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2014 (11) TMI 90 - ITAT MUMBAIPenalty u/s 271(1)(c) – Penalty levied on interest disallowance – Held that:- The assessee has furnished all the details relating to the interest claim - the assessee has mainly used the borrowed funds for making investments in proprietary concerns, partnership concerns and the private limited companies, wherein he is substantially interested - the AO has worked out the disallowance by considering the investments made in one of the concerns only – CIT(A) rightly was of the view that the additions made during assessment proceedings would not automatically give rise to penalty proceedings - CIT(A) was justified in deleting the penalty levied on the interest disallowance – Decided against revenue. Penalty on cash credits u/s 68 – Held that:- The penalty u/s 271(1)(c) is not levy-able merely on the reasoning that the assessee has agreed for assessment of the loan amount as his income - The assessee has furnished reasons as to why he accepted for the assessment of the loan amount as his income - Though the assessment has been made on the basis of statement given by the lender, yet it cannot be taken as a strong ground for levying penalty - Relying upon SHREE NIRMAL COMMERCIAL LTD. Versus COMMISSIONER OF INCOME-TAX [2008 (8) TMI 158 - BOMBAY HIGH COURT] – thus, the order of the CIT(A) is set aside and the AO is directed to delete penalty levied on the loan amount – Decided in favour of assessee.
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