TMI Blog2020 (11) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... not at par with concealment or inaccurate particulars of income. As in the case of CIT vs. Dalmia Dyechem Industries Ltd [ 2015 (7) TMI 619 - BOMBAY HIGH COURT] to observe 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 - Decided in favour of assessee. - I.T.A. No. 1234/Ahd/2018 - - - Dated:- 12-10-2020 - Shri Pradip Kumar Kedia, Accountant Member And Smt. Madhumita Roy, Judicial Member For the Appellant : None For the Respondent : Shri Vidhyut Trivedi, Sr.D.R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Ahmedabad ( CIT(A) in short), dated 05.04.2018 arising in the penalty order dated 24.03.2017 passed by the Assessing Officer (AO) under s. 271(1)(c) of the Income Tax Act, 1961 (the Act) concerning AY. 2012-13. 2. When the matter was calle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its associate, namely, M/s. Laser Exports Pvt. Ltd. free of interest. After analysis of facts, the AO disallowed proportionate interest expenses of ₹ 27,25,150/- attributable to interest free advances on the ground that interest paid on borrowed funds have been diverted towards interest free advances resulting in reduction of taxable income. On this disallowance of interest expenses attributable to interest free advances, the AO also imposed penalty under s.271(1)(c) of the Act on alleged furnishing or inaccurate particulars of income by claiming non-genuine interest expenses to suppress the income. A penalty of ₹ 9,54,528/- was accordingly quantified on the disallowances made towards interest etc. 5. Aggrieved, the assessee preferred appeal before the CIT(A) challenging the legitimacy of imposition of penalty. The CIT(A), however, did not find any merit in the grievance of the assessee qua penalty on interest disallowance and accordingly confirmed the action of the CIT(A) in following terms: 3.3 Decision:- I have carefully considered the facts of the case, the penalty order and the written submission of the appellant. The AO has levied penalty U/S. 271 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that his failure to return his correct income was not due to fraud or neglect, he shall be deemed to have concealed the particular^ of his income or furnished inaccurate particulars thereof and, consequently, be liable to the penalty provided by that section. No express invocation of the Explanation to section 271 in the notice under section 271 is necessary before the provisions of the Explanation therein are applied. The High Court was, therefore, justified in reversing the Tribunal' s order cancelling the penalty under section 271 (1)(c). 3.5. The Hon'ble Supreme Court in the case of Union of India vs. Dharmendra Textiles Processors, 174 Taxman 571/306 ITR 277 -, has held as under:- It is of significance to note that the conceptual and contextual - difference between section 271 (1)(c) and section 276C of the Income-tax Act was lost sight of in Dilip N. Shroff' s case (supra) The explanation appended to section 271 (1)(c) of the Income tax Act entirely indicates the elements of strict liability on the assessee for concealment or for giving inaccurate particulars while f i ling return. The judgment in Dilip N. Shroffs case (supra) has not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to represent the income in respect of which inaccurate particulars-have been filed. 3.8. In view of the above, penalty levied by the AO is found to be correct and justified and the same is confirmed. 3.9. As regard to penalty on disallowance of sales promotion expenses of ₹ 3.63. 936/-, the AO has made the disallowance on the estimate @ 40% and same has been reduced by the CIT(A). As the disallowance is based on purely estimate and assumptions, penalty is not leviable on amount of ₹ 3, 63,936/-. The ground of appeal is partly allowed. 6. Further aggrieved, the assessee preferred appeal before the Tribunal. 7. We have heard the representative of the Revenue on the challenge made by the assessee in its appeal and perused the orders of the authorities below. The controversy involves 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 ina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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