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TMI Blog2013 (9) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,66,239 on the disallowance of interest tax recovered from the borrowers which has been confirmed by the learned Commissioner (Appeals)-VII, Mumbai, vide order dated 30th January 2012. 2. Facts in brief:-The assessee is a public institution carrying on various banking activities. For the assessment year 2000-01, the assessee has filed its interest tax return on 29th December 2000, wherein chargeable interest was shown at Rs. 4472,11,45,510. In the return of income, the assessee has filed detail statement of income, wherein the interest tax recovered from the borrowers aggregating to Rs. 9121,01,772 were duly shown. However, the same was deducted on the ground that it is not interest within the meaning of section 2(7) of the Interest Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption cannot lead to concealment of income or filing of inaccurate particular as laid down by various High Court decisions where a particular disallowance has been made on the basis of interpretation. We state that since the explanation offered by us neither false nor have they been unsubstantiated and since the claims made are bonafide, no penalty proceedings can be levied under section 13 of the Act. The Mumbai Tribunal in the case of VIP Industries (30 SOT 454) and the Pune Tribunal in the case of Kanbay Softwane India (P) Ltd. (119 ITD 153 have held that penalty is not leviable on issues involving legal interpretation on which two views are possible." 4. However, the Assessing Officer rejected the assessee's explanation on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning has been made for various assessment years wherein despite the issue being confirmed by the learned Commissioner (Appeals), the penalty proceedings have not been initiated. The details of such assessment orders are given at Page-7 of the appellate order which for the sake of ready reference are reproduced below:- A.Y. Date of Re- assessment order Date of CIT(A) order Remarks 1995-96 March 30, 2004 November 30, 2004 Penalty u/s 13 not initiated 1996-97 March 30, 2004 November 30, 2004 " 1997-98 March 30, 2004 November 30, 2004 " 1999-00 February 28, 2005 November 22, 2004 Penalty initiated not levied 2000-01 March 24, 2006 May 14, 2008 Penalty @ 100% 6. Since in assessee's case, the issue was decided ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the assessment completed under section 8(2) was made under section 10 for various assessment years and the same was disallowed by the Assessing Officer and confirmed by the learned Commissioner (Appeals). All this was on subsequent dates. Thus, the assessee, at the time of filing of the return of income, was under a bonafide belief that all the particulars of interest tax recovered from the borrowers were disclosed and, therefore, there cannot be a case of furnishing of inaccurate particulars of income. Thus, no penalty can be levied under section 13. The explanation given before the learned Commissioner (Appeals) was also heavily relied upon and submitted that merely because in the quantum proceedings, the matter has been decided aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers from the chargeable interest cannot be held to be not bonafide at least at the time of filing of return of income. Even though such a claim has been disallowed under the re-assessment proceedings and also confirmed by the appellate authority, however, the same cannot be held that in the penalty proceedings such a finding will apply automatically. In the penalty proceedings, the assessee can very well furnish explanation as to what was the bonafide ground and reasons for claiming such a deduction and if such an explanation has not been found to be false, the penalty cannot be levied. In this case, it cannot be held that the assessee has furnished any kind of inaccurate particulars because all the details were duly furnished along with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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