CONCRETE IDEAS REALTORS PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER 12 (1) (4), MUMBAI

Facts leading to imposition of impugned penalty are that the assessee being resident corporate entity stated to be engaged as engineers & architects during impugned AY was assessed u/s 143(3) on 31/01/2013 wherein it transpired that the assessee computed short term capital gains of Rs.72.43 Lacs on sale of various office premises which constituted depreciable business assets for the assessee. While arriving at the said gains, written down value [WDV] of the office premises as per The Companies Act was considered as the cost. Further, each premises were considered as separate block of assets, while working out the gains. However, the WDV, in terms of Section 50, as per Income Tax Act was to be considered as cost and further the computations were to be made considering the various office premises as single block of asset. The aforesaid differences led to enhancement of gains from Rs.72.43 Lacs to Rs.89.43 Lacs, against which impugned penalty 271(1)(c) was initiated in the quantum assessment order for furnishing of inaccurate particulars of income.

During penalty proceedings, the assessee submitted that the same was bona-fide mistake which was realized only at the time of assessment and therefore, the penalty was not justified. However, not connived Ld. AO levied penalty of Rs.5.30 Lacs against the same. The same, upon confirmation by first appellate authority, is under appeal before us.

Concrete Ideas Realtors P.Ltd. Assessment Year :2010-11 4. Upon careful consideration, we find that the genesis of the impugned penalty lies in the wrong computations made by the assessee. The mistake has already been admitted during assessment proceedings. It is observed that the assessee was required to take WDV as per Income Tax Act as against The Companies Act as taken by the assessee and secondly, all the premises were to be considered as single block of assets. Nevertheless, the same could not be termed as furnishing of inaccurate particulars of income which justifies imposition of penalty u/s 271(1)(c). In our opinion, the computational error, at best, be termed as bona fide error on the part of the assessee and the assessee stood benefitted by the judgment of Hon’ble Apex Court rendered in Price Waterhouse Coopers Pvt. Ltd. Vs. CIT [2012 25 Taxmann.com 400] and also by the decision rendered in CIT Vs. Reliance Petroproducts Pvt. Ltd. [2010 322 ITR 158]. Therefore, we are inclined to delete the same.

The appeal stands allowed. Order pronounced in the open court on 18th March, 2019. Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 18/03/2019 Sr.PS, Jaisy Varghese