TMI Blog2010 (11) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... ws. The appellant is a company incorporated under the provisions of the Companies Act, 1956, and is engaged in the business of manufacturing of automobile spare parts. For the year under consideration, it filed a return of income on 28/10/04 declaring a loss of ₹ 42,77,980/-. The said return was subject to scrutiny assessment u/s 143(3) of the Act on 21/09/06 wherein the total loss was determined at ₹ 6,36,543/-. The only disallowance made by the Assessing Officer was on account of section 43B(e) of the Act with regard to interest outstanding to a scheduled bank of ₹ 36,41,437/-. The said addition has become final, since the assessee has not preferred any appeal against such addition as stated before us in the course of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no effort on the part of the assessee to save taxes by deliberately making a wrong claim. It was, therefore, contended that the omission to make the disallowance in the return was a bonafide mistake with no intention to evade taxes. It is also pointed out that directors of the assessee company are technical persons and are not aware of the legal provisions and they bonafidely relied upon the professional advice and, therefore, did not make the impugned disallowance in the return of income itself. It has also been submitted that the concerned chartered accountant has furnished an affidavit in this regard, which has been summarily brushed aside by the CIT(A). In the course of hearing, learned counsel has relied upon the following jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has concealed its income or the assessee has furnished inaccurate particulars of such income. It is a well settled proposition that making of a claim, which is unsustainable in law, by itself, would not result in levy of penalty u/s 271(1)(c) of the Act for concealment or furnishing of inaccurate particulars of income. 7. Factually speaking, in the present case, the disallowance of ₹ 36,41,047/-, made in terms of section 43B(e) of the Act, has resulted in the levy of penalty U/S 271(1)(c) of the Act. Section 43B(e) of the Act prescribes that no deduction on account of any sum payable by the assessee as interest on a term loan from a scheduled bank shall be allowed unless the same is actually paid by him. The aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d pleas, it would be sufficient to observe that insofar the bonafides of the assessee's claim in the return of income is concerned, the same is well-founded, especially, considering that an addition made u/s 43B of the Act is a case of mere disallowance resulting from an application of a provision of law and would not tantamount to concealment or furnishing of inaccurate particulars of income, within the meaning of section 271(1)(c) of the Act in the present case. In the aforesaid proposition, we are supported by the judgment of the Hon'ble Madras High Court in the case of CIT Vs. MSK Construction (P.) Ltd., 296 ITR 18(Mad.), wherein it has been observed that a disallowance made u/s 43B of the Act does not amount to concealment with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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