TMI Blog2016 (5) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... its. More so when it is apparent that the assessee during the earlier assessment years has credited in its books of accounts with income stating it to be earned from Aqua culture while as those income related to earnings from unaccounted sale of steel and correspondingly debited the same in fictitious debtors accounts because the assessee in the earlier proceedings has admitted that no expenditure was debited in the books of accounts for earning such income. Hence it is abundantly clear that these debtors are bogus. Further, the assessee has transferred its interest bearing funds to its sister concerns as interest free advances and thereby erroneously absorbed the interest pertaining to that funds in its books of account. This amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ₹ 75,66,580/- in respect of bogus write off of bad debts of ₹ 1.8 crores and interest claimed as deduction amounting to ₹ 44,79,440/- which is attributable towards the interest free loan advanced to sister concern. 3. Brief facts of the case are that the assessee company is engaged in the business of manufacturing of iron rods and bars filed its return of income on 27.03.2008 declaring Nil income. The case was selected for scrutiny and thereafter the assessment was completed by the learned Assessing Officer under section 143(3) of the Act on 30.12.2009 disallowing various claims of the assessee and initiating penalty proceedings under section 271(1)(c) of the Act. Thereafter, penalty was levied with respect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to ₹ 12,60,15,000/- against which the assessee had paid interest of ₹ 1,12,67,000/-. From the above sum of ₹ 12,60,15,000/- the assessee company had transferred ₹ 5,01,00,000/- to M/s KBDL as interest free advance. Therefore, the learned Assessing Officer had disallowed the interest amount of ₹ 44,79,440/- which is attributable to interest free advance and added the same to the income of the assessee. 4. Since the assessee has furnished incorrect particulars and thereby concealed his income, the learned Assessing Officer levied penalty of ₹ 75,66,580/- by observing as under:- The penalty u/s.271 (1) (c) has been issued on 30.12.2009. The assessee has submitted the reply on 13.01.2010. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee company has claimed interest on the overdraft facilities in their Profit and Loss account and reduce the profit. The assessee company diverted the loan to sister concern and claimed interest as expenditure in their Profit and Loss account. Therefore, the assessee company has deliberately conceal income by way of claiming interest on overdraft facilities which is not used for the business purposes of the company. In view of the above discussion, the assessee has produced inaccurate particulars or concealment of income as per section 271 (1) (c) of the Income Tax Act, 1961. Thus, initiation of penalty U/S 271 (1) (c) was to the satisfaction of the assessing officer. As the assessee failed to prove the facts of the case, I a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Commissioner of Income Tax (Appeals) deleted the entire penalty levied by the learned Assessing Officer 7. Before us, the learned Departmental Representative vehemently argued stating that the assessee had concealed the income by furnishing incorrect particulars such as bogus claim of bad debts and further by shifting the interest from the assessee s subsidiary company to the assessee company since the assessee company had advanced interest free loan to its sister company from interest bearing funds. 8. The learned Authorized Representative on the other hand relied on the orders of the learned Commissioner of Income Tax (Appeals) and argued in support of the same. 9. We have heard both the parties and carefully perused the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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