreme Court are very much relevant:- "By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars." In the above cited case, the claim of interest expenditure became incorrect, only in view of the provisions of sec. 14A of the Act and hence the Hon'ble Supreme Court observed that making of an incorrect claim in law cannot tantamount to furnishing of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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