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TMI Blog2016 (8) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... effect to the order of CIT(A) determined income at Rs. 3,48,03,446/-. The AO initiated penalty proceedings u/s. 271(1)(c) of the Act and after giving full effect to the order of the CIT(A) started penalty proceedings by issuing notice u/s. 274 r.w.s. 271(1)(c) of the Act. The assessee explained that it had continued to adopt project completion method and it is duly confirmed by ITAT in assessee's own case in earlier years. According to the assessee it was under bona fide belief that the method adopted by it was recognized method for computing income for construction business i.e. project completion method. However, the AO has not accepted the explanation of the assessee by observing as under: "ii) The explanation of the assessee compay's AR gives details about the facts of the case and inter-alia it is stated that the project completion method adopted by the assessee company has been accepted by the Hon'ble ITT in assessee's own case in earlier years. However, in the current year, the additions made by the AO under percentage completion method has been confirmed by the Ld. CIT(A). It is also submitted that all particulars of income and expenditure have been truly and fully disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain claims and counter claims were made by and against the appellant company and therefore as a prudent policy the appellant may be justified in deferring the decision of revenue recognition till the issue is settled. It is well settled that assessment proceedings and the penalty proceedings are two different proceedings and that addition made in assessment proceedings may not necessarily be the ground for levying the penalty. It would be apt to refer to the provisions of section 271(1)(c) which reads as under: .... ... 3.1 Clause (A) to explanation indicate that where the assessee fails to offer an explanation or offers an explanation which is found by the AO to be false, then in such case penalty would be levied. It is not in dispute that the appellant had filed all the requisite details/explanation which were necessary for the assessment proceedings and therefore in so far as particulars in respect of such income being filed it could not be said that either the appellant had concealed the income or that he had not furnished the facts and material before the AO or the explanation filed by the assessee was found to be false which could be construed or concealment under cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. The assessee has continuously adopted the project completion method and the same has duly been confirmed by the ITAT in earlier years. The assessee was under bona fide belief that the method being adopted for recognizing the income for construction business is project completion method, which is correct method. It was explained that no penalty is leviable on the credit balance written back and the interest income, which were already offered by the assessee in its profit and loss account and the only dispute remains for an amount of Rs. 2,28,36,247/- and on income estimated by the AO at Rs. 3,48,03,446/- on which the AO levied penalty. 4. We find that the aforesaid project of the assessee was under litigation before the Hon'ble High Court and the assessee was under bona fide belief that the project cannot be treated as complete considering the dispute between the assessee and MHADA. The dispute was also with Chandivali Residence Association, who were litigating for defective work of the assessee and counter claims were made by MHADA. This fact is coming out of the order of this Tribunal, wherein there was difference between the Accountant Member and the Judicial Member and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that in accordance with the consent terms payment of Rs. 13,35,17,603/- was made to the assessee (subject to TDS) by MHADA on 04.08.2003 There is no dispute that the aforesaid amount was paid to the assessee in the accounting year relevant to the assessment year 2004-05. The Housing Society through its Secretary questioned the consent terms in Civil Writ Petition No: 2611 of 2003, which was registered as a PIL in the Hon'ble Bombay High Court and the assessee was made the second respondent therein. A perusal of the prayer in the Writ Petition shows that, inter alia, the Housing Society had prayed for quashing of the record and proceedings pertaining to the release of the money to the assessee with a direction that MHADA should recover the amount from the assessee with interest at 18% per annum, The Writ Petition was admitted by the Hon'ble Bombay High Court on 11.03.2004 and MHADA and the State Government were directed to produce all original files relating to the settlement with the assessee. A copy of the order of the Hon'ble High Court is at page 111 of the Paper Book. On these facts it is difficult to accept the contention of the assessee that the project was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d collected the excess sugar price from Food Corporation of India. Subsequently, the Government of India enacted the Levy Sugar price Equalisation Fund Act, 1976, according to which amounts realised in excess of the levy prices were required to be credited to the said fund. The excess collection was treated as income by the Assessing Officer, whose orders were reversed by the CIT(A), whose decision was confirmed by the Tribunal. The Hon'ble High Court confirmed the order of the Tribunal. It may be seen that in this case the dealings were between the assessee and Food Corporation of India but the right of the assessee to appropriate the excess sugar price as its income was effected by the passing of the law by the Government of India which was not party to the dealings between the assessee and Food Corporation of India. There can be no valid distinction between statutory enactment which affects the rights of an assessee to appropriate a receipt as his income and the ruling of a Court or competent jurisdiction, rendered at the instance of a third party, which affects the accrual of the income in favour of the assessee. In the present case, firstly, in the PIL filed by the Housing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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