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2017 (9) TMI 1526 - ITAT MUMBAIPenalty u/s 271(1)(c) - interest expenses disallowance - Held that:- A.O did not issue any summons u/s 131 to these parties against whom interest expenses was claimed nor any notices u/s 133(6) were issued to these parties to seek confirmations from these parties to whom interest were claimed to have been incurred. Thus, the AO did not made any enquiry rather disallowance has been made despite assessee bringing on record details of said interest expenses incurred by the assessee. The assessee has discharged its onus as it lay under penalty provision u/s 271(1)(c) as the assessee has come out with bonafide explanation and it was for the AO to have brought on record cogent and positive material to disprove the claim of the assessee. Thus, it is a case where the assessee made a claim of expenditure which did not found favour with the AO and merely because it was not accepted by the AO does not warrant levy of penalty automatically u/s 271(1)(c) . No such positive incriminating material is brought on record to disprove the claim of the assessee by authorities below. The case of the assessee gets support from the decision of Hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts Private Limited (2010 (3) TMI 80 - SUPREME COURT) as in the instant case of the assessee , the assessee made a claim of expenses which did not found favour with Revenue and merely because claim of expenses is not accepted by Revenue, the penalty u/s 271(1)(c) is not automatic. We hereby order deletion of penalty on this ground also , as levied by the AO and as confirmed by learned CIT(A). - Decided in favour of assessee.
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