TMI Blog2014 (1) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... sus Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] - It is not every infraction or denial of claim for deduction or exemption that invites penalty - A penalty would follow only where inaccurate particulars have been furnished with mens rea to evade tax - An assessee is entitled, by provisions of the Act, to claim deductions or exemptions and to present his income in such a manner as he may deem beneficial to his business/interest - Where an assesse has exercised a bona fide right but the deductions or exemptions so claimed are found to be incorrect, penalty would follow only if the claim is raised with intent to furnish incorrect particulars and to evade tax – Decided against Revenue. - ITA No.109 of 1999 - - - Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished nor any income concealed because the income on due basis was duly shown in the hands of the partners? Counsel for the assessee submits that it is not every infraction of the Income Tax Act or every rejected claim for exemption or deduction, that would attract a penalty. A penalty can only be levied if the assessee furnishes incorrect particulars with mens rea to evade tax. The Income Tax Appellate Tribunal has, therefore, rightly set aside the penalty. We have heard counsel for the parties. Admittedly, the quantum appeal filed by the assessee, has been dismissed by affirming addition of income on account of interest received from deposits standing in the name of partners and ex-partners. Notices for levy of penalty, served u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of interpretation where one view has been held by the I.T.A.T. That FDRs are purchased from the funds of the firm in which individual capital account gets merged with the total capital available with the firm, therefore the interest should be credited in the profit and loss account of the firm. The reason for making above discussion is that it is the question of entry of interest which is reflected in the books of account and shown to the Income-tax Department. The Ld. Counsel has pleaded that in the past they were crediting the interest income in case of the firm whereas during the year under consideration, on the legal advice, they were advised to credit directly the interest income in the hands of the partners which they did and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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