New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (9) TMI 495 - ITAT PUNE

2016 (9) TMI 495 - ITAT PUNE - TMI - Levy of penalty u/s. 271(1)(c) - income/profits from sale of flats in Wing A and C of project ‘Meghsparsha’ developed by the assessee - Held that:- The Hon'ble Supreme Court of India in the case of Commissioner of Income Tax and Another Vs. Anwar Ali [ 1970 (4) TMI 1 - SUPREME Court ] has observed that the findings in the assessment proceedings may constitute good evidence in the penalty proceedings but it does not follow that penalty for concealment u/s. 271 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssment year 2006-07 declaring income from sale of flats in Wing A and C almost one year prior to the completion of assessment for assessment year 2005-06. Thus, there was no intention on the part of the assessee to withhold such income and not to pay tax thereon, therefore bonafide of assessee is proved. In such circumstances we are of the considered view that no penalty u/s. 271(1)(c) is leviable. Accordingly, the impugned order is set aside - Decided in favour of assessee - ITA No. 313/PN/2014 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nating from records are: The assessee is a partnership firm engaged in the business of builder and developers. The assessee is consistently following project completion method to account for its revenue from the construction projects. The assessee had developed a housing project Meghsparsha at Bibewadi, Pune. In the said project the assessee constructed three buildings viz. Wing A, B and C. In the return of income for the assessment year 2005-06 the assessee disclosed the income from sale of fla .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oject are also complete. Since, the assessee is following project completion method the profit/income from Wing A and C is taxable in assessment year 2005-06. Hence, the Assessing Officer made addition of the profits from sale of flats in Wing A and C of project Meghsparsha. The Assessing Officer applied GP ratio of 18.30% on the sale of flats and made addition of ₹ 1,07,48,442/-. 2.1 Aggrieved by the assessment order dated 31-12-2007, the assessee preferred an appeal before the Commission .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

u/s. 271(1)(c) of the Act in respect of additions confirmed by the Commissioner of Income Tax (Appeals). The order levying penalty of ₹ 52,27,549/- u/s. 271(1)(c) was passed on 27-03-2012 for furnishing inaccurate particulars of income or concealment of income. The assessee filed appeal before the Commissioner of Income Tax (Appeals) against the order levying penalty u/s. 271(1)(c). The Commissioner of Income Tax (Appeals) vide impugned order dismissed the appeal of the assessee and confi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the subsequent year i.e. financial year 2005-06. The ownership of the flats in Wing A and C was transferred to the buyers in the financial year 2005-06 i.e. the period relevant to the assessment year 2006-07. There were 23 residential units in Wing A and 13 residential units in Wing C. The Assessing Officer included the income from sale of flats in Wing A and C in the period relevant to assessment year 2005-06, whereas the assessee had offered the income from sale of flats in Wing A and C in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uction of Wing A, B and C is in completion stage and Wing A and C are not in use. The ld. AR submitted that although the completion certificate from PMC in respect of project Meghsparsha was received from PMC on 17-03-2005 but the actual possession of the flats were given to the allottees after April, 2005. The water connection to the Wing A and C was released by concerned authority on 05-04-2005. It was only after the water connection was made available, the possession of flats was given to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in assessing the income from sale of flats in Wing A and C in assessment year 2005-06. However, the Tribunal restricted the addition to the profits from sale of 20 flats in respect of which the ld. AR has carried out investigation. The ld. AR referred to paras 8, 9 and 10 of the Tribunal order in ITA No. 206/PN/2011 dated 31-03-2015. 3.1 The ld. AR of the assessee submitted that the Assessing Officer has erred in levying the penalty u/s. 271(1)(c) of the Act. The assessee had declared the income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts filed by the various allottees at pages 83 to 116 of the paper book to show that final possession of the flats was delivered by the assessee to the allottees in the month of April-May, 2005. 3.2 The ld. AR of the assessee further submitted that in penalty order the computation of penalty levied is erroneous. The ld. AR pointed that penalty has been levied on the entire assessed income of ₹ 1,33,65,663/- instead of levying penalty on the addition made during assessment proceedings. Furth .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to the year of the taxability. The ld. AR placed reliance on the decision of Hon'ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Reliance Petroproducts Pvt. Ltd. reported as 322 ITR 158 (SC). The ld. AR further placed reliance on the decision of Mumbai Bench of the Tribunal in the case of M/s. Parinee Developers Pvt. Ltd. Vs. ACIT in ITA No. 6772/M/2013 for assessment year 2009-10 decided on 11-09-2015. The ld. AR pointed that in the said case, the assessee offered .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Commissioner of Income Tax (Appeals) in confirming the levy of penalty u/s. 271(1)(c) of the Act. The ld. DR submitted that in quantum appeal the Tribunal has upheld the findings of authorities below that the income from sale of flats in Wing A and C are subject to tax in the assessment year 2005-06. The ld. DR referred to the reply given by assessee in response to the notice given by PMC to stop the work at pages 13 to 19 of the paper book. The ld. DR contended that the assessee has admitted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ved by assessee on 17-03-2005. For accounting and income recognization purpose, the assessee is following project completion method. Once, the assessee has received completion certificate from PMC in respect of all the three buildings during the period relevant to assessment year 2005-06, the profits from sale of flats in all the three buildings was liable to be assessed to tax in assessment year 2005-06. The assessee had received substantial amount from all the allottees of Wing A and C and the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

its at pages 83 onwards in the paper book, the ld. DR asserted that all the affidavits are identically worded. This clearly shows that the assessee had tutored the allottees. The case laws on which the ld. AR of the assessee has placed reliance have no application in the facts and circumstances of the present case. The claim of the assessee was not bonafide and thus, the penalty has been rightly imposed. The ld. DR prayed for dismissing the appeal of the assessee. 5. Controverting the submission .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

used the orders of the authorities below. The penalty has been levied u/s. 271(1)(c) in respect of income/profits from sale of flats in Wing A and C of project Meghsparsha developed by the assessee. The assessee has offered the income from sale of flats in Wing A and B of the aforesaid project in return of income for assessment year 2006-07, whereas, the Revenue has included the income from sale of flats in assessment year 2005-06. Thus, the only dispute was the year of taxability of the profits .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t of Building A and C was made on 14-05-2004. Further, the assessee had admitted the fact that some of the allottees were given temporary possession of the flats before 31-03-2005. All these facts clearly show that the flats in Building A and C were complete in every respect and were ready for possession before 31-03-2005. Ostensibly, the assessee has declared the income from sale of flats in the assessment year 2006-07 as formal possession of flats according to assessee were handed over to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shows that the assessee had no intention to suppress the income from sale of flats. The assessee had disclosed the income from flats and has paid tax liability on the said income as well. At the most it can be considered as postponement of tax liability. In such circumstances penalty u/s. 271(1)(c) cannot be levied. 7. The Mumbai Bench of the Tribunal in the case of M/s. Parinee Developers Pvt. Ltd. Vs. ACIT (supra) deleted the penalty under similar circumstances. The assessee offered the income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

9.03 Crs is undisputedly offered in the AY 2010-2011 and the same is now taxed in the year under consideration, where the tax rates are identical in both the years. Therefore, the legal question will arises from the above facts is should the addition by way of preponement of the already disclosed income attracts such levy of penalty u/s 271(1)(c) of the Act or not. The assessee offered the said income in the later assessment year basing on the principle pay as you earn‟. This principle is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s is crystallized in the AY 2010-2011 not in the AY 2009- 2010. But the CIT (A) insists the same would be taxable in the year under consideration. In our opinion, such additions, in principle, are unsustainable in law considering the said binding judgment. If some of the reasons, such additions are accepted by the assessee, the same will not attract penalty u/s 271(1)(c) of the Act as the said amount was already offered to tax by the assessee. In our opinion, there is neither concealment of inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version