TaxTMI 
TaxTMI 
2014 (2) TMI 1107
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.... (East). Subsequently, it filed the return of income for the assessment year under consideration on 10.10.2008 declaring a total income of Rs.3,55,44,415/-, which included the additional income offered during the course of survey. 3.1 The return of income filed by the assessee was taken up for compulsory scrutiny. The AO noticed that the assessee has claimed expenses on purchase of TDR against the project completed during the year. The TDR was purchased from a concern M/s Ami Corporation for a consideration of Rs.3,22,29,676/-, vide agreement entered on 19.5.2008. The AO noticed that the Development Right Certificate (DRC) itself was issued to M/s Ami Corporation on 19.03.2008 and the agreement between M/s Ami Corporation and the assessee was entered on 19.05.2008, i.e., during the year relevant to the assessment year 2009-10. As per the DRC Utilisation form No.32007 issued on 3.5.2008, the assessee was allowed to utilise built up area admeasuring 1710 Sq. mts., out of total built up area available in DRC certificate No.0000681 dated 19.3.2008 Folio No. TDR/WS/Ward PS-164 of 9217.10 Sq. mts issued to M/s Ami Corporation. It is pertinent to note that M/s Ami Corporation had trans....
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....be completed on the basis of TDR purchased by it. Accordingly, the assessee contended that the entire cost of land should be deducted against the completed projects. The AO did not accept the contentions of the assessee and accordingly added the value of utilised land amounting to Rs.86,10,542/- to the total income of the assessee. The assessee accepted this addition also and hence it did not challenge the same by filing appeal. 5. During the course of survey operations, physical cash of Rs.1,80,000/- was found, while the cash balance shown in the books of accounts was Rs.1,03,000/-. The assessee could not reconcile the difference of Rs.77,000/- and hence the AO added the same as undisclosed income of the assessee. The assessee accepted this addition also. 6. The AO, during the course of penalty proceedings, asked the assessee to furnish explanations with regard to the penalty notice. The assessee furnished following explanations before the AO (as extracted by the AO in the penalty order): "3. The TDR was issued on 19.03.2008 to Amit Corporation and the same was then sold to the assessee on 19.05.2008. The assessee was of the view that the TDR was originally issued on 19.0....
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....Reliance Petro Products Pvt Ltd (322 ITR 158)(SC) and deleted the penalty levied on disallowance of TDR purchase expenses and land cost. The relevant observations made by Ld CIT(A) are extracted below:- "11. I have considered the submissions of the representative and the stand taken by the AO. Although the AO was correct in disallowing the said expenses in the light of fact that the same does not relate to Financial Year under consideration, but the same by itself does not amount to Concealment of Income or Furnishing Inaccurate Particulars of Income. I understand that the appellant had made wrong claims for these expenses and accordingly were disallowed in assessment proceedings. However, their disallowance does not by itself mean willful Concealment or Inaccurate Furnishing of Income." Aggrieved by the order passed by Ld CIT(A), the revenue has filed this appeal before us. It is pertinent to note that the assessee did not contest the penalty levied on the cash balance difference. 8. The Ld D.R placed reliance on the decision of Hon'ble Supreme Court in the case of MAK Data (P) Ltd Vs. CIT (2013)(38 taxmann.com 448)(SC) and submitted that the mere acceptance of additions ....
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....the year under consideration, yet the AO has allowed the same in the succeeding year. Accordingly he submitted that the assessee did not furnish any inaccurate particulars of income, as alleged by the AO, but the assessing officer has only shifted the deduction to the succeeding year. Since the said adjustment was revenue neutral, the assessee also accepted to the same during the course of assessment proceedings. The Ld A.R further submitted that the assessee entered into the agreement with M/s Pranay Investments only in the succeeding year to formally reduce the terms and conditions in writing and hence the date of agreement cannot be considered as a deciding factor. 9.1 With regard to the disallowance of land cost, the Ld A.R submitted that the assessee had fully consumed the base land FSI in the projects already completed and hence it claimed the entire amount of land cost as deduction. The assessee proceeded to purchase TDR to carry out balance portion of the project. Here again, the AO has allowed the cost of land of Rs.86,10,542/- (disallowed portion) in the succeeding assessment years as detailed below:- Assessment Year Amount claimed Amount allowed by AO 2009-10....
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.... view about the year of allowability. 10.1 Hence, we need to examine as to whether the assessee has furnished inaccurate particulars of income or not. Further we notice that, under Explanation 1 which reads as under, all the additions are deemed to be the income in respect of which the particulars of income have been concealed:- "Explanation 1.--Where in respect of any facts material to the computation of the total income of any person under this Act,-- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub- section, be deemed to represent the income in respect of which particulars have been concealed." Hence, we need to examine as to whether the ....
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....hich are not accurate, not exact or correct, not according to truth or erroneous." 10.4 A combined reading of both the decisions of Hon'ble Apex Court, i.e., the decisions rendered in the case of MAK Data (P) Ltd (supra) and Reliance Petroproducts (P) Ltd (supra), it may be noticed that the assessee can be held to have furnished inaccurate particulars of income only if the details supplied in the return, are not accurate, not exact or correct, not according to truth or erroneous. Further the assessee, in order to discharge the presumption of concealment of particulars of income raised upon him by Explanation 1 to sec. 271 (a) should offer an explanation which is not found by the tax authorities as not false. or (b) if he offers an explanation which he is not able to substantiate, then he has to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. 11. By duly considering the legal position discussed above, we shall examine the facts prevailing in the case vis-à-vis explanations offered by the assessee. The first addition relates to the disallowance of....
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.... was not furnished before the AO, since the penalty order does not contain any discussion about this document. (d) As per the recitals made in the agreement dated 07-05-2008 entered with M/s Pranay Investment, the TDR certificate was issued to M/s Ami Corporation on 19.03.2008 for 9217.10 Sq. mtr and M/s Pranay Investment obtained TDR rights for 3750 Sq. Mts, vide agreement entered between both of them on 14.4.2008. There after M/s Pranay Investments have sold TDR rights of 1710 Sq. mts to the assessee, vide agreement dated 07-05-2008. These sequence of events show that there is actually no connection between the assessee and M/s Ami Corporation and hence the existence of agreement dated 19.05.2008 between the assessee and M/s Ami Corporation is, in our view, doubtful. (e) It appears that the assessee has made payments aggregating to Rs.3.22 crores to M/s Pranay Investments during October and November, 2007 on the strength of a letter dated 27.10.2007 issued by M/s Pranay Investments to the assessee, wherein the subject of the letter is mentioned as "Memorandum of Understanding". The Ld A.R furnished a copy of the same before us and it is not known as to whether the said lett....
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.... C & D wing. In view of the above said fact, the assessee should be eligible to claim the cost of TDR, only against the revenue generated from C & D wing. However, the assessee has claimed the same against the completed projects. These facts also demonstrate that the assessee has not furnished correct details before the AO, i.e., the assessee has made wrong claim for deduction, which is not allowable during the year under consideration. 11.3 The discussions made in the preceding paragraph would show that the assessee has made incorrect or erroneous claim of cost of TDR against the projects completed during the year under consideration. The assessee's contention is that there is no inaccuracy with regard to the particulars. However, as held by Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt Ltd (supra), furnishing of incorrect or erroneous details or the details which are not in accordance with truth, will fall in the category of "inaccurate particulars of income". Further as per Explanation 1 of sec. 271, the assessee is required to give explanations which are not found to be false. The discussions made in the preceding paragraph would show that the assessee has ....
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....sment proceedings. Hence, in our view, the disallowance of TDR expenses would not fall in the category of "incorrect claim in law". Hence, in our view, the decision rendered by Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt Ltd (supra) cannot be taken support of by the assessee and the Ld CIT(A) was not correct in placing reliance on the said decision to delete the penalty on this issue. Accordingly, we reverse the order of Ld CIT(A) on this issue and restore the penalty levied by the AO on this addition. 12. The AO has levied penalty on the disallowance of proportionate cost incurred on purchase of land. It is a settled principle of computation of income that the income should be ascertained under "Revenue-Cost matching principle". It is an admitted fact that the assessee has claimed entire land cost against the completed projects, though the part of land cost related to the pending projects. Hence, the AO noticed that the claim made by the assessee was not in accordance with the accounting principles. Hence the AO has disallowed a part of land cost proportionate to the uncompleted projects, which the assessee has also agreed to. 12.1 The contention of the a....