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TMI Blog2016 (2) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... -2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Nikhil Pathak For The Respondent : Shri Hintendra Ninawe ORDER PER R.K. PANDA, AM : This appeal filed by the Revenue is directed against the order dated 29-01-2014 of the CIT(A)-II, Pune relating to Assessment Year 1990-91. 2. Deletion of penalty of ₹ 48,60,000/- by the CIT(A) levied by the AO u/s.271(1)(c) of the I.T. Act is the only issue raised by the assessee in the grounds of appeal. 3. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business as Builder and Promoter. The assessee has filed the return of income on 30-11-1990 declaring total loss of ₹ 13,21,990/-. In this case, a search action u/s.132 of the I.T. Act was carried out at the business premises of the assessee on 31-01-1990 during which evidence of receipt of on-money collected by the assessee was found. In the statement recorded u/s.132(4) one of the partners Shri P.S.Talwalkar had declared an amount of ₹ 60 lakhs as undisclosed income for the A.Y. 1990-91 on account of extra money received which was not disclosed in the books of account. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closure of all material facts necessary for computation of total income. Relying on the decision of Hon ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 and various other decisions the Ld.CIT(A) held that the penalty levied by the AO u/s.271(1)(c) cannot be sustained. He accordingly cancelled the penalty levied by the AO. 7. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : (1) The Learned Commissioner of Income-tax (Appeals) erred in deleting the penalty u/s 271 (1)(c) without examining the facts evidences available on record and brought out by the Assessing Officer in the penalty order in support of levy of penalty u/s 271 (1)(c) of the Act. (2) The Learned Commissioner of Income-tax (Appeals) erred in not appreciating that the assessee had changed its method of accounting from WIP to project completion method only after detection by search party that assessee was collecting on-money over above the agreement amount, thereby wilfully evading tax. (3) The Learned Commissioner of Income-tax (Appeals) erred in not considering that even after offering the amount of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in A.Y. 94-95. Referring to the copy of the assessment order for 91-92, a copy of which is placed at pages 96 to 99 of the paper book, he submitted that the AO in the said order has clearly mentioned that the assessee has declared an amount of ₹ 34,55,600/- as income on proportionate basis out of extra unaccounted collection of ₹ 60 lakhs from the row house purchasers. 11. Referring to the decision of the Hon ble Bombay High Court in the case of CIT Vs. Karda Constructions Pvt. Ltd. vide ITA No.1960/2012 order dated 25-02-2013 he submitted that the Hon ble High Court in the said decision has held that on-money can be taxed only in the year in which the assessee has recorded the sale of flats. Therefore, the same can be taxed only when the flats were handed over, i.e. in A.Y. 91-92 and 94-95 and cannot be taxed in the impugned year. He submitted that the AO has invoked Explanation 5 to provisions of section 271(1)(c) of the Act. The Ld. Counsel for the assessee drew the attention of the Bench to the provisions of Explanation 5 as well as Explanation 5A to section 271(1)(c) of the Act and submitted that Explanation 5A was inserted by the Finance Act, 2007 w.e.f. 01-06- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -92 and 94-95. 15. So far as decision of Hon ble Bombay High Court in the case of Karda Constructions Pvt. Ltd. (Supra) relied on by the Ld. Counsel for the assessee is concerned he submitted that there is no mention of the method of accounting employed by the assessee in the said decision. Therefore, the penalty was rightly levied by the AO in A.Y. 90-91 and the CIT(A) was not justified in cancelling the penalty so levied. 16. The Ld. Counsel for the assessee in his rejoinder submitted that change of method only affects the accounted profit and not to unaccounted income. Referring to page 87 of the paper book which is the assessment order for A.Y. 90-91 the Ld. Counsel for the assessee drew the attention of the Bench to Para 3 of the assessment order and submitted that the assessee has declared loss of ₹ 13,21,990/-. The AO completed the assessment by disregarding the loss and determined the profit at ₹ 13,12,629/-. The AO determined the total income at ₹ 74,43,200/- which includes the undisclosed income of ₹ 60 lakhs. However, the AO has levied penalty only on ₹ 60 laklhs and not levied penalty on the remaining income which he had added to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded u/s.132(4) had admitted additional income of ₹ 60 lakhs for the impugned assessment year and therefore there is no rationale in deferring the same to A.Yrs. 1991-92 and 1994-95. The assessee which was following work-in-progress method cannot switch over to project completion method just to defer the tax liability to escape from the penalty proceedings. It is the case of the assessee that although quantum addition has been sustained by the Tribunal, however, in view of the decision of the Hon ble Bombay High Court, on-money can be brought to tax only in the year of sale of flats. Further, change of method only affects the accounted profit and not to undisclosed income. It is also the case of the assessee that Explanation 5 is not applicable to the assessee since no money, bullion, jewellery or other valuable article or thing was found from the premises of the assessee during the search. It is also the submission of the Ld. Counsel for the assessee that the assessee has given a bonafide reason and not declared the additional income in A.Y. 1990-91 and declared the same in subsequent years when the flats were sold. It is the alternate contention of the assessee that sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he buyers were also found during the course of the search. In these circumstances, on the basis of the finding of fact cash receipts were undisputedly in respect of sale of flats and the same were offered to tax in the year in which flats were sold that the appeal of the revenue before the Tribunal was dismissed. 3. Since the decision of the Tribunal is essentially based on a concurrent finding of fact, we see no reason to entertain the proposed question of law. 4. Accordingly, the appeal is dismissed with no order as to costs. 20. Further, it is also a fact that no money, bullion, jewellery or any other valuable article was found during the course of search. No cash was also found during the course of search, a statement made by the Ld. Counsel for the assessee at the bar and not controverted by the Ld. Departmental Representative. Therefore, Explanation 5 cannot be invoked in the instant case. 21. We further find the assessee in the return filed for the impugned assessment year has appended a note justifying nondisclosure of the additional income during this assessment year. It is also a fact that a part of the undisclosed income has been offered to tax in A.Y. 1991- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs.Rajasthan Spg. Wvg. Mills [2009(13) SCC 448] and reiterated in para 13 that:- 13. It goes without saying that for applicability of Section 271(1)(c), conditions stated therein must exist. 8. Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. [2007(6) SCC 329], this Court explained the terms concealment of income and furnishing inaccurate particulars . The Court went on to hold therein that in order to attract the penalty under Section 271(1)(c), mens rea was necessary, as according to the Court, the word inaccurate signified a deliberate act or omi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Anr. (cited supra). However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra), where the Court explained the meaning of the terms conceal and inaccurate . It was only the ultimate inference in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra) to the effect that mens rea was an essential ingredient for the penalty under Section 271(1)(c) that the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra) was overruled. 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word inaccurate has been defined as:- not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript . We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunctio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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