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2020 (11) TMI 272 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of interest expenses - estimated interest expenses in proportion to the corresponding interest free advances given by the assessee - Whether there is neither concealment of particulars nor inaccurate particulars of income for bonafide claim of interest expenses? - HELD THAT:- While a claim towards expenditure may not found acceptable in quantum proceedings, such disallowance cannot invite tax burden by way of penalty. When all material facts relevant to the said claim were placed on record, the presence or absence of commercial instinct in a given case is a matter of inference. Such adverse inference against assessee would not attract imposition of penalty. The claim of expenditure towards interest made, at best, be taken as erroneous claim by the assessee. Such claim made in a bonafide manner cannot lead imposition of penalty. Although such claim may not be maintainable for the purposes of quantum proceedings, however, in the absence of any falsity per se in such claim, making an incorrect claim for deduction is not at par with concealment or inaccurate particulars of income. As in the case of CIT vs. Dalmia Dyechem Industries Ltd [2015 (7) TMI 619 - BOMBAY HIGH COURT] to observe that the penalty cannot be imposed unless the action of the assessee per se is dishonest, malafide and amounting to concealment of facts. There, being no concealment of fact per se, imposition of penalty is not justified. The penalty, in our view, is clearly not maintainable in the absence of any contumacious or dishonest conduct - Decided in favour of assessee.
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