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2015 (3) TMI 704 - ITAT CHANDIGARHPenalty under section 271(1)(c) - bona fide or mala fide with an intention to evade taxes - addition of ₹ 225 crores on account of expenditure incurred on the development of infrastructure in the form of setting up of international airport at Mohali - Held that:- The assessee in present case having paid for the establishment of an International Airport at Mohali was under the bona fide belief that the expenditure is duly allowable as revenue expenditure and same was so claimed in the profit and loss account. The said expenditure has been held by the Tribunal not to have been incurred for the purpose of business. It has also been held by the Tribunal that the expenditure is in nature of capital expenditure and therefore, the same is not allowable. Mere disallowance of expenditure in the hands of the assessee does not establish the charge of concealment in the hands of the assessee. Various courts have time and again laid down the principle that where the assessee has bona fide explanation of non-exclusion of receipts as its income or for claiming particular item of expenditure as deduction, even where claim of the assessee is rejected, no penalty for concealment of income or furnishing of inaccurate particulars of income could be levied under section 271(1)(c) of the Act. The assessee having declared complete facts with regard to expenditure of ₹ 225 crores and the claim of the assessee being bona fide, though not allowed as expenditure in the hands of the assessee, does not justify levy of penalty under section 271(1)(c) of the Act, much less penalty at the rate of 150 per cent. of the tax sought to be evaded. We thus hold that the assessee, in the present set of facts and circumstances, is not exigible to levy of penalty under section 271(1)(c) of the Act where the claim of the assessee vis-a-vis expenditure incurred on establishment of an international airport had been rejected. Accordingly, we delete the penalty levied under section 271(1)(c) of the Act and the Assessing Officer is directed to delete the same. - Decided in favour of assessee. Penalty u/s 271(1)(c) - addition made on account of instalments received during the year on account of for sale of houses/flats - Held that:- The present issue of addition on account of instalments received on sale of houses/flats has been remitted back to the file of the Assessing Officer with directions to recompute the income in the hands of the assessee arising on account of the instalments received on sale of houses/flats after holding that the same are includible in the hands of the assessee in view of the mercantile system of accounting followed by the assessee. The Assessing Officer was directed to recompute the income after considering the receipts and expenditure incurred by the assessee on this account. Consequently, the addition on this issue has been cancelled and the issue sent back to the Assessing Officer with directions to decide the same de novo. In view thereof, we hold that the issue of levy of penalty under section 271(1)(c) of the Act in relation to the aforesaid addition on account of instalments received on sale of flats/houses does not stand as the said addition has not been upheld by the Tribunal and the matter has been sent back to the file of the Assessing Officer. However, in the interest of justice, we hold that the Assessing Officer shall be at liberty to initiate and complete the penalty proceedings under section 271(1)(c) of the Act after deciding the issue of addition on account of instalments received on sale of houses/flats and the proportionate expenditure allowable against the same, under the regularly employed method of accounting followed by the assessee. we delete the penalty levied under section 271(1)(c) of the Act on the addition made on account of sale/purchase of houses/flats with the liberty to reinitiate the said proceedings after giving appeal effect to the order of the Tribunal. - Decided in favour of assessee.
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