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2020 (10) TMI 662 - AT - Income TaxPenalty u/s 271(1)(c) - set off of business loss against income from other sources disallowed - HELD THAT:- The assessee has disclosed the income in the financial statements which is not disputed by the A.O. A.O. has levied the penalty because of set off claimed by the assessee and the mere disallowance or disagreement of a claim cannot be a basis for levy of penalty and also the addition made in the assessment order by the A.O cannot be a gateway for automatic levy of penalty. CIT(A) has passed a elaborate order confirming the penalty, overlooking the facts, nature and method of operations of the assessee business. We are of the view that penalty cannot be automatic and rely on the decision of the CIT Vs. Manjunatha Cotton and Ginning factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT]. A.O has levied the penalty for concealment of income as the assessee company has the treated the speculation loss as a business loss and claimed set off against the income from other sources. Claim of the assessee is in consideration of the financial statements and the assessee adopted one of the possible views that the business loss can be set off against the income from other sources. The assessee has made a claim under the bonafide belief that it is allowable under the law. Direct the A.O to delete the penalty and allow the grounds of appeal of the assessee.
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