TMI Blog2017 (1) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 8,63,435/- as submitted by assessee or ₹ 44,19,194/- as alleged by ld. Assessing Officer which was the figure taken by him from perusal of the construction account in which interest amount of ₹ 44,19,194/- was transferred and was not fully claimed in the year. We just confine to adjudicate as to “whether in these circumstances assessee should have been visited with penalty u/s 271(1)(c) of the Act.” In the given circumstances there has been a claim made by the assessee treating it to be a bona fide claim but not accepted by the Revenue authorities. We observe that Hon. Supreme Court in the case of CIT vs. Reliance Petro Product Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) has held that if the assessee had furnished all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be set-side and that of Assessing Officer may be restored to the above extent. 2. Briefly stated facts as culled out from the records are that assessee is a private limited company engaged in construction work. Return of income for Asst. Year 2007-08 showing NIL income was filed on 19.10.2007. The case was selected for scrutiny assessment and assessment order u/s 143(3) of the Act was framed on 15.12.2009 after disallowing interest expenses of ₹ 44,19,194/- and income assessed at Rs.NIL after setting off of brought forward losses. In the quantum appeal assessee could not succeed before ld. CIT(A) and the Tribunal. Penalty proceedings u/s 271(1)(c) of the Act were initiated on the disallowance of interest and levied penalty of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then interest expenses of ₹ 8,63,435/- stands to be claimed against profits and the remaining amount continues to be carried forward in succeeding years and would be booked to expenditure head as and when remaining area is sold. 6. Ld. AR further submitted that the ld. Assessing Officer has also accepted the fact that expenditure was allowable on mercantile basis and the same has been done by assessee by claiming it only against the sales made. The claim made by the assessee was legitimate legal claim which has not been accepted by the ld. Assessing Officer but certainly it cannot call for imposing a penalty under section 271(1)(c) of the Act for furnishing inaccurate particulars of income or concealment of income. Ld. AR referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to construction account and the amount standing in the construction account has been apportioned on the basis of square feet areas sold. In the year under appeal assessee sold 2191 sq.ft. out of 11,219 sq.ft and proportionate amount of ₹ 2,49,81,176/- being the total construction amount was accordingly apportioned by applying 2192 sq.ft. /11,219 sq.ft., which gave a figure of ₹ 48, 80,893/- and the same was transferred to profit and loss account. Assessee has also submitted before ld. Assessing Officer that ₹ 48,80,893/- includes the interest amount of ₹ 8,63,435/- only and not ₹ 44,19,194/- and the expenditure claimed was normal business expenditure on mercantile basis. However, Ld. Assessing Officer brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ₹ 44,19,194/- was paid towards interest towards preceding Asst. Years 2004-05 and 2005-06 at ₹ 21,10,019/- and ₹ 23,09,175/- respectively and this amount which was capitalized in the preceding years was transferred to construction account and proportionate amount was transferred to profit and loss account on the basis of area sold. We will not like to go into the issue of actual interest expenditure claimed by the assessee as it was ₹ 8,63,435/- as submitted by assessee or ₹ 44,19,194/- as alleged by ld. Assessing Officer which was the figure taken by him from perusal of the construction account in which interest amount of ₹ 44,19,194/- was transferred and was not fully claimed in the year. We just c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return and that it unequivocally stated that the provision for payment was not allowable under Section 40A(7) of the Act indicates that the assessee made a computation error in its return of income. Apart from the fact that the assessee did not notice the error, it was not even noticed even by the Assessing Officer who framed the assessment order. In that sense, even the Assessing Officer seems to have made a mistake in overlooking the contents of the Tax Audit Report. 19. The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. It appears to us that all that has happened in the present case is that throug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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