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TMI Blog2019 (3) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion. The A.O. is of a different opinion. When all the facts are available, that cannot be termed as furnishing of inaccurate particulars of income leading to invoking the rigours of penalty u/s. 271(1)(c). As rightly noted by the CIT(A) the issue was only year of taxability and in this regard, the ld. CIT(A) has rightly relied upon the decision in the case of CIT vs. Excel Industries [2013 (10) TMI 324 - SUPREME COURT] as expounded that the Revenue should not be aggrieved if it was only a matter of difference in the year of taxability. It was held that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, it was held that the dispute raised by the Revenue was entirely academic or at best may have a minor tax effect. Therefore, it was held that there was no need for the revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. Though the assessee has not challenged the addition, we note that when the additions itself is on weak footing, the deletion of levy of penalty qua that additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Term Capital Gains 9,09,29,507/- 4) Interest on Fixed Deposit 3,25,000/- The additions were primarily made on 1. Disallowance of benefit of claim U/s.80IB(10) of the Income Tax Act,1961 which amounted to ₹ 2,42,51,035/-. 2. ₹ 11,04,54,860/- being a business income 3. ₹ 9,09,29,507/- being treated as long term capital gain and 4. ₹ 3,25,000/- being Interest on Fixed Deposit. 4. As regards addition of ₹ 2,42,51,035/- is concerned, the Assessing Officer (A.O) has observed that the assessee is a builder and was following the mercantile system of accounting for its project called Manish Garden, Pune. The A.O also observed that the revenue in respect of the aforesaid project was recognized on the basis of sales for which possessions were given to the purchaser. However, it was also observed that assessee had given possessions to various flat owners during the year but had not offered such sales as income during the year under consideration but same was offered to tax in the subsequent year i.e. assessment year 2008-09 and against which the assessee had also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s Kubix Realities Pvt. Ltd. i.e., ₹ 9,09,29,507/- will be taxed in A.Y. 2007-08 since registration and possessions were given during the period relevant to A.Y. 2007-08. (v) Finally, interest of ₹ 3,25,009/- will also be taxed in A.Y. 2007-08 since even Auditors have pointed out that it pertains to F.Y.relevant to A.Y. 2007-08 and not A.Y. 2008-09. 7. In the penalty proceedings, the assessee in response to the show cause notice submitted that the penalties are primarily on all the issues due to difference of opinion between the department and the assessee. That however all the requisite particulars were furnished and assessee had not concealed any income. That since the assessee has already disclosed all the material facts and it is only the difference of opinion which has led to the assessment of said amount in the current year and therefore it could not be said that the assessee has concealed the income or filed inaccurate particulars. That reliance is placed in the case of Judgment of the Hon'ble Supreme Court in the case of Reliance Petro Products (P) Ltd . 322 ITR 158, wherein it is held that mere disallowance of claim does not taantamount to concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of ₹ 2,42,51,035/- and also ₹ 11,04,54,860/- being a business income and ₹ 9,09,29,507/- being treated as long term capital gain, it is not in dispute that the appellant had already offered the aforesaid income in the subsequent year pertaining to assessment year 2008-09. It is also not in dispute that the return for assessment year 2008-09 was filed on 30.09.2008 where the appellant had already offered the aforesaid income even prior to assessment was completed and, therefore, it is not a case where the income assessed was not brought to the knowledge of the department by the appellant but it is only about an issue as to when the income should be brought to tax i.e. whether in the assessment year 2007-08 as assessed by the AO or in assessment year 2008-09 as offered by the appellant. Under the circumstances, what transpires is that the instant case is not for concealment of income or filing of inaccurate particulars but the year of chargeability of the income of the assessee. According to the A.O the income offered by the assessee in the assessment year 2008-09 was chargeable to tax in the year under consideration, but so far as the quantum of income so ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above order, the Revenue is in appeal before us only with regard to the deletion of penalty with regard to addition of ₹ 2,42,51,035/-. The Revenue has not appealed against the deletion of penalty qua the addition of ₹ 11,04,54,860/- and ₹ 9,09,29,507/-. 12. We have heard both the counsel and perused the records. The ld. Departmental Representative (ld. DR for short) submitted that this is clearly a case of furnishing of inaccurate particulars of income and the A.O. has correctly levied the penalty. He submitted that the addition have been sustained by the ld. CIT(A). Hence, penalty levied is justified. 13. Per contra, the ld. Counsel of the assessee made elaborate submissions. These are summarized as under: '4. In the order dated 11.11.2016, Id, CIT(A) deleted the penalty on the following grounds:- a) ₹ 2,42,51,035/- being the profit ascertained by the Ld. A.O . from Manish Garden Project. b) ₹ 11,04,54,860Y- being profit on sale of land c) ₹ 9,09,29,507/- being long term capital gains ' 5. Against the above relief, the revenue has preferred an appeal only against the deletion of penalty on ₹ 2,42,51,03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing on the percentage completion method. However, the said amount was reflected in the return for the AY 2010-2011 based on the principle of,,pay as you earn . During the first appellate proceedings ie enhancement of assessment, the whole of the sales made to the Standard Chartered Bank was offered as recognising the income by filing the revised return of income preponing the completion of the project from 2012-2013 to 2009- 2010, the A Y under consideration. CIT (A) levied the penalty on this sum of sales of ₹ 179.03 Crs which is otherwise offered to tax in the AY 2010-2011 8. During the proceedings before us, on the above facts, Ld Counsel for the assessee submitted that this is the case of preponement of income, which is otherwise undisputedly offered to tax in the later year in order to end litigation with the Department. Since, it is already offered in the return of income for the A Y 2010- 2011, there is neither failure on the part of the assessee in matter of disclosure of particulars nor furnishing of any inaccurate particulars. Assessee has followed the principle of ,,pay as you earn ie percentage completion method, whereas the CIT (A) thrust on the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the above addition was accepted by the assessee and the same has reached finality. 10. On hearing both the parties, we find there is no dispute on the facts that the said sum ofRs. 179.03 Crs is undisputedly offered in the A Y 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(l)(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 hypothetical income. Income accrued when it becomes due at the same time, it must also be accompanied by corresponding liability of other party to pay the amount. Only then, it can be said for the purpose of taxability that the income is not hypothetical and it has really accrued to the assessee. In the instant case, the liability to pay by the other parties is crystall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 80IB(10) was originally disallowed by the AO in the assessment order. Against the said order, an appeal was filed before CIT(A) and finally before Hon'ble ITAT. Against the said appeal, the deduction u/s 80IB(10) on profit from Project Manish Garden has been allowed by ITAT vide its order dated 31.05.2017 bearing ITA No.2955/Mum/2012, after appreciating the facts of the case at para 28. The copy of the order is enclosed herewith. ' 13. Therefore, the contention of the department that the deduction claimed by the assessee is incorrect is incorrect and nullified by the ITAT own order. 14. Thus, it is submitted that the contention of the department is incorrect and there is no occasion on the part of the assessee of concealing or furnishing any inaccurate particulars. It is therefore, submitted that the penalty deleted by the CIT(A) is correct and the same may kindly be upheld. 14. Upon careful consideration, we find that in the assessment order, there were 3 additions made which read as under: Sr. No. Addition Amount 1) Business income on account of sale of flats of Manish Gar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urthermore, just because the assessee has not appealed against the addition, the same cannot lead to a inference of contumacious conduct of the assessee. As rightly noted by the ld. CIT(A) the issue was only year of taxability and in this regard, the ld. CIT(A) has rightly relied upon the decision of the Hon'ble Apex Court in the case of CIT vs. Excel Industries (supra) wherein the Hon ble Apex Court had expounded that the Revenue should not be aggrieved if it was only a matter of difference in the year of taxability. It was held that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, it was held that the dispute raised by the Revenue was entirely academic or at best may have a minor tax effect. Therefore, it was held that there was no need for the revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. Though the assessee has not challenged the addition, we note that when the additions itself is on weak footing, the deletion of levy of penalty qua that addition by the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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