ITO 9(2)(2), MUMBAI vs. K.K. B DEVELOERS P.LTD, MUMBAI

आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, मुंबई अिधकरण मुंबई मुंबई ए खंडपीठ मुंबई खंडपीठ खंडपीठ खंडपीठ In the Income-tax Appellate Tribunal -“A”Bench Mumbai सव"ी राजे"",लेखा सद"य एवं अिमत शु"ला "याियक सद"य Before S.Sh.Rajendra,Accountant Member and Amit Shukla,Judicial member आयकर आयकर आयकर अपील आयकर अपील अपील संसंसंसं /ITA No.1993/Mum/2012, िनधा"रण अपील िनधा"रण िनधा"रण वष" िनधा"रण वष" वष" /Assessment Year 2006-07) वष" Income tax officer-9(2)(2) M/s. K.K.B. Developers Pvt. Ltd. 203, Swastik Sadan, 8th Room No.225, Aayakar Bhavan M.K. Road Vs. Road, Khar(W),Mumbai-50. Mumbai- 400 020. PAN: AACCK 1948 A (अपीलाथ" /Appellant) (""यथ" / Respondent) अपीलाथ" अपीलाथ" अपीलाथ" ओर अपीलाथ" ओर ओर सेसेसेसे / Assessee by :None ओर ""यथ" क" ओर से/Revenue by :Shri R.A. Dhyani सुनवाई सुनवाई सुनवाई क" सुनवाई क" क" तारीख क" तारीख तारीख / Date of Hearing :19.10.2015 तारीख घोषणा क" तारीख / Date of Pronouncement : 28.10.2015 आयकर आयकर आयकर अिध आयकर अिध अिधिनयम अिध िनयम िनयम,1961 क" िनयम क" क" धारा क" धारा धारा 254(1)केकेकेके अ"तग"त धारा अ"तग"त अ"तग"त आदेश अ"तग"त आदेश आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) Per Rajendra, A.M.लेखा सद"य राजे"" के अनुसारः Challenging the orders dtd.25.01.2012of the CIT(A)-20,Mumbai,the Assessing Officer(AO)has filed the present appeal.The effective ground of appeal is about deletion of penalty levied u/s.271(1)(c) of the Act.

Brief Facts: 2.Assessee-company,engaged in the business of constructing the buildings,filed its return of income on 29.11.2006,declaring income of Rs.5.12 lakhs.The AO completed the assessment on 26.12.2008 u/s.143(3) of the Act,determining the income of the assessee at Rs.43.89 lakhs. During the assessment proceedings,the AO estimated the cost of construction @ 1,000/- per sq. feet as against Rs.979.22 per sq.ft.shown by the assessee.He held that the assessee had not filed quantity wise details of material used for construction.Besides,the AO disallowed certain other expenses namely development right purchase(Rs.2 lakhs),Fee charges Paid to BMC(Rs. 16.85 lakhs),Administrative and selling expnses(27.61 lakhs).The assessee challenged the order of the AO before the First Appellate Authority(FAA),who partly allowed the appeal.He gave relief with regard to the first two items but for the third item he upheld the addition.In the meanwhile the AO initiated penalty proceedings u/s.271(1)(c)of the Act for furnishing inaccurate particulars of income.Vide his order dated 29.03.2011,he levied a penalty of Rs.6,70,697/- u/s.271(1)( c) of the Act. 3.During the Appellate proceedings,the assessee contended that the AO not assigned any reason for disallowing the administrative expenses,that books of accounts were audited and were produced before the AO,that rejection of claim made by the assessee without giving any reason could not be equated with furnishing of inaccurate particulars. After considering the material available,the FAA held that the AO had disallowed three items of expenditure while completing the assessment without assigning any reason,that the AO had not given any finding that the administrative expenses were not genuine,that expenditure claimed by the assessee and rejected by the AO could not lead to levy of penalty,that the issue as to whether the administrative selling and general expenses would constitute part of construction or not was a subjective matter,that AO was not justified in levying penalty. 4.During the course of hearing before us,the Departmental Representative (DR) supported the order of the AO.No one appeared on behalf of the assessee,as stated earlier.

ITA No.1993/Mum/2012KKB Developers P.Ltd. 2 5.We have perused the material before us.We find that the AO had levied penalty u/s.271(1) (c)of the Act,as he was of the opinion that the administrative selling and general expenses would constitute part of construction.It is not the case of the AO that the details about the expenses were not made available by the assessee.The incurring of expenditure is also not in doubt. The AO has not allowed the expenditure.In our opinion,disallowance of an expenditure does not and should not result in automatic levy of concealment penalty.Secondly,we find that the AO not assigned any reason for making disallowance.In these circumstances,we are of the opinion that it was not a case of concealing or furnishing of inaccurate particulars of income by the assessee.Therefore,we do not see any justification in disturbing the order of the FAA. Confirming his order we decide effective ground of appeal against the AO. As a result,appeal filed by the AO stands dismissed. फलतः िनधा"रती अिधकारी "ारा दािखल क" गई अपील नामंजूर क" जाती है. Order pronounced in the open court on 28th,October,2015. आदेश क" घोषणा खुले "यायालय म" "दनांक 28 अ"टूबर,2015 को क" गई । (अिमत शु"ल / Amit Shukla ) (राजे"" / Rajendra) "याियक सद"य/Judicial member लेखा सद"य/Accountant member मुंबई Mumbai, "दनांक Date: 28.10.2015 व.िन.स.Jv.Sr.PS. आदेश क" आदेश क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत