DRONAGIRI INFRASTRUCTURE P.LTD, MUMBAI v. DCIT 6(2), MUMBAI

ITA 5797/MUM/2014 | 2008-2009
Pronouncement Date: 07-10-2016 | Result: Allowed

Appeal Details

RSA Number 579719914 RSA 2014
Assessee PAN AACCA7661A
Bench Mumbai
Appeal Number ITA 5797/MUM/2014
Duration Of Justice 2 year(s) 22 day(s)
Appellant DRONAGIRI INFRASTRUCTURE P.LTD, MUMBAI
Respondent DCIT 6(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 07-10-2016
Assessment Year 2008-2009
Appeal Filed On 15-09-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SANJAY GARG JUDICIAL MEMBER AND SHRI ASHWANI TANEJA ACCOUNTANT MEMBER ITA NO.6887/M/2013 ASSESSMENT YEAR: 2008-09 M/S. ROHAN DEVELOPERS PVT. LTD. 2 ND FLOOR 12/14 GOVARDHAN BUILDING PAREKH STREET PRARTHANA SAMAJ MUMBAI - 04 PAN: AACCA7661A VS. ACIT CENTRAL CIRCLE-44 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA A.R. REVENUE BY : SHRI B.S. BIST D.R. DATE OF HEARING : 04.10.2016 DATE OF PRONOUNCEMENT : 07.10.2016 O R D E R PER SANJAY GARG JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 30.09.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2008-09. THE ASSESSEE HAS AGITATED THE LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE PROFESSION OF BUILDERS AND DEVELOPERS. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT THE ASSESSING OFFI CER (HEREINAFTER REFERRED TO AS THE AO) FOUND THAT THE ASSESSEE HAD CLAIMED CERT AIN CONSULTANCY CHARGES OF RS.12 91 284/-. ON PERUSAL OF THE DETAILS HE FOUN D THAT THE SAID EXPENDITURE WAS INCURRED FOR THE PURPOSE OF OBTAINING CONSULTAN CY FOR AN ONGOING PROJECT SITUATED AT NEPEAN SEA ROAD AND FURTHER THAT THE AS SESSEE HAD NOT OFFERED ANY ITA NO.6887/M/2013 M/S. ROHAN DEVELOPERS PVT. LTD. 2 INCOME FROM THE SAID ONGOING PROJECT. THE SAID PRO JECT WAS SHOWN AS WORK IN PROGRESS. THE AO THEREFORE TREATED THE SAID CONS ULTANCY CHARGES INCURRED ON THE SAID PROJECT AS WIP AND HELD THAT THE ASSESSEE WOULD BE ELIGIBLE TO CLAIM THE SAID EXPENDITURE IN THE YEAR WHEN THE INCOME FR OM THE SAID PROJECT WILL BE OFFERED FOR TAXATION. HE ALSO INITIATED PENALTY PR OCEEDINGS IN THIS RESPECT. DURING THE PENALTY PROCEEDINGS THE ASSESSEE EXPLAI NED THAT THERE WAS NO DELIBERATE ACT ON THE PART OF ASSESSEE IN CONCEALIN G ANY PART OF ITS INCOME OR IN FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH AT THE COMPUTATION OF INCOME SUBMITTED WAS UNDER BONAFIDE BELIEF. OTHERW ISE THE ASSESSEE HAS NOT CLAIMED ANY BOGUS EXPENDITURE. THE AO HAS ONLY POS TPONED THE CLAIM OF EXPENDITURE TILL THE COMPLETION OF PROJECT. THE AO HOWEVER DID NOT GET SATISFIED FROM THE ABOVE REPLY OF THE ASSESSEE AND IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3. THE LD. CIT(A) ALSO CONFIRMED THE PENALTY. THE ASSESSEE THUS HAS COME IN APPEAL BEFORE US. 4. THE LD. A.R. HAS BROUGHT OUR ATTENTION TO THE CO PY OF THE LETTER SUBMITTED TO THE AO IN RESPECT OF THE CONSULTANCY C HARGES. THE LD. A.R. HAS FURTHER BROUGHT OUR ATTENTION TO PAPER BOOK PAGE 4 WHICH IS THE COPY OF THE LEDGER ACCOUNT AND HAS STATED THAT THE ABOVE SAID C ONSULTANCY CHARGES WERE DEBITED IN THE LEDGER ACCOUNT OF NEPEAN SEA ROAD PR OJECT INADVERTENTLY. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE IN FACT W AS CARRYING ON VARIOUS PROJECTS AT VARIOUS LOCATIONS AND THAT THE CONSULTA NCY CHARGES PAID WERE NOT IN RESPECT OF NEPEAN SEA ROAD PROJECT ONLY BUT IN RESP ECT OF ALL THE PROJECTS; THAT THE ASSESSEE HAD NOT DEBITED ANY SEPARATE CONSULTAN CY CHARGES IN RESPECT OF ANY OF THE PROJECTS. HE HAS FURTHER INVITED OUR ATTENT ION TO PAGE 10 OF THE PAPER BOOK TO STATE THAT A RECTIFICATION WAS ALSO MADE IN THE ACCOUNTS AND THE CONSULTANCY CHARGES EARLIER DEBITED TO NEPEAN SEA R OAD PROJECT WERE TRANSFERRED TO P & L ACCOUNT UNDER THE HEADING CONSULTANCY CHARGES WHICH WERE NOT RELATED TO ANY PARTICULAR PROJECT. HE HAS ITA NO.6887/M/2013 M/S. ROHAN DEVELOPERS PVT. LTD. 3 THEREFORE SUBMITTED THAT THE ABOVE DISALLOWANCE DU RING THE ASSESSMENT PROCEEDINGS WAS MADE BY THE AO DUE TO INADVERTENT M ISTAKE ON THE PART OF ASSESSEE IN DEBITING THE CONSULTANCY CHARGES IN RES PECT OF NEPEAN SEA ROAD PROJECT ONLY. HE HAS THEREFORE STATED THAT THE SAI D EXPENDITURE OF CONSULTANCY CHARGES WAS OTHERWISE ALLOWABLE AS EXPENDITURE. HE HAS FURTHER SUBMITTED THAT THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE SEPARATE AND DISTINCT PROCEEDINGS. MERELY BECAUSE A DISALLOWANC E HAS BEEN MADE BY THE AO IN RESPECT OF CONSULTANCY CHARGES THAT ITSELF IS NO T SUFFICIENT TO HOLD THAT THE ASSESSEE HAD CONCEALED ITS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. 5. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED T HAT THE FACTUM OF INADVERTENT MISTAKE REGARDING THE DEBITING OF CONSU LTANCY CHARGES IN RELATION TO NEPEAN SEA ROAD PROJECT HAS NOT BEEN EXAMINED BY TH E AO AND HENCE AT THIS STAGE THE ASSESSEE HAS COME WITH A NEW PLEA. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAV E ALSO GONE THROUGH THE RECORDS. FROM THE CONSIDERATIONS OF OVERALL FACTS AND CIRCUMSTANCES WE FIND THAT THE AO HAS NOT DOUBTED THE INCURRING OF THE EX PENDITURE. IT HAS ALSO NOT BEEN DOUBTED BY THE AO THAT THE SAID EXPENDITURE WA S INCURRED FOR BUSINESS PURPOSES. THE SAID EXPENDITURE HAS BEEN DISALLOWED BY THE AO FOR THE YEAR UNDER CONSIDERATION CONSIDERING THE SAME AS PART OF WORK IN PROGRESS. HOWEVER THE AO HAS GIVEN A CATEGORICAL FINDING THA T THE ASSESSEE WILL BE ELIGIBLE TO CLAIM THE SAID EXPENDITURE ON COMPLETIO N OF THE PROJECT OR ON OFFERING OF THE INCOME FROM THE SAID PROJECT. THE ASSESSEE HAS ALSO EXPLAINED BEFORE US THAT THE ASSESSEE OTHERWISE WAS ELIGIBL E TO CLAIM THE SAID EXPENDITURE AS CONSULTANCY CHARGES IN GENERAL AND N OT RELATED TO ANY SPECIFIC PROJECT BUT DUE TO SOME INADVERTENCE THE SAME ARE D EBITED TO A PARTICULAR PROJECT. WE DO NOT THINK THAT IT IS A CASE OF ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. UN DER THESE CIRCUMSTANCES THE ITA NO.6887/M/2013 M/S. ROHAN DEVELOPERS PVT. LTD. 4 PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LD. C IT(A) UNDER SECTION 271(1)(C) OF THE ACT IS HEREBY ORDERED TO BE DELETE D. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.10.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 07.10.2016. * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.