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19-12-2018, GRANITE GATE PROPERTIES, Section 260A, 271(1)(c),HIGH COURT OF DELHI

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3 months 2 days ago #8397 by amit
Section - 260A, 271(1)(c), 276C, 271, 37
Order Date - 19-12-2018
Favouring - Set Aside
Court - HIGH COURT OF DELHI
Appellant - GRANITE GATE PROPERTIES PVT. LTD.
Respondent - PCIT
Justice - SANJIV KHANNA & ANUP JAIRAM BHAMBHANI
Citation - 119Taxpundit193
Appeal No. - ITA Nos. 398/2017, 399/2017
Asstt. Year - 2012-13

Order

PER : SANJIV KHANNA, J.

CM APPL. No. 52227/2018 in ITA No.398/2017 (for placing on record additional documents)

Learned counsel for the respondent-Revenue does not oppose this application for taking additional documents on record.

Following additional documents relating to the assessment year 2012- 13 are taken on record-:

(i) Copy of acknowledgment of income-tax returns filed for assessment year 2013.

(ii) Copy of computation of income accompanying the income-tax return for assessment year 2012-2013.

(iii) Copy of audited financial statement for financial year ending 31.03.2012.

(iv) Copies of assessment and rectification orders dated 23.01.2017 and 25.01.2018 for assessment year 2012-13.

(v) Copy of Reconciliation of Figures for assessment year 2010-11 and 2012-13.

Application is allowed with clarification that the legal effect has not been commented upon and is left open to be decided in the main appeal.

ITA No.398/2017 and ITA No.399/2017

Above-captioned appeals under Section 260A of the Income Tax Act, 1961 (‘Act’, for short) by M/s Granite Gate Properties Pvt. Ltd. (‘appellantassessee’, for short) arise from common order dated 16.12.2016 passed by the Income Tax Appellate Tribunal (‘Tribunal’ for short) accepting the appeals preferred by the Revenue against the order of the Commissioner of Income Tax (Appeals) [‘CIT (Appeals) for short] deleting penalty and upholding the orders of the Assessing Officer imposing penalty for concealment of income under Section 271(1)(c) of the Act. The appeals pertain to the assessment years 2010-11 and 2011-12.

2. The appeals were admitted for hearing vide order of this Court dated 24.01.2018 by framing the following substantial question of law.

“Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the penalty under Section 271(1)(c) of the Income Tax Act, 1961 was leviable in the circumstances of the case, when the assessee asserted that it had commenced business at the relevant time?”

3. Hearing in the appeals has been expedited as the appellant-assessee had filed applications for stay of recovery of outstanding penalty by coercive steps, prosecution etc. in which interim orders have been passed. While admitting the appeals vide order dated 24.01.2018 liberty was granted to the Revenue to file criminal complaint under Section 276C of the Act but with stipulation not to proceed by taking further steps. The appellant-assessee on the prayer for stay of demand was required to first approach the Assessing Officer to explain difficulties in the context of business operations. By subsequent order dated 02.04.2018, Revenue was directed to maintain status quo with respect to filing of complaint against the directors. Interim applications were disposed of vide order dated 20.4.2018 with directions that Revenue shall not take coercive steps to enforce the penalty demand attributable to the subject matter of the appeals.

4. The facts which are required to be noticed in the present appeals are rather short and brief.

4.1. The appellant-assessee is a company engaged in real-estate development.

4.2. Appellant-assessee had commenced construction of two housing projects Lotus Boulevard and Lotus Panache in Noida, during the period relevant to the assessment years 2010-11 and 2011-12, respectively.

4.3. The appellant-assessee was following and recognizing revenue from the projects based upon the Percentage of Completion Method of accounting (‘PoC Method’ for short). PoC Method was recognized under the Accounting Standards 2002 prescribed and applicable namely, AccountingStandard – 7 (‘AS-7’ for
short).

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