TMI Blog2019 (2) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... ectures and surmises, the conclusions are drawn by the AO against the assessee. Merely averred by the AO that assessee has paid more interest on unsecured loans raised than what was earned on these loans advanced by the assessee. The findings of the AO may be sufficient to make disallowance in quantum on the theory of preponderance of probabilities but it is not sufficient to fasten and saddle the assessee with penalty provisions as are enshrined u/s. 271(1)(c) of the Act as it could not be said based on the factual matrix of the case that the assessee submitted inaccurate particulars of income while filing return of income with Revenue or any attempt was made by the assessee to conceals its income from Revenue to evade taxes. there is no cogent incriminating material/evidence on record to justify levy of penalty within provisions of Section 271(1)(c) - Decided in favour of assessee. - I.T.A. No.6584/Mum/2016 - - - Dated:- 8-2-2019 - Shri Pawan Singh, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri. B.V Jhaveri For the Revenue : Shri. Manoj Kumar Singh ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year under consideration. The AO was of the view that on the grounds of prudency and normal practices of the businessman , no one will pay interest at a higher rate than interest earned. The AO had observed from the Balance Sheet of the assessee that it was showing loan advanced at ₹ 22.14 crores and unsecured loans raised were to the tune of ₹ 23.96 crores. Thus, it was observed by the AO that there is a little difference between loans taken by the assessee and the loans advanced by the assessee . The AO observed that the assessee has declared total interest received on loan advanced at ₹ 41,68,122/- whereas interest paid on the loans advanced was at ₹ 1,16,53,956/- which was claimed as deduction u/s. 57 of the Act. The AO was of the view that deduction u/s. 57(iii) of the Act is allowable in respect of expenses incurred to earn the income from other sources provided that such expenditure should be wholly exclusively incurred for the purpose of making or earning of such income only. The claim of the assessee of deduction u/s 57(iii) was not allowed by the AO due to huge difference of ₹ 74,85,834/- because as per AO it clearly indicates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant facts and circumstances of the case, there was no occasion even for initiation of proceedings u/s 271(1)(C) much less imposition of the penalty thereunder. It is therefore submitted that the penalty being devoid of merit and is liable to be annulled without any further argument. (iv) Based on the above facts we humbly stale that there was neither concealment of particulars nor there was any furnishing of inaccurate particulars in respect of filing of return looking at above facts we request that as all particulars were submitted appropriately and therefore the penalty proceedings under section271(1)(C) of the Act should not be initiated and our reliance is placed on the following case laws to support our case : CIT V/s Reliance Petroproducts Pvt. Ltd 322 ITR 158 the Hon 'ble Supreme Court. The case of the assessee is squarely covered by the above decision since mere making of the claim, which is not sustainahle in law, by itself, will not amount to furnishing inaccurate claim of furnishing inaccurate particulars regarding the income of the assessee. We therefore hereby pray to the learned A.O. to drop the penalty proceedings to meet the ends of justice . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is now not reproduce again . It was submitted by learned counsel for the assessee that total income computed was Nil‟ in the said rectification order dated 20.02.2014. It was also submitted that the assessee filed return of income declaring Nil‟ income and no attempt was made to carry forward of losses i.e. excess of expenditure over income viz. loss of ₹ 31,91,743/- in the return of income filed with the Revenue and hence no loss/prejudice was suffered by Revenue. On being directed by the Bench, the assessee has filed copy of income-tax return for impugned assessment year. It was explained that the assessee filed its return of income belatedly beyond the time stipulated for filing of return of income u/s 139(1) of the 1961 Act. The assessee has also filed an affidavit dated 15.11.2018 which is placed in file wherein it has been contended that assessee has not attempted to carry forward loss of ₹ 31,91,743/-. Our attention was also drawn to para 5.9 of Ld. CIT(A). 7. The Ld. DR on the other hand referred to explanation 4(b) of Section 271(1)(c) of the Act and it was submitted that return of income was filed late and the assessee was not entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in column no. 15 of Part B-TI Computation of Income‟ of the return of income dated 22.12.2011 for AY 2011-12, the losses of the current year to be carried forward is shown as Nil‟ . In column no. 3 Profits and gains from business or profession‟ in Part B-TI Computation of Income‟ , the income from Profits and gains from business or profession is shown at ₹ 42,94,091/- which is the Total‟ income of the assessee as shown in column no. 6 in Part B-TI Computation of Income‟ of the said return of income and in column no. 7 Losses of current year set off against 6‟ in Part B-TI Computation of Income‟ to the tune of ₹ 42,94,091/- and hence it can be seen that although income from other sources in schedule OS Income from other sources‟ was shown to be (-)Rs. 74,85,834/- , but the same is not set off in toto against income but was set off only to the extent of income earned by assessee of ₹ 42,94,091/- . Even in schedule CYLA of the said ROI, the loses set off were shown to the tune of ₹ 42,94,091/- and losses remaining after set off were shown to be ₹ 31,91,743/- , while in schedule CFL t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed return of income filed by the assessee with the Revenue keeping in view that the same could not have been allowed to be carried forward keeping in view provisions of Section 139(3). The AO has not brought on record any incriminating material/evidence to come to conclusion that this interest expenditure is not allowable but a general and bald averment is made by the AO while disallowing excess of interest expenditure , of advancing of loans by assessee to its sister concerns without interest wherein the AO involved principles of prudency and being against normal human conduct to incur more interest expenditure than earning interest income which on touchstone of preponderance of probabilities could be sufficient to fasten tax liability in quantum but we are presently concerned with penalty provisions as are enshrined in Section 271(1)(c) which certainly requires proof on higher pedestal . There is no averment by the AO that this excess interest expenditure of ₹ 31,91,743/- was never incurred by the assessee nor is the averment by the AO that this is a bogus claim set up by the assessee. The AO has invoked principles of prudency and normal business conduct of the tax-payer th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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