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TMI Blog2016 (4) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... t to furnishing of inaccurate particulars of income. Thus we uphold the order of CIT(A) deleting the penalty levied by the AO by dismissing the appeal of the revenue. - Decided in favour of assessee - I.T.A. No.5355 to 5359/Mum/2012, I.T.A. No.4346/Mum/2013 - - - Dated:- 15-3-2016 - SHRI AMIT SHUKLA, JM AND SHRI RAJESH KUMAR, AM For The Appellant : Shri S S Kemwal For The Respondent : Shri Anuj Kisnadwala ORDER PER RAJESH KUMAR, AM : All these appeals are directed against the common order dated 11.6.2012 passed by the ld.CIT(A)-41, Mumbai and they relate to the assessment years 2001-02 to 2006-07. Since the issue involved in all these appeals are common, therefore, these appeals were clubbed together ,heard together and are being decided by this consolidated order, for the sake of convenience. 2. The facts in dispute involved in all these appeals are same except figures. Therefore, we are taking up the ITA No 5355/Mum/2012 assessment year 2001-02 first for adjudication. The assessee has taken followings grounds of appeal:- 1. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) was correct in deleting penalty of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 2007-08 were ₹ 34,16,95,092/- which was actually found to be allocable to the construction projects and it was further stated that out of these allocable expenses the amount to the extent of ₹ 10,34,31,192/- were related to the project covered under section 80IB(10). The AO accordingly, rejected the claim of the assessee u/s 80IB(10) in all the assessment years and also initiated penalty proceedings under section 271(1)( c ) of the Act. The second addition involved on which the penalty was levied by the AO was deduction of 10% of the stock-in-trade. The AO asked the assessee to explain the provisions made while reducing its value of stock-in-trade and further asked the assessee to explain that since the value of real estate had appreciated manifold what was the logic of writing off 10% of stock in-trade i.e building. The assessee submitted before the AO that land and building constituted stock-in-trade in the business of the assessee as it was engaged in the business of Real Estate development and slum rehabilitation and therefore, 10% of the closing stock is in accordance with Accounting Standared-2 as notified by The Institute of Chartered Accountant. The AO rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns given above. During the appellate proceedings, the AR of the appellant has submitted that the assessee has claimed expenses and despite relating to allocation of common expenses towards 80IB(10) projects was accepted on the basis of the CIT(A) by the department and the assessee. Similarly, on the second issue of disallowance of reduction of 10% claimed in stock-in-trade, the assessee has made claim and it has increased deduction u/s. 80IA(4) and not affecting the tax liability. The AR of the appellant has relied on various decisions on this issue that the disallowance made and confirmed in appeal does not mean that the assessee has concealed income and submitted inaccurate particulars of income. Especially the AR of the appellant has relied on the decision of Supreme Court in the case of CIT vs. Reliance Petroproducts (supra) where it is held that the word inaccurate particulars mean that the details supplied in the return or not accurate, not exact or correct, not according to truth or erroneous. It was held that a mere making of the claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per structure due to passage of time as per accounting standard 2 'valuation of inventory' issued by ICAI. It was disallowed by the AO and confirmed in appeal. Now question arises whether the assessee' has concealed the facts or Submitted inaccurate particulars of income? The answer is given by Hon'ble Supreme Court in case of Reliance Petro products by holding that merely the claim made by the assessee which is not accepted by the AO is not a case of concealment and submitting of inaccurate particulars of income as per the provisions of section 271(1)(c). In view of these facts, it is held that it was not a case of concealment of income or submitting of inaccurate particulars as per the decisions of the Hon ble Supreme Court and other Courts cited above, Keeping in view the totality of the facts and circumstances, it is held that the penalty levied by the AO is not sustainable, hence, deleted. Ground of appeal is allowed. 4. The ld. DR relied on the order of AO heavily and submitted that the assessee had manipulated its account by apportioning less expenses to the projects which were covered by the provisions of section 80IB(10) and allocating more expenses t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year 1998-99. The assessee had during the year completed certain projects at Saiwadi and MIDC and the profits earned on the these were claimed as deduction us 80IB (10). These projects were under construction since last two to three years and common expense were never allocated to these projects and consequently never charged to the profit and loss account of the respective year. Further in respect of claim of the assessee being 10% of the super structure due to wear and tear, the assessee submitted that stock-in-trade was valued as per Accounting standard-2 issued by The Institute Of Chartered Accountants Of India which deals with valuation of inventory at cost or market price whichever is lower and accordingly, the assessee followed it stock-in-trade at cost less 10%. This had appended because the assessee leased out various building in Phase-I, II, III and MIDC, Ancheri (E) which were held as stock-in-trade and not sold immediately. Since there was considerable time gap in the completion and selling these buildings, the assessee valued these building at cost less 10% on account of wear and tear. The ld. AR submitted that all these facts were adequately sufficiently discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 2007-08 77,769,576 14,535,981 Total 341,695,092 103,431,192 The AO on the basis of the above breakup recomputed the deduction u/s 80IB(10) in all the assessment years from assessment year 2001-02 to 2007-08 and according imposed the penalty u/s 271(1)(c) of the Act. The second issue on which the penalty was imposed was on account of reduction in the value of stock-in-trade to the tune of 10% on the ground that the building constructed were held as stock-in-trade and were leased out during the year. Since the time gap between completion of construction and selling was huge therefore in order to account for normal wear and tear in the value of building the assessee reduced of 10% of the stock value which was claimed to be according to AS-2 issued by ICAI. The AO imposed the penalty of ₹ 30,31,840/- on the ground that the assessee had furnished inaccurate particulars of income by not allocating the expenses of ₹ 73,12,726/- to pocket 7 project and for claiming 10% reduction in stock in trade. Now, the issue before us is whether the penalty was i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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