TMI Blog2016 (1) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... that by adding the surrendered income in the project cost on the one hand and paying taxes on such income on the other hand, would amount to nullifying the effect of surrender, as the assessee will take benefit of the same in succeeding year, is correct. In view of the above, the action of the Assessing Officer in not allowing the surrendered amount to be considered as project cost is found to be correct. Penalty u/s 271(1)(c) - Held that:- We have upheld the action of the Assessing Officer in not treating the surrendered amount as part of the project cost. In this background, we also agree with the contention raised by the learned D.R. that only because the assessee has voluntarily surrendered the income, penalty could not be levied, is not a correct proposition. However, there are other reasons for which the penalty in such a case cannot be levied. Firstly, the assessee has filed its return of income including the surrendered income and has paid taxes on the same. The income has been assessed at the same amount. The only dispute is with regard to the amount being treated by the assessee as a part of its project cost. However, we do not find any reason to uphold the levy of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in project cost or in any unexplained investment, then the said surrendered amount has to be added in the said closing stock or project cost or expenditure head with the surrendered amount because then only the true and fair view of the project cost or stock in trade or investment shall be calculated and ascertainable. The learned CIT (Appeals), after considering these submissions, formed a view that the surrendered amount can be treated as part of project cost only if the amount has been utilized towards purchase of material/land for the project or expenditure incurred for the project. Since the assessee had not explained so, the action of the Assessing Officer was confirmed by the learned CIT (Appeals). 5. Aggrieved by this order of the learned CIT (Appeals), the assessee has come in appeal raising the following grounds of appeal: 1. That the Order dated 17.10.2012 passed by the CIT (Appeals) Chandigarh and the order dated 29.12.2011 passed by the Deputy Commissioner of Income Tax, Circle 6(1), Mohali for the above referred year are both bad in law and against the facts of the case. 2. That the Ld. CIT (Appeals) has greatly erred in law and against facts of the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -, the only issue to be decided by us is whether the amount of ₹ 90,00,000/- surrendered by the assessee during the course of survey be formed part of its project cost. The learned CIT (Appeals) has decided the issue at page 4, para 4.3 of his order, which reads as under: 4.3 I have considered the submission of the Ld. Counsel. A perusal of the surrender letter reveals that the appellant had agreed to be taxed on additional income of ₹ 90,00,000/- as per Annexure A-4 and A-6 of the material impounded at the time of survey. The surrender made can be treated as part of project cost only if the amount had been utilized towards purchase of material /land for the project or expenditure incurred for the project. The appellant has not explained as to whether the amount was so utilized. Hence, the appellant cannot be allowed to increase the project cost by the amount of surrender and so action of the Assessing Officer in reducing the project cost by ₹ 90,00,000/- is upheld. 10. On going through the same, we do not find any infirmity in the order of the learned CIT (Appeals), since the undisputed facts of the case are that the additional income of ₹ 90,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act'), in the background of the facts as stated in ITA No. 1351/Chd/2012. Since the assessee has added the surrendered income of ₹ 90 lacs in its project cost, the Assessing Officer levied penalty considering ₹ 90 lacs as the income concealed by the assessee. 14. Before the learned CIT (Appeals), it was argued that the assessee has neither concealed any income, nor has filed any inaccurate particulars of its income. The amount of ₹ 90 lacs as surrendered during the course of survey was duly reflected in the return of income. The only difference of opinion between assessee and the Assessing Officer was with regard to treating the said surrender as part of the project cost. Further, the surrender was made with a condition of no imposition of penalty. After considering the submission of the assessee, the learned CIT (Appeals) held that the income has been assessed as declared by the assessee in its return of income and since surrender was made voluntarily with a condition not to levy penalty, the learned CIT (Appeals) deleted the penalty. 15. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Revenue's appeal): (Progressive Promoters Developers) 21. It is relevant to observe here that the facts and circumstances of this case are similar to that of RKM Housing Ltd. in ITA No. 816/Chd/2013 and the findings given in ITA No. 816/Chd/2013 shall apply to this case mutatis mutandis. ITA No. 16/Chd/2013 (Revenue's appeal): (Progressive Promoters Developers) 22. Briefly, the facts of the case are that the assessee is a real estate developer and at the time of survey under section 133A of the Act carried out at the business premises of the assessee as on 6.3.2009, statement of one Shri Ashok Kukreja, the husband of the partner of the assessee firm Mrs. Meena Kukreja was recorded, whereby he stated that the actual cash in hand was ₹ 3,50,000/-, while cash as per books was ₹ 52,81,277/-. An addition of ₹ 49,31,277/- (Rs. 52,81,277/- - ₹ 3,50,000/-) was made by the Assessing Officer. 23. Before the learned CIT (Appeals), the assessee filed a detailed chart reconciling the cash in hand and cash as per books. Further, it was explained that the cash in hand on the date of survey was ₹ 3,50,000/- while as per books was ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated by Mr. Ashok Kukreja that the cash in hand on 06/03/2009 is ₹ 3,50,000/- but as per books of accounts it was ₹ 52,80,777/-. He gave the statement only on the estimated basis not as per the books of accounts. Further ₹ 49,30,777/- was kept with Mrs. Meena Kukreja for business activity at her residence to avoid any kind of theft in the office which was not in the knowledge of Mr. Ashok Kukreja and the cash in hand as per cash book as mentioned above was utilized in the subsequent months for the business activities of the firm. 3.3 I have considered the submission of the Ld. Counsel. The difference between cash in hand on the date of survey as stated by the partner of the husband of the firm at the time of survey and as per the cash book produced at the time of assessment has been added in this case. It is not understood as to in what capacity Shri Ashok Kukreja had given the statement before the survey party i.e. whether he was authorized by Mrs. Meena Kukreja, partner of the firm to give any statement on her behalf or on behalf of the firm. It is also not understood as to whether the cash book was available at the time of survey and if so whether it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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