Shailesh D. Patel, , Baroda vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL " D " BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA Kr. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)

I.T. A. No. 1021 /AHD/2012 & 2870/AHD/2014 (Assessment Year: 2008-09)

Shri Shailesh D. Patel Prop. V/S Assistant Commissioner of of Sharda Construction 27, Income Tax Circle-4 Aayakar GIDC, Makarpura, Bhavan, Race Course Vadodara-390020 Vadodara-390007

(Appellant) (Respondent)

PAN: ACQPP7076

Appellant by : Shri Milin Mehta, A.R. Respondent by : Smt. Sonia Kumar, Sr. D.R.

(आदे श)/ORDER

Date of hearing : 23-04-2015 Date of Pronouncement : 30-04-2015

PER SHRI ANIL CHATURVEDI,A.M.

1. These 2 appeals filed by the Assessee, one against the quantum addition and the other against the levy of penalty, are against the order of CIT(A)-III, Baroda dated 22.02.2012 and 19.08.2014 respectively for A.Y. 2008-09.

2. The relevant facts as culled out from the material on record are as under.

3. Assessee is an individual and proprietor of Sharada construction which is

engaged in the business of construction of residential houses and sale of 2 ITA No1021/A/12 & 2870/A/2014 . A.Y. 2008-09 developed lands. Assessee filed his return of income for A.Y. 2008-09 on 29.09.2008 declaring total income of Rs. 75,69,290/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 24.12.2010 and the total income was determined at Rs. 1,95,86,678/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 22.02.2012 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following grounds;-

1.The learned CIT(A) erred in fact and in law in confirming the action of AO in treating an amount of Rs. 1,12,46,198/- as income of current year. 1.1 The learned CIT(A) erred in fact and in law in confirming the action of AO in making the addition by rejecting the consistent method of accounting followed by the Appellant. 1.2 Without prejudice to above, the learned CIT(A) erred in fact and in law in confirming the action of AO in not allowing the tax credit in the current year on the amount added despite the fact that the Appellant had already offered to tax the said income in AY 09-10.

1.3 Without prejudice to above, the learned CIT(A) erred in fact and in law in confirming the action of AO in taxing the amount twice, once in AY 08-09 and also in AY 09-10. The learned Assessing Officer erred in fact and in law in not passing a consequential order for reducing the income from total income of AY 2009-10.

2. The learned CIT(A) erred in fact and in law in confirming the action of AO in disallowing a sum of Rs. 1,66,853/-u/s 14A of the Act.

4. On the quantum addition made, A.O levied penalty of Rs. 40,07,700/- on account of concealment of income, u/s. 271(1)(c) of the Act and the aforesaid penalty was confirmed by ld. CIT(A) vide order dated 19.08.2014. Aggrieved by the order of penalty, Assessee is now in appeal before us and has raised the following grounds:-

1. The learned Commissioner of the Income Tax (Appeal) - III, Baroda ["the CIT(A)"] erred in fact and in law in confirming the action of the ACIT, Circle-4, Baroda ("the AO") in levying penalty amounting to Rs.40,07,700/- u/s. 271(l)(c) of the Income Tax Act, 1961 ("the Act").

3 ITA No1021/A/12 & 2870/A/2014 . A.Y. 2008-09

5. Since both the appeals are interconnected both the appeals are considered together.

6. During the course of assessment proceedings, A.O noticed that Assessee had sold a piece of land situated at Gotri for Rs. 4,29,00,435/- and the sale deed for the same was also executed during the year. He noticed that the sale consideration of land was considered by Assessee in 2 years i.e. A.Y. 2008- 09 and A.Y. 2009-10. He noticed that for A.Y. 08-09, Assessee has taken into consideration the sale of land at Rs. 2,32,11,111/- and Rs. 1,96,89,324/-

was considered in A.Y. 2009-10. A.O was of the view since Assessee was following mercantile system of accounting, the entire sales consideration whether received in full or not, was required to be taxed as receipts of the year under consideration. A.O was further of the view that the Assessee should have accounted for the income as per AS-9 of the Accounting Standard according to which in a transaction involving sale of goods, performance should be regarded as having been achieved when the seller of the goods has transferred to the buyer the property for a price and all significant risks and rewards of ownership have been transferred to the buyer. He was therefore of the view that the profit on sale of land of Rs. 1,12,46,198/- which was shown by the Assessee in A.Y. 09-10 should have been offered for tax in the year under consideration. He accordingly made an addition of Rs. 1,12,46,198/- that was shown by Assessee in A.Y. 09-10 in A.Y. 08-09 and on the aforesaid addition, penalty of Rs. 40,07,603/- on account of concealment of income u/s. 271(1)(c) was also levied by the A.O. Aggrieved by the order of A.O, Assessee carried the matter before ld. CIT(A) who upheld the order of A.O, both on the quantum and penalty.

4 ITA No1021/A/12 & 2870/A/2014 . A.Y. 2008-09

7. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us.

8. Before us, at the outset the ld. A.R. submitted that A.O had considered the income of Rs. 1,12,46,198/- as income for A.Y. 08-09 and had taxed it in A.Y. 08-09 whereas the Assessee on the other hand had considered the aforesaid income for A.Y. 09-10. The ld. A.R. therefore submitted that by taxing the income which was offered by the Assessee in A.Y. 2009-10 on the sale of land in A.Y. 08-09 has resulted into double taxation of the same income which is not permissible under the Act. He therefore submitted that the Assessee does not want to contest the inclusion of income shown by him in 09-10 in A.Y. 08-09 but however necessary directions may be given that the same income is not again taxed in A.Y. 09-10 so as to avoid the double taxation. The ld. A.R. also submitted that on the aforesaid addition made, A.O vide penalty order dated 28.03.2013 levied penalty u/s. 271(1)(c) for furnishing inaccurate particulars of income. He submitted that the Revenue Department has accepted the sales consideration and also the quantum of profits and it was not a case for detection of undisclosed income by the Department. He therefore submitted that the aforesaid addition being technical in nature, no penalty u/s. 271(1)(c) is called for. Ld. D.R. on the other hand supported the order of A.O and ld. CIT(A).

9. We have heard the rival submissions and perused the material on record. It is an undisputed fact that Assessee had sold land for Rs. 4,29,00,435/- and the profits arising on its sale was considered by the Assessee in A.Y. 08-09 (Rs. 78,94,518/-) and in A.Y. 2009-10 (Rs. 1,12,46,198/-) aggregating to Rs. 1,91,40,714/- but the Revenue Department has considered the income 5 ITA No1021/A/12 & 2870/A/2014 . A.Y. 2008-09 offered by the Assessee in A.Y. 2009-10 as income of A.Y. 2008-09. It is the submission of the Assessee that by including the income offered by the Assessee in A.Y. 09-10 of Rs. 1,12,46,198/- as the income for A.Y. 08-09 has resulted into double taxation of the same income because the same income was offered by the Assessee in A.Y. 09-10. We find force in the argument of the Assessee but at the same time in the absence of the complete details of the assessment order for A.Y. 09-10, we are of the view that the submissions made by the Assessee on the aforesaid factual aspect needs verification at the end of A.O. We therefore remit the issue to the file of A.O to decide the issue afresh in light of the submissions made by the Assessee and in accordance with law. Needless to state, the A.O shall grant adequate opportunity of hearing to the Assessee. The Assessee is also directed to co-operate by furnishing all the required details called for by the A.O. In the result, this ground of Assessee is allowed for statistical purposes.

10. Ground No. 2 with respect to addition u/s. 14A is not pressed and therefore the same is dismissed as not pressed.

11. Thus the appeal of Assessee is partly allowed for statistical purposes.

12. As far as levy of penalty u/s. 271(1)(c) with respect to the inclusion of income that was offered by the Assessee in A.Y. 09-10 as income in A.Y. 08-09 is concerned, we find that it is not a case where Assessee has filed inaccurate particulars of income or has concealed the particulars of income more so, when the dispute is in the year in which the income should have been considered to be taxable. It is also a fact that the quantum of income as disclosed by the Assessee has not been altered by the A.O. and further the 6 ITA No1021/A/12 & 2870/A/2014 . A.Y. 2008-09 explanation of the Assessee has also not been found to be false. Further considering the fact that penalty proceedings and quantum proceedings are distinct and separate and in view of the fact that submission of the Assessee has not been found to be untrue or false, we are of the view that in the present case no penalty u/s. 271(1)(c) is called for. We therefore direct its deletion. Thus this ground of Assessee is allowed.

13. In the result, the appeal in ITA No. 1021/AHD/2012 of the Assessee is partly allowed for statistical purposes and appeal in ITA No. 2870/AHD/2014 is allowed.

Order pronounced in Open Court on 30 - 04 - 2015.

Sd/- Sd/- (SHAILENDRA Kr. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad. TRUE COPY Rajesh

Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) - 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad