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The Commissioner of Income Tax-2, Mumbai Versus M/s. Dalmia Dyechem Industries Ltd, Mumbai

2015 (7) TMI 619 - BOMBAY HIGH COURT

Penalty u/s 271(1)(c) - Assessee in it's accounts, had shown borrowed funds and interest free advances to it's sister concerns - Tribunal accepted the reasoning of the Commissioner that the penalty cannot be levied merely because the claim of the Assessee is found to be incorrect - Held that:- In the present case when the Assessee had bonafide pleaded that it was covered by a particular position of law and that one authority i.e. the Tribunal had passed certain orders in it's favour during the a .....

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e evidence. In the circumstances, both the grounds urged by the Revenue cannot be termed as substantial questions of law. - Decided against revenue. - Income Tax Appeal No. 1396 of 2013 - Dated:- 6-7-2015 - M. S. Sanklecha And N. M. Jamdar,JJ. For the Appellant : Mr P C Chhotaray For the Respondent : Mr Atul Jasani ORDER P.C. By this appeal under Section 260A of the Income Tax Act, 1961, the Revenue seeks to challenge the order passed by the Income Tax Appellate Tribunal, Mumbai dated 21 Novembe .....

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efore of Income Tax (Appeals)(Commissioner), who upheld the same. Thereafter the Assessee filed an appeal before the Income Tax Appellate Tribunal. The Tribunal set aside the orders and restored the matter to the file on Assessing Officer for reexamination of the deductibility. The Tribunal relied on the decision of the Apex Court in S.A.Builders Ltd. v. Commissioner of Income Tax (Appeals) and another reported in [2007] 288 ITR 1(SC). 3. Upon remand, the Assessing Officer again disallowed the p .....

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dated 10 June 2011 allowed the appeal. The Commissioner came to the conclusion that merely because the claim made by an Assessee was disallowed, penalty cannot be levied, unless it is demonstrated that the Assessee had any malafide intention. 4. The Revenue thereafter filed an appeal to the Income Tax Appellate Tribunal. The Tribunal accepted the reasoning of the Commissioner that the penalty cannot be levied merely because the claim of the Assessee is found to be incorrect. The Commissioner and .....

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nation and penalty was rightly imposed. He submitted that the Tribunal mechanically applied the decision of the Apex Court in the case of Reliance Petroproducts (supra) without appreciating the factual aspects in which the decision was rendered. He submitted that the decision of the Apex Court has not laid down an absolute proposition as held by the Tribunal and if such interpretation is accepted there will be virtually no case where a penalty can be levied. He submitted that in the case of Reli .....

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that would arise in this Appeal are, firstly: whether on facts and circumstances of the case and in law the Tribunal was justified in upholding the order of Commissioner (Appeals) deleting the penalty imposed by the Assessing Officer, and secondly : whether the Tribunal was right in law in deleting the penalty and upholding the order of the Commissioner of IncomeTax ignoring that Assessee had wilfully claimed deductions in respect of interest on borrowed funds which were diverted to sister conc .....

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he issue upto the Tribunal and had also succeeded in as much as the matter was remanded back to the Assessing Officer. It is therefore submitted that no penalty could be levied as the actions of the Assessee were bonafide. 8. Section 271(1)(c) of the Act lays down that the penalty can be imposed if the authority is satisfied that any person has concealed particulars of his income or furnished inaccurate particulars of such income. The Apex Court in Reliance Petroproducts (supra) applied the test .....

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he appeal by submitting that the decision of the Apex Court should be interpreted in such a manner that there is no scope of misuse especially since minuscule number of cases are picked up for scrutiny. Because small number of cases are picked up for scrutiny does not mean that rigors of the provision are diluted. Whether a particular person has concealed income or has deliberately furnished inaccurate particulars, would depend on facts of each case. In the present case we are concerned only wit .....

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