TMI Blog2014 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... O for fresh verification of all the relevant facts and giving a clear finding – Decided in favour of Assessee. - I.T.A. No. 4046/Mum/2012 - - - Dated:- 18-6-2014 - Shri P. M. Jagtap, AM And Dr. S. T. M. Pavalan, JM,JJ. For the Appellant : Shri Sharmesh Shah For the Respondent : Shri Vikram Batra ORDER Per P. M. Jagtap, A. M. This appeal filed by the assessee is directed against the order of the ld. CIT(A) 24, Mumbai dated 05-03-2012 for assessment year 2007-08 whereby he confirmed the penalty imposed by the A.O. u/s 271(1)(c) of the Income Tax Act, 1961 in respect of addition made to the total income of the assessee on account of disallowance of interest amounting to Rs. 22,55,829/-. 2. The assessee in the present case is an individual who is engaged in the business of running a shop under the name and style of his proprietary concern M/s Modern Copy Centre. He is also a partner in the firm of M/s Gemini Career Mfg. Co. and derives income from other sources. The return of income for the year under consideration was filed by him on 26-10-2007 declaring a loss of Rs. 25,02,591/-. In the said return, deduction on account of interest expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of interest to the extent of Rs. 22,55,829/-. 3. The penalty imposed by the A.O. u/s 271(1)(c) of the Act was challenged by the assessee in an appeal filed before the ld. CIT(A) and it was submitted on behalf of the assessee before the ld. CIT(A) that complete details of interest expenditure claimed were duly furnished by the assessee. It was also submitted that the assessee was under wrong impression that interest expenditure to the extent of Rs. 13,12,619/- claimed under the head income from other sources was the same expenditure claimed while computing business income of his proprietary concern. It was submitted that there was no such claim of double deduction of the said interest expenditure claimed by the assessee and the interest expenditure claimed under both the heads was in respect of separate loans. As regards the balance interest expenditure of Rs. 9.43 lacs, it was reiterated on behalf of the assessee before the ld. CIT(A) that the same was pertaining to the loan taken in the earlier years and similar interest claimed on the said loans was allowed in the earlier years even in the assessments completed u/s 143(3) of the Act. 4. The submissions made on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio of the decision laid down by the Hon ble Delhi High Court in the case of Zoom Communications Ltd. (327 1TR 510), the case of the assessee is covered by the provisions of sec. 271(1)(c) and penalty would be leviable on the amount of Rs. 9.43 lakhs for furnishing inaccurate particulars of income. 2.3.6 Coming to the levy of penalty on the disallowance of interest expenditure of Rs. 13.12 lakh (which is part of the interest expenditure of Rs. 22.55 lakhs claimed as expenditure against interest income), I find that this interest expenditure is exactly identical to the interest expenditure already claimed as deduction from the business income. This fact was not disputed by the assessee at the time of the assessment and the penalty proceedings. In fact, the assessee had not even submitted details of such interest expenditure. Hence, it is clear that the assessee has claimed deduction of the same income under the head Income from Other Sources . The assessee has, therefore, clearly furnished inaccurate particulars of income within the meaning of sec. 271(1)(c) of the Act. The ratio of the decision of the Hon ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same were utilized for making investment in shares as well as giving loan. He submitted that interest paid on the said loans was also claimed by the assessee in the earlier years and the same was also allowed by the A.O. consistently in all the earlier years including the immediately preceding three years wherein the assessments were completed u/s 143(3) of the Act. He submitted that even the interest received by the assessee on loans given in the earlier years was duly offered to tax but since no such interest was recovered during the year under consideration, the amount was not offered to tax. He contended that such interest, however, was again received by the assessee in the subsequent year and same was duly offered to tax. He submitted that the disallowance made by the A.O. on account of interest for the year under consideration, however, was not disputed by the assessee for the simple reason that there was huge loss resulting into no tax liability even after making disallowance on account of interest. 6. The ld. D.R., on the other hand, strongly supported the impugned order of the ld. CIT(A) and submitted that the penalty imposed by the A.O. u/s 271(1)(c) of the Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan amount was also utilized for giving loans on interest and the interest received on the said loans in the earlier years as well as in the subsequent years was duly offered to tax by the assessee. He has contended that such interest, however, was not recovered by the assessee during the year under consideration and the same therefore was not offered to tax. This new contention raised by the assessee, in our opinion, also requires verification before the same is taken into consideration for deciding the issue relating to imposition of penalty u/s 271(1)(c) of the Act. Keeping in view this ambiguity and lack of clarity in the relevant facts of the case which is material to decide the issue relating to penalty u/s 271(1)(c) of the Act, we are of the view that it would be fair and proper and in the interest of justice to restore the matter to the file of the A.O. to decide the same afresh after verifying all the relevant facts and giving a clear finding thereon. In this view of the matter, we set aside the impugned order of the ld. CIT(A) on this issue and restore the matter to the file of the A.O. for deciding the same afresh after verifying all the relevant facts of the case and af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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