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2017 (4) TMI 168 - ITAT DELHIPenalty u/s 271(1)(c) - non application of mind - notice between charge and approval given by the higher authorities of the penalty order - Held that:- As perused the letter dated 28/03/2012 issued by the joint Commissioner of income tax, range – 37, New Delhi to the assessing officer approving the penalty order. On reading of the above letter, it is apparent that the assessee has sent the penalty order for approval which was received on 27th of March 2012 by the Ld. at joint Commissioner of income tax and who has granted approval. It is also apparent from reading of the letter that the Ld. assessing officer has sent the draft assessment order along with the assessment records to the Ld. at joint Commissioner of income tax, who approved the same as well as also instructed the assessing offer officer. Regarding timely services of the order returning the assessment records and is also directed him to submit a copy of the order to his office. The approval means confirmation, ratification, or assent to some action or thing done by another, which is submitted to. It may not be said in so many words, but it can also be inferred by the conduct of the higher authorities. Therefore it cannot be said that the deponent granted by the higher authorities without application of mind and is a nonspeaking order when same as been granted after perusal of the order as well as on verification of the records. Hence, we also reject the contention of the Ld. AR that the approval granted by the higher authority is by a nonspeaking order and without application of mind. Disallowance of interest u/s 234A and 234C applying provisions of section 40a (ii) - Held that:- While interpreting the provisions of section 2 (43) of the income tax act and has held that from a reading of Section 2(43) of the Act it is clear that tax under the Act does not include penalty and interest. Therefore it can be a plausible argument that the provisions of section 40a(ii) do not include the payment of interest under section 234B and 234C of the income tax act. Furthermore identical situation prevails under section 249 (4) (a) as well as provisions of section 221 of the income tax act. However, the courts have held that „tax dues‟ does not include interest and penalty. Therefore it can be possibly argued that if the „tax dues‟ does not include interest and penalty then how the word „tax‟ can include the interest and penalty. The above, you can also be examined with respect to the provisions of section 209 of the income tax act. It provides for the payment of advance tax and after that there are other specific provisions that if the advance tax is not paid in accordance with the scheme of the act then assessee are liable for payment of interest under the provisions of section 234A, 234B, 234C of the income tax act. In the tax audit report also the tax auditor has also mentioned the amount is allowable as Rs. nil though the claim of the assessee was on the face of the profit and loss account Therefore according to us during the course of penalty proceedings as well as during the course of assessment proceedings the assessee has made a claim, which is one of the arguable claims, but assessee in its own wisdom, withdrawn that claim During the course of assessment proceedings itself, but it cannot be said that the claim of the assessee was wrong or false. Therefore according to us, for the reasons mentioned above, penalty under section 271 (1) ( c) of the act cannot be levied on claim of the assessee for not disallowing interest on income tax under section 40 a(ii) of the income tax act and thereby claiming deduction of interest under section 234B and 234C of the income tax act, which was withdrawn during the course of assessment proceedings. In the result we set aside the order of the penalty - Decided in favour of assessee
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