TMI Blog2014 (8) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... ws/methods of accounting, which though was not accepted by the AO and further by the Tribunal, but was held to be justified by the CIT(A) in quantum assessment/appellate proceedings. Merely because the accounting method of the assessee was not accepted by the AO or that the claim of brought forwarded expenses was disallowed because of the peculiar fact that no construction activity could be carried out by the assessee during the past years, that itself, ipso facto, cannot be a ground in holding that the assessee had furnished inaccurate particulars of income or had concealed its income - It is not a fit case for levy of penalty and accordingly the penalty levied by the lower authorities is hereby set aside. - Decided in favour of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to the financial year under consideration. The assessee explained that it was maintaining its accounts on the cash basis and therefore all the expenses were debited to the current year's Profit Loss account. It was also stated that such expenditure was allowable as assessee was following Project Completion Method. It was further stated that said expenses were debited to Profit Loss a/c on year-to-year basis. The AO after considering the assessee's submissions observed that in Form No.3CD, col. No.11(a) the method of accounting was mentioned as 'Mercantile' and not 'Cash system of accounting' as was contended by the assessee. He further observed that in Tax Audit Report nowhere it was mentioned that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction activities, the expenses had been carried over and no income had been offered for taxation. The assessee had taken loan from number of persons and was paying interest thereupon which was debited to P L account and transferred to balance sheet as Work in progress . He further observed that though there was no specific finding given by the AO that the assessee followed the project completion method, yet, the AO had allowed the work in progress to be capitalized during the earlier assessment years. In none of the earlier assessment years, the AO had computed the income of the assessee under the percentage completion method. He therefore considering the position adopted by the AO in the earlier years and also in view of the fact that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had furnished inaccurate particulars of income, thereby concealing his income. He therefore upheld the levy of penalty by the AO in respect of the disallowance of brought forward expenses. The assessee is, thus, with the present appeal before us. 7. We have heard the rival contentions of the parties and also gone through the records. There is no doubt to the position that the disallowance of assessee s claim of brought forwarded expense by the AO, has been upheld by the Tribunal. However it is also a fact on the file that, as has been observed by the ld. CIT(A) in the quantum appeal proceedings, the AO had allowed the work in progress to be capitalized during the earlier assessment years. In none of the earlier assessment years, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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