2014 (4) TMI 1171

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....The Revenue through its grounds of appeal has agitated the deletion of the penalty of Rs. 20,41,627/- for the assessment year 2003-04 and Rs. 10,71,601/- for the assessment year 2002-03 which were levied by the Assessing Officer (hereinafter referred to as the AO) under section 271(1)(c) of the Income Tax Act (hereinafter referred to as the Act) on account of the incomes estimated from the residential projects under progress on the ground that the assessee has failed to follow the consistent method of accounting. 3. The brief facts of the case are that assessee is a partnership firm established on 20th March 1987, engaged in the construction and sale of flats. The assessee filed its returns of income on 31st October 2002 declaring loss of ....

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....se projects. Consequently, the assessee filed revised computations of income during the course of assessment proceedings on the basis of ITAT's decision that profit should be estimated @ 5% of the recoveries made and accordingly computed incomes at Rs. 21,75,630/- and Rs. 48,11,190/- for A.Yrs.2002-03 and 2003-04 respectively. The computations of income submitted by the assessee were accepted by the AO and assessments were completed u/s.153A r.w.s. 143(3) assessing the total incomes at Rs. 21,75,630/- and Rs. 48,11,190/- for A.Yrs.2002-03 and 2003-04 respectively. Penalty proceedings u/s.271(1)(c) of the Act were also initiated. During the penalty proceedings, the AO asked the assessee to explan as to why the penalties u/s.271(1)(c) of ....