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2016 (1) TMI 166 - ITAT AHMEDABAD

2016 (1) TMI 166 - ITAT AHMEDABAD - TMI - Penalty u/s. 271(1)(c) - assessment levying tax and interest - Held that:- In the present case the assessee had disclosed the material facts before the AO. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccur .....

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iate penalty proceedings or impose penalty. We are of the view that in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income - Decided in favour of assessee. - ITA Nos: 2649, 2650/AHD/2013 - Dated:- 16-10-2015 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACC .....

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essment years and amounts and the submissions are also common for both the appeals and therefore both the appeals can be heard together. Ld D.R did not object to the aforesaid submissions of Ld. A.R. We therefore proceed to dispose of both the appeals together for the sake of convenience and proceed with the facts in A.Y. 2006-07 in ITA No. 2649/Ahd/2013. 3. Assessee is a partnership firm stated to be engaged in the business of providing Barge services. Assessee filed its return of income for AY .....

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incurred towards the construction of new barge, which according to the AO was a capital expenditure and therefore not allowable. On the aforesaid disallowance of interest expenditure, AO vide order dated 20.6.2012 concluded that interest expenses was wrongly claimed by the assessee more so in view of the fact that the books of accounts of assessee were audited by Chartered Accountants and thereby assessee has concealed the income by furnishing inaccurate particulars of income and therefore Asse .....

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Act, 1961. 4. Before us, Ld AR reiterated the submissions made before AO and ld. CIT(A). He further submitted that Assessee had debited the interest in its books of accounts and had provided details in the return of income and also furnished the details in assessment and reassessment proceedings and when Assessee came to know about the non allowability of expenses, it voluntarily accepted the disallowance of interest in reassessment proceedings. He therefore submitted that Assessee had not conc .....

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erused the material on record. We find that in the present case penalty u/s 271(l)(c) has been levied on the interest disallowed by AO as according to A.O, the interest incurred for the construction of barge was not allowable as it was in the nature of capital expenditure and by claiming the interest expenditure, Assessee has concealed income by furnishing inaccurate particulars of income. 6. The penalty under s. 271(l)(c) of the Act is leviable if the AO is satisfied in the course of any procee .....

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offers the explanation which is found by the AO or the ld. CIT(A) or the ld. CIT to be false, or (iii) the person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him. If the case of any assessee falls in any of these three categories, then according to the deeming provision provided in Explanation 1 to Section. 271(l)(c) the amount added or disallowed in computing the .....

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sent case the assessee had disclosed the material facts before the AO. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars thereof. What is to be seen is whether the said claim made by the assessee was bona fide and whether all the ma .....

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and is also not able to prove that the explanation is bonafide, the addition made would amount to concealment of particulars of income. It is a settled legal position that penalty proceedings are different from assessment proceedings and the findings given in the assessment though it may constitute good evidence but same is not conclusive in the penalty proceedings Further, merely because Assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest t .....

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