M/s. Amit Estate Organizer, Anand v. The Income tax Officer, Ward-3,, Anand

ITA 1210/AHD/2008 | 1999-2000
Pronouncement Date: 23-07-2010 | Result: Allowed

Appeal Details

RSA Number 121020514 RSA 2008
Assessee PAN AADFA9859J
Bench Ahmedabad
Appeal Number ITA 1210/AHD/2008
Duration Of Justice 2 year(s) 3 month(s) 15 day(s)
Appellant M/s. Amit Estate Organizer, Anand
Respondent The Income tax Officer, Ward-3,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 23-07-2010
Date Of Final Hearing 20-07-2010
Next Hearing Date 20-07-2010
Assessment Year 1999-2000
Appeal Filed On 07-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH B BB B BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N NN N. .. .S. SAINI S. SAINI S. SAINI S. SAINI ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER AND AND AND AND SHRI SHRI SHRI SHRI MAHAVIR SINGH JUDICIAL MEMBER MAHAVIR SINGH JUDICIAL MEMBER MAHAVIR SINGH JUDICIAL MEMBER MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING 19-7-10: DRAFTED ON: 19-7-10 ITA NO. 1206 1207 1208 1209 &1210 /AHD/ 2008 . ASSESSMENT YEAR :1995-96 1996-97 1997-98 1998-99 &1999-00 M/S. AMIT ESTATE ORGANIZER 7-8 THAKKAR ARCADE SARDAR GUNJ ANAND. VS. INCOME TAX OFFICER WARD-3 INCOME TAX OFFICE ANAND. PAN/GIR NO. : AADFA 9859 J (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S.N.SOPARKAR SR. ADV. RESPONDENT BY: SHRI K.MADHUSUDAN SR.D.R. O R D E R O R D E R O R D E R O R D E R PER BENCH:- THESE ARE THE APPEALS FILED BY THE ASSESSEE AGA INST THE CONSOLIDATED ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS)-IV BARODA DATED 19-12-2007 FOR THE AB OVE MENTIONED ASSESSMENT YEARS. 2. THE COMMON GROUND OF APPEAL TAKEN BY THE ASSESSE E IN ALL THE APPEALS READS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX( APPEALS) H AS ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY LEV IED UNDER SECTION 271(1)(C) BY LEARNED ASSESSING OFFICER OF `.3 84 220/-IN ASSESSMENT YEAR 1995-96 `. 9 95 397 /- IN ASSESSMENT YEAR 1996-97 `.10 33 468/-IN ASSESSMENT YEAR 1997-98 AND `.5 92 712/- IN ASSESSMENT YEAR 1998-9 9 `. 3 29 170/- IN ASSESSMENT YEAR 1999-00 ON THE ADDIT ION OF 5% OF THE COST OF CONSTRUCTION MADE ON THE BASIS OF THE REPORT OF THE DEPARTMENTAL VALUATION OFFICER (DVO) AND CONFIRMED BY THE ORDER OF THE THIRD MEMBER OF THE H ON'BLE INCOME TAX APPELLATE TRIBUNAL THAT IS WHOLLY UNSUST AINABLE IN LAW AND ON FACTS. BOTH THE LOWER AUTHORITIES HAVE F AILED TO APPRECIATE THE FACT THAT THE APPELLANT HAS NEITHER FURNISHED INACCURATE PARTICULARS NOR CONCEALED ANY INCOME AND HELD THAT SIMPLY BECAUSE ADDITION IS SUSTAINED PENALTY IS LEVIABLE. THE PENALTY LEVIED BEING WITHOUT ANY MERITS AND JUS TIFICATION REQUIRES TO BE QUASHED. - 2 - 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM OF BUILDER WHICH CARRIED OUT CONSTRUCTION OF HOUSING P ROJECT CALLED ASHLESH BUNGALOWS HAVING 31 BUNGALOWS WITH COMMON AMENITIES AND INFRASTRUCTURE FACILITIES. THE EXPENDITURE INC URRED ON THE COST OF THE CONSTRUCTION WAS DISCLOSED BY THE ASSESSEE A S UNDER :- ASSESSMENT YEAR EXPENDITURE(`) 1995 - 96 27 45 946/ - 1996 - 97 67 39 422/ - 1997 - 98 68 78 879/ - 1998 - 99 45 22 750/ - THE RETURNS OF INCOME IN RESPECT OF THE ABOVE MENTI ONED ASSESSMENT YEARS WERE PROCESSED UNDER SECTION 143(1 )(A). NO SCRUTINY ASSESSMENTS WERE MADE UNDER SECTION 143(3) . SUBSEQUENTLY ON 28-11-2000 THE LEARNED ASSESSING O FFICER ISSUED NOTICE UNDER SECTION 148 FOR REOPENING OF THE ASSES SMENT FOR A.Y. 1997-98. DURING THE REASSESSMENT PROCEEDINGS THE A SSESSING OFFICER NOTED THAT CERTAIN CONTRA ACCOUNTS CALLED FROM VARIOUS PARTIES DID NOT TALLY WITH THE ACCOUNT OF THESE PAR TIES IN THE BOOKS OF THE ASSESSEE. CERTAIN OTHER DISCREPANCIES IN THE BOOKS OF ACCOUNTS WERE NOTICED VIZ. THAT THE STATEMENT OF C LOSING STOCK WIP SHOW DETAILS OF ONLY 33 UNITS WHEREAS THE SCHEME H AS 51 UNITS THE MATERIALS PURCHASED WERE NOT ENTERED PROPERLY IN TH E RESPECTIVE HEADS IN THE ITEM-WISE PURCHASE REGISTER MAINTAINED BY THE ASSESSEE OPENING AND CLOSING BALANCE IN THE CASH B OOK WRITTEN IN PENCIL ALTHOUGH THE BOOKS WERE STATED TO HAVE BEEN AUDITED AND MISCELLANEOUS PAYMENTS MADE AND VOUCHERS PREPARED W ERE NOT SIGNED BY THE PERSON TO WHOM THE PAYMENTS WERE STA TED TO HAVE BEEN MADE. CONSIDERING THESE DEFICIENCIES IN THE BO OKS OF ACCOUNTS THE A.O. REJECTED THE BOOKS AND REFERRED T HE MATTER TO THE DVO FOR VALUATION. THE DVO SUBMITTED HIS REPORT ACC ORDING TO WHICH THE YEAR WISE COST OF CONSTRUCTION WAS IN EXC ESS OF THE CONSTRUCTION COST SHOWN BY THE ASSESSEE. SUCH EXCE SS COST OF CONSTRUCTION CAME TO `. 87 66 792/- FOR THE ENTIRE PROJECT THE DETAILS OF WHICH ARE AS UNDER :- - 3 - SL. NO. PERIOD OF CONSTRUCTION CONSTRUCTION COST SHOWN BY THE ASSESSEE (`) FAIR COST OF CONSTRUCTION AS PER DVO (`.) DIFFERENCE (`.) 1 7/93 TO 3/94 13 64 923/ - 18 33 939/ - 4 79 016/ - 2 4/94 TO 3/95 27 45 946/ - 37 06 493/ - 9 60 547/ - 3 4/95 TO 3/96 67 39 422/ - 92 27 910/ - 24 88 488/ - 4 4/96 TO 3/97 68 78 879/ - 94 57 014/ - 25 78 135/ - 5 4/97 TO 3/98 45 22 750/ - 62 16 218/ - 16 93 468/ - 6 4/98 TO 12/98 15 44 733/ - 21 21 871/ - 5 77 138/ - 2 37 96 445/ - 3 25 63 445/ - 87 66 792/ - THE ASSESSMENTS WERE COMPLETED BY THE A.O.BY MAKING ADDITIONS BASED ON THE DIFFERENCE IN COST OF CONSTRUCTION OF THE VARIOUS YEARS AS ABOVE. THE ADDITIONS WERE CONFIRMED IN APPEAL BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 4. THE LEARNED ASSESSING OFFICER THEREAFTER ISSUE N OTICE AND LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT F OR FILING INACCURATE PARTICULARS TO CONCEAL THE INCOME. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE AT THE TIME OF THE HEARING SUBMITTED THAT THE TRIBUNAL IN THE QUANTUM APPEAL FILED BY THE ASSESSEE REPORTED AS AMIT ESTAT E ORGANIZER VS. ITO IN (2008) 113 ITD 255 (AHD) (TM) FOR ASSESSMENT YEARS 1995- 96 TO 1998-99 CONFIRMED THE ADDITION TO THE EXTENT OF 5% OF THE RECORDED COST OF CONSTRUCTION BY OBSERVING AS UNDER :- THE REPORT OF DVO IN VIEW OF CLEAR PROVISIONS OF S . 142A(3) HAS TO BE USED BY THE AO IN MAKING THE ASSESSMENT OR REASSESSMENT. ON THE CONTRARY FOR MAKING ADDITION DEPARTMENT CANNOT PLACE SOLE RELIANCE ON DVO REPORT AND MAKE T HE ADDITION OF ENTIRE DIFFERENCE. IT IS NOT SACROSANCT BUT AN E STIMATE BY A TECHNICAL PERSON AND TAKEN IN ADVISORY CAPACITY AND AS A MARK OF GUIDANCE. ON THE CONTRARY THE MISTAKES POINTED O UT BY THE AO BEING VERY VENIAL MIGHT NOT JUSTIFY THE REJECTI ON OF BOOKS OF ACCOUNT UNDER S. 145(3) BUT THESE WOULD BE RELEVAN T TO MAKE DISALLOWANCES AND ADDITIONS TO THAT EXTENT HAVE TO BE MADE. THE BOOKS OF ACCOUNT CAN BE RELIED UPON FOR WHAT TH AT IS RECORDED THEREIN AND NOT FOR THAT WHICH IS NOT REC ORDED IN THE BOOKS. FOR THAT REJECTION OF BOOKS FOR DEFECT FOUND THEREIN MAY NOT BE RELEVANT. DVO REPORT SHOWS A HUGE DIFFERENCE A PART OF WHICH OF COURSE IS EXPLAINED BY THE ASSESSEE BUT TH E OTHER PART REMAINED UNEXPLAINED. THEREFORE THE REVENUE CANNOT PLACE FULL RELIANCE ON THE DVO REPORT AND MAKE ADDITION FOR TH E ENTIRE DIFFERENCE. DVO REPORT THOUGH OF A TECHNICAL EXPERT AS AFORESAID HAS TO BE TAKEN AS A GUIDANCE AND CANNOT BE DISREGARDED IN VIEW OF THE SPECIFIC PROVISIONS OF S . 142A(3) FOR TAKING INTO CONSIDERATION THE REPORT OF DVO IN MAKI NG - 4 - ASSESSMENT OR REASSESSMENT ON GIVING THE ASSESSEE A N OPPORTUNITY OF BEING HEARD ON SUCH REPORT. THE REPO RT OF REGISTERED VALUER FURNISHED BY THE ASSESSEE ALSO SU PPORTS THE FACT THAT CONSTRUCTION COST RECORDED BY THE ASSESSE E IN ITS BOOKS OF ACCOUNT WAS LOWER BY RS. 1.51 LAKHS IT WOULD AL SO NOT BE JUSTIFIED TO WHOLLY RELY ON THE ACCOUNTS AND MAKING NO ADDITION AT ALL. KEEPING IN VIEW THE TOTALITY OF FACTS AND C IRCUMSTANCES OF THE CASE IT WOULD BE RIGHT TO RETAIN THE ADDITION TO THE EXTENT OF 5 PER CENT (FIVE PER CENT) OF COST OF CONSTRUCTION AS RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IN RESPECTIVE ASSESSMENT YEARS UNDER CONSIDERATION SO AS TO COVER UNACCOUNT ED EXPENSES WITH REGARD TO OBSERVATIONS MADE BY THE DV O IN HIS REPORT AS WELL AS THE EXCESS COST WORKED OUT BY THE OWN VALUER OF THE ASSESSEE AS COMPARED TO THE COST ACTUALLY R ECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. 6 . THEREAFTER THE ASSESSEE FILED MISCELLANEOUS APPLIC ATION AGAINST THE ABOVE ORDER OF THE TRIBUNAL BEING MISCE LLANEOUS APPLICATION NOS.295 296 302 329 330 331 AND 332/A HD/2008. THE TRIBUNAL VIDE ITS CONSOLIDATED ORDER DATED 4-9-2009 PASSED IN THESE MISCELLANEOUS APPLICATIONS DELETED THE ADDITION OF 5% OF THE CONSTRUCTION COST IN THE ASSESSMENT YEARS 1995-96 T O 1998-99 BY OBSERVING AS HELD AS UNDER :- THESE ARE SEVEN MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE UNDER SECTION 254(2) OF THE INCOME TAX ACT 1961 (THE ACT FOR SHORT) SEEKING RECTIFICATION OF THE ORDERS OF THE TRIBUNAL. 2. THE FIRST SET OF FOUR MISCELLANEOUS APPLICATIONS IN MA NOS.329 TO 332/AHD/2008 RELATE TO THE ASSESSMENT YE AR 1995-96 TO 1998-99.IN THESE APPLICATIONS IT IS THE CONTENTION OF THE ASSESSEE THAT THE OBSERVATION OF THE LEARNED JUDICIAL MEMBER IN PARA-30 OF THE ORDER TO THE EFFECT THAT S ECTION 69C OF THE ACT IS CLARIFICATORY IN NATURE AND WILL BE D EEMED TO BE APPLICABLE RETROSPECTIVELY AND TO ALL MATTERS PENDI NG ON THAT DAY AND THEREFORE THE ASSESSEE WILL NOT BE ENTITLED TO THE DEDUCTION OF THE AMOUNT ADDED AS UNEXPLAINED EXPEND ITURE UNDER SECTION 69C REQUIRED RECTIFICATION. THE OBSER VATION IS BASED ON THE PROVISO TO SECTION 69C WHICH WAS INSER TED BY THE FINANCE (NO.2) ACT 1998 WITH EFFECT FROM 1-4-1 999.IT IS NOW POINTED OUT THAT AFTER THE ORDER OF TRIBUNAL T HE HON'BLE GUJARAT HIGH COURT HAS DECIDED IN THE CASE OF CIT V S. STAR BUILDERS 294 ITR 338 AND KRISHNA TEXTILES VS. CIT 310 ITR 227 THAT IF ANY AMOUNT IS ADDED AS UNEXPLAINED INVE STMENT OR EXPENDITURE IT HAS TO BE ALLOWED AS DEDUCTION U NDER SECTION 69C IF IT REPRESENTS EXPENDITURE ALLOWABLE IN COMPUTING THE PROFITS OF THE BUSINESS OF THE ASSESS EE. THE CONTENTION OF THE ASSESSEE IS THAT AS HELD BY THE S UPREME COURT IN ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE 262 ITR 146 NON-CONSIDERATION OF THE JUDGEMENT OF THE JURI SDICTIONAL - 5 - HIGH COURT EVEN WHEN IT WAS RENDERED AFTER THE ORD ER OF THE TRIBUNAL GIVES RISE TO A MISTAKE APPARENT FROM THE RECORD AND THE ORDER OF THE TRIBUNAL SHOULD BE CORRECTED U NDER SECTION 254(2) TO CONFIRM TO THE LAW LAID DOWN BY T HE JURISDICTIONAL HIGH COURT. AFTER HEARING THE RIVAL CONTENTIONS ON THIS POINT WE ARE OF THE VIEW THAT THE MISCELLANEOUS APPLICATIONS SHO ULD SUCCEED. THE ORDER OF THE LEARNED JM AS REGARDS THE RESPECTIVE APPLICABILITY OF THE PROVISO TO SECTION 69C IS CONTRARY TO JUDGEMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN KRISHNA TEXTILES VS. CIT (SUPRA) RENDERED ON 18 TH JULY 2008. IN THIS JUDGEMENT IT HAS BEEN HELD THAT THE P ROVISO TO SECTION69C INSERTED WITH EFFECT FROM 1-4-1999 IS NO T RETROSPECTIVE IN NATURE AND IS ONLY PROSPECTIVE. TH E ORDER OF THE LEARNED JM ON THIS POINT HAS TO THEREFORE BE CO RRECTED TO CONFORM TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT WHICH IS THE JURISDICTIONAL HIGH COURT. IN ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) IT HAS BEEN HELD THAT AN ORDER OF THE TRIBUNAL HAS TO BE RECTIFIED UNDER SEC TION 254(2) IN CONFORMITY WITH THE JUDGEMENT OF THE JURISDICTIO NAL HIGH COURT AND IT WAS ALSO HELD THAT EVEN IF THE JUDGEME NT OF THE HIGH COURT WAS RENDERED SUBSEQUENT TO THE ORDER OF THE TRIBUNAL THE ORDER OF THE TRIBUNAL CAN BE RECTIFIE D UNDER SECTION 254(2). IN HOLDING SO THE SUPREME COURT AP PROVINGLY CITED A JUDGEMENT OF THE HON'BLE GUJARAT HIGH COURT IN SUHRID GEIGY LTD. VS. CST (1999) 237 ITR 834. IN THE LIGH T OF THE JUDGEMENT OF THE SUPREME COURT AND THE HON'BLE GUJA RAT HIGH COURT AND RESPECTFULLY FOLLOWING THEM WE HOLD THAT THE ORDER OF THE LEARNED JM IN SO FAR AS IT SAYS THAT THE PROVISO TO SECTION 69C APPLIES RETROSPECTIVELY AND IS ONLY CLA RIFICATORY IN NATURE CALLS FOR RECTIFICATION UNDER SECTION 254(2) . WE RECTIFY THE SAME BY HOLDING THAT THE SAID PROVISO IS PROSPE CTIVE IN NATURE AND THEREFORE DOES NOT APPLY TO ANY OF THE ASSESSMENT YEARS PRIOR TO THE ASSESSMENT YEAR 1999- 2000.THE YEARS INVOLVED NOW ARE THE ASSESSMENT YEAR S 1995-96 TO 1998-99. THE PROVISO DOES NOT APPLY TO T HESE YEARS WITH THE RESULT THAT THE ASSESSEE WILL BE ENT ITLED TO THE DEDUCTION OF THE AMOUNTS ADDED AS UNEXPLAINED EXPEN DITURE UNDER THE SECTION WITHOUT BEING AFFECTED BY THE PRO VISO. THE ORDER OF THE TRIBUNAL IS RECTIFIED ACCORDINGLY AND THE ASSESSEES APPLICATIONS ARE ALLOWED. 7. THEREFORE IT WAS THE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT AS THE ADDITION MADE IN THE ASSESSMENT YEARS 1995-96 TO1998-99 WERE DELETED THE REFORE THE PENALTY LEVIED IN THOSE YEARS HAS TO BE DELETED SIN CE THE VERY BASIS FOR LEVY OF PENALTY DOES NOT SURVIVE. AS REGARDS TH E ASSESSMENT YEAR 1999-00 IT IS SUBMITTED THAT THE ADDITION WAS SUSTAINED AT 5% - 6 - OF THE COST OF CONSTRUCTION ON ESTIMATE BASIS BY RE JECTING THE BOOKS OF THE ASSESSEE. AS THE ADDITION WAS MADE ON ESTIMA TE BASIS THE ASSESSEE CANNOT BE MADE LIABLE TO PENALTY U/S. 271( 1) (C) OF THE ACT. 8. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSED THE SUBMISSIONS O F THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. HE RELIED ON THE DECISIONS OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF LOKNATH CHOWDHURY VS. CIT REPORTED IN 155 ITR 291 ( CAL) AND RAHMAT DEVELOPMENT & ENGG. CORPORATION VS. CIT REPO RTED IN 130 ITR 602 (CAL) AND SUBMITTED THAT PENALTY CAN BE LEV IED IN A CASE OF ESTIMATED ADDITION MADE IN THE CASE OF THE ASSESSEE . 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND SALE OF REAL ESTATES. DURING THE ASSESSMENT YEARS UNDER CONSIDERATION THE LEARNED ASSESSING OFFICER MADE ADDITION IN ALL THE YEARS ON THE GROUND THAT EXPENSE SHOWN FOR CONSTRUCTION OF REAL ESTATES WAS LESSER THAN THE COST ESTIMATED BY THE DVO AND THEREFORE THE DIFFER ENCE AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. THE LEARNE D ASSESSING OFFICER THEREAFTER ALSO LEVIED PENALTY UNDER SECTI ON 271(1)(C) IN ALL THE ASSESSMENT YEARS IN RESPECT OF THE ADDITION ON ASSESSMENT. 10. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) CONFIRMED THE LEVY OF PENALTY UNDER SECTION 271(1)( C) FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 11. BEFORE US THE LEARNED AUTHORISED REPRESENTATIV E OF THE ASSESSEE POINTED OUT THAT THE TRIBUNAL VIDE ITS ORD ER DATED 27 TH AUGUST 2007 PASSED IN ITA NOS.414 TO 417/AHD/2005 A ND ORDER DATED 4-9-2009 IN MISCELLANEOUS APPLICATION NOS.329 TO 332/AHD/2008 FOR ALL THE YEARS UNDER CONSIDERATION EXCEPT FOR THE ASSESSMENT YEAR 1999-00 DELETED THE ADDITION ON THE GROUND THAT THE EXCESS EXPENDITURE IS ALSO ALLOWABLE AS DEDUCTI ON TO THE ASSESSEE. THUS IT WAS CONTENDED BY THE LEARNED AUTH ORISED REPRESENTATIVE OF THE ASSESSEE THAT FOR THE ASSESSM ENT YEARS 1995-96 TO 1998-99 THE ADDITION MADE WAS DELETED BY THE TRIBUNAL - 7 - IN QUANTUM APPEAL AND THEREFORE PENALTY LEVIED UND ER SECTION 271(1)(C) CANNOT STAND ALONE. THE LEARNED DEPARTMEN TAL REPRESENTATIVE FAIRLY CONCEDED THE ABOVE POSITION. WE FIND THAT THE VERY BASIS FOR WHICH PENALTY UNDER SECTION 271(1)( C) WAS LEVIED FOR ASSESSMENT YEARS 1995-96 TO 1998-99 BECAME NON EXIS TENT AND THEREFORE THE PENALTY LEVIED CANNOT SURVIVE. WE TH EREFORE DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEARS 1995-96 TO 1998-99. 12. IN RESPECT OF THE ASSESSMENT YEAR 1999-00 IT IS OBSERVED THAT THE LEARNED ASSESSING OFFICER MADE ADDITION OF `. 5 77 138/- IN ASSESSMENT ON ACCOUNT OF LESSER EXPENDITURE DISCLOS ED BY THE ASSESSEE. THE LEARNED ASSESSING OFFICER ACCORDINGLY LEVIED PENALTY OF `.3 29 170/- UNDER SECTION 271(1)(C) OF THE ACT. ON APPEAL AGAINST THE ASSESSMENT ORDER THIS TRIBUNAL VIDE ITS ORDER DATED 18- 2-2009 PASSED IN ITA NO.750/AHD/2005 DELETED THE AF ORESAID ADDITION AND DIRECTED THE LEARNED ASSESSING OFFICER TO RESTRICT THE ADDITION TO 5% OF THE CONSTRUCTION EXPENSES DECLARE D BY THE ASSESSEE. THE CONSTRUCTION EXPENSES FOR THE YEAR UN DER CONSIDERATION DECLARED BY THE ASSESSEE WAS `.15 44 733/- AND THEREFORE THE ADDITION ULTIMATELY MADE COMES TO `.7 7 237/-ONLY. THUS AT THE MAXIMUM THE PENALTY UNDER SECTION 271( 1)(C) CAN BE LEVIED ONLY IN RESPECT OF TAX AMOUNT INVOLVED ON TH E ABOVE `.77 237/- ONLY. 13. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE EXPLAINED THAT THE ABOVE ADDITION WAS MADE ON ESTIM ATE ONLY AND THE VARIATION OF 5% ON THE BASIS OF VALUATION REPOR T CANNOT BE CALLED AS WILLFUL NEGLIGENCE ON THE PART OF THE ASS ESSEE. HE FURTHER SUBMITTED ESTIMATE. HE CONTENDED THAT THE ASSESSEE CANNOT BE SAID TO HAVE EVADED ANY TAX BY DECLARING LESSER AMO UNT OF OTHERWISE ALLOWABLE EXPENDITURE. BY NO STRETCH OF I MAGINATION IT CAN BE HELD THAT THE ASSESSEE COULD HAVE EVADED ANY GENUINE PAYMENT OF TAX BY REPORTING LESS EXPENDITURE WHICH IS ALLOWABLE AS DEDUCTION TO THE ASSESSEE IN COMPUTING ITS TAXABLE INCOME. THEREFORE PENALTY UNDER SECTION 271(1)(C) WHICH IS LEVIABLE FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF - 8 - INCOME WITH THE OBJECT OF EVADING PAYMENT OF GENUIN E TAX IS NOT EXIGIBLE IN THE INSTANT CASE. FOR THIS HE PLACED R ELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K. C.BUILDERS & ANOTHER VS ACIT (2004) 265 ITR 562 (SC).ON THE OTHE R HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE PENALTY IS LEVIABLE UNDER SECTION 271(1)(C) IN RESPECT OF ESTIMATED ADDITION OF `.77.237/- IN VIEW THE DECISION OF THE HON'BLE C ALCUTTA HIGH COURT IN THE CASE OF LOKNATH CHAUDHRY VS. CIT (1985) 155 ITR 291 (CAL) AND REHMAT DEVELOPMENT & ENGG. CORPORATION VS. CIT (1981) 130 ITR 602 (CAL). 14. WE FIND THAT IT IS NOT IN DISPUTE THAT THE CONS TRUCTION EXPENSES INCURRED BY THE ASSESSEE IS OTHERWISE ALLO WABLE AS DEDUCTIBLE EXPENDITURE TO THE ASSESSEE. THUS NO T AX CAN BE SAID TO HAVE BEEN AVOIDED BY THE ASSESSEE BY REPORTING L ESSER AMOUNT OF DEDUCTIBLE EXPENDITURE. FURTHER IN THE INSTANT CASE THE AMOUNT OF EXPENDITURE WHICH WAS HELD AS LESSER REPORTED BY THE ASSESSEE WAS BASED ON ESTIMATE ONLY AND NO MATERIAL WAS BROU GHT ON RECORD TO SHOW THAT THE ASSESSEE HAD ACTUALLY INCURRED MOR E EXPENSES WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. FUR THER IT IS OBSERVED THAT THE AFORESAID CITED TWO DECISIONS OF THE HON'BLE CALCUTTA HIGH COURT BY THE REVENUE ARE DISTINGUISHA BLE ON FACT IN AS MUCH AS THE EXPENDITURE WHICH WAS HELD AS LESSER REPORTED BY THE ASSESSEE WAS OTHERWISE ALLOWABLE AS DEDUCTIBLE REVENUE EXPENDITURE IN THE HANDS OF THE ASSESSEE WHICH WAS NOT THE FACT OF THOSE TWO CASES WHICH WERE BEFORE THE HON'BLE CALCU TTA HIGH COURT. THE HON'BLE SUPREME COURT IN THE CASE OF K. C. BUILDERS & ANOTHER (SUPRA) HAD HELD TO THE EFFECT THAT PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE WHERE THE ASSESSEE WITH AN IN TENTION OR DESIRE TRIED TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID IMPOSITION OF TAX THEREON. IN VIEW OF THE ABOVE IN OUR CONSIDERED OPI NION PENALTY UNDER SECTION 271(1)(C) IS NOT EXIGIBLE FOR THE LES SER EXPENDITURE REPORTED BY THE ASSESSEE WHICH WAS BUT FOR THE PROV ISIONS OF SECTION 69C WAS ALLOWABLE TO THE ASSESSEE AS DEDUCT ION FROM ITS TAXABLE INCOME. WE THEREFORE DELETE THE PENALTY LE VIED UNDER - 9 - SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 1999-00 A LSO. THUS ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 23RD JULY 2010 SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER AC COUNTANT MEMBER AHMEDABAD; ON THIS 23RD DAY OF JULY 2010 PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPO NDENT 3. THE CIT CONCERNED 4. THE LD. CIT ( APPEALS)-IV BARODA. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 19.07.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 19.07.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 19.07.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ------------------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ----------------- --- 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK --------------- ----- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------