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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI C.N. PRASAD & SHRI ASHWANI TANEJA
आदेश / O R D E R
PER C.N. PRASAD, JM:
This appeal is filed by the Revenue against the order of the Ld. CIT(A)-31 , Mumbai dated 13.5.2014 pertaining to assessment year 2006-07 challenging the order of the Ld. CIT(A) in levying penalty u/s. 271(1)(c) of the Act.
Brief facts are that the assessee firm is engaged in the business of interior decorators and furniture manufacturers. The assessee filed its return of income on 27.10.2006 declaring income of Rs. 4,53,500/-. The assessment was completed u/s. 143(3) on 14.11.2008 determining the income of the assessee at Rs. 1,02,39,390/-. The Assessing Officer while completing the assessment made addition of Rs. 97,86,392/- being the income received from M/s. Wipro Ltd., and M/s. Rallis India Ltd., for the reason that assessee has not reported this income as its turnover though credit for TDS on such income was claimed by the assessee for the assessment year 2006-07 which is under consideration. The contention of the assessee before the Assessing Officer was that it had received only advance from both these parties for the sub- contracts work undertaken by the assessee and therefore these advances cannot be brought to tax for this assessment year unless work is completed. However, rejecting the contention of the assessee, the Assessing Officer brought to tax the income of Rs. 97,86,392/- received from both these parties for the assessment year 2006-07. The assessee preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) confirmed the addition made by the Assessing Officer. Penalty proceedings u/s. 271(1)(c) were initiated and an order was passed on 20.3.2012 levying penalty of Rs. 3,98, 576/- holding that assessee concealed the true particulars of its income and has no bonafide explanation to offer. On appeal , the Ld. CIT(A) sustained the penalty levied by the Assessing Officer.
The Ld. Counsel for the assessee submits that assessee has not concealed any particulars of income. The Ld. Counsel further submits that income was spread over for the assessment years 2006-07 and 2007-08 and there is no revenue leak. The reason for spreading over is that in the assessment year 2006-07, the assessee has received advance from both these parties and since the contract was concluded in assessment year 2007-08, income was shown in both assessment years 2006-07 and 2007-08.
The Ld. Departmental Representative vehemently supports the orders of the lower authorities in levying penalty for concealment of income or furnishing of inaccurate particulars of such income.
Heard both parties and perused the orders of the lower authorities. The assessee before the lower authorities contended that it had received only an advance from M/s. Wipro Ltd., and M/s. Rallis India Ltd., and since the contract work was concluded in both the financial years 2005-06 & 2006-07, the income was shown in the assessment years 2006-07 and 2007-08. It is the contention of the assessee that there is no concealment of income and furnishing of inaccurate particulars of such income. It is also the contention of the assessee that the Ld. CIT(A) in the quantum appeal estimated the income at 10% of the contract receipts for the assessment year 2006- 07 but sustained the penalty holding that the assessee issued Pro- forma invoice against which payments were made and therefore there is concealment of income or furnishing of inaccurate particulars of income by the assessee for the assessment year 2006- 07.
We are not in agreement with the contention of the lower authorities that there is concealment of income by the assessee. The fact that the assessee concluded the contracts in the financial year 2006-07 relevant to assessment year 2007-08 is not in dispute. The assessee was under the bonafide impression that the income has to be reported on completion of the contract reported the income in the assessment year 2007-08 on conclusion of contract.. We also find that the assessee had infact shown the income in both assessment years i.e. A.Y. 2006-07 and 2007-08 depending upon the execution of contract as rightly contended by the assessee that there is no revenue leak since the entire income has been reported by the assessee. In the quantum proceedings, the entire contract receipts were assessed during the assessment year 2006-07 by estimating income at 10%. The Hon’ble Supreme Court in the case of Hindustan Steel Ltd., Vs CIT (83 ITR 26) and in the case of K.C. Builders Vs ACIT (265 ITR 562) has held that conduct of assessee must be conscious and mere omission from the return of income of any item of receipt does not amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax. In this case, we do not find any deliberate concealment or furnishing of inaccurate particulars of such income by the assessee. The assessee was following mercantile system of accounting and accounted for the income based on the completion of contract method in both the assessment year 2006-07 and 2007-08. Thus, we hold that there is no concealment or furnishing of inaccurate particulars of income by the assessee. Therefore, we direct the Assessing Officer to delete the penalty levied u/s. 271(1)(c) of the Act.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 27th April, 2016.