TaxTMI 
TaxTMI 
2017 (11) TMI 857
X X X X Extracts X X X X
X X X X Extracts X X X X
....the circumstances of the case and in law, the Hon. CIT Appeal-Thane-3, order passed u/s 250 of the I.T. Act, 1961 confirming penalty on your appellant is misconceived, contrary to law, invalid and therefore bad in law on the following grounds amongst other grounds set out herein below without prejudice to one another. 2. Vide para 11 of the order of learned Income Tax officer has made' disallowance of the following expenses under several section without providing adequate opportunity and without considering the laws of the land and settled judicial pronouncements: a. Rs. 27,16,400/- on account of cost of allocation [among plots of expenses actually incurred]. b. Rs. 46875/- Adhoc disallowances 3. Show-cause notice under section 274 to assessee was defective as it did not spell out specific grounds on which penalty was sought to be imposed, order imposing penalty was invalid and, consequently, penalty imposed is to be cancelled, we pray to set aside penalty order of Learned AO and consequently that also of CIT-Appeal on this count alone. 4. Assessing Officer had not recorded till conclusion of assessment proceedings his satisfaction that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s. 143(3) , additions , inter-alia, were made by the AO to the tune of Rs. 27,16,400/- wherein assesses has debited indirect expenses to the P&L account with respect to the unsold plots in deviation of the existing accounting policy which indirect expenses ought to have been debited by the assessee to the unsold plots as per the accounting policy consistently followed by the assessee , which deviation in accounting policy led to the reduction of profits and consequently less taxes were paid by the assessee to the Revenue during the impugned assessment year due to this change in accounting policy which as per the AO was not a bonafide change in accounting policy. The aforesaid additions were , inter-alia , made by the AO in the assessment framed u/s 143(3) which led to the assessed income being Rs. 1,61,56,050/- as against the returned income of Rs. 1,33,75,275/- , vide assessment order dated 25-03-2013 passed by the AO u/s 143(3). The AO initiated penalty proceedings u/s. 271(1)(c) which led to the issuance of notice u/s 271(1)(c) r.w.s. 274 dated 25.03.2013 for furnishing of inaccurate particulars of income. The assessee during the course of penalty proceedings before the AO repl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the case of C.I.T. Ahmedabod U/s Reliance Petroproducts Pvt. Ltd. of 17th March, 2010 wherein court has rightly disallowed the claim of Revenue in imposing penalty u/s 271 (1)(c) & observed the following among other things:- (i) It was pointed out that the disallowance made by the Assessing Authority in the Assessment Order under Section 143(3) of the Act were solely on account of different views taken on the same set of facts and, therefore, they could at the most, be termed as difference of opinion but nothing to do with the concealment of income or furnishing of inaccurate particulars of such income. It was claimed that mere disallowance of the claim in the assessment proceedings could not be the sole basis for levying penalty under section 271 (1)(c) of the Act. (ii) It is also rightly pointed out that in case of every Return where the claim made is not accepted by the A.O for any reasons the assessee will invite Penalty u/s 271 (1)(c) that is clearly NOT the intendment of the Legislature. 2) Sir, once again to support our stand for non levy of penalty we would like to state as follows- 'Concealment of Income' and 'Furnishing inaccurate p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ound that the expenses incurred were not pertaining to the plots sold during the year, but pertains to unsold plots, and the claim of aforesaid expenses have been claimed to reduce the current year profit, therefore, it tantamount to filing of inaccurate particulars of income. (iii) On the other hand, the AR of the appellant claim that the penalty imposed by the AO is not warranted as there is not concealment or filing inaccurate particulars of income on the following reasons - because of extra ordinary situations like changes in Partnership, plots had to merge into one big plot & de-merge into 6 smaller plots & than sold. The appellant has relied upon in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. & Dilip N. Shroff v. JCIT (2007) 291 ITR 519 After considering the above, I am of the opinion that, the penalty imposed by the AO is justified on the following grounds- a) the incorrect claim of expenses are pertaining to unsold plots, therefore, by claiming such expenses, the profit of the appellant in the year under consideration is reduced .b) The appellant has deliberately debited the expenses of unsold plots in the name of extra-ordinary situations. The ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... unsold stocks which led to reduction in profits of this year leading to payment of lower taxes to Revenue and hence penalty levied by the AO u/s 271(1)(c) and as confirmed by learned CIT(A) is justified . 6. We have considered rival contentions and perused the material on record including cited case laws. We have observed that the assessee is engaged in the business of land development. The assessee has claimed indirect expenses of Rs. 27,16,400/- attributable to the unsold plot by debiting the same to Profit and Loss account in deviation to the existing accounting policy followed by the assessee wherein as per existing accounting policy , these indirect expenses attributable to the unsold stock of plot of land ought to have been debited to the cost of unsold costs of plot as per accounting policy consistently followed by the assessee . This change in accounting policy led to reduction of declared taxable profits and also reduction in tax paid to Revenue in the impugned assessment year as indirect expenses which ought to have been debited to unsold stock of plot of land instead got debited to the Profit and Loss Account in this year itself which otherwise would have been claime....