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ACIT-17(2), Room No. 217, 2nd Floor, Piramal Chambers, Parel Mumbai- 400 012 Vs. M/s. Royal Enterprises, 4/98, Amrit Villa, R.A. Kidwai Road, Wadala, Mumbai
August, 30th 2014
                      MUMBAI BENCH "D", MUMBAI
                 DR. S.T.M. PAVALAN, JUDICIAL MEMBER
                           ITA No. 829/Mum/2013
                            Assessment Year: 2007-08
         ACIT-17(2),                       M/s. Royal Enterprises,
         Room No. 217, 2nd Floor,      Vs. 4/98, Amrit Villa, R.A. Kidwai
         Piramal Chambers, Parel           Road, Wadala, Mumbai
         Mumbai- 400 012
               (Appellant)                             (Respondent)

                  Permanent Account No. :-AAAFR 1378 Q

                         Assessee by     :   Shri Rahul K. Hakani
                          Revenue by     :   Smt. Tripura Sundari

                     Date of hearing  : 06.08.2014
                Date of Pronouncement : 28.08.2014



      This appeal filed by the Revenue is directed against the order of the
Ld.CIT(A)-17, Mumbai dated 19.11.2012 deleting the penalty of Rs.8,76,040/- levied
by the AO u/s 271(1)(c) of the Income-tax Act for the Assessment Year 2007-08.

2.    Briefly stated, the assessee, a registered firm, engaged in the business of
construction activity, during the year under consideration had declared a total
income at Rs.1,00,00,000/-. The assessee had constructed number of buildings
which were named as 2, 3 to 7, 8 & 9 and 10 &11. Building nos 2, 3 to 7, 10 & 11
were qualified for deduction u/s 80IB and building nos. 8 & 9 did not qualify for
deduction u/s 80IB. The assessee had offered the income from buildings 8 & 9 of 1
crore during the year consideration. In the assessment framed, the AO observed
that the cost of building 8 & 9 had been shown more as compared to other
buildings. Accordingly, the AO averaged out the total cost and estimated an
additional income of Rs.26,02,600/- arising from building no. 8 & 9. The assessee
did not prefer any appeal against the addition made by the AO. Consequently, the
                                                                       ITA No. 829/Mum/2013
                                          2                                M/s. Royal Enterprises,
                                                                        Assessment Year: 2007-08

AO initiated the penalty proceeding u/s 271(1)(c) which resulted in the levy of
penalty of Rs.8,76,040/-. On appeal against the penalty order, the Ld. CIT(A)
deleted the impugned penalty on the reason that the assessee did not provide
inaccurate particulars of income or concealed any income. Aggrieved by the
impugned order, the Revenue is in appeal before us.

3.      Having heard both the sides and perused the material on record, it is
pertinent to mention that the perusal of the assessment order indicates that the AO
has not pointed out any specific evidence regarding the inflation of expenses or
making an inflated claim u/s 80IB. The AO entered into a scientific exercise and
worked out the average cost of construction. The building nos. 8 & 9 are duplex flat
building and the construction cost is higher according to the assessee and this fact
has been ignored by the AO as observed by the Ld.CIT(A). It is also pertinent to
mention that the AO has not brought on record any specific instances of inflation of
expenses by the assessee. Also, it is observed that the assessee has filed all details
before the AO and hence there is no question of furnishing inaccurate particulars of
income or the assessee has concealed any income. In view of that matter, we do not
find any infirmity in the decision of the Ld.CIT(A) deleting the impugned penalty
levied by the AO and thus the same is upheld.

4.      In the result, the appeal filed by the Revenue is dismissed.

     Order pronounced in the open court on this 28th day of August, 2014.

           Sd/-                                                       Sd/-
       (RAJENDRA)                                           (Dr. S.T.M. PAVALAN)
     ACCOUNTANT MEMBER                                       JUDICIAL MEMBER
Mumbai, Dated: 28.08.2014.
Copy to: The Appellant
          The Respondent
          The CIT, Concerned, Mumbai
          The CIT(A) Concerned, Mumbai
          The DR "D" Bench
                                  //True Copy//

                                                      By Order

                                         Dy/Asstt. Registrar, ITAT, Mumbai.
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