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2019 (5) TMI 421 - AT - Income TaxPenalty u/s 271(1)(c) - addition u/s 41 on account of cessation of liability - bonafide explanation - assessee claimed that the said Alok Textile Traders stood merged with M/s Alok Textiles Limited and it was cited as one of the reasons by the assessee for not getting confirmation from the said party - HELD THAT:- The assessee has offered an explanation which is a bonafide explanation as to existence of its liability to said concern as on 31.03.2009 which is also reflected to be payable in its books of accounts. The assessee did discharge its burden as is laid on it under penalty provisions as is contained in Section 271(1)(c). Now it is for the Revenue to rebut the same with cogent incriminating material that explanation offered by the assessee in penalty provisions are false. The Revenue did not bring any incriminating material to prove that the said liability ceased to exist and the assessee had obtained any benefit as is contemplated u/s 41(1) - AO did not made any enquiry with the aforesaid party as no notices u/s. 133(6) or summons u/s 131 were issued by the AO to Alok Textile Traders ( Now Alok Textiles Limited) to unravel truth. AO has not brought any cogent incriminating material to prove that the assessee has obtained any benefit as is contemplated u/s. 41(1). The assessee has rightly relied on the decision of ITAT, Mumbai benches in the case of Shiva Pigments Private Limited v. ITO [2012 (10) TMI 861 - ITAT MUMBAI] - thus no penalty u/s 271(1)(c) is exigible on the assessee Income from sub-letting of the premises - income from house property or income from other sources - bonafide belief - dispute regarding taxability of head of income in respect of sub-letting is going on - HELD THAT:- Obviously with a view to avoid litigation for the year under consideration, the assessee filed return of income on 26.09.2009 declaring rental income from sub-letting as income from house property despite the fact that the assessee being not owner of the said property. The explanation put forward by the assessee is bonafide which takes it out from the clutches of penalty provisions as are contained in Section 271(1)(c) and we hereby order deletion of the penalty levied by the AO u/s. 271(1)(c) of the Act. - Decided in favour of assessee.
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