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2023 (5) TMI 706 - AT - Income TaxPenalty u/s 271(l)(c) - assessee offered additional income only because of search - inaccurate particulars of income for not following recognization of revenue as per AS-9, as the assessee had violated the law by not following percentage of completion method (POCM) as prescribed by ICAI in AS-7 - HELD THAT:- Though the assessee had explained that assessee was following Project Completion Method. We are aware that explanation 5A to Section 271(1) has introduced the deeming fiction. In this case the difference in the return of Income is only because of Method of Accounting. It is not disputed that assessee was following Project Completion Method which was allowed for AY 2016-17. Therefore, the explanation submitted by the assessee for the difference in the original return of income and return filed after the search is a valid reason. See TRIDENT ESTATE PRIVATE LTD. [2021 (5) TMI 384 - ITAT MUMBAI] as held that the project is incomplete and in substance if assessee wishes to offer for taxation its gain on completion of project i.e. apply completed contract method the same cannot be rejected. A legal claim or change of opinion cannot partake character of concealment. Section 43CB has been inserted w.e.f. 1/4/2017. Hence Section 43CB is not applicable to the year under consideration. Revenue has raised a ground that Assessee had violated law by not following AS-7 method of Accounting, however, it was never, a compulsory method for the year under consideration. Hence, there is no violation qua AS-7. We agree with the Ld. CIT(A) that Penalty u/s 271(1)(c) is not sustainable - Decided against revenue.
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