INCOME TAX OFFICER, WARD - 1(1), PANAJI vs. SHRI LALJI PURUSHOTTAM BABHOYYA PATEL, ALTINHO

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.361/PAN/2018 Assessment Year: 2006-07 ITO, Vs. Shri Lalji Purshottam Dabhoyya Ward 1(1), Patel, Panaji, Hill View, Althinho, Goa. Panaji, Goa- 403 001. PAN: ABAPD1169Q ITA No.339/PAN/2018 Assessment Year: 2006-07 Shri Lalji Purshottam Vs. ACIT, Dabhoyya Patel, Circle -1(1), Hill View, Althinho, Panaji, Panaji, Goa- 403 001. Goa. PAN: ABAPD1169Q (Appellant) (Respondent) Assessee by : Shri Jitendra Jain, Advocate Revenue by : Shri Mayur Kamble, Sr. DR Date of Hearing : 15.06.2022 Date of Pronouncement : 17.08.2022 ORDER PER C.M. GARG, JM: ITA No.339/PAN/2018 This appeal has been filed by the assessee against the order of the CIT(A), Panaji-1, dated 31.05.2018 for assessment year 2007-08.

ITA Nos.361 & 339/PAN/2018 2. Facts of the case, in brief, are that the assessee is a civil contractor carrying on the business at Panaji, Goa. The assessee filed his return of income declaring the total income at Rs.9,02,333/-. The AO completed the assessment u/s 143(3) of the Act by making the following additions:- i) Unexplained Cash Credit - Rs.27,33,000.00 ii) Unconfirmed creditors - Rs. 6,30,000.00 iii) Depreciation disallowance - Rs. 1,03,697.00

ITA Nos.361 & 339/PAN/2018 6. Having considered the rival arguments and perused the material available on record, we find the issue is squarely covered by the decision of the Hon'ble Karnataka High in the case of CIT vs. Manjunath Cotton & Ginning Factor (2013) 359 ITR 565 (Kar). Further, in the notice issued u/s 274 r.w.s. 271 of the IT Act, the irrelevant part has not been struck off and it has not been made clear whether the penalty was being imposed for concealment of income or furnishing of inaccurate particulars of income, which is a mandatory requirement under the law. The said notice is reproduced below for ready reference:-

ITA Nos.361 & 339/PAN/2018 7. In view of the above arguments advanced by the learned counsel for the assessee which have not been controverted by the learned Departmental Representative, we are of the considered opinion that the penalty in the instant case has wrongly been imposed and sustained by the Assessing Officer and the learned CIT(A) respectively. Therefore, the Assessing Officer is directed to cancel the impugned penalty u/s 271(1)(c) of the Act imposed on the assessee.

ITA No.361/PAN/2018 This appeal has been filed by the Revenue against the order of the CIT(A), Panaji—1, dated 31.05.2018 for Assessment Year 2006-07.

“1. The Order of the Ld. CIT(Appeals) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied u/s. 271(1)(c) of Rs. 85,77,932/-. On the assessment made on the basis of admitted undisclosed income during the course of survey u/s. 133A of the IT Act which proved concealment of income. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in concluding that the assessment made accepting revised income filed consequent to survey grants immunity from penalty u/s. 271(l)(c) of the Income Tax Act, 1961. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to note that the assessee himself in the statement recorded under oath admitted the undisclosed income of Rs. 67,50,000/- however, arrived at the undisclosed income to the tune of 4

ITA Nos.361 & 339/PAN/2018 Rs. 2,53,89,129/- and accordingly declared the income of Rs.2,57,40,889/- in the Revised Return of Income. The Ld. CIT(A) failed to note that the admitted additional income was due to the investigations carried out by the Department u/s. 133A of the Income Tax Act, 1961 and it is not a voluntary offer. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) that the Amendment of Section 45(5A) was introduced vide Finance Act, 2017, effective from A.Y. 2018-19, prescribing the taxability of area-sharing arrangement under a Joint Development Agreement in the hands of land owner, in the year in which the capital assets i.e. construction area is received by it against the transfer of land under the Joint Development Agreement. However, the Amendment of sec. 45(5A) of the Income Tax Act, 1961 cannot be applied retrospectively for Joint Development Agreement with area- sharing arrangement entered prior to AY 2018-19, the amendment status is effective from the said Asst. Year. 6. The appellant craves leave to add, alter, amend and / or delete any of the grounds mentioned above.” 10. We have heard the arguments of both the sides and carefully perused the relevant material available on record.

ITA Nos.361 & 339/PAN/2018 12. On careful consideration of the above submissions, we observe that the ld.CIT(A) has granted relief to the assessee by observing as follows:-

“On Merits: 15. The original return of income for the AY 2006-07 was filed on 08/03/2007 declaring income of Rs.3,51,760. During the course of survey, a statement u/s 131 of Shri Lalji Daboyya Patel was recorded on 26/03/2012 where he agreed to declare income amounting to Rs.67,50,000 for AY 2006-07. The assessee filed his return of income on 13/03/2014, declaring income of Rs.2,57,40,889. The asaessment u/s 143(3) has been completed on 26/03/2014 by accepting returned income of Rs.2,57,40,889/-. 16. Shri R.K. Pikale, the AR of the appellant has also requested to take into consideration the death of the appellant’s 18 years old son and condition of his wife who is mentally disturbed, seriously ill and undergoing treatment in Mumbai. 17. The AO has stated that the assessee would not have declared his additional income, but due to concealment detected during the course of survey operation u/s 133A, the assessee has declared the income of Rs.2,57,40,889/-. I find that neither in the assessment order nor in the penalty order the AO has brought out the nature of concealment by the appellant. 18. The appellant on the other hand has submitted that the consideration from the joint development project was to be received in kind to the extent of 12.5% of the built up area equivalent to 22 flats admeasuring 2620.52 sq.mts. 19. The appellant has also argued that the income will be liable to tax only in the year of completion of the project since it is joint development project. Further, it is argued by the appellant that the issue is debatable in view of the amendment of the Sub Section (5A) to Section 45 the joint development agreement the tax payable on the sale consideration which is received in kind to be offered for taxation in the year of completion of the construction. The detailed submission is already extracted in para 4 supra. 20. It is also submitted by the appellant that the project got delayed due to delay in approvals and objection from local people 6

ITA Nos.361 & 339/PAN/2018 and the appellant could neither sell the flats nor the developer could complete the construction till today (16.5.2018 i.e. till dt. of the submission before me). Therefore it is claimed by the appellant that there are two opinions possible as per the method of accounting. So, it is claimed that the short term gain declared cannot be considered as concealed income and the penalty is requested to be deleted. 21. I find that in the facts and circumstance of the case the decision of the Hon. Supreme Court of India in the case of Commissioner of Income-tax v. Balbir Singh Maini [2017] 86 taxmann.com 94 (SC) is applicable. It is held by Hon. Supreme Court of India that where for want of permissions, entire transaction of development of land envisaged in Joint Development Agreement (JDA) fell through, there would be no profit or gain which arose from transfer of a capital asset, which could be brought to tax under section 45, read with section 48. 22. I hold that the AO has failed to bring out the nature of concealment by the appellant either in the assessment order or in the penalty order. Further, in the facts and circumstance of the case the decision of the Hon. Supreme Court of India in the case of Commissioner of Income-tax v. Balbir Singh Maini [2017] 86 taxmann.com 94 (SC) is applicable and the penalty is hereby deleted. 23. In the result, the appeal is allowed.”

ITA Nos.361 & 339/PAN/2018 see any ambiguity, perversity or any other valid reason to interfere with the findings given by the ld.CIT(A). Therefore, we uphold the same.