ACIT, CC-XII, Kolkata, Kolkata v. M/s. Vedic Realty Ltd., Kolkata

ITA 905/KOL/2010 | 2006-2007
Pronouncement Date: 29-03-2011

Appeal Details

RSA Number 90523514 RSA 2010
Assessee PAN AAHCS6430Q
Bench Kolkata
Appeal Number ITA 905/KOL/2010
Duration Of Justice 10 month(s) 23 day(s)
Appellant ACIT, CC-XII, Kolkata, Kolkata
Respondent M/s. Vedic Realty Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2011
Appeal Filed By Department
Bench Allotted C
Tribunal Order Date 29-03-2011
Assessment Year 2006-2007
Appeal Filed On 06-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BEN CH C KOLKATA () BEFORE . .. . . .. . SHRI D.K.TYAGI JUDICIAL MEMBER. !' !' !' !' /AND . .. . . .. .! !! ! # SHRI C.D.RAO ACCOUNTANT MEMBER '$ '$ '$ '$ / ITA NO . 905/KOL/2010 %&' !()/ ASSESSMENT YEAR : 2006-07 (+ / APPELLANT ) A.C.I.T. CENTRAL CIRCLE-XII KOLKATA - !& - - VERSUS - . (.+ / RESPONDENT ) M/S. VEDIC REALTY LTD. KOLKATA (PAN: AAHCS 6430 Q) + / 0 / FOR THE APPELLANT: SHRI A.K.PRAMANIK .+ / 0 / FOR THE RESPONDENT: SHRI A.K.TULSIYAN 1 / ORDER ( (( ( . .. . . .. .! !! !) )) ) # PER SHRI C.D.RAO AM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 12.02.2010 OF THE CIT(A)-CENTRAL-II KOLKATA PERTAINING TO A.YR. 2006 -07. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS IN RESPECT OF DELETION OF PENALTY OF RS.2 55 222/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T.ACT. 3. THE BRIEF FACTS OF THE ISSUE ARE THAT THE AO HAS LEVIED PENALTY OF RS.2 55 222/- U/S 271(1)(C) OF THE IT ACT BEING 100% OF THE TAX S OUGHT TO BE EVADED ON THE TOTAL INCOME OF RS.7 73 390/- BY OBSERVING THAT IN COURSE OF SCRUTINY ASSESSMENT IT IS NOTICED TH AT THE ASSESSEE HAD SEVERAL OTHER RECEIPTS VIZ. SALE OF SCRAP HIRE CHARGES OF VEHICLES MISC.RECEIPT INTEREST RECEIPT ETC. HOWEVER THESE RECEIPTS WERE NOT CONSI DERED AS INCOME BUT WERE ADJUSTED WITH WORK-IN-PROGRESS. THE ASSESSEE WAS AS KED TO EXPLAIN THAT WHY THE ABOVE RECEIPTS SHOULD NOT BE CONSIDERED AS INCOME. THE ASSESSEE HAVING NO 2 ANSWER IN SUPPORT OF THE CLAIM CONFESSED THAT THE ABOVE RECEIPTS MAY BE CONSIDERED AS INCOME SUBJECT TO DEDUCTION OF PROPOR TIONATE EXPENSES AND DEPRECIATION. IN THE LETTER ASSESSEE CLAIMED 10% OF THE ADMINISTRATIVE EXPENSES AS PROPORTIONATE EXPENSES WHICH WAS CONSIDERED EXCE SSIVE BY THE ASSESSING OFFICER. HOWEVER 8% DEDUCTION WAS ALLOWED AND ADDI TION OF RS.7 73 390/- WAS MADE AND THE TOTAL INCOME ASSESSED WAS RS.23 34 590/-. THE FACT OF THE CASE INDICATES WITHOUT ANY AMBIGUI TY THAT ASSESSEE CONCEALED INCOME AS WELL AS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE TUNE OF RS.7 73 390/-. THIS WAS DONE BY ADJUSTMENT OF REVEN UE RECEIPT FROM WORK IN PROGRESS. 3.1. ON APPEAL THE LD. CIT(A) HAS DELETED THE SAME BY OBSERVING THAT I FIND THAT ALL MATERIAL FACTS WHICH LED TO THE FI NAL COMPUTATION OF ADDITIONAL INCOME BY ASSESSING OFFICER SUCH AS SALE OF SCRAP CAR HIRE CHARGES RECEIPT INTEREST RECEIPT MISCELLANEOUS RECEIPTS DEPRECIAT ION AND ADMINISTRATIVE EXPENDITURE WERE DISCLOSED BY THE APPELLANT IN THE RETURN OF INCOME. IT IS AGAIN A FACT THAT ASSESSING OFFICER COMPUTED THE BUSINESS INCOME OF APPELLANT AT RS.7 73 390/- AND THEREFORE THE BUSINESS OF APPELLA NT WAS IN EXISTENCE. IT IS APPARENT FROM THE ASSESSMENT ORDER AND PENALTY ORDE RS OF ASSESSING OFFICER THAT APPELLANT WAS TAKING ALL THE EXPENDITURES RELA TABLE TO THE PROJECT INCLUDING THE ADMINISTRATIVE EXPENDITURE TO WORK IN PROGRESS AND WAS REDUCING THIS AMOUNT WITH MISCELLANEOUS RECEIPT. IN FACT IF THE MISCELLANEOUS RECEIPTS ARE OF REVENUE NATURE SO ARE THE ADMINISTRATIVE EXPENDITUR ES. THE OFFER OF THE APPELLANT TO ALLOCATE 10% OF ADMINISTRATIVE EXPENDI TURE TOWARDS EARNING THE MISCELLANEOUS RECEIPTS AND THEN ASSESSING OFFICER A LLOWING ONLY 8% OF SUCH EXPENDITURE APPEARS TO BE AN ACT OF AVOIDING LITIGA TION BECAUSE AN ESTIMATION OF ABOUT 13% OF SUCH ADMINISTRATIVE EXPENSES ALLOCABLE TOWARDS MISCELLANEOUS RECEIPT WOULD HAVE RESULTED IN NO SUCH BUSINESS INC OME. IN NUTSHELL IF ANY ALLOCATION OF ADMINISTRATIVE EXPENSES OF MORE THAN 13% WAS MADE IT WOULD HAVE RESULTED IN A BUSINESS LOSS. THEREFORE THE OFF ER OF APPELLANT TO ALLOCATE 10% OF ADMINISTRATIVE EXPENDITURE WHICH RESULTED IN OFFER OF TAXATION OF BUSINESS INCOME OF RS.4 17 738 CANNOT BE CONSTRUED ANYTHING OTHER THAN AN OFFER TO BUY PEACE. THE ENHANCEMENT OF THIS OFFER O F RS.4 17 738 BY THE ASSESSING OFFICER TO RS.7 73 390 BY ESTIMATING ONLY 8% OF ADMINISTRATIVE EXPENSES INSTEAD OF 10% OFFERED BY THE APPELLANT IS A PURE ESTIMATION AS APPARENT FROM THE ASSESSMENT ORDER. APPELLANT HAD DISCLOSED ALL MATERIAL FACTS IN THE RETURN OF INCOME FROM WHERE ANY INCOME COULD BE CALCULATED ON ESTIMATE BASIS WHICH COULD BE A LOSS A NIL INCOME OR A POSI TIVE INCOME DEPENDING UPON THE ESTIMATION OF PERCENTAGE OF ADMINISTRATIVE EXPE NDITURE ALLOCABLE TOWARDS MISCELLANEOUS RECEIPTS. FURTHER THE COMPUTATION OF ANY POSITIVE BUSINESS INCOME IN THE ASSESSMENT YEAR UNDER APPEAL WOULD RE SULT IN HIGHER WORK IN PROGRESS AND ULTIMATELY LESSER BUSINESS PROFIT WHEN THE PROJECT IS FINALLY SOLD. THEREFORE IN MY OPINION THERE IS NO CONCEALMENT OF INCOME BY THE APPELLANT AND THE AMOUNT ADDED BY ASSESSING OFFICER TO THE TOTAL INCOME IS NOT EMANATING FROM ANY FACT WHICH THE APPELLANT HAD NOT DISCLOSED IN THE RETURN OF 3 INCOME AND IS A RESULT OF PURE ESTIMATION WHICH WAS ACCEPTED BY APPELLANT TO AVOID LITIGATION AND FOR THE REASON THAT SUCH ADDIT ION WILL FINALLY RESULT IN LESSER PROFIT IN THE YEAR THE PROJECT IS SOLD. I THEREFORE CANCEL THE PENALTY OF RS.2 55 222/- LEVIED BY THE ASSESSING OFFICER U/S 2 71(1)(C) OF THE IT ACT. 3.2. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEF ORE US. 4. THE LD. DR APPEARING ON BEHALF OF THE REVENUE H EAVILY RELIED ON THE ORDER OF THE AO. 5. ON THE OTHER HAND THE LD. AR APPEARING ON BEHA LF OF THE ASSESSEE RELIED ON THE ORDERS OF THE LD. CIT(A ) AND FURTHER CONTENDED THA T ALL THE MATERIAL FACTS WHICH ARE RELEVANT FOR THE COMPUTATION OF TOTAL INCOME HAS BE EN DULY FILED BEFORE THE AO. THEREFORE HE SUPPORTED THE ORDERS OF THE LD. CIT(A) . 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD KEEPING IN VIEW OF THE FACT TH AT THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS IN THE RETURN OF INCOME FROM WHERE A NY INCOME COULD BE CALCULATED.. IN THE PRESENT CASE THE AO HAS COMPUTED THE DISALLOWAN CE OF ADMINISTRATIVE EXPENSES ON ESTIMATED BASIS BASED ON THE INFORMATION FURNISHED BY THE ASSESSEE HIMSELF THE LD. AO HAS COMPUTED THE DISALLOWANCE OF ADMINISTRATIVE EXP ENSES ON ESTIMATION BASIS. THEREFORE IN OUR CONSIDERED OPINION IT WILL BE NO T BE CONSIDERED AS CONCEALMENT OF INCOME BY THE ASSESSEE AND LEVY OF PENALTY U/S 271( 1)(C) OF THE IT ACT IS NOT JUSTIFIABLE. THEREFORE WE CONFIRM THE ACTION OF TH E LD. CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29.03.2011. SD/- SD/- . .. . . .. . % % % % D.K.TYAGI JUDICIAL MEMBER . .. . . .. .! !! ! # # # # C.D.RAO ACCOUNTANT MEMBER. ( (( (# # # #) )) ) DATE:29.03.2011 ORDER PRONOUNCED IN THE COURT ON 29.03.2011 SD/- SD/- AM JM (CDR) (MS) R.G.(.P.S.) 4 1 / .%%2 32(4- COPY OF THE ORDER FORWARDED TO: 1. M/S. VEDIC REALTY LTD. 1/1B UPPER WOOD STREET KO LKATA-700017. 2 THE ACIT CENTRAL CIRCLE-XII KOLKATA 3. THE CIT 4. THE CIT(A)-CENTRAL-II KOLKATA 5. DR KOLKATA BENCHES KOLKATA 2 .%/ TRUE COPY 1&9/ BY ORDER DEPUTY /ASST. REGISTRAR ITAT KOLKATA BENCHES