TMI Blog2014 (6) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has furnished the explanation which seems to be bonafide before the AO for making this entry for provision towards interest - The penalty 'cannot be levied unless and until there is concealment or when the explanation which has been filed before the AO and which is found not bonafide - wherever assessee might have made a claim on bonafide basis and that claims is ultimately found to be incorrect, the same will not lead to the penal consequence. The Tribunal noticed that the entry towards interest on advances given to Government of Punjab and CONWARE was made by the assessee - principal amount due from Punjab Government as well as CONWARE was written off in the next subsequent year i.e. AY 2005-06 - The assessee was not hoping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roversy involved, as narrated in the appeal, may be noticed. The assessee is a Public Sector Undertaking of the Government of Punjab. It is engaged in procurement and storage of food grains on behalf of the Central agencies and the State Government. Return declaring an income of Rs. 7,52,18,530/- for the assessment year 2004-05 was filed by the assessee on 1.11.2004. The case was selected for scrutiny as per CBDT guidelines and notice under section 143(2) of the Act was issued on 9.3.2005. The assessee filed a revised return on 28.3.2006 declaring loss of Rs. 22,37,96,121/-. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had debited Rs.3.50 crores in profit and loss account as provision for inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had refused to pay any amount to the assessee. After the addition was confirmed by the CIT (A), the Assessing Officer issued show cause notice to the assessee for imposition of penalty under section 271(1) (c) of the Act on 17.3.2009 amounting to Rs.1,25,56,250/-. Vide order dated 31.3.2009, Annexure A.4, the Assessing Officer imposed penalty of Rs. 1,25,56,250/- under section 271(1) (c) of the Act. The assessee filed appeal before the CIT(A), which was dismissed vide order dated 17.11.2009, Annexure A.5. Thereafter, the assessee filed appeal before the Tribunal. Vide order dated 21.6.2013, Annexure A.6, the Tribunal allowed the appeal and deleted the penalty holding that the claim of the assessee seemed to be bonafide as the principal amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly shows that assessee was not hoping to recover the interest and entry of interest was made only for memorandum purposes i.e. why corresponding debit entry was also made. It is settled law that penalty proceedings are not automatic in the sense that once addition is made, the same will not be followed by penalty. Further, the assessee has furnished the explanation which seems to be bonafide before the Assessing Officer for making this entry for provision towards interest. The penalty 'cannot be levied unless and until there is concealment or when the explanation which has been filed before the Assessing authority and which is found not bonafide. The Hon'ble Supreme Court in the case of Cement Marketing Co. of India Limited vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.' 9. In the case before us, there is no finding that details provided by the assessee are incorrect. As observed earlier, the claim of the assessee seems to be bonafide because principl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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