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2015 (7) TMI 619 - BOMBAY HIGH COURT

2015 (7) TMI 619 - BOMBAY HIGH COURT - [2015] 377 ITR 133 (Bom) - 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. .....

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ny case this is a possible view of the matter upon appreciating the 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 pa .....

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given to the sister concern. The Assessee challenged this order before 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 .....

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and details were placed on record. The Commissioner by the order 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 cl .....

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e submitted that the Assessee did not even bother to furnish explanation 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 wh .....

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ective. Mr.Chhotaray therefore submitted that the questions of law 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 respec .....

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Developers (supra). He submitted that the Assessee had contested the 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. .....

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penalty can be imposed. Mr.Chhotaray tried to widen the scope of the 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 .....

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e same back to the Assessing Officer. Therefore, the interpretation placed by Assessee on the provisions of law, while taking the actions in question, cannot be considered to be dishonest, malafide and amounting concealment of facts. Even the Assessing Officer in the order imposing penalty has noted that commercial expediency was not proved beyond doubt. The Assessing Officer while imposing penalty has not rendered a conclusive finding that there was an active concealment or deliberate furnishin .....

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