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2017 (4) TMI 104 - AT - Income TaxPenalty u/s 271(1)(c) - Addition u/s 41(1) - Held that:- We find that the assessee has disclosed all the facts and substantiated the same with the letter issued by the Bank on 30.06.2004 and 08.08.2005, wherein the Bank has given details of amount waived without any bifurcation of interest and principal amount. Therefore, the addition made on the basis of deeming provisions of Section 41(1) of the Act does not attract penalty u/s 271(1)(c) and its case is not covered by Explanation Clause ‘B’ to Section 271(1)(c) as the assessee has substantiated its explanation that it was bona fide and all the facts relating to the same have been disclosed and as appearing from the profit and loss account and balance sheet. Based on the above facts of the case, it can be held that the assessee has made all the necessary disclosure on a bona fide belief which is not agreeable to the AO, which does not automatically lead to the case for penalty u/s 271(1)(c) The assessee is a sick company and has brought forward business losses from the earlier years and after making disallowance on account of interest also, the income comes to loss figure leaving further set off for brought forward losses. Therefore, there appears no motive to reduce the tax liability by not showing interest amount. We are, therefore, of the considered view that the penalty is not sustainable in law. Moreover, in the light of the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance petro Products Limited, (2010 (3) TMI 80 - SUPREME COURT ), wherein it was held that merely because the assessee has claimed expenditure, which claim was not accepted or was not found acceptable by the Revenue, penalty u/s 271(1)(c) cannot be attracted. - Decided in favour of assessee
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