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2019 (5) TMI 1868 - AT - Income TaxRevision u/s 263 - order passed by the A.O. dropping the penalty proceedings initiated u/s 271(1)(c) - as per CIT A.O. had failed to examine the complete dimension of the facts and circumstances of the case and also failed to apply the correct proposition of law and, therefore, the order of the A.O. dropping the penalty u/s 271(1)(c) of the Act for the impugned year was erroneous in so far as it was prejudicial to the interest of the Revenue - HELD THAT:- It is not disputed that in the impugned year also penalty proceedings were initiated on the same addition made of interest on FDR’s, in the same facts as circumstances, as in A.Y 2007-08 to A.Y 2009-10 and A.Y 2012-13 and A.Y 2013-14 - In view of the fact that in all those years penalty levied was deleted by the ITAT/CIT(A), considering the backdrop of the case as stated, we have no hesitation in holding that the A.O’s view that no penalty was leviable for the impugned year i.e. A.Y 2011-12, was a plausible view and not outrightly incorrect as canvassed by the Revenue/Pr.CIT. That the Department has contested the deletion of penalty by the I.T.A.T. in assessment years 2008-09 and 2009-10 is, we hold, wholly irrelevant for the conclusion that the view of the A.O. was a plausible view. The Department is well within its rights to contest any order as legally permissible, but merely by so contesting it does not make the orders challenged as being wholly untenable in law. Interpretation of fact by the A.O. that the issue was identical to A.Y 2007-08, was correct. In A.Y 2007-08 the penalty had been deleted on the basis of agreement between the assessee and the department, as recorded in the ROD, to not levy penalty. This agreement, we hold, was applicable to the impugned year also. The reason being, the agreement was regarding the issue whether the assessee was a nodal agency of Chandigarh Administration or not. Even otherwise, we hold, that the claim of the assessee that the interest income was not taxable in its hands, was based on a bonafide belief that the funds invested in FDR’s did not belong to it and were collected by it as a nodal agency of the Chandigarh administration. This stand was consistently taken by the assessee and was conceded only by amicable settlement with the department on taking a prima facie view of the matter. It is not that the claim was found outrightly untenable by any authority. Therefore till the date of settlement of the dispute the claim of the assessee was undoubtedly under a bonafide belief. In view of the same therefore the assessee could not be charged with having concealed or furnished any inaccurate particulars of income so as to levy penalty u/s 271(1)(C) of the Act. We therefore hold that the order passed by the AO dropping penalty proceedings initiated u/s 271(1)(C) of the Act was not erroneous and the order passed by the Ld.Pr.CIT u/s 263 of the Act is therefore set aside. The appeal of the assessee is therefore allowed.
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