2023 (2) TMI 312 - AT - Income Tax

Penalty u/s 271(1 )(c) - changing method of recognition of income from project completion to percentage completion - Necessity to mention specific provision - income recognized had increased from zero in the return filed in response to notice issued u/s. 153A - HELD THAT:- In AO’s penalty order that he has nowhere invoked the foregoing deeming fiction of furnishing of inaccurate particulars of undisclosed taxable income as per his detailed discussion comprising of nine pages.

Revenue has further not placed on record any such notice to this clinching effect. Explanation 5A to sec.271(1)(c) is a special provision imposing deeming fiction of an assessee having both concealed particulars of his taxable income as well as furnishing of inaccurate particulars of such income, as the case may be, in an instance of a search carried out on or after 01.06.2007.

Once the Assessing Officer had nowhere invoked the above specific provision, there is hardly any justification on Revenue’s part to quote general principles of furnishing of inaccurate particulars u/s.271(1)(c) of the Act. The Revenue could further not dispute the clinching fact taken note of both in the assessment order as well as the CIT(A)'s order before us the assessee had already filed his revised return declaring the very income of Rs.1,83,86,690/- which stood duly accepted and processed.

Revenue’s reliance on hon'ble apex court’s decision Mak Data Pvt. Ltd.[2013 (11) TMI 14 - SUPREME COURT] we note that the said assessee was found in possession of bogus share application form and other documents as against facts of the instant case wherein this taxpayer had only followed project completion method.

We make it clear that Revenue’s instant arguments deserve to be rejected only in light of the foregoing factual matrix i.e., non-application of Explanation 5A to sec.271(1)(c) of the Act and filing of revised return at the assessee’s behest indicated hereinabove. Decided against revenue.