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2019 (5) TMI 342

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..... f penalty. When all material facts relevant to the said claim were placed on record, the presence or absence of commercial instinct in a given case is a matter of inference. Such adverse inference against assessee would not attract imposition of penalty. The claim of expenditure towards interest made at best be taken as erroneous claim by the assessee. Such claim made in a bonafide manner cannot lead imposition of penalty. Although such claim may not be maintainable for the purposes of quantum proceedings however, in the absence of any falsity per se in such claim, making an incorrect claim for deduction is not at par with concealment or inaccurate particulars of income. Decision in the case of CIT vs. Dalmia Dyechem Industries Ltd. [ .....

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..... n the part of the assessee. Therefore the penalty so levied u/s 271(1)(c) of ₹ 12.13,525/- be deleted. 2. The Commissioner of Income Tax (Appeals) has erred in imposing penalty u/s 271(1)(C) of ₹ 12.13.525/- on the- addition confirmed by CIT(A) of ₹ 33,99,231/- on account of disallowance of proportionate interest expenses of ₹ 33,99.231/- merely by not accepting the explanation given by the appellant during the course of Appellate proceedings. It is submitted that it is a purely a matter of difference of opinion in interpretation of facts of the case & explanations given. All the details regarding claim of above expenses has been filed along with return of income as well as during the course of appellate proceedi .....

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..... olves imposition of penalty u/s.271(1)(c) of the Act on disallowance on estimated interest expenses in proportion to the corresponding interest free advances given by the assessee. We straightway note that in order to attract penalty u/s.271(1)(c) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or furnishing of inaccurate particulars. The disallowance of certain expenditure on estimated basis actually incurred on the grounds of lack of commercial expediency is neither concealment of any particulars of income per se nor furnishing of inaccurate particulars as such. Needless to say, before penalty can be imposed, the entirety of circumstances must reasonably point to the conclusion t .....

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..... sence of any falsity per se in such claim, making an incorrect claim for deduction is not at par with concealment or inaccurate particulars of income. 7. We also take note of the decision of the Hon ble Bombay High Court in the case of CIT vs. Dalmia Dyechem Industries Ltd. Income Tax Appeal No. 1396 of 2013 judgment dated 06.07.2015 to submit that the penalty cannot be imposed unless the action of the assessee per se is dishonest, malafide and amounting to concealment of facts. There, being no concealment of fact per se imposition of penalty is not justified. The penalty, in our view, is clearly not maintainable in the absence of any contumacious or dishonest conduct. Consequently, we set aside the order of the CIT(A) and direct the AO to .....

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