Itxa/794/2017 Of Pr. Commissioner Of Income Tax-12, Mumbai v. Abode Construction Ltd

JPP IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 794OF 2017 Principal Commissioner of Income Tax-12, Mumbai … Appellant V/s. Abode Construction Ltd. ... Respondent. Mr. Sham Walve for the Appellant. CORAM : M.S. SANKLECHA & NITIN JAMDAR, JJ. DATE : 16 SEPTEMBER 2019. P.C.:- The Appellant – Revenue has filed this Appeal under Section 260A of the Income Tax Act, 1961 challenging the orderdated 8 July 2016 passed by the Income Tax Appellate Tribunal,Mumbai. By the impugned order the Tribunal had dismissed theAppeal filed by the Appellant – Revenue against the order passed bythe Commissioner of Income Tax (Appeals) deleting the penaltylevied on the Respondent – Assessee by the Assessing Officer. 2.According to the Appellant following question is asubstantial question of law that arises in the Appeal :- “Whether in the facts and in the circumstances ofthe case and in law, the Tribunal was right in holdingthat the failure to disclose income by the Assessee whenthe project is complete would not amount to furnishinginaccurate particulars of income thereby resulting inconcealment of the income by the Assessee ?” 3.The Respondent – Assessee, a company is engaged inbusiness of construction and real estate. The assessment of theRespondent for the Assessment Year 2004-05 was completed withtotal income of Rs.16,96,75,146. An Appeal was filed and theCommissioner of Income Tax (Appeals) granted relief on account ofreceipt of Rs.13,31,96,400/- and an irrevocable loan of Rs.16.75 lacs.The Assessing Officer gave effect to the order in Appeal anddetermined income at Rs.3,48,03,446/- The penalty proceedingswere initiated under Section 271(1)(c) of the Act 1961. TheRespondent – Assessee gave its explanation. The Assessing Officerrejected the explanation and imposed penalty of Rs.1,50,00,000/- forfurnishing inaccurate particulars of income to the tune ofRs,3,48,03,446/-. The Respondent – Assessee filed an Appealbefore the Commissioner (Appeals). The Commissioner (Appeals)by order dated 27 April 2009 set aside the penalty. The Appellant –Revenue filed an Appeal ITA 4067/Mum/2009 in the Tribunal. By impugned order dated 8 July 2016, the Tribunal dismissed theAppeal. Both, the Commissioner (Appeals) and the Tribunal heldthat the stand taken by the Respondent was bonafide, and levy ofpenalty was not warranted. 4.We have heard Mr. Sham Walve, learned Counsel for theAppellant. 5.It has been the case of the Respondent – Assesseethroughout that it was under a bonafide belief that the methodadopted by it was recognized method for computing income forconstruction business i.e. project completion method. The questiontherefore arose whether the action of the Respondent was bonafide.It appears that the project was a subject matter of litigation beforethis Court. There was a dispute between the Respondent andChandivali Residents Association and also between the Respondentand Maharashtra Housing and Area Development Authority. Therewere claims and counter-claims made against the Respondent andthe Respondent took a stand that it would be appropriate to deferthe decision of revenue recognition till the issue is settled. In fact, inquantum proceedings, when the dispute had come before theTribunal, there was difference of opinion between the members andthird member had to resolve the dispute as to when the project issaid to be completed for revenue recognition. This itself would support the case of the Respondent that it was under a bonafidebelief that the project would be completed only after the dispute isresolved. Thus, it is not a case of furnishing inaccurate particulars ofincome to justify invocation of Section 271(1)(c) of the Act. support the case of the Respondent that it was under a bonafidebelief that the project would be completed only after the dispute isresolved. Thus, it is not a case of furnishing inaccurate particulars ofincome to justify invocation of Section 271(1)(c) of the Act. 6.In view of concurrent finding of fact by theCommissioner (Appeals) and the Tribunal, not being shown to beperverse or illegal, the view of the Tribunal calls for no interference.Thus, the issue raised in the Appeal does not give rise to anysubstantial question of law. The Appeal is dismissed. NITIN JAMDAR, J. M.S. SANKLECHA, J.