TMI Blog2017 (10) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... such a bonafide belief has been accentuated by the fact that the Ld. CIT (Appeals) had allowed such netting off and decided the issue in favour of the assessee. Under these facts it cannot be held that the assessee had furnished any inaccurate particulars of income so as to warrant levy of penalty u/s 271(1)(c) read with Explanation 1. Appeal filed by the revenue is dismissed. - ITA No. 4422/Del./2014 - - - Dated:- 6-10-2017 - AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER For The Revenue : Shri R.C. Danday, Sr. DR For The Assessee : Shri Nageshwar Rao, Advocate ORDER PER AMIT SHUKLA, JUDICIAL MEMBER: The aforesaid appeal has been filed by the Revenue against the impugned order dated 20.05.2014 passed by the ld. CIT (Appeals)-IV, New Delhi in relation to the penalty proceedings u/s 271(1)(c) for the A.Y. 2002-03. In the grounds of appeal the sole ground raised by the revenue reads as under:- 1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the penalty of ₹ 54,37,000/- imposed u/s 271 (1 )(c) of the 1.1.Act, 1961, ignoring the fact that patently a wrong claim has been made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaking. The Assessing Officer held that interest income falls under the head, income from other sources and therefore, cannot be netted. The total interest accrued to the assessee during the year was ₹ 1,64,62,391/- and the assessee had netted interest income of ₹ 1,52,29,404/- against the interest paid. Thus, the Assessing Officer held that the whole interest income of ₹ 1,64,62,391/- is to be treated as income under the head of income from business. He added the netted interest income of ₹ 1,52,29,404/-. 4. In the quantum appeal the Learned CIT (Appeals) had deleted the said addition after observing and holding as under:- 21.1. I have carefully considered the submissions made by the appellant, and the decision of the Hon ble ITAT in appellant's own case for Assessment Year 1996- 97. Respectfully following the above order of the IT AT, the ground of appeal is allowed. Accordingly, the interest on income-tax refund of ₹ 1,52,29,404/- is to be netted off against the interest payment of ₹ 1,85,09,964/- and since the interest received by the Appellant is less than the interest expense for the year under appeal, no part of the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee genuinely makes a claim after disclosing necessary material facts, there is no concealment or furnishing of inaccurate particulars even if the claim is rejected. I find that the similar issue arose for my consideration in the appellant's own case for the A.Y. 2003-04. I have decided this issue in the favour of the appellant vide my appeal order dated 12.8.2013. I find that the facts of the case during this year are similar to the facts of the case in the A.Y. 2003-04. In view of the above discussion, I am of the view that the penalty levied by the AO cannot be upheld and the same is deleted. Grounds of appeal are allowed. 8. Before us the Ld. DR first of all relied upon various judgments of Hon'ble Supreme/ High Court rendered in the context of levy of penalty u/s 271(1)(c) without even addressing us as to in what manner these judgments are relevant on the facts of the case. For the sake of ready reference case laws relied upon by him are reproduced here under:- 1. CIT Vs Moser Baer India Ltd. (184 Taxman 8 (SC)/2009 315 ITR 460 (SC)/(2009) 222 CTR 213) 2. CIT Vs Gold Coin Health Food (P.) Ltd (172 Taxman 386 (SC)/(2008) 304 ITR 308 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of total income the assessee had giving following note:- The company's appeal for Assessment Year 1996-97 was disposed off during the previous year relevant to present assessment year on 7th Jan' 2002 wherein the Assessing Officer was directed to treat the income as exempt under Section 10B and pass consequential order. In terms of the direction of the IT AT the Assessing Officer vide his order dated 22nd July, 2002 (much after close of the year) recomputed the income at NIL computed a total sum of ₹ 80,792,340 (including interest of ₹ 16,462,391) as refundable. Out of the said sum of interest, a sum of ₹ 15,229,404 has been credited in the books of account having accrued during the year. Since the tax demand had arisen due to the department not accepting that the company is entitled to exemption under Section 10B and the company had borrowings over the period of the payment of this tax demand, no net interest is earned, and the interest received on the consequential refund is in the course of business being carried on by the assessee and is derived from die only Export Oriented Unit of the company. In this connection we also refer to the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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