2021 (2) TMI 447

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..... l. 2. Brief facts of the case shows that the assessee is a company who filed its return of income on 26.11.2013 declaring total loss of Rs. 53,41,415/-. During the course of assessment proceedings it was noted that a sum of Rs. 3,98,934/- is written back out of legal and professional expenses in the next year and therefore, the assessee was asked to justify the above expenses for this year. As the ld AR of the assessee did not file any justification the above. Hence , addition was made to the total income of the assessee and consequently loss was reduced by an order dated 03.03.2016 u/s 143(3) of the Act. As the ld AO recorded a satisfaction that the assessee has furnished inaccurate particulars of its income penalty proceedings u/s 271(1) .....

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..... ccount. Therefore in the assessment proceedings the legal and professional expenditure debited to the profit and loss account, which were reversed in the subsequent year and offered for taxation, was disallowed, and penalty on such disallowance was initiated and levied by the learned assessing officer. The facts leading to the provision of such expenditure explained by the assessee and mentioned in the findings of the learned CIT - A shows that In the present case the assessee has paid a sum of Rs. 101124/- to the SR Dinoidia and Co. for the purpose of reporting u/s 92E of the Act for the year ended on 31.03.2013. Therefore, on 31.03.2013 the provision of such services was made. Later on these services were provided by BSR & co. for amount .....

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..... ubsequent year. Thus even otherwise expenditure is debited in the one year and if not paid same is reversed in the next year. It is not the case of the AO that no such mandate for provision of services was available from the professionals. There may be many reasons for a professional to not to render those services even after agreeing a particular fees. It may be because of multiple reasons. However such provision of services and it subsequent revision may result in disallowance of the expenditure but certainly it cannot lead to levy of penalty u/s 271 (1) (C) of the income tax act for furnishing of inaccurate particulars of income. The learned that lower authorities have not considered the above explanation of the assessee for first making .....

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