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TMI Blog2016 (9) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2005-06. Thus, there was no intention on the part of the assessee to withhold such income and not to pay tax thereon, therefore bonafide of assessee is proved. In such circumstances we are of the considered view that no penalty u/s. 271(1)(c) is leviable. Accordingly, the impugned order is set aside - Decided in favour of assessee - ITA No. 313/PN/2014 - - - Dated:- 1-8-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Nikhil Pathk Shri Suhas Bora For The Revenue : Shri Hitendra Ninawe ORDER PER VIKAS AWASTHY, JM : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-II, Pune dated 28-11-2013 for the assessment year 2005-06 in confirming the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The brief facts of the case as emanating from records are: The assessee is a partnership firm engaged in the business of builder and developers. The assessee is consistently following project completion method to account for its revenue from the construction projects. The assessee had developed a housing project Meghsparsha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Bora appearing on behalf of the assessee submitted that the assessee had offered the income from sale of flats in Wing B of the project Meghsparsha in the assessment year 2005-06. The work of Wing A and C was in progress till the end of the financial year 2004-05. The assessee had incurred considerable expenditure in the subsequent year i.e. financial year 2005-06. The ownership of the flats in Wing A and C was transferred to the buyers in the financial year 2005-06 i.e. the period relevant to the assessment year 2006-07. There were 23 residential units in Wing A and 13 residential units in Wing C. The Assessing Officer included the income from sale of flats in Wing A and C in the period relevant to assessment year 2005-06, whereas the assessee had offered the income from sale of flats in Wing A and C in the assessment year 2006-07. The Assessing Officer made addition of ₹ 1,07,48,442/- on account of profit of sale of flats in Wing A and C by applying gross profit ratio of 18.30%. The assessee had received notice dated 30-06-2004 from Pune Municipal Corporation (PMC) to immediately stop the work on Wing A and C of the project Meghsparsha. The ld. AR referred to the translat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty levied is erroneous. The ld. AR pointed that penalty has been levied on the entire assessed income of ₹ 1,33,65,663/- instead of levying penalty on the addition made during assessment proceedings. Further, the penalty has been levied on the addition confirmed by the Commissioner of Income Tax (Appeals), whereas the Tribunal in appeal by the assessee has restricted the addition to profit from sale of 20 flats only. 3.3 The ld. AR of the assessee submitted that it is not a case where the assessee has suppressed the facts or has furnished inaccurate particulars. The assessee had disclosed the entire income from sale of flats in Wing A and C in subsequent assessment year. The dispute is with regard to the year of the taxability. The ld. AR placed reliance on the decision of Hon'ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Reliance Petroproducts Pvt. Ltd. reported as 322 ITR 158 (SC). The ld. AR further placed reliance on the decision of Mumbai Bench of the Tribunal in the case of M/s. Parinee Developers Pvt. Ltd. Vs. ACIT in ITA No. 6772/M/2013 for assessment year 2009-10 decided on 11-09-2015. The ld. AR pointed that in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit and the affidavits of the various allottees placed on record by the assessee are also not reliable. Referring to the affidavits at pages 83 onwards in the paper book, the ld. DR asserted that all the affidavits are identically worded. This clearly shows that the assessee had tutored the allottees. The case laws on which the ld. AR of the assessee has placed reliance have no application in the facts and circumstances of the present case. The claim of the assessee was not bonafide and thus, the penalty has been rightly imposed. The ld. DR prayed for dismissing the appeal of the assessee. 5. Controverting the submissions of the ld. DR, the ld. AR contended that the assessee had given actual possession of the flats in April-May, 2005. The ld. AR placed on record photocopies of the possession notice at pages 1 to 59 of the paper book-II. The ld. AR admitted that the assessee is following project completion method, however, the income from Wing A and C is offered to tax when the flats are finally handed over to the allottees. 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The penalty has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances. The assessee offered the income from sale of land in the assessment year 2010-11. The Commissioner of Income Tax (Appeals) held the income to be assessable in assessment year 2009-10. Penalty u/s. 271(1)(c) was levied by Commissioner of Income Tax (Appeals) for not disclosing the income from sale of land in assessment year 2009-10. The assessee carried the matter in appeal before the Tribunal. The Tribunal held as under : 10. On hearing both the parties, we find there is no dispute on the facts that the said sum of ₹ 179.03 Crs is undisputedly offered in the AY 2010-2011 and the same is now taxed in the year under consideration, where the tax rates are identical in both the years. Therefore, the legal question will arises from the above facts is should the addition by way of preponement of the already disclosed income attracts such levy of penalty u/s 271(1)(c) of the Act or not. The assessee offered the said income in the later assessment year basing on the principle pay as you earn ‟ . This principle is upheld by the Hon ‟ ble Supreme Court in the case of Excel Industires (supra) wherein it is held that the income tax cannot be levied on hyp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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