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2015 (12) TMI 502 - ITAT MUMBAI

2015 (12) TMI 502 - ITAT MUMBAI - TMI - Penalty u/s.271(1)(c) - chargeability of income v/s concealment of income - Held that:- It is clearly proved from the chronological events narrated above that difference of opinion has come out between the assessment stage and the first appellate authority stage wherein the AO had passed an order which was unfavourable for the assessee. On the other hand, the CIT(A) considered the matter and concluded the same in favour of the assessee. Hence, penalty ough .....

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the tax accordingly in the return of income for AY 2007-2008 after the conveyance attained finality and all litigations concerning the subject matter of conveyance were resolved. Thus, where assessee has furnished all particulars of income, imposition of penalty is not automatic in nature. Mere making of a claim which is not sustainable in law does not amount to levying of penalty under section 271(1)(c) of the Act. It is just a matter of difference between assessee and revenue regarding year of .....

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e assessee is aggrieved by the action of the CIT(A) in confirming the penalty u/s.271(1)(c) of the Act of ₹ 86,88,110/- on the addition of ₹ 2,77,00,000/-. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a firm which is carrying on business of building construction and had completed two projects viz. Paschim Apartments consisting A to C wing and Shaan Apartments consisting only one wing i.e. D Wing long back. During the course of asses .....

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he CIT(A) deleted the addition so made by the AO and in further appeal before the Tribunal by the revenue, the order of the CIT(A) was set aside and the assessment order of the AO was upheld. In view of the same, the AO levied penalty of ₹ 86,88,110/- on the addition of ₹ 2.77cr., against which the assessee preferred appeal before the CIT(A) and the CIT(A) dismissed the appeal of the assessee against which assessee is in further appeal before us. 4. Rival contentions have been heard .....

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plan of the property to the Corporation for constructing towers. Assessee constructed building which is Paschim Apartment, Tower A, B, C & Shaan Apartment Tower D, but could not construct Tower E as the said land was in occupation of M/s Mercury Paints (to whom land was leased). The buildings have been completed and all apartments therein sold and are fully occupied by the flat purchasers. On 6-10-2000, the Assessee filed a suit against Mercury Paints and Varnishes Limited for ejectment (evi .....

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entered into an MOU with Kalpavruksha Developers for constructing Building E on the 4,190 sq. meters of land which was in occupation of Mercury Paints and Varnishes Ltd. An advance of ₹ 51 lacs was to be paid in advance and other amounts for different purposes. The terms of the MOU could not be complied with which led to a suit and compromise and another development agreement dated 22.01.2004. Further on 2-4-2004 the Assessee and Class Construction & Hotel Pvt. Ltd. agreed to cancel t .....

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7.01cr. (which included 3.75 crores payable to Class Construction as damages) and two other parties including Shaan Apartment Co-op Housing Society and Paschim Apartments. The net sum receivable by the assessee was 2,77,00,000. The disputes arose between the seller and the purchasers (pertaining to 4,910 sq. meters which was occupied by Mercury Paints & Varnishes Ltd.) and they also joined the pending proceedings in the Small Cause Court. The conveyance deed specifically mentions as under.. .....

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the said lessee tenant for ejectment and other reliefs and the same is pending ... " This basically proves that the land sought to be transferred already had pending litigations with respect to its occupation and possession. 7. On 29-11-2005, Small Cause Court directed the Court Registrar to take the possession of the suit premises and allow the assessee and Kalpavruksha Developers to remain in physical and actual possession of the premises as agents of the Court Receiver. Mercury Paints &a .....

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ated 10th April, 2006. We had also gone through the copy of the consent terms annexed in the paper book from page no. 6-15. The issue pertaining to the possession of the premises was finally settled by way of the consent terms Additional Consent Terms. On 2-5-2006, Additional Consent Terms were filed in High Court (Suit No.3717 of 2003) between the assessee and Kalpavruksha Developers which provided as follows: a. The Additional Consent Terms confirmed the Agreement between the assessee and Kalp .....

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2,01,00,000/- (1,00,00,000/- paid on or before the execution of the consent terms and the second installment of 1,01,00,000/- to be paid on registration of Deed of Rectification and additional consent terms filed in the Court. 8. In the return filed for assessment year 2007-08 the assessee offered a sum of 4.78 Cr. as their income for A.Y.2007-2008. The sum comprises of ₹ 2,77 Cr. referred to in Conveyance Deed dated 28th February, 2005 as modified by the Deed of Modification signed on 10t .....

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ee has received further amount of 2,01,00,000/- against same Paschim Apartment plot over and above 2,77,00,000/- as a full and final settlement. So the assessee firm has offered total sale value 4,78,00,000/- in Asst. Year 2007-2008." 9. On the basis of above note, the AO took the view that as the land to the developer was conveyed vide Conveyance Deed dated 28-2-2005, he made an addition of ₹ 2.77 cr in the A.Y.2005-06. However, in an appeal before the CIT(A), he accepted assessee s .....

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clearly proved from the chronological events narrated above that difference of opinion has come out between the assessment stage and the first appellate authority stage wherein the AO had passed an order which was unfavourable for the assessee. On the other hand, the CIT(A) considered the matter and concluded the same in favour of the assessee. Hence, penalty ought not to be levied in a situation where there arises a difference of opinion. Under the circumstances discussed above, the assessee c .....

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