TaxTMI 
TaxTMI 
2010 (4) TMI 846
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....inst a separate order of the Commissioner of Income-tax (Appeals) dated even. All the appeals relate to penalty levied and confirmed on the assessee for the respective assessment years and since the fact situation giving rise to the levy of penalty is the same for all these years, these appeals are disposed of through a consolidated order. 2. The facts apropos as culled out from the orders of the lower authorities for the assessment year 2000-01 are as follows. There was a search and seizure on the premises of the assessee whose main business was developing housing plots and selling them. The assessee was doing this business by purchasing land, predominantly on the basis of powers of attorney, and thereafter incurring expenditure for dev....
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....ing stock was not taken into account, profit would remain deflated resulting in loss of revenue. Therefore, in his opinion the value of land could not be taken as nil. Thus, he considered the amount as calculated by him, as the undisclosed stock of the assessee and added it to the income. Penalty proceedings under section 271(1)(c) of the Act were initiated for each of the years. In response to the relevant notices, the assessee, in addition to its submissions made at the time of assessment, also stated that it had admitted the income at the time of search proceedings only to avoid protracted litigation. However, the Assessing Officer did not accept this plea of the assessee, but on the other hand held as under : "It is obligatory for th....
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....ceptions as the income admitted in course of search was not reflected in the return filed under section 153C of the Income-tax Act, 1961. As stated already the assessee-company failed to disclose fact regarding undisclosed stock in the original return and therefore it is liable to penalty under section 271(1)(c)." 3. The penalty was levied at the minimum rate for each of the assessment years. 4. The appeals were preferred by the assessee against penalty orders. The submissions made by the assessee before the Commissioner of Income-tax (Appeals) could be summarised as under : (i) Valuation of stock of land was being done at nil and it was offering income in full as and when the sales were effected. (ii) Stocks were re....
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....uld not help the assessee in any manner. He thus, came to a conclusion that the Assessing Officer was justified in levying penalty. 6. Now before us, the learned authorised representative submitted that land sold was always accounted, but based on a consistent policy adopted by the assessee, the value of the stock of such land was shown "nil". Further as per learned counsel, none of these land was owned by the assessee or appearing in its name, but were held only as a part arrangement with the seller thereof, for developing such land. It was argued that as and when sales were effected, the margins that were available after paying of the purchase cost was fully reflected in its accounts. Since all the transactions were duly accounted, the....
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....o value whatsoever for the stock of land in its return. However, if we look at the assessment for all the assessment years, it is clearly mentioned therein that the assessee was carrying on its business by purchasing land through powers of attorney. The mode in which the assessee carried on its business as given by the Assessing Officer himself in the assessment order is reproduced hereunder : "The land is acquired by brokers. When a seller is found, the assessee-company obtains power of attorney from the person who agrees to develop the land into housing plots. This is done through agents of that particular area. Then the assessee-company enter into agreement with the broker for arranging the land on behalf of M/s. S & S Foundation." ....
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....audit reports regarding any discrepancy in the valuation of stock of land for any of the years. Valuing the land simply based on the part payments made to prospective sellers, even before such purchases had fructified can never be considered a scientific method, but only an estimate. Just because the assessee had agreed to an addition out of compulsion in search proceedings, it would not be sufficient enough to come to a conclusion that there was concealment or furnishing of inaccurate particulars. Other than stating that it was a fit case for imposition of penalty under section 271(1)(c) of the Act, the Assessing Officer has not recorded his reasons why the valuation done at "nil" amount by the assessee was a good enough reason for levy of....