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2018 (12) TMI 824 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance being the amount of interest on account of diversion of the fund - Held that:- Regarding the loan taken from magma leasing Ltd for the purchase of machinery ₹ 45,09,000/- we note that there was no interest paid by the assessee in the year under consideration. The assessee has received a sum of ₹ 45,09,000/- from M/s Shri OSHIYA Engineering company as evident from the copy of the ledger placed on page 52 of the paper book. The amount received was deposited in the syndicate bank account (SOD) and Indian Overseas Bank of the assessee as evident from the bank book placed on pages 53 to 57 of the paper book. Such deposits have resulted in the reduction of the loan amount from the Syndicate Bank and Indian Overseas Bank - the assessee subsequently has Squared up the account of Shri OSHIYA Engineering company with the amount of loan taken from magma leasing Ltd. All these accounting adjustments show that the amount of loan taken by the assessee from magma leasing company Ltd for the purchase of machinery was ultimately utilized for the purpose of the business. - no disallowance can be made Treating the amount of ₹ 3,39,456/- as undisclosed income of the assessee - Held that:- On perusal of the ledger of the assessee in the books of the V Arks Engineers private Ltd we note that the assessee has raised invoices for ₹ 16,09,044/- which evidences that the assessee has worked for V arks Engineers private Ltd for ₹ 16,09,044/- in the year under consideration. The copies of ledgers are placed on pages 69 to 73 of the paper book. Therefore we do not find any infirmity in the order of the Ld. CIT(A). Hence the ground of appeal of the assessee is dismissed. Regarding the penalty appeal, at the outset, we note that there was no representation made by the assessee on merit. Therefore we are of the view that the matter should be restored back to the file of AO in the interests of justice and fair play. Accordingly we remit the issue to the file of AO with the direction to adjudicate the issue of fresh in the light of the order of this Tribunal in relation to the quantum appeal of the assessee. Hence the ground of appeal of the assessee is allowed for statistical purposes.
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