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Trans Polyurethane Pvt. Ltd. Versus Dy. Commissioner of Income Tax Range-8 (3) Mumbai

Penalty u/s. 271(1)(c) - Held that:- No valid basis in making a claim for bank interest i.e., to the extent covered by section 43B. That is to say that the assessee could not substantiate its claim of it being based either on any material or even as arising on account of a bona fide mistake, validating the charge of penalty in terms of Explanation 1 to section 271(1)(c). Income to that extent, but for itsí scrutiny by the Revenue, would have escaped assessment. The decision in the case of Price .....

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return, which again the A.O. shall verify. - Decided partly in favour of assessee. - I.T.A. No. 8125/Mum/2010 - Dated:- 25-3-2015 - SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARORA, AM For the Appellant Shri Rakesh Joshi For the Respondent Shri Neil Philip O R D E R Per Sanjay Arora, A. M.: This is an Appeal by the Assessee agitating the confirmation of the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 ( the Act hereinafter) by .....

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stify its claim for interest, made in the sum of ₹ 2,73,95,100/-, specifically requiring the details of the payments made, in-as-much as interest to bank is among the sums specified in section 43B, so that its deduction is subject to payment. The assessee, in response, filed a revised computation of income on 09.02.2006, disallowing its interest claim afore-said. It was further explained that as its records and factory were in the possession of the bank, it could not be ascertained as to h .....

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ssee pleaded its case before the Revenue on the same basis, i.e., of it being constrained for want of information as to the extent of the bank liability outstanding, which fact had been in fact mentioned in the tax audit report as well. The company was in fact a sick company, registered with BIFR, reporting no profit even in the subsequent years. There was as such no loss of revenue, and the charge of evasion of tax thus does not stick. The company had in fact made a one-time settlement (OTS) wi .....

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the words term loan by the words loans or advances in section 43B(e) was done only by Finance Act, 2003 w.e.f. 01.04.2004, so that it would impact only assessments A.Y. 2004-05 onwards. The A.O., in fact, ought to have factored the same and made only a proportionate disallowance of interest, i.e., rather than for the entire amount of ₹ 273.95 lacs, making a suggestive calculation based on the balance outstanding in the two accounts, i.e., term loan and cash credit, by applying the average .....

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in the present case in-as-much as the assessee itself concedes to being constrained for want of the relevant information, i.e., the payment appropriated by its bank, and which it has been unable to exhibit. 3. We have heard the parties, and perused the material on record. The assessee s case rests on its claim being an inadvertent mistake, and which stood corrected in the first instance. However, as pointed out by the Revenue authorities, the same cannot be said to be volu .....

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er be a contradiction in terms to suggest that while the assessee is in the know of the amount of the interest charged by the bank for the year, and for both its accounts, duly reflected as interest accrued and due in its balance-sheet as at the relevant year-end, it does not know if, or to the extent, the same is paid up. All it was required to do was to issue a letter to the bank seeking the said information, i.e., even if, which again has not been shown, the payment/s stood realized by the ba .....

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has not been shown. Further still, the assessee is a regular assessee, well serviced by tax and audit professionals. The latter issuing a disclaimer for being unable to state the amount disallowable u/s.43B in the absence of the relevant information, defeats its case of it being an inadvertent mistake. On what basis, then, one may ask, was the deduction claimed? The only course, in the absence of the information, was that the assessee seek leave to revise its return, which the law ev .....

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