Thakkers Developers Ltd.,, v. ACIT,(Cen.), Cen-3,Nashik,

ITA 485/PUN/2006 | 1997-1998
Pronouncement Date: 23-12-2010 | Result: Allowed

Appeal Details

RSA Number 48524514 RSA 2006
Bench Pune
Appeal Number ITA 485/PUN/2006
Duration Of Justice 4 year(s) 7 month(s) 26 day(s)
Appellant Thakkers Developers Ltd.,,
Respondent ACIT,(Cen.), Cen-3,Nashik,
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 23-12-2010
Assessment Year 1997-1998
Appeal Filed On 27-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 485/PN/2006 (ASSTT. YEAR : 1997-98) THAKKERS DEVELOPERS LTD. 7 THAKKERS NEAR NEHRU GARDEN NASHIK - 422001 PAN : NOT AVAILABLE .. APPELLANT V. ACIT (CENTRAL) CIRCLE-3 NASHIK . RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI SANGRAM GAIKWAD ADDL.D.I.T ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-I NAGPUR ON THE POINTS OF PENALTY LEVIED OF RS.1 86 070/- UNDER THE PROVISIONS OF SECTION 271(1 )(C ). 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVEL OPER AND CIVIL CONSTRUCTION AND CONSISTENTLY FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. FOR REVENUE RECOGNITION WITH RESPECT TO CONSTRUCTION CONTRACTING ACTIVITY ASSESSEE HAS CO NSISTENTLY ADOPTED COMPLETED CONTRACT METHOD. THUS THE PR OFIT FROM THE CONSTRUCTION CONTRACT PROJECTS WAS RECOGNIZED ON C OMPLETION OF CONSTRUCTION PROJECT AND ITS HANDNG OVER OF THE SAM E TO THE CONTRACTEE. ASSESSEE SUBMITTED IT REGULAR RETURN O F INCOME FOR THE A.Y. 1997-98 ON 27.11.1997 DECLARING THEREIN TO TAL INCOME AT ITA NO 485/PN/2006 THAKKERS DEVELOPERS LTD. A.Y. 1997-98 PAGE OF 6 2 RS. 40 19 590/-. CREDIT FOR PREPAID TAXES ON ACCO UNT OF TDS AMOUNT WAS CLAIMED AT RS. 6 05 726/- WHICH WAS PRO CESSED U/S. 143(1) AND CREDIT FOR ENTIRE AMOUNT OF TDS OF RS.6 05 726/- WAS ALLOWED. DURING THE PREVIOUS YEAR RELEVANT T O A.Y. 1997- 98 THERE WERE TWO CONSTRUCTION CONTRACT PROJECT I N HAND (I) CONSTRUCTION OF STAFF QUARTERS FOR RAYMONDS STEEL L TD. AND (II) CONSTRUCTION OF RESIDENTIAL QUARTERS FOR MAHARASHTR A STATE POLICE HOUSING AND WELFARE CORPORATION LTD. ( HEREINAFTER CALLED MSPHWC). DURING THE YEAR UNDER CONSIDERATION SOME OF THE BUILDINGS FROM RAYMONDS STEEL PROJECTS WERE COMPLET ED AND HANDED OVER TO CONTRACTEE AND HOWEVER WITH REGARD TO WORK OF MSPHWC NONE OF THE BUILDING WAS COMPLETED AND NO B UILDING WAS HANDED OVER TO CONTRACTEE. THEREFORE PROFIT F ROM RAYMOND WORK WAS RECOGNIZED WITH RESPECT TO THE COMPLETED B UILDINGS. HOWEVER NO PROFIT WAS RECOGNIZED WITH RESPECT TO B UILDINGS UNDER CONSTRUCTION FOR RAYMOND STEEL LTD. AS WELL A S MSPHWC. OUT OF TOTAL TDS OF RS. 6 05 726/- TDS OF RS. 1 7 3 009/- RELATED TO THE CONTRACT RECEIPTS FROM COMPLETED BUI LDINGS OF RAYMONDS STEEL LTD. AND BALANCE TDS OF RS. 4 32 7 17/- RELATED TO CONTRACT RECEIPT FROM WORK IN PROGRESS FOR RAYMO ND STEELS LTD. AS WELL AS MSPHWC. HOWEVER IN RETURN OF INC OME ASSESSEE CLAIMED CREDIT FOR THE ENTIRE AMOUNT OF TD S OF RS. 6 05 726/- WITHOUT TREATING THE AMOUNT OF TDS OF R S. 4 32 717/- FROM CONTRACT RECEIPTS AGAINST INCOMPLET E WORK AS INCOME OF ASSESSEE FOR THE YEAR. THIS SYSTEM OF C LAIMING CREDIT ITA NO 485/PN/2006 THAKKERS DEVELOPERS LTD. A.Y. 1997-98 PAGE OF 6 3 FOR TDS IN THE YEAR IN WHICH IT WAS MADE WAS CONSI STENTLY FOLLOWED BY THE ASSESSEE TILL THE TIME A.O POINTED OUT THAT IN TERMS OF PROVISIONS U/S. 198 THE AMOUNT OF TDS IS DEEMED AS INCOME RECEIVED AND THEREFORE TAXABLE IN THE YEAR I N WHICH SUCH TDS IS MADE. A.O. ISSUED NOTICE U/S. 148 FOR A.Y. 1997-98 TO TAX THE AMOUNT OF TDS OF RS.4 32 717 DEEMED AS INCOME RECEIVED U/S. 198. IN RESPONSE TO THE NOTICE U/S. 148 A RE VISED RETURN OF INCOME WAS SUBMITTED BY ASSESSEE ON 01.04.2004 AND THE AMOUNT OF TDS OF RS. 4 32 717/- WAS OFFERED AS INCO ME RECEIVED U/S. 148. THEREAFTER ASSESSMENT ORDER U/S. 143(3) READ WITH SECTION 147 WAS PASSED ON 16.02.2005 ASSESSING TOTA L INCOME OF THE ASSESSEE AT THE FIGURE OF TOTAL INCOME RETURNED IN THE RETURN OF INCOME SUBMITTED IN RESPONSE TO NOTICE U/S. 148 . HOWEVER WHILE COMPLETING THE ASSESSMENT U/S. 143(3) R.W.S. 147 A.O. INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C ) WITH RESECT TO THE INCOME OF RS. 4 32 717/- DEEMED AS INCOME UNDER RUL E 198. ACCORDINGLY PENALTY U/S. 271(1)(C ) WAS LEVIED BY A.O WHICH WAS CONFIRMED BY CIT(A). SAME HAS BEEN OPPOSED BEFORE US. 3. THE STAND OF THE ASSESSEE IS THAT THERE IS NO P ENALTY IN SIMILAR SET OF CIRCUMSTANCES IN EARLIER YEAR AND SU BSEQUENT YEARS. SO RELYING ON THE DECISION OF I.T.A.T. IN THE CASE OF DYNAMIC LOGISTICS PVT. LTD. VS. DY. CIT (ITA NO. 7/PN/2006 FOR A.Y. 2001-02 DATED 29-2-2008 WHEREIN ON IDENTICAL FACTS THE ASSESSING OFFICER HAS NOT LEVI ED THE PENALTY FOR OTHER YEARS. IN THAT EVENT PENALTY LEV IED WAS ITA NO 485/PN/2006 THAKKERS DEVELOPERS LTD. A.Y. 1997-98 PAGE OF 6 4 HELD NOT JUSTIFIED. RELEVANT PORTION OF THE SAID D ECISION IS REPRODUCED AS UNDER: 5. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT WHEN THE SIMILAR NOTE S ENCLOSED WITH THE RETURNS FOR THE A.Y. 2001-01 200 2- 03 AND 2003-04 THE A.O HAD DROPPED PENALTY PROCEEDINGS IT WAS NOT OPEN TO THE A.O TO IMPOSE PENALTY ON THE ADMITTEDLY IDENTICAL FACTS FOR THI S ASSESSMENT YEAR. A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ORIENT PRESS LTD. (99 TTJ 1091) HAS HELD THAT IF THE A.O HAS DROPPED PENALTY ON SIMILAR SET OF FACTS IN THE OTHER YEARS THE PEN ALTY NEEDS TO BE DROPPED ON THAT GROUND ALONE. IN THE SAID CASE THE TRIBUNAL HAS OBSERVED AS FOLLOWS: 4. IT IS DIFFICULT TO UNDERSTAND AS TO HOW CAN REVENUE DEFEND IMPOSITION OF PENALTIES FOR A.Y. 1993094 AND 1994-95 WHEN ON THE MATERIALLY SIMILAR SET OF FACTS NO PENALTY IS IMPOSED FOR THE ASSESSMENT YEAR 1995-96. THE DROPPING OF PENALTY PROCEEDINGS FOR THE A.Y. 1995-96 IS A CONSCIOUS ACT BY THE A.O AS EVIDENT FROM THE SPECIFIC ORDER DROPPING THE PENALTY PROCEEDINGS FOR THAT YEAR. DURING THE COURSE OF HEARING BEFORE US WE DID ASK THE DEPARTMENTAL REPRESENTATIVE TO EXPLAIN THIS CONTRADICTION IN THE STAND BUT HE WAS NOT ABLE TO EXPLAIN THE SAME AND HE MADE A VAGUE STATEMENT TO THE EFFECT THAT THE FACTS OF THAT YEAR MAY BE DIFFERENT. THIS IS UNACCEPTABLE. IN ANY CASE THE MATERIAL FACTS AS EVIDENT FROM THE DOCUMENTS BEFORE US WERE CLEARLY THE SAME SO FAR AS THE QUESTION OF DECLARATION WAS CONCERNED. ON ONE SET OF FACTS IN ONE YEAR THE PENALTY IS DROPPED AND FOR THE REMAINING YEARS THE PENALTIES ARE IMPOSED ARE POINTED OUT FOR THIS REASON ALONE PENALTIES IMPOSED ARE NOT SUSTAINABLE IN LAW 6. WE HAVE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY A CO-ORDINATE BENCH. THE MATERIAL FACTS BEING IDENTICAL INASMUCH AS ON SIMILAR SET OF FACTS AS WERE BEFORE THE A.O IN THIS YEAR THE PENALTY PROCEEDINGS HAVE BEEN DROPPE D FOR OTHER YEARS WE HOLD THAT IT WAS NOT A FIT CASE FOR IMPOSITION OF PENALTY. THE CIT(A) OUGHT TO HAVE DELETED THE SAME. IN ANY EVENT EVEN ON MERITS SI NCE ASSESSEE HAD DISCLOSED ALL MATERIAL FACTS BY WAY OF A NOTE ATTACHED TO THE INCOME-TAX RETURN IT CANNOT B E ITA NO 485/PN/2006 THAKKERS DEVELOPERS LTD. A.Y. 1997-98 PAGE OF 6 5 SAID TO BE A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. BEARING IN M IND THESE FACTS AS ALSO ENTIRETY OF THE CASE WE DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED PENALTY OF RS . 95 39 005. THE ASSESSEE GETS THE RELIEF ACCORDINGL Y. REFERENCE WAS ALSO PLACED TO THE DECISION OF CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ORIEN T PRESS LTD. (99 TTJ 1091) WHICH HAS BEEN FOLLOWED BY PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DYNAMIC LOGISTICS PVT. LTD. (SUPRA). IN VIEW OF THIS THE S TAND OF THE ASSESSEE IS THAT IN THIS CASE ALSO THE ASSESSING OFFICER HAS NOT LEVIED PENALTY FOR OTHER YEARS PENALTY FOR A.Y. 2001-02 IS NOT JUSTIFIED AN D SHOULD BE CANCELLED. 4. SO WE FIND THAT IN SIMILAR SET OF CIRCUMSTANCES PENALTY HAS BEEN LEVIED ONLY IN THE YEAR UNDER CONSIDERATION W HILE IN THE SUBSEQUENT YEAR WHICH IS BASIS FOR RE-OPENING OF TH E ASSESSMENT NO PENALTY HAS BEEN LEVIED AND WE ALSO FIND IN THE IMMEDIATELY PRECEDING EARLIER YEAR NO PENALTY HAS BEEN LEVIED IN THE SIMILAR SET OF CIRCUMSTANCES. THOUGH EVERY YEAR IS INDEPEN DENT YEAR BUT FOR THE SAKE OF CONSISTENCY PENALTY SHOULD NOT BE LEVIED AS HELD IN THE CASE OF DYNAMIC LOGISTICS PVT. LTD. (S UPRA). BESIDES THIS WE FIND THAT MUMBAI BENCH HELD IN TOY O ENGINEERING INDIA LTD. VS. JCIT (MUMBAI BENCH) REPORTED AS 100 TTJ 373 THAT EXRESSION OF INCOME INCLUDES NOT MERELY WHAT IS RECEIVED OR WHAT COMES IN BY EXPLOITING USE OF PROPERTY BUT ALSO WHAT ONE SAVES BY USING IT BY ONESELF AND ALSO WHICH CAN BE CONVERTED INTO INCOME. LIKEWISE THE NEXUS BETWEEN THE DEDUCTION OF TAX AT SOURCE AND ASSESSABLE INCOME IS NOT APPARENT IN ITA NO 485/PN/2006 THAKKERS DEVELOPERS LTD. A.Y. 1997-98 PAGE OF 6 6 EVERY ASSESSMENT YEAR. EVERY AMOUNT FROM WHICH TDS IS MADE DOES NOT CONSTITUTE INCOME. THE WORD INCOME I S OF THE WIDEST AMPLITUDE AND IT MUST BE GIVEN ITS NATUR AL AND GRAMMATICAL MEANING. SO IN VIEW OF ABOVE DISCUSSION PENALTY IS NOT JUSTIFIED AND SAME IS DI RECTED TO BE DELETED. 5. IN THE RESULT THE APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23RD DECEMBER 2010. SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER PUNE DATED THE 23RD DECEMBER 2010 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED NASHIK 4. THE CIT(A)-I NAGPUR 4. THE D.R. B BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE