| The Tax Publishers2021 TaxPub(DT) 2102 (Mum-Trib) INCOME TAX ACT, 1961
Section 271(1)(c)
Where the assessee claimed deduction towards interest on borrowed capital and also advanced certain sum interest free and the AO disallowed interest on borrowed capital because of this dous then no penalty under section 271(1)(c) was leviable because the assessee had declared the full facts and full factual matrix or facts were before AO while passing the assessment order and it was another matter that the claim based on such facts was found to be inadmissible.
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Penalty under section 271(1)(c) - Leviability - Assessee had declared full facts and full matrix to substantiate its case - Claim made in return disallowed
In the assessment completed under section 143(3), the AO observed that in the balance sheet, it was reflected that loans advanced totaling to Rs. 1,04,57,183 have been continued to the previous year to the following parties, from whom no interest has been charged The assessee had claimed deduction of Rs. 8,55,582 on account of interest paid. The AO came to a finding that interest to the extent the advance had been made without charging any interest is to be disallowed under section 36(1)(iii) of the Act. Accordingly, he computed the interest on the loan of Rs. 1,04,57,183 @ 12% which came to Rs. 12,54,862. Further observing that the deduction on account of interest paid exceeds the above amount, he disallowed the interest expenses to the extent of Rs. 8,55,582. Then he revised the disallowance to Rs. 7,49,606 vide rectification Order, dated 8-2-2017. Held: In case of CIT v. Shahabad Co-operative Sugar Mills Ltd., (2010) 322 ITR 73 (P&H) : 2010 TaxPub(DT) 0869 (P&H-HC), Court held that making of wrong claim was not at par with concealment or giving of inaccurate information which may call for levy of penalty under section 271(1)(c). In present case it was quite evident that assessee had declared the full facts and full factual matrix or facts were before AO while passing the assessment order. It is another matter that the claim based on such facts was found to be inadmissible. This was not the same thing as furnishing of inaccurate particulars of income as contemplated under section 271(1)(c). Therefore, penalty levied was liable to be deleted.
Followed:CIT v. Shahabad Co-operative Sugar Mills Ltd., (2010) 322 ITR 73 (P&H) : 2010 TaxPub(DT) 0869 (P&H-HC) Ventura Textiles Ltd. v. CIT (ITA.No.958/2017) : 2020 TaxPub(DT) 2582 (Bom-HC) and CIT v. Reliance Petroproducts (P.) Ltd. (2010) 189 Taxman 322 (SC) : 2010 TaxPub(DT) 1683 (SC) .
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2014-15
IN THE ITAT, MUMBAI BENCH
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