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2016 (3) TMI 85
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....O is justified in levying penalty u/s 271(1)(c ) of the Act. 4. Facts of Akshara Shelters Consortium - ITA No. 246/Kol/2013 The brief facts of the case are that the search and seizure operation u/s 132 of the Act was conducted in the business and residential premises of "Akshara Group of Cases" on 11.9.2008 which is engaged in real estate business. During the course of search and seizure operation, Shri Prakash Chandra Agrawalla, one of the key persons of the group, filed a disclosure petition u/s 132(4) of the Act before the ADIT (Investigation) , Kolkata disclosing an amount of Rs. 80,82,140/- being the unaccounted income of the assessee consortium from sale of residential flats during the financial year 2007-08 relevant to Asst Year 2008-09 based on the documents seized u/s 132 of the Act with Identification Mark ALT/5 (page 15) from the office premises of M/s Akshara Shelters Pvt Ltd and others at "Supra Court" , 35, Lansdowne Terrace, Kolkata - 700026. Considering the above, notices u/s 153C read with section 153A of the Act were issued to the assessee consortium calling for returns of income for the Asst Years 2003-04 to 2008-09. In response to the said notices, return ....
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.... Asst Year 2008-09 were filed on 4.10.2010 showing total income of Rs. Nil and Rs. 46,22,280/- respectively. No return of income was filed for the Asst Years 2003-04 to 2005-06 since the assessee consortium was incorporated only on 2.6.2005. Shri Prakash Chandra Agrawalla gave a statement u/s 131 of the Act on behalf of the group and demonstrated the manner of receiving the undisclosed income of Rs. 46,22,280/- from sale of flats to certain customers in cash . The Learned AO observed that the since the project under consortium i/e 'Whispering Willow' at Rajarhat, Kolkata has not been completed during the year, the assessee consortium has not shown any income from the same other than its undisclosed cash receipts of Rs. 46,22,280/- (37,85,080 + 8,37,200). The assessment was completed u/s 153C / 143(3) of the Act on 31.12.2010 accepting the income returned of Rs. 46,22,280/- for the Asst Year 2008-09. 4.2. The Learned AO initiated penalty proceedings u/s 271(1)(c ) of the Act in respect of both the assesses for the Asst Year 2008-09 after completion of section 153C assessments. During penalty proceedings, it was pleaded by the assessee that the assessee gave a disclosure petition ....
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....the Act was nothing , but the sale proceeds of the flats received in cash. Since the assessee is following the Project Completion Method and since during the Asst Year 2008-09 the project was not completed, as admitted and accepted by the Learned AO in the assessment order, therefore, the income from sale of these flats have been assessed only in Asst Year 2009-10. Accordingly any consideration received on sale of flats and income therefrom could be assessed only in the Asst Year 2009-10. It was further argued that in the event of the purchaser of flat cancelling the agreement before the sale was made, the assessee had to return the cash portion also to him. The consideration was received against sale of flats which flats were given possession of or transferred to the purchasers in Asst Year 2009-10 and income from sale of said flats have been recognized in Asst Year 2009-10 which has been accepted by the department. It was also pleaded that the return of income for the Asst Year 2009-10 was filed declaring total income of Rs. 59,97,588/- in the case of Akshara Shelters Consortium and assessment u/s 143(3) of the Act was completed on 31.12.2010 accepting the returned income. Simila....
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....ney against proposed sale of flats, it cannot be assessed in the year of receipt but has to be assessed as per the system of accounting followed by the assessee and accepted by the department. It was further argued that for the purpose of assessment of sale consideration and revenue recognition of the project, different treatment cannot be given to the amount received by cash and amount received by cheque for same very flats or project. 4.4 The Learned CIT(A) appreciated the aforesaid contentions of the assessee and deleted the levy of penalty u/s 271(1)(c ) of the Act. Aggrieved, the revenue is in appeal before us on the following grounds:- The Ld, CIT(A) erred in deleting the penalty made by AO amounting to Rs. 24,97,381/- u/s 271(1) (c) of the Act for the A.Y. 2008-09. The assessee consortium itself admitted receipt of money not disclosed in the books of accounts and on the basis of the said disclosure before DDIT (Inv), addition was made in its income. The assessee consortium was not in appeal for addition in the order passed u/s 153C/143(3) and on the basis of the said disclosure penalty proceeding was initiated and penalty u/s 271(1)(c) was impos....
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....ed to challenge the validity of impugned penalty order on the ground that a proper and valid assessment was not completed in the case of assessee. 5.1.2. Reliance is placed on the decision of Hon'ble Allahabad High Court in the case of Jaidayal Pyarelal vs CIT reported in (1973) Tax LR 880 (All), wherein it was held that with reference to a new plea taken in the penalty proceedings which was not taken in the regular assessment proceedings as under:- "It is thus clear that the regular assessment order is not a final word upon the plea taken therein or which might have been taken at this stage. The assessee is entitled to show cause in penalty proceedings and to establish by the material and relevant facts which may go to affect his liability or the quantum of penalty. He cannot be held to be debarred from taking appropriate plea simply on the ground that such a plea was not taken in the regular assessment proceedings. " 5.1.3. Reliance is also placed on the decision of the Hon'ble Rajasthan High Court in the case of Deep Chand Kothari vs CIT reported in 171 ITR 381 (Raj) wherein it was held that an order passed by an authority without jurisdiction is a nullity and its....
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....n inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted. In other words, accounting of profits have to be made on the basis of the method of accounting followed by the assessee. 5.2.5. Decision of Hon'ble Supreme Court in the case of CIT vs Bilahari Investments P Ltd reported in 299 ITR 1(SC) , wherein it was held that income is to be assessed in accordance with the method of accounting followed by the assessee. 5.2.6. Decision of Hon'ble Gujarat High Court in the case of CIT vs Motilal C. Patel & Co reported in (1988) 173 ITR 666 (Guj) , wherein it was held that earnest money received for sale of property is not assessable in the year of receipt but is assessable in the year of completion of sale of the said flats. 5.2.7. Decision of Hon'ble Bombay High Court in the case of Jainarayan Babulal vs CIT reported in (1988) 170 ITR 399 (Bom) , wherein it was held that the entries aggregating to Rs. 24,600/- were made during the course of the financial year that began on 1st April 1948, and ended on 31st March, 1949. The relevant assessment year for that financial....
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....under this Act' occurring in sub-section (1) of section 271 of the Act and contending that even during survey when it was found that the assessee had concealed the particular of his income, it would amount concealment in the course of 'any proceedings'. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the Assessing Officer or the Commissioner of Income-tax (Appeals). When the survey is conducted by a survey team, the question of satisfaction of Assessing Officer or the Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is the Assessing Officer who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings, in this case. 15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income-tax return filed by....
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....ion 153A, original return of income filed under section 139 cannot be considered - Held, Yes - Whether concealment of income has to be seen with reference to additional income brought to tax over and above income returned by assessee in response to notice issued under section 153A and, therefore, once returned income under section 153A is accepted by Assessing Officer, it can neither be a case of concealment of income nor furnishing of inaccurate particulars of such income - Held, yes - Search was conducted on 22-11-2006 and cash was found from possession of assessee - Assessee had drawn cash flow statement for entire period of six years in order to determine undisclosed income based on seized material for each of six assessment years - Whether penalty under section 271(1)(c ) cannot be imposed by invoking Explanation 5 in assessment year 2004-05 in respect of cash found in previous year relevant to assessment year 2007-08 , merely on presumption that assessee might have been in possession of cash throughout period covered by search assessments - Held, yes [ in favour of assessee".] 5.3.2. We find that this decision of Delhi Tribunal has been followed by this Tribunal in the cas....