AARTI PROJECTS AND CONSTRUCTIONS,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-5(1), MUMBAI

3. Disallowance u/s 40(a)(ia) 1,00,000/- TOTAL 69,48,279/-

As evident from Grounds of appeal

, the assessee is aggrieved by confirmation of penalty of Rs.21.47 Lacs levied u/s. 271(1)(C). 2.1 Facts leading to imposition of penalty are that the assessee being resident firm stated to be engaged as builder & property developer was assessed u/s. 143(3) on 20/01/2016 wherein returned loss of Rs.70.42 lacs e-filed by the assessee on 31/07/2013 was reduced to Rs.0.94 Lacs in view of following disallowances: - S.No. Particulars Amount (Rs.)

1. Disallowance of expenses 68,47,479/-

2. Disallowance u/s 43B 800/-

3. Disallowance u/s. 40(a)(ia) 1,00,000/- 3 Aarti Projects & Constructions Assessment Year -2013-14 All the disallowances were admitted allowances. During assessment proceedings, it transpired that the assessee did not earn any income from business but debited expenses of Rs.72.28 Lacs. The assessee submitted that it incurred expenses in relation to project income that was offered to tax in AY 2012-13. However, it was noted that the project was notified project and the income earned therefrom qualified for exemption u/s 80IB (10) in earlier years. The assessee, while admitting the same, contended that it made a genuine mistake in return filed u/s 139. The mistake was bona-fide and due to human error. Consequently, project expenses of Rs.68.47 Lacs claimed by the assessee were admitted and disallowed. The second disallowance of Rs.800/- was u/s 43B on account of professional tax not paid before due date of filing of return of income. Penalty was initiated for furnishing of inaccurate particulars of income, against both these additions. The last disallowance of Rs.1 Lacs was u/s 40(a)(ia) on the ground that TDS was not paid up to the day of filing of return. Penalty was initiated for furnishing of inaccurate particulars and concealment of income. 2.2 Consequently, penalty proceedings were initiated against the assessee. During penalty proceedings, the assessee contended that the claim of expenditure was made under bona-fide mistake which was realized at the time of assessment proceedings. Realizing the said mistake, the assessee revised its return of income for AYs 2014-15 & 2015-16 to withdraw the claim of carry-forward losses by the amount of disallowance even before the completion of assessment proceedings. In the above background, the assessee submitted that there was no concealment of 4 Aarti Projects & Constructions Assessment Year -2013-14 income or furnishing of inaccurate particulars of income within the meaning of Section 271(1)(c). Reliance was placed, inter-alia, on the decision of Hon’ble Supreme Court in Reliance Petroproducts (P) Ltd. (2010 322 ITR 158) and Price Water house Coopers (P) Ltd. V/s CIT (2102 25 Taxmann.com 400). However, rejecting the same, Ld. AO levied impugned penalty of Rs.21.47 Lacs for furnishing of inaccurate particulars of income. 2.3 The learned CIT(A) noted that the decision of Tribunal in AY 2012-13 with respect to assessee’s claim u/s 80IB (10) would have no relevance and a patently incorrect expenses were claimed. The assessee claimed higher losses and had the case not been selected for scrutiny, the assessee would have enjoyed evasion of tax on income thus suppressed. Finally, the penalty was confirmed by observing as under: - 7. It is noted that there is no relevance of the decision in its own case for AY 2012-13 wherein Hon’ble ITAT allowed its claim u/s. 80IB(10). In the facts before me a patently incorrect expense was claimed. Even if appellant's contention that it followed project completion method of accounting and that expenses are claimed this year but are for earlier years is accepted, there is no denying the fact that by claiming it this year a higher loss is claimed and correspondingly higher carried forward loss is claimed. If the case was not selected under scrutiny and this was not found in assessment proceedings, the appellant would have enjoyed evasion of tax on income thus suppressed. It does not matter that the appellant revised its return for subsequent years after being confronted as this making a virtue out of an erroneous and false claim on being caught. As per Explanation 4 to section 271(i)(c) penalty is imposable even where the return is a loss return. Thus penalty in this regard is upheld.

8. As regards the penalty in respect of disallowance of Rs 800 on account of section 43B and Rs 1,00,000 u/s 40(a)(ia), it is noted that the disallowance is again not disputed. How it was an oversight is not shown. The Assessing Officer has held that such a claim is not bonafide. I find no reason to interfere.

Aggrieved, the assessee is under appeal before us.

5 Aarti Projects & Constructions Assessment Year -2013-14 3. We have heard the rival submissions, perused relevant material on record including documents placed in the paper-book and deliberated on judicial pronouncements as cited before us.