IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “A” BENCH: MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER Assessment Year : 2012-13 M/s. Allied Construction ITO-30(1)(1), Company, C-13, 5^th Floor, 4&5, Sai Zarukha vs. Pratyakshakar Bhavan, B.J. Patel Road, Bandra East, Malad (West), Mumbai-400051.

Mumbai-400064.

PAN : AAPFA8255N (Appellant) (Respondent)

Assessee by : Shri Jose Pulikkoden Revenue by : Shri Surendra Mohan, Sr.DR Date of Hearing : 06-08-2025 Date of Pronouncement : 23-09-2025

O R D E R

PER VIKRAM SINGH YADAV, A.M :

This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-51, Mumbai [„Ld.CIT(A)‟], dated 16-04-2025, pertaining to Assessment Year (AY) 2012-13, wherein the assessee has taken the following grounds of appeal:

“1. The Ld. Commissioner of Income Tax (Appeals) ["Ld. CIT(A)"] erred in upholding the levy of penalty of ₹1,08,45,900/- under Section 271(1)(c) of the Income-tax Act, 1961, without appreciating that the Ld. AO while initiating the said penalty in the assessment order as well as in the notice u/s 271(1)(c) of the IT Act, 1961 has merely mentioned all the grounds of penalty, without adjudicating whether it is a case of concealment or furnishing of inaccurate particulars of Income.

2. The Ld. CIT(A) erred in upholding the levy of penalty of ₹1,08,45,900/-under Section 271(1)(c) of the Income-tax Act, 1961, without appreciating that the AO had levied the penalty stating that no reply has been filed when the Appellant had already filed a reply dated 07.10.2016 objecting to the levy of penalty u/s 271(1)(c)

of the IT Act, 1961.

3. The Ld. CIT(A) erred in upholding the levy of penalty of ₹1,08,45,900/-under Section 271(1)(c) of the Income-tax Act, 1961, without adjudicating or considering the final reply submitted online by the Appellant on 21.02.2024.

4. The Ld. CIT(A) erred in not appreciating the fact that the Ld. AO has not decided as to whether the penalty u/s 271(1)(c) of the IT Act, 1961 is for concealment or for filing inaccurate particulars of Income as can be seen from para 6 of the Penalty order.

5. The Ld. CIT(A) failed to appreciate that the amount of ₹3,51,00,000/-constituted advances from prospective customers, duly recorded in a diary seized during survey proceedings on 22.02.2012, i.e., before the end of the financial year and that the Appellant had, during the survey itself, voluntarily informed that the said sum shall be recorded in the books of accounts for the financial year ending

31.03.2012- evidencing transparency and absence of mens rea.

6. The Ld. CIT(A) erred in not appreciating the fact that the Appellant followed the project completion method and that the profit is to be arrived at on completion of the project when the amount of Rs. 3,51,10,500/- being advances received from prospective customers as appearing in the books of accounts of the Appellant was to be offered to tax, thereby proving that there is no deliberate concealment of income nor furnishing of inaccurate particulars thereof by the Appellant.

7. That the Ld. CIT(A) has erred in concluding that the Appellant failed to discharge its burden of proof under Explanation 1 to Section 271(1)(c), without considering that the Appellant had furnished a bona fide explanation, supported by contemporaneous evidence, and the absence of any contrary finding by the Assessing Officer.

8. That the penalty proceedings under Section 271(1)(c) are quasi-criminal in nature, and in the absence of any material to establish contumacious conduct, deliberate falsity, or intention to mislead the tax authorities, the confirmation of penalty is bad in law and liable to be quashed.

9. That the CIT(A) has failed to consider the settled legal position that penalty cannot be sustained where the addition itself arises from a debatable or controversial treatment of business advances, especially when such sums were recorded during survey and not discovered durin