IN INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA No.6887/M/2013 Assessment Year: 2008-09 M/s. Rohan Developers Pvt. ACIT Central Circle-44, Ltd., Aayakar Bhavan, 2nd Floor, 12/14, M.K. Road, Govardhan Building, Vs. Mumbai - 400020 Parekh Street, Prarthana Samaj, Mumbai - 04 PAN: AACCA7661A (Appellant) (Respondent) Present for: Assessee by : Shri Vijay Mehta, A.R. Revenue by : Shri B.S. Bist, D.R. Date of Hearing : 04.10.2016 Date of Pronouncement : 07.10.2016 ORDER Per Sanjay Garg, Judicial Member: present appeal has been preferred by assessee against order dated 30.09.2013 of Commissioner of Income Tax (Appeals) [hereinafter referred to as CIT(A)] relevant to assessment year 2008-09. assessee has agitated levy of penalty under section 271(1)(c) of Act. 2. brief facts of case are that assessee is engaged in profession of builders and developers. During assessment proceedings under section 143(3) of Act, Assessing Officer (hereinafter referred to as AO) found that assessee had claimed certain consultancy charges of Rs.12,91,284/-. On perusal of details, he found that said expenditure was incurred for purpose of obtaining consultancy for ongoing project situated at Nepean Sea Road and further that assessee had not offered any 2 ITA No.6887/M/2013 M/s. Rohan Developers Pvt. Ltd. income from said ongoing project. said project was shown as work in progress. AO, therefore, treated said consultancy charges incurred on said project as WIP and held that assessee would be eligible to claim said expenditure in year when income from said project will be offered for taxation. He also initiated penalty proceedings in this respect. During penalty proceedings, assessee explained that there was no deliberate act on part of assessee in concealing any part of its income or in furnishing of inaccurate particulars of income. That computation of income submitted was under bonafide belief. Otherwise, assessee has not claimed any bogus expenditure. AO has only postponed claim of expenditure till completion of project. AO, however, did not get satisfied from above reply of assessee and imposed penalty under section 271(1)(c) of Act. 3. Ld. CIT(A) also confirmed penalty. assessee, thus, has come in appeal before us. 4. Ld. A.R. has brought our attention to copy of letter submitted to AO in respect of consultancy charges. Ld. A.R. has further brought our attention to paper book page 4 which is copy of ledger account and has stated that above said consultancy charges were debited in ledger account of Nepean Sea Road project inadvertently. He has further submitted that assessee, in fact, was carrying on various projects at various locations and that consultancy charges paid were not in respect of Nepean Sea Road project only but in respect of all projects; That assessee had not debited any separate consultancy charges in respect of any of projects. He has further invited our attention to page 10 of paper book to state that rectification was also made in accounts and consultancy charges earlier debited to Nepean Sea Road project were transferred to P & L account under heading consultancy charges which were not related to any particular project. He has, 3 ITA No.6887/M/2013 M/s. Rohan Developers Pvt. Ltd. therefore, submitted that above disallowance during assessment proceedings was made by AO due to inadvertent mistake on part of assessee in debiting consultancy charges in respect of Nepean Sea Road project only. He has therefore stated that said expenditure of consultancy charges was otherwise allowable as expenditure. He has further submitted that penalty proceedings under section 271(1)(c) of Act are separate and distinct proceedings. Merely because disallowance has been made by AO in respect of consultancy charges that itself is not sufficient to hold that assessee had concealed its income or had furnished inaccurate particulars of income. 5. Ld. D.R., on other hand, has submitted that factum of inadvertent mistake regarding debiting of consultancy charges in relation to Nepean Sea Road project has not been examined by AO and hence at this stage assessee has come with new plea. 6. We have considered rival contentions and have also gone through records. From considerations of overall facts and circumstances, we find that AO has not doubted incurring of expenditure. It has also not been doubted by AO that said expenditure was incurred for business purposes. said expenditure has been disallowed by AO for year under consideration considering same as part of work in progress. However, AO has given categorical finding that assessee will be eligible to claim said expenditure on completion of project or on offering of income from said project. assessee has also explained before us that assessee, otherwise, was eligible to claim said expenditure as consultancy charges in general and not related to any specific project but due to some inadvertence same are debited to particular project. We do not think that it is case of any concealment of income or furnishing of inaccurate particulars of income. Under these circumstances, 4 ITA No.6887/M/2013 M/s. Rohan Developers Pvt. Ltd. penalty levied by AO and confirmed by Ld. CIT(A) under section 271(1)(c) of Act is hereby ordered to be deleted. 7. In result, appeal of assessee is hereby allowed. Order pronounced in open court on 07.10.2016. Sd/- Sd/- (Ashwani Taneja) (Sanjay Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 07.10.2016. * Kishore, Sr. P.S. Copy to: Appellant Respondent CIT, Concerned, Mumbai CIT (A) Concerned, Mumbai DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. M/s. Rohan Developers Pvt. Ltd. v. ACIT – Central Circle-44, Mumbai