TMI Blog2021 (4) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. It is not the case of the Assessing Officer that any receipt of the appellant from any project has been suppressed or deduction of any expenditure not actually incurred by the appellant has been claimed. The entire dispute relates to the method of working of income from the project for assessment during an intermediary year until the first outcome of the project is known in the year of completion. As noted that the main plank of the Assessing Officer in the assessment order that income from project 'Sai Sthaan' should be assessed on final basis for Assessment Year 2009-10 has not been accepted by Hon'ble ITAT. It cannot be said that there is concealment of income or furnishing of inaccurate particulars of income for the reason only that there is difference of opinion in respect of allocation of income of the project amongst different years. Hence, two views are possible in the appellant's case as addition made by the AO is debatable in nature. As long as all primary facts are correctly stated by the appellant the penalty cannot be levied as decided in the judgement of Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. [ 2010 (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee submitted that for A.Y. 2009-10 under consideration the assessee has offered intermediate profit of ₹.47,90,899/- based on percentage of accretion to work in progress. In all assessment years up to A.Y. 2008-09 the method of working of income in intermediate years from various projects including this project has been accepted by the Assessing Officer. But for A.Y.2009-10 the Assessing Officer did not accept the assessee s treatment to the project SAI STHAAN and held that this project should be assessed on final basis because occupation certificate had been issued in the A.Y. 2009-10. It is submitted that Assessing Officer stated that in most of the cases possession of flats had been given during financial year 2008-09 and ignored that in many cases possession of flats was given beyond A.Y. 2009-10. It is submitted that merely based on the possession being given to the customers it cannot be said that project is complete unless all costs are incurred, and entire sale price is received. It is submitted that in the return of income for assessment year under consideration, the assessee declared profit from another project SAI SWAR at ₹.64,12,084/-. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. In fact, the assessee has worked out final profit from the project at higher amount than that worked out by learned Assessing Officer. The Ld. Counsel for the assessee further submits that Assessing Officer failed to appreciate that unlike many assessees in this line of business the assessee has been recognizing revenue from the project and offering to tax income on annual basis. The assessee could have chosen if he had so desired, to follow completion of project method, and refrained from recognizing any income from the project until the year of completion of project i.e. A.Y.2010-11. Therefore, it is submitted that the assessee has declared income from the project from A.Y. 2006-07 and the assessment year under consideration is fourth year of the assessment of income from the project SAI STHAAN . It is submitted that the case of the assessee is on higher pedestal for having offered substantial income in this year and earlier years instead of Nil income and therefore there cannot be any penalty levied. 8. Ld. Counsel for the assessee further submits that having regard to the nature of construction projects undertaken by the assessee it is not possible for the assessee to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions in relation to the addition worked out by the Tribunal for AY 2009-10 under consideration. However, Learned Counsel for the assessee submitted that it may be appreciated that whatever addition has been computed by Hon'ble ITAT A.Y. 2009-10 results into corresponding reduction from the income declared by the assessee himself in its return of income for Assessment Year. 11. Learned Counsel for the assessee submitted that once it is found that the assessee stated primary facts of the case truly and fully, it cannot be said that there is concealment of income or furnishing of inaccurate particulars of income for the reason that there is difference of opinion as respects allocation of income of the project amongst different years. If all primary facts are correctly stated, the penalty cannot be levied. In support of his contention Ld. Counsel for the assessee relied on the decision of the Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P)Ltd. 322 ITR 158 (SC). 12. Ld. DR vehemently supported the orders of the Assessing Officer. Ld. DR relied on the order of the Champion Construction Company v. ITO (1983) 5 ITD 495 (Bom). 13. In reply Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id additions, the appellant preferred appeal before the Ld.CIT(A). The CIT(A) vide his order dated 09-08-2012 confirmed the addition made on account of income on completion of project of ₹ 6,31,61,224/- and reduced the disallowance of personal expenses to 10% as against 20% added by the AO. The Ld.CIT(A) had allowed the appeal of the appellant in respect of interest expenses of ₹ 22,1 8,124/-. 6.8. The ITAT Mumbai vide its order dated 02-08-2013 had partly allowed the appeal of the appellant in respect of addition made on account of income on completion of project of ₹ 6,31,61,224/-, by directing as follows: . The AO is directed to verify the ratio of 40,22% as worked out by the assessee and apply the said percentage i.e., 40%, assuming the same as correct, to the incremental MP for the current year. The incremental WIP shall include, irrespective of the year of incurring, the proportion of basis cost, as referred to above, attributable to the current year. We may hasten to add that by directing so, we are not in any manner advocating or endorsing the said method for consistent application, but only providing for a reasonable basis for allocatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compulsion. In this case, income on completion of project and cash deposits could be identified only on account of the scrutiny assessment proceedings in the case of the appellant, which would have otherwise have gone undetected. This is consequent to the efforts of the Assessing Officer to examine the correctness of claim made by the appellant. The appellant has not shown these details only with a view to reduce the tax liability for the year under consideration. Even in the penalty proceedings, the appellant has not adduced any evidence to show that these incomes were not liable for taxation. In view of the above facts, AO concludes that it is very clear that the attempt of reducing of tax liability being intentional, and that the appellant has concealed the income and furnished inaccurate particular of income and levied penalty amounting to ₹ 2,15,12,104/-. 6.10. On careful perusal of the written submission of the appellant, penalty order, the CIT(A) order and the Order passed by the Hon'ble ITAT, it appears that AO is heavily relying on Occupancy Certificate (OC). The ITAT has observed in the order that OC signifies completion of the project or not is largely ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e final year of the project `Sai Sthaan'. For assessment year 2009-10 under consideration, the appellant has offered intermediate profit of ₹ 47,90,899/- on the basis of percentage of accretion to work in progress. The Hon'ble ITAT, has agreed that the year of Occupancy Certificate did not has much significance. However, they worked out intermediate income for the assessment year 2009-10 before them at a higher amount for the reason that the project having already been completed in assessment year 2010-11 as the final picture was before them. Accordingly, ITAT sustained in part the addition made by the Assessing Officer, though on an altogether different reasoning, on average basis. The appellant could have chosen if he had so desired not to offer any income from the project until the project was substantially completed and sold. The AO has not noticed any discrepancy in the accounts as maintained by the appellant. There is no allegation from the AO that any entry made in the books of accounts does not truly or correctly reflect the transactions of the appellant. It is not the case of the Assessing Officer that any receipt of the appellant from any project has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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