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2016 (1) TMI 1323 - AT - Income TaxNot allowing the surrendered amount to be considered as project cost - surrender was made on account of unexplained expenditure - Held that:- Section 292C of the Act is quite clear that in case of any document found during the course of survey, the presumption is against the assessee to consider that the document is owned by the assessee. Though the presumption is a rebuttable one, but in the present case, nowhere at any stage the assessee had even tried to rebut the same. So far, the assessee is right in adding the said amount in its return of income. However, adding the said amount in its project cost will amount to taking the fact of surrendering the income to an unreal extent. The amount is considered to be of the nature of unexplained expenditure, the expenditure which were not recorded in the books of accounts, once the amount expanded were out of an undisclosed income of the assessee, the assessee after surrendering the same cannot ask for increase in project cost by this amount. The contention of the learned D.R. that by adding the surrendered income in the project cost on the one hand and paying taxes on such income on the other hand, would amount to nullifying the effect of surrender, as the assessee will take benefit of the same in succeeding year, is correct. In view of the above, the action of the Assessing Officer in not allowing the surrendered amount to be considered as project cost is found to be correct. Penalty u/s 271(1)(c) - Held that:- We have upheld the action of the Assessing Officer in not treating the surrendered amount as part of the project cost. In this background, we also agree with the contention raised by the learned D.R. that only because the assessee has voluntarily surrendered the income, penalty could not be levied, is not a correct proposition. However, there are other reasons for which the penalty in such a case cannot be levied. Firstly, the assessee has filed its return of income including the surrendered income and has paid taxes on the same. The income has been assessed at the same amount. The only dispute is with regard to the amount being treated by the assessee as a part of its project cost. However, we do not find any reason to uphold the levy of penalty in such circumstances. The assessee has made a claim by treating the surrendered income as a part of its project cost, which has been declined by the Assessing Officer. There is a difference of opinion between the assessee and the Assessing Officer. This is neither a case of concealment of income, nor furnishing of inaccurate particulars. The assessee has disclosed every thing properly.
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