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2016 (8) TMI 733 - ITAT AHMEDABAD

2016 (8) TMI 733 - ITAT AHMEDABAD - TMI - Levy of penalty levied u/s.271(1)(c) - AO disallowed interest as of the view that assessee had diverted interest- bearing funds for nonbusiness purposes - It is well settled that the parameters of judging the justification for addition made in the assessment case of the assessee is different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made .....

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d any income. Further, in the present case, there is nothing on record to demonstrate that assessee had filed inaccurate particulars of income or had concealed the particulars of income. We also get support from the judgement of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt.Ltd. reported at (2010 (3) TMI 80 - SUPREME COURT ), wherein the Hon’ble Apex Court has held that a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnis .....

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er of Income Tax(Appeals)-IV, Baroda dated 25/02/2013 for Assessment Year (AY) 2002-03, whereby levy of penalty levied u/s.271(1)(c) of the Act by A.O. was upheld by the ld. CIT(A). 2. The relevant facts as culled out from the materials on record are as under:- 2.1. Assessee is a company stated to be engaged in business of manufacturing and sale of agricultural Equipments. Assessee filed its return of income for AY 2002-03 on 29/10/2002 showing total loss of ₹ 70,18,213/-. The case of asse .....

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T(A) who vide order dated 17/11/2009 (in Appeal No.CAB/IV-A-100/05-06) granted partial relief to the assessee by confirming the addition on account of disallowance of interest to the extent of ₹ 4,73,510/- and thereby granting relief to the extent of ₹ 5,34,396/-. On the disallowance of interest of ₹ 4,73,510/- that was upheld by ld.CIT(A), AO vide order dated 30/03/2011 held that assessee had furnished inaccurate particulars of income and thereby concealed the income and there .....

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ies. As per the Ld. CIT(A) the details filed by the appellant before Assessing Officer were as per remarks column on page 5 & 6 of the assessment order. As per the Ld. CIT(A) the appellant could not be able to rebut AO's conclusion that advances in list-A were neither towards purchases nor had any other business purpose. In respect of list-C also, appellant could not substantiate its claim that the advances were for expenses or for machinery. Appellant's contention that it had nonint .....

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ly observed by the Ld. CIT(A). The Ld. CIT(A) has held that the appellant could not rebut AO's conclusion that advances in list-A were neither towards purchases nor had any other business purpose. Further in respect of list-C also, appellant could not substantiate its claim that the advances were for expenses or for machinery. Again appellant's contention that it had non-interest bearing capital or in other words, interest free funds at its disposal were also not supported with any facts .....

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ntertained. The Ld. CIT(A) has finally held that considering all aspects, Assessing Officer's conclusion that interest bearing funds were diverted for non business purpose and therefore, interest on non-interest bearing loans/advances etc. to relatives and others required to be disallowed, was on sound footing. From these observations of Ld. CIT(A) it can clearly be held that the appellant had filed inaccurate particulars of income in respect of its claim of interest expenditure as it had no .....

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s are dismissed. 2.2. Aggrieved by the order of ld.CIT(A), assessee is now in appeal before us and has raised following ground:- 1. The Ld. CIT(A)-IV, Baroda has erred in law and in facts in confirming the action of Ld. AO in levying penalty of ₹ 1,69,100 u/s 271(1)(c) of the Act on the addition of ₹ 4,73,510 made on account of alleged diversion of interest bearing funds for non business purposes on the ground that the appellant had filed inaccurate particulars of income. The Ld. CIT .....

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vailable on record. 3.1. Before us, ld.Sr.DR supported the order of lower authorities. 4. We have heard the ld.Sr.DR, perused the material available on record and gone through the orders of the authorities below. In the present case, AO had disallowed interest of ₹ 10,08,306/- as he was of the view that assessee had diverted interest- bearing funds for nonbusiness purposes. When the matter was carried before the ld.CIT(A), the disallowance was restricted to ₹ 4,73,510/- and on such d .....

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ble to prove that the explanation is bonafide, the addition made would amount to concealment of particulars, of income. It is well settled that the parameters of judging the justification for addition made in the assessment case of the assessee is different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceedings on the preponderance of probabilities but no pe .....

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