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2016 (3) TMI 85 - AT - Income TaxPenalty u/s 271(1)(c ) - Addition in the order passed u/s 153C/143(3) - selection of assessment year - Held that - We hold that the assessee had offered the business income on sale of flats in Asst Year 2009-10 in respect of cheque portion of sale consideration which has been accepted by the department in section 143(3) proceedings. Therefore the unaccounted cash element received on sale of flats was also assessable only in Asst Year 2009-10 and not in Asst Year 2008-09 as per the accounting practice followed by the assessee and also as held in the various decisions relied upon hereinabove. We hold that income has to be assessed in the year to which it pertain to and not in any other assessment year based on the offering of the assessee. Hence we hold that the cash receipts on sale of flats as per the seized document was not taxable in Asst Year 2008- 09 though the same was offered by the assessee itself in that year. This would be an excruciating factor in the penalty proceedings and hence the assessee cannot be attributed with any concealment of income or furnishing of inaccurate particulars of income for the Asst Year 2008-09 in this regard. In view of the aforesaid findings and judicial precedents, we hold that once a particular income was not assessable in the Asst Year 2008-09 then even though the income might have been assessed in Asst Year 2008-09, penalty u/s 271(1)(c) of the Act cannot be imposed on the same. - Decided in favour of assessee
Issues Involved:
1. Justification of penalty under Section 271(1)(c) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Justification of Penalty under Section 271(1)(c) of the Income Tax Act, 1961: Facts of Akshara Shelters Consortium (ITA No. 246/Kol/2013): A search and seizure operation under Section 132 of the Act was conducted on 11.9.2008 at the business and residential premises of the "Akshara Group of Cases," engaged in real estate. During this operation, Shri Prakash Chandra Agrawalla disclosed Rs. 80,82,140/- as unaccounted income from the sale of residential flats for the financial year 2007-08. Notices under Sections 153C and 153A were issued, and the return for the assessment year 2008-09 was filed showing this income. The assessment was completed under Sections 153C/143(3) on 31.12.2010, accepting the income returned. Facts of Akshara Projects Consortium (ITA No. 247/Kol/2013): A survey operation under Section 133A was conducted on 11.93.2008 at the business premises of the assessee consortium. Shri Prakash Chandra Agrawalla disclosed Rs. 37,85,080/- and Rs. 8,37,200/- as unaccounted income from the sale of residential flats for the financial year 2007-08. Notices under Sections 153C and 153A were issued, and returns for assessment years 2006-07, 2007-08, and 2008-09 were filed. The assessment for 2008-09 was completed under Sections 153C/143(3) on 31.12.2010, accepting the income returned. Penalty Proceedings: The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) for both assessees for the assessment year 2008-09. The assessees argued that the disclosed income was offered in the return filed in response to the notice under Section 153C, and thus, there was no concealment. The AO, however, levied penalties, stating that the income would not have been disclosed without the search and survey action. Appeal to CIT(A): The assessees raised an additional ground before the CIT(A) that the income on which penalty was imposed was not assessable in the assessment year 2008-09. They argued that they followed the "completed contract method" for revenue recognition, and the income from the sale of flats was offered in the assessment year 2009-10. The CIT(A) appreciated these contentions and deleted the penalty. Revenue's Appeal: The revenue argued that the penalty was justified as the assessees admitted receipt of unaccounted money, and the addition was made based on this disclosure. Tribunal's Analysis: The Tribunal held that: - Fresh pleas can be taken in penalty proceedings, as established by various judicial precedents. - The income was recognized in the assessment year 2009-10 when the sale deeds were executed, and possession was given. - Different treatment cannot be given to cash and cheque receipts for the same project. - The assessment must be in accordance with statutory provisions, not merely based on the assessee's agreement. - The Government should not unjustly enrich itself by collecting undue taxes or penalties, as per Article 265 of the Constitution. - The Tribunal relied on several judicial decisions supporting the assessee's method of accounting and the timing of income recognition. Conclusion: The Tribunal concluded that the cash receipts from the sale of flats were not taxable in the assessment year 2008-09, despite being offered by the assessee. Therefore, the penalty under Section 271(1)(c) could not be imposed for that year. The revenue's appeals were dismissed, and the deletion of penalties by the CIT(A) was upheld.
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