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2022 (12) TMI 1262 - AT - Income TaxPenalty imposed u/s 271(1)(c) - addition to the capital of the assessee firm - CIT-A deleted the addition - HELD THAT:- CIT (A) has considered that fact that the first proviso was inserted by the Finance Act 2012 w.e.f 01/04/2013 i.e. A. Y. 2013-14 and therefore, prior to the insertion of first proviso to section 68, the liability of the assesses was limited to establish the identity of the Creditor/Lender/Investor, the creditworthiness and genuineness of transaction, and further the proviso is not applicable to the appellant assessee being a partnership Firm. (Not a company in which the public are substantially interested). According we find no perversity in the order of the CIT(A) to the facts on record inasmuch as the appellant firm succeeded in proving the three essential ingredients u/s 68 of the act to prove the identity, credit worthiness and the genuineness of the transactions. According, the order of the CIT(A), deleing the impugned addition of Rs.9,80,000/-, is sustained. Addition on account of transfer of interest-bearing borrowed funds at lesser rate of interest - CIT(A) has rightly followed case of ‘South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] wherein it is held that if assessee possesses sufficient interest free funds as against investment in tax free securities, then, there is a presumption that investment which has been made in tax free securities were out of interest free funds owned by the assessee. The case of ‘Principal Commissioner of Income Tax (Central) - 1 vs. NRA Iron and Steel Pvt. Ltd.’ [2019 (3) TMI 323 - SUPREME COURT] relied by the Department is distinguished of peculiar fact of the instant case. Accordingly, we find no infirmity in finding of the Ld. CIT(A) in deleting Addition. Since the assessee gets relief in quantum appeal, the consequential penalty levied u/s 271(1)(c) is deleted. - Decided in favour of assessee.
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