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2012 (8) TMI 180 - ITAT MUMBAIPenalty u/s. 271(1)(c) of the Income-tax Act - disallowance of interest expenditure - Assessing Officer disallowed the expenditure on the ground that the assessee claimed the set off against the interest income of the minors. Since the assessee could not explain the loans and utilization of the funds, the Assessing Officer disallowed the same – Held that:- If the assessee has explained the fact during the penalty proceedings, which are neither found bogus nor false, then the explanation of the assessee has to be considered on the parameters of bonafide. The assessee has disclosed all these fact before the Assessing Officer that the interest expenditure pertains to the borrowed funds, which was utilised for investment in the shares - mere disallowance of claim of expenditure would not lead to attract penalty provisions u/s 271(1)(c) of the act - appeal filed by the assessee is allowed.
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