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2016 (5) TMI 626 - ITAT MUMBAI

2016 (5) TMI 626 - ITAT MUMBAI - TMI - Penalty u/s. 271(1)(c) - no allowability of claim of expenses - Held that:- Where the difference between the assessee and the Revenue is merely on account of difference in the year of allowability of claim, and in the absence of any finding or doubt with regard to the genuineness of the expenses claimed, the penal provisions of Sec. 271(1)(c) of the Act are not attracted. In our considered opinion, the aforesaid proposition clearly covers the instant case a .....

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M/2013 - Dated:- 29-4-2016 - Shri G. S. Pannu, Accountant Member And Shri Ram Lal Negi, Judicial Member For the Petitioner : Shri K. Shivaram & Shri Rahul Sarda For the Respondent : Ms. Radha Katyal Narang ORDER Per G. S. Pannu, AM The captioned appeal by the assessee is directed against the order of CIT(A)-20, Mumbai dated 04.03.2013, pertaining to the Assessment Year 2007-08, which in turn has arisen from the order passed by the Assessing Officer dated 30.03.2012 under section 271(1)(c) of .....

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urn of income filed for Assessment Year under consideration, income was computed from such business by following the project completion method of accounting, as in the earlier years. In an assessment finalized u/s. 143(3) of the Act dated 24.12.2009, the Assessing Officer disallowed an expenditure of ₹ 3,54,47,542/- claimed towards advertisement/sales promotion. This difference between the returned and assessed income formed the basis for the Assessing Officer to subsequently hold the asse .....

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earned representative for the assessee has made varied submissions on facts and in law to justify that there was no concealment of income or furnishing of inaccurate particulars of income within the meaning of u/s. 271(1)(c) of the Act in the present case qua the disallowance of ₹ 3,54,47,542/- being advertisement/sales promotion expenses. The learned representative explained that the aforesaid expenses were claimed as revenue expenditure on the basis of the method of accounting followed b .....

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as been incurred. The learned representative pointed out that the manner of claim made by the assessee in the return of income was consistent with the past and also accepted by the Revenue upto the Assessment Year 2005-06, and it was only in the preceding Assessment Year of 2006-07 that the Assessing Officer made a departure. As regards the status of the quantum assessment proceedings, the learned representative explained that since the expenditure was otherwise allowed to the assessee in subseq .....

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proceedings u/s. 271(1)(c) of the Act but considering the explanations furnished, the same was dropped. Similarly, in Assessment Year 2008-09 also similar disallowance was made by the Assessing Officer but no penalty was initiated in the assessment order itself and in this connection reference was made to the assessment order u/s. 143(3) of the Act for Assessment Year 2008-09 placed at pages 66 to 71 of the Paper Book. Apart therefrom, the learned representative pointed out that a mere differen .....

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Pvt. Ltd., 228 Taxmann 66 (Delhi). 5. On the other hand, the ld. DR has defended the action of the lower authorities by pointing out that the assessee had wrongfully claimed advertisement/sales promotion expenses of ₹ 3,54,47,542/- against the income of the current year whereas such expenditure did not pertain to such income. The ld. DR pointed out to the assessment order wherein it was noted that the claimed expenses were in relation to the upcoming projects, for which no income had been .....

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eing satisfied that an assessee has either concealed particulars of his income or furnished inaccurate particulars of such income. In other words, in order to attract the penal provisions of Sec. 271(1)(c) of the Act it is required to be established that in a given fact-situation, assessee has either concealed particulars of his income or furnished inaccurate particulars of such income. 7. In the above context, we may now refer to the fact-situation in the instant case. The assessee before us is .....

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year in which corresponding flats are sold, i.e., advertisement expenditure is to be allowed in the year in which the flats are sold in respect of which the advertisement expenses is incurred. The aforesaid stand of the Revenue in the quantum assessment proceedings has become final and, in any case, we are not concerned with the merits of the rival stands thereof. Presently, we are examining the fact-situation with the objective of determining as to whether the claim made in the return of income .....

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Year 2005-06 it stood accepted. The Assessing Officer differed with the assessee for the first time in Assessment Year 2006-07 and in that year penalty u/s. 271(1)(c) of the Act has not been levied, a fact-position asserted by the learned representative for the assessee at bar which has not been controverted by the Department. On this factum itself, in our view, the action of the Assessing Officer in levying penalty in this year becomes untenable because it militates against consistency in appro .....

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s should be allowed in the year in which the sale of flats were undertaken in respect of which such expenses were incurred. Pertinently, in Assessment Years 2009-10 and 2010-11 such expenses were allowed following the methodology devised by the Assessing Officer in the instant Assessment Year. The aforesaid factual matrix goes to amply demonstrate that the difference between the assessee and the Revenue does not hinge on allowability or genuineness of expenditure but merely on the year of allowa .....

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. In all the Assessment Years starting from Assessment Year 1990-91 and upto 2005-06 the claim for deduction of expenses has been allowed in the manner claimed by the assessee following the project completion method of accounting. Therefore, if in a subsequent period the Assessing Officer re-visits an accepted position and makes a disallowance, same would not be construed as a deliberate attempt by the assessee to furnish inaccurate particulars of income or concealment of particulars of his inco .....

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