New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (5) TMI 424 - ITAT DELHI

2015 (5) TMI 424 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - deduction on account of interest u/s 24 claimed - Held that:- AO in the course of assessment proceedings had not recorded any satisfaction while initiating the penalty proceedings, therefore, the penalty u/s 271(1)(c) of the Act was not leviable. In the present case, this contention of the ld. Counsel for the assessee that in the subsequent year similar claim was although disallowed but penalty proceedings were dropped was not rebutte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er year, the assessee disclosed all the facts relating to the payment of interest and claim of deduction before the AO. Therefore, only on this basis that the claim in full was not accepted by the AO, it cannot be said that the assessee concealed the particulars of his income or furnished inaccurate particulars of his income. As such the penalty u/s 271(1)(c) of the Act was not leviable. - Decided in favour of assessee. - ITA No. 6000/Del/2010 - Dated:- 27-4-2015 - Sh. N. K. Saini, AM And Sh. A. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der that mere disallowance claim of interest does not tantamount to concealment of particulars/income. 3. That the appellant reserves its rights to amend, alter or raise any other additional grounds of appeal before or during the course of appellate proceedings. 3. From the above grounds it would be clear that only grievance of the assessee relates to the confirmation of penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The facts of the case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

th the return of income relating to TDS on payment of interest u/s 194A of the Act, it was noticed that the assessee had also received interest from various companies amounting to ₹ 55,30,390/-. The AO asked the assessee to explain the discrepancy. In response the assessee submitted that the interest received, had been netted against the interest paid and filed the details of reconciliation of interest paid and received. From the said details, the AO found that against the rental income of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessee to give justification in respect of balance interest payment of ₹ 70,22,831/- which had been reduced from the interest income of ₹ 55,30,319/- and set off wrongly against income from House Property. The AO was of the view that the interest received from and interest paid to companies should be hived off from the calculations under the head Income from House Property and be separately dealt under the head Income from Other Sources, especially as the assessee was not carryi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1 ITR 729 (Karnataka) Smt. Slandamma Vs CIT 164 ITR 446 (Karnataka) 4. The AO asked the assessee to establish the nexus between the loans received and the loans given. In response, the assessee furnished copies of ledger accounts of respective concerns and claimed that the funds were arranged from various companies to whom interest had been paid, as well as the amount had been forwarded to the companies from whom the interest had been charged. The AO observed that the details furnished by the as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

@ 9% of the above said amount and worked out the allowable interest of ₹ 37,80,200/- as against the claimed interest of ₹ 70,22,831/-. The AO also worked out the interest income from companies at ₹ 55,30,319/- and allowed the deduction u/s 57 of the Act for ₹ 37,87,200/-, the balance amounting to ₹ 17,43,119/- was held to be income from other sources and the deduction of ₹ 70,22,831/- claimed against income from House Property was disallowed in totality. Acco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d any income and nor furnished any particulars of income. Therefore, no penalty u/s 271(1)(c) of the Act was leviable. It was further stated that mere making of claim which was not sustainable in law by itself would not amount to furnishing of inaccurate particulars regarding income of the assessee. The reliance was placed on the following case laws: CIT Vs Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 73 (SC) CIT Vs Shahabad Co-op Sugar Mills (2002) 253 ITR 630 (Punj.& Har.) CIT Vs Ajaib .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nan Vs CIT 251 ITR 99 (SC) CIT Vs Anwar Ali (1970) 76 ITR 696 (SC) CIT Vs Gates Foam & Rubber Co. (1973) 91 ITR 467 (Kerala) 7. Being aggrieved the assessee carried the matter to the ld. CIT(A) who discussed the facts relating to the quantum addition in para 2, submissions of the assessee in penalty proceedings and the conclusion of the AO in paras 3 & 4 respectively of the impugned order. Thereafter in paras 5 & 6 of the impugned order the ld. CIT(A) made his observations and confir .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ticulars of income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of income. Present is not the case of concealment of the income. That is not the case of Revenue either. As per Law Lexicon, the meaning of the word 'particular' is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word 'particulars' used in s. 271(1)(c) would embrace the meaning of the details of claim made. It is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urate particulars. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. Reading the words 'inaccurate' and 'particulars' in conjuction, they must mean the details supplied in the return, which are not accurate, not exact or correct, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to the authorities to accept its claim in the or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under section 271(1)(c). If the contention of the Revenue is accepted then in case of every return where the claim made .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s a question of fact whether there is a nexus between the interest paid and interest earned and the assessee was in the knowledge of the same at the time of filing of return of income. The Assessing Officer conducted intensive examination of various loans raised and given and utilization thereof to prove that there was no nexus between the interest debited and interest earned. It is riot a case where the assessee has made a legal claim and same has been disallowed instead the assessee has made a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o legal disallowance. The Assessing Officer has proved beyond doubt that interest claimed was factually not allowable and the same has been accepted as correct by the assessee. 8. Now the assessee is in appeal. The ld. Counsel for the assessee submitted that the assessee neither concealed the income nor furnished inaccurate particulars of income, therefore, penalty u/s 271(1)(c) of the Act was not leviable. It was further stated that the assessee claimed the netting of the interest, however the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e concealed the income or furnished inaccurate particulars of income. However, the AO nowhere in the assessment order dated 24.12.2009 stated that he was satisfied that the assessee concealed the income or furnished inaccurate particulars of income. The ld. Counsel for the assessee drew our attention towards page no. 5 of the assessment order and stated that the AO while making the addition of ₹ 32,35,660/-, simply stated that penalty for furnishing of inaccurate particulars of income is i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me but the penalty was levied for concealment of income. Therefore, the AO wrongly applied the provision of Explanation 1 of section 271(1)(c) of the Act which applies only to the concealment of income and not for furnishing of inaccurate particulars of income. It was stated that in the earlier years similar claim of the interest was allowed so, the assessee was under a bonafide belief to make the claim of interest, therefore, penalty u/s 271(1)(c) of the Act was not leviable. The reliance was p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the order of the authorities below and further submitted that the assessee concealed the income which was clear from this fact that no appeal was filed against the addition made by the AO which clearly established that the assessee himself admitted that the income shown by him was wrong. It was further stated that as per Explanation 1(b) to section 271(1)(c) of the Act, the penalty u/s 271(1)(c) of the Act was leviable to the facts of the present case and the ld. CIT(A) rightly confirmed the pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erest amounting to ₹ 55,30,319/- from different companies. The AO limited the interest @ 9% on the loans advanced amounting to ₹ 4,20,80,000/- and worked out the interest of ₹ 37,87,200/- which was allowed as deduction u/s 57 of the Act against the interest income of ₹ 55,30,319/-. 12. From the above facts it is clear that the AO allowed the interest on estimate basis i.e. @ 9% amounting to ₹ 37,87,200/- as against the interest claimed at ₹ 70,22,831/-. In the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

etails supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

elating to the payment of interest were furnished to the AO., therefore, the penalty u/s 271(1)(c) of the Act was not leviable because the AO did not accept full claim of the assessee. In the present case, it is also noticed that the AO in the assessment order nowhere recorded his satisfaction that the assessee concealed the income or furnished inaccurate particulars of income, he simply stated as under: Penalty u/s 271(1)(c) of the Act for filing inaccurate particulars of income is being initia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

insertion of section 271(1B). Prima facie satisfaction of the Assessing Officer as reflected in the record as against his final conclusion should be discernible clearly from the order passed during the course of such proceedings. The provision only provides that an order initiating penalty cannot be declared bad in law only because it states that penalty proceedings are initiated, if otherwise it is discernible from the record, that the Assessing Officer has arrived at prima facie satisfaction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

imposition of penalty would render the provision arbitrary. The assessing Officer would in such a situation be in a position to pick a case for initiation of penalty merely because there is an addition or disallowance without arriving at a prima facie satisfaction with respect to infraction by the assessee of clause (c) of sub-section (1) of section 271 of the Act. 15. Similarly the Hon ble Gujarat High Court in the case of CIT Vs Lakhdhir Lalji (1972) 85 ITR 77 held as under: That the penalty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version