DCIT 24(3), MUMBAI vs. SHEKHAR S. DADARKAR, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order,dated 31/03/2014, of the CIT (A)-34,Mumbai the Assessing Officer(AO) has filed the present appeal.Assessee, an individual, filed its return of income on 30/10/2005, declaring total income at Rs. 65.41 lakhs. The AO completed the assessment u/s. 143 (3) of the Act,on 28/12/2007, determining his income at Rs. 2.94 crores.While finalising the assessment, the AO made certain disallowances/additions.Aggrieved by the order of the AO, the assessee filed an appeal before the First Appellate Authority (FAA) who confirmed the addition on account of sale, amounting two Rs. 27.49 lakhs made by the assessee during the year but not accounted for by him in the books of accounts. The FAA also confirmed the addition on account of sale of shops amounting Rs. 65.40 lakhs which were not declared by the assessee in the return of income. 2.The AO issued a notice to the assessee for living penalty u/s. 271(1)(c) of the Act.After considering the submission of the assessee, he held that explanation filed by the assessee was neither convincing not acceptable, that the additions were confirmed by the FAA,that there was no difference of opinion with regard to taxability of the income in the year under consideration, that the sale of four of the flats/shops was affected in the AY. 2005-06,that the income relating to such sale was not offered to tax by the assessee during the year under consideration but in the next AY., that there was no obvious and acceptable reason for postponement of income of the current year to the next year, that same was the case in respect

3911/M/14-Shekhar S. Dadarkar of the sale of shops, that the registration took place on 12/07/2004, that the assessee was following the Mercantile system of accounting, that there was no justification for not offering the sales for the AY. 2005-06,that the assessee had understated the particulars of the income for the year under consideration, that the assessee had concealed the particulars of income and had furnished inaccurate particulars. Finally, the AO levied a penalty of Rs. 31.37 lakhs invoking the provisions of section 271(1)(c) of the Act.

3.Aggrieved by the penalty order of the AO, the assessee preferred an appeal before the FAA and made elaborate submissions. He also referred to certain case laws before the FAA.After considering the submission of the assessee,penalty order and the assessment order, the FAA held that the AO had made addition in respect of the agreements for sale of flat/shops which were registered with the Sub Registrar during the previous year corresponding to the subject AY., that he had not recorded these transactions in the books of accounts for the year under appeal, that the assessee recorded the sales in subsequent AY. on the basis of education of agreements, that in the quantum appeal the FAA had confirmed the addition on the ground that as per the provisions of Transfer of Immovable Properties Act the sales took place in the year under consideration, that the then FAA had allowed the deduction in the subsequent AY. i.e. AY. 2006-07 in which the assessee had recorded the sales, that the observation of the then FAA showed that there was no concealment of income by the assessee,that if the business activities of the assessee were properly understood it would be clear that parting of the possession was the basis for showing the income,that at times the agreement with the buyer for sale of flat was made in registered at the initial stage when the construction of building would began that in such circumstances the property would not come into existence and would not be transferred merely by making agreement.He referred to the case of KC Builders (265 ITR 562) and deleted the penalty levied by the AO.

4.During the course of hearing before us the Departmental Representative (DR) supported the order of the AO and stated that assessee had not disclosed the income arising out of the sale of flat/shops during the year under consideration,that he had concealed the particulars of income, that the AO was justified in living penalty u/s. 271(1)(c) of the Act. As stated earlier, none appeared on behalf of the assessee. No application was filed by the assessee for adjourning the case. Therefore, we are deciding the matter on the basis of available material.

3911/M/14-Shekhar S. Dadarkar