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M/s. Naraindas Bhagwan Das Versus ITO, Ward 29 (3) , New Delhi.

2015 (12) TMI 611 - ITAT DELHI

Penalty u/s u/s 271(1)(c) - whether mere disallowance of any expenditure can not be treated as a case of concealment? - Held that:- The assessee had claimed the expenditure on interest incurred by the assessee to certain parties which was disallowed by the AO. We find that the claim of the assessee, in respect to loan from unsecured creditors, is not disputed and that disbursement of interest free loan have not been concealed by the assessee before the AO. Here we find that the claim made by the .....

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ve facts, we find that the instant case does not merit penalty to be levied against it. Therefore, we are inclined to delete the penalty levied against the assessee. - Decided in favour of assessee. - ITA No.6089/Del./2013 - Dated:- 31-7-2015 - SHRI S.V. MEHROTRA, ACCOUNTANT MEMBERand SHRI A.T. VARKEY, JUDICIAL MEMBER For Te Assessee : Shri Anil Malhotra, Advocate For The Revenue : Shri P. Dam Kanunjna, Senior DR ORDER PER A.T. VARKEY, JUDICIAL MEMBER : This appeal, at the instance of the assess .....

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disallowance of any expenditure can not be treated as a case of concealment. 3. Brief facts of the case are that the assessee firm had income from purchase and sale of medicines during the relevant assessment year. The quantum assessment in this case was completed on an income of ₹ 18,85,690/- as against the returned income of ₹ 5,23,500/- which was subsequently revised by the assessee enhancing it to ₹ 14,21,690/-. During the course of the original assessment proceedings, the .....

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he assessee thereafter did not prefer any appeal against the impugned quantum appeal, so it has became final. 3.1 Emboldened by the said order of the CIT(A) in quantum appeal of the assessee , thereafter, the AO passed an order u/s 271 (1)(c) of the Act imposing the penalty of ₹ 1,43,376/- i.e. 100% of the tax evaded inter-alia on the grounds that assessee diverted the business loans on which interest was borne by the assessee; no argument was offered that the assessee had not concealed th .....

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t is necessary that funds should be utilized in the business. 3.2 Aggrieved, the assessee preferred an appeal before the CIT (A) who confirmed the penalty levied u/s 271(1)(c) of the Act as under :- 5. I have given a thoughtful consideration to the submissions made by the appellant, the facts on record and all the material aspects having a bearing on the penalty order dated 12/03/2013. As regards the first ground of appeal, it is of general nature, hence no comments. As regards the other ground .....

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laid down by the above decisions so as to attract the doctrine of "Binding Precedent". As regards the defence put forward by the AR of the assessee, which had a bearing on the factual aspects of the case, the same were meticulously considered by me. It was the case of the appellant that it was under the bonafide belief that the interest expenditure amounting to ₹ 4.64 lakhs did qualify for deduction regardless of the fact that the interest expenditure so incurred was attributabl .....

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certain parties without charging any interest. That being so there was no question of claiming interest expenditure proportionate to the loan amount diverted for giving loans free of interest. Difference of opinion implies the possibility of the existence of two or more divergent views. In the instant case, the position of law i.e. section 36(1)(iii) of the Income Tax Act, 1961 being clear, there was not any occasion for difference of opinion. It is true that the assessees have generally very li .....

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usiness. In the instant case, the claim of interest expenditure which was not eligible for deduction as per law does go to show that by some positive act of omission & commission the income was sought to be concealed by claiming the full amount of interest payable on the unsecured loans not otherwise allowable in full. In the above view of the matter penalty order imposing levy of ₹ 1,43,376/- is sustained. 4. The assessee, being aggrieved against the order of the CIT (A), is in appeal .....

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id not prefer an appeal before the ITAT in respect to quantum. Ld. AR also brought to our notice that 90% of the interest free loan was given by the assessee in the previous years and a perusal of the books of account would corroborate that only 10% of the interest free loan was given in this assessment year and only in respect to the said sum, no interest was charged by the assessee on the said loan amount. He pleaded that for disallowance on account that interest was not levied on interest bea .....

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the claim of interest for the reason that the assessee had not charged any interest from certain parties when the assessee was paying interest on loans raised by them. We find that the quantum appeal of the assessee has been dismissed by the ld. CIT (A). However, the assessee/appellant did not prefer to file an appeal before the ITAT in the quantum. Thereafter, we find that the AO initiated the penalty proceedings against the assessee which culminated in levying minimum penalty @ 100% of tax so .....

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