INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Validity - Assessee claimed inadmissible expenses -

Revenue challenged order of Tribunal deleting penalty imposed under section 271(1)(c) without properly appreciating the facts of the case and without specifying what was wrong with assessing officer's order as of why penalty was not leviable in the case. Held: There was no dispute on the fact that during the relevant assessment year, assessee changed the accounting method from project completion to percentage method. It was the result of change of method that certain indirect expenses claimed could not be allowed. The account books of the assessee were found to be duly audited and prepared in accordance with accepted accounting standard. The change of accounting method was also duly disclosed by auditor. It was not the case of the revenue even before the Appellate Authority that the assessee had suppressed any material fact. At the highest, the case of the revenue was that even though the material was disclosed by the assessee but he had claimed certain inadmissible expenses. Claiming of an expense which is not sustainable in itself cannot be a ground for invoking Section 271(1)(c).

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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