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TMI Blog2021 (2) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... or that particular year. It is also not impossible that those professional do not render such services in the next year and instead of that some other professional render such services. In that case the provision of legal and professional fees made in the earlier year was reversed in the subsequent year. 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany who filed its return of income on 26.11.2013 declaring total loss of ₹ 53,41,415/-. During the course of assessment proceedings it was noted that a sum of ₹ 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)(c) of the Act was initiated. 3. During the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings 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 ₹ 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 of ₹ 137529/-. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provision for expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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