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TMI Blog2019 (7) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... e the brief facts of the case pertaining to the assessment year 2011-12 as lead case. The assessee company engaged in the business of construction, filed its return of income for the assessment year 2011-12 on 28.09.2011, declaring the total income of Rs. 3,62,365/-. The return was processed u/s 143 (1) of the Act. A survey action u/s 133A was carried out on the business premises of the assessee company on 30.10.2012. During the survey action, a dispute arose regarding accounting policy followed by the assessee with regard to the recognition of the revenue on the construction contract. The assessee agreed to offer revenue on such construction contract by offering of income at the rate of 5% on the incremental construction work in progress on year on year basis subject to the condition that the revenue will not levy penalty on such voluntary declaration. 2. Subsequently, the assessment was reopened u/s 147 of the Act after issuing notice u/s 148 of the Act. In response to the notice u/s 148 of the Act the assessee company filed its return of income declaring the total income at Rs. 1,85,68,786/-. During the year relevant to the assessment year under consideration the assessee had s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore there is neither any act of concealment of income nor Assessee Company has furnished inaccurate particulars of income. In view of the above, it is submitted that Penalty levied in these case is unwarranted and the same should be deleted." 4. During the pendency of the appeal, the assessee moved an application for allowing additional ground of appeal against the said order under rule 11 of the Income Tax Appellate Tribunal Rules, 1963. The additional ground raised by the assessee reads as under:- Without prejudice to the other grounds of appeal, the learned assessing officer erred in levying penalty without issuing proper notice U/s 271 (1) (c) of the Income Tax Act, 1961. The penalty notice is invalid in law as the learned Assessing Officer has not arrived at any conclusion whether the addition made is "concealment of income" or "furnishing of inaccurate particulars of income". The learned assessing officer failed to strike off the relevant clause in the notice issued u/s 271 r.w.s. 271 (1) c) of the Income Tax Act, 1961 rendering the notice as invalid." 5. Since, the additional ground raised by the assessee is on legal issue, after hearing the Ld. Departmental Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. counsel further submitted that this clause was inserted as per the prevailing industrial practice in the construction industry. The Ld. counsel further pointed out that Mr. SK Laharuka, Director has already explained the stand of the assessee company in his statement recorded u/s 131 of the Act. The Ld. counsel further submitted that this was the first year of business activity and work under progress of Rs. 72.83 crores had been disclosed in the return of income for the A.Y. 2010-11. The assessee had already filed return of income for the A.Y. 2011-12 and 2012-13 disclosing total income of Rs. 7.2 crore on 28.09.2012 i.e. before the survey operation. The Ld. counsel further pointed out that the formula adopted by the assessee resulted in substantial reduction of income for the A.Y. 20012-13 which had already been disclosed necessitating filing of revised return of income for the A.Y. 2012-13 of Rs. 6.76 crores resulting in refund of Rs. 1.24 crores. So the assessee neither concealed any income nor furnished any inaccurate particulars of its income so as to impose penalty u/s 271 (1) (c) of the Act. The cases relied on by the Assessing Officer are not applicable to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract agreement between the assessee and Shree Ram Urban Infra Urban is reproduced as under:- 2 Existing Clause E on the page No. 4 of the First Agreement The developer intends to award a contract for construction of a part of the project involving of 2 million sq.ft. at an estimated value of 450 crores (Work). The developer would periodically indentify and the issue the specific scope of work to be executed and contract value attributable (part of work). The initial scope of work has been captured in Schedule-II at a firm contract value of 143 crores. 2. Revised Clause E on the page no. 4 of the First Agreement The developer intends to award a contract for construction of a part of the project at an estimated value of Rs. 450 crores (work) as per Schedule -II. The developer would periodically identify and the issue the specific scope of work to be executed. The contractor will raise the bill only after completion of the 30% value of the works of Rs. 450 crores. Further, First Construction Agreement dtd: 02/09/2009, clause 9 on page no. 9 was replaced as under:- 2 Existing Clause 9 Considering Sub-clause (9.11) on the page no. 9 On completion of each part of work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) such person offers and explanation which is not able to substantiate and fails to prove that the such explanation is bona fide and that all the facts relating to same and material to computation of his total income have been disclosed by him, then the amount of added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to be represent the income in respect of which particulars have been concealed. 16. In the present case since the assessee has explained the circumstances under which the addition in question has been made and further established that the explanation is bona fide and it has disclosed all the facts material to the computation of its total income, the Ld. CIT(A) has wrongly confirmed the addition made by the AO. In our considered opinion, this is not a case of concealment of particulars of income by the assessee. We do not find any active concealment of particulars of income by the assessee in the present case which is a pre condition for imposing penalty under the said section. 17. As per the settled law, the penalty proceedings are different from the assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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