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TMI Blog2017 (8) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... letter of IDC and the other documents available in the paper book clearly indicate that the claim made by the assessee could not be termed a malafide claim. It is also noteworthy that the assessee had deducted TDS on labour charges and same were not found to be bogus or non-genuine. AO has not challenged the method of accounting followed by the assessee i.e. the project completion method. Thus we are of the opinion that the claim made by the assessee was bonafide and legal claim and disallowance of the same should not be visited by penal provisions. Therefore, reversing the order of the FAA we decide the effective ground of appeal in favour of the assessee. - I.T.A. /6457/Mum/2014 And I.T.A. /6991/Mum/2014 - - - Dated:- 5-7-2017 - Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment order for the assessment year 2004-05, the AO held that the opening WIP as on 01/04/2007 stood inflated by ₹ 19.25 lakhs. 2.1. There was one more issue about the WIP. During the course of assessment proceedings for the assessment year 2007-08, the AO found that the work in progress as on 31/03/2007 was found inflated by ₹ 3.41 lakhs on account of excess labour charges. Accordingly, work in progress was reduced to the extent of ₹ 3,41,600/-.The assessee did not agitate the issue in that regard.The AO reduced the amount of ₹ 3.41 l akhs from the amount of WIP and added the same to the total of the assessee for the year under consideration. 2.2. In the appellate proceedings,First Appellate Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that disallowances of ₹ 19.25 lakhs on account of inflation of WIP and disallowance of ₹ 44.30 lakhs u/s. 40 have been deleted/remanded back to the file of the AO by the Tribunal, that the penalty on both the counts would not survive.With regard to disallowance of ₹ 3.41 lakhs with respect to reduction in WIP he observed that the assessee did not prefer any appeal before the Tribunal, that the Tribunal did not have any opportunity to adjudicate the issue, that the assessee had argued that it had disclosed all the information about the person who had received labour charges, that the return of inco me for the AY 2007-08 was filed before the scrutiny assessment of the year under consideration , that it could not adjust/corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of excess labour charges debited to WIP in respect of Ishwar Dayal Chavda (IDC) in the assessment for the AY.007-08, that while completing the assessment for AY.2008-09 he reduced ₹ 3,41,600/- from the opening WIP, that in the quantum proceedings the assessee filed additional evidences being confirmation from IDCPg-63-70 of the PB), that it also filed ban k statement, ledger account and return of income of IDC (Pg-71-94 of the PB), that the FAA con firmed the addition made by the AO, that the assessee did not agitate the issue before the Tribunal, that the AO levied penalty u/s. 271(1)(c)and same was confirmed by the FAA. In our opinion, there is no need for any authority t o state that assessment proceedings and penalty p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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