The Tax Publishers2021 TaxPub(DT) 0777 (Del-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Provision of services and its subsequent revision may result in disallowance of the expenditure but certainly it cannot lead to levy of penalty under section 271(1)(c) for furnishing of inaccurate particulars of income.

Penalty under section 271(1)(c) - Leviability - Provision of services and its subsequent revision -

Assessee had written back a sum out of legal and professional expenses in the next year. It explained that it was merely an expenditure debited in this year. Such expenses have been written back in the next year. AO rejected the contention of the assessee and passed an order under section 271(1)(c) holding that the assessee had furnished inaccurate particulars and concealed the facts. Held: It is not the case of AO that no such mandate for provision of services was available from the professional. There may be many reasons for a professional not to render those services even after agreeing a particular fee. It may be because of multiple reasons. However, such provision of services and its subsequent revision may result in disallowance of the expenditure but certainly it cannot lead to levy of penalty under section 271(1)(c) for furnishing of inaccurate particulars of income. AO had not considered the above explanation of the assessee for first making provision for expenditure and subsequently writing back in the subsequent year. Thus, there were no inaccurate particulars of any income furnished by the assessee in this case.

REFERRED :

FAVOUR : In favour of assessee.

A.Y. : 2013-14



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