2016 (9) TMI 1393

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....en as the lead case to appreciate the controversy. ITA No. 5726/MUM/2013 (A.Y : 2007-08) 2. In this year, assessee is aggrieved by the action of CIT(A) in sustaining the penalty imposed by Assessing Officer u/s 271(1)(c) of the Act amounting to Rs. 1,01,62,606/-. 3. In brief, the relevant background of the case can be summarized as follows. The appellant is a company incorporated under the provisions of Companies Act, 1956 and is engaged in the business of real estate development. Assessee-company is one of the three Special Purpose Vehicles (SPVs) which have been entrusted with the task of meeting the liabilities (secured/unsecured), workers dues, etc. by developing or otherwise dealing with the real estate transferred to it from 'The ....

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....1,937/- was considered as to be transferred to project work-in-progress account and thus the loss for the year was arrived at Rs. 12,088/- only. The aforesaid difference between the originally returned loss and the finally assessed loss was considered by the Assessing Officer to be 'furnishing of inaccurate particulars of income' within the meaning of Sec. 271(1)(c) of the Act. Accordingly, in the order passed u/s 271(1)(c) of the Act, Assessing Officer levied penalty of Rs. 1,01,62,606/- being 100% of the tax sought to be evaded on such income of Rs. 3,01,91,937/-. The said penalty has since been affirmed by the CIT(A) and accordingly, assessee is in further appeal before us. 4. Before us, the learned representative for the assessee, at t....

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.... case of M/s. Chaitra Realty Ltd. In the case of M/s. Chaitra Realty Ltd. (supra), the Tribunal deleted the penalty by making the following discussion :- "6. We have perused the records and considered the rival contentions carefully. The assessee is a developer who was executing a property development project and method of accounting followed was project completion method. The assessee had however claimed expenses amounting to Rs. 33,11,617/- consisting interest of Rs. 25,22,797/- and other day to day expenses in the profit and loss account. This has been disallowed by the AO on the ground that the expenditure could be claimed only in the year of completion. The disallowance had been accepted by the assessee. However the AO had also impose....

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....er dated 22.9.2005 in which it was held that the interest has to be allowed in the year of completion of the project. The said decision it has been pointed out was published in the ITD only in the year 2006. Moreover the decision of the special bench has been disputed before the High Court where the appeal is pending. Under such circumstances in our view it is possible to form a bonafide belief on the date of filing return of income i.e. on 31.10.2005 that the expenses could be allowed from year to year basis. The Learned AR has also submitted that the assessee had no other income even till today and therefore there was no advantage to the assessee in claiming expenses and declare losses from year to year as the losses could be carried forw....