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2021 (8) TMI 1145 - AT - Income TaxDisallowance of expenses and interest - assessee though appeared in person on two occasions but did not furnish any supporting bills/vouchers - CIT(A) has deleted the addition towards interest by observing that the same cannot be disallowed without proper verification - HELD THAT:- Observation of the CIT(A) is not correct inasmuch as it was the assessee who did not furnish any details of the expenses including interest paid to others. There can be several reasons for the disallowance of interest. When the AO required the assessee to furnish the relevant details, it was the assessee who was at fault. AR submitted that the assessee had to shift its business premises because it was required to surrender under lock and key to the bank. No doubt, the assessee put in its appearance twice before the AO but did not furnish books of account which could have enabled the AO to examine and verify the details. AO in such circumstances should have found out a reasonable amount of deductible expenses on a certain parameter rather than disallowing the entire expense. Neither the AO was justified in making total disallowance of expenses nor the CIT(A) was justified in coming to the conclusion that no interest disallowance could be made without proper verification and further deleting disallowance by 90% of the remaining expenses. On a pertinent query, the ld. AR submitted that the books of account and vouchers, which were earlier under lock and key of the bank, are now available and can be produced before the AO. - Matter remanded back. Penalty u/s.271(1)(b) - HELD THAT:- We find that the AO imposed penalty on account of failure of the assessee to put in any appearance and furnishing the necessary evidence - the premises of the assessee was under lock and key of the bank. Despite that, the assessee put in its appearance twice before the AO during the course of assessment proceedings. Evidence could not be furnished because it was not available at the material time - no penalty u/s. 271(1)(b) can be imposed because there was a ‘reasonable cause’ in terms of section 273B of the Act for not producing the evidence.
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