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of <h1>Revenue's appeal against penalty cancellation under Income Tax Act dismissed by Tribunal citing debatable issues.</h1> <h3>The Deputy Commissioner of Income-tax, CIT, Circle 1 (1), Versus M/s. Lord Krishna Bank Limited</h3> The Deputy Commissioner of Income-tax, CIT, Circle 1 (1), Versus M/s. Lord Krishna Bank Limited - TMI Issues involved: Challenge to cancellation of penalty u/s. 271(1)(c) of the I.T. Act by the Ld. CIT(A) in relation to assessment year 2001-02.Summary:The appeal was filed by the Revenue against the order of the Ld. CIT(A) cancelling the penalty of Rs. 2,15,24,700/- levied u/s. 271(1)(c) of the I.T. Act. The major addition of Rs. 4,35,45,000/- was on account of Relatable interest on tax free investments disallowed u/s.14A of the I.T. Act, which was considered a debatable issue not warranting penalty. The Tribunal had previously allowed the claim of Premium amortization on purchase of securities and the addition of Rs. 70,56,000/- was sent back to the AO for verification, hence no penalty was justified. The addition of Rs. 5,00,000/- for Difference in investment depreciation added back was found to be due to non-application of mind by the AO, and the penalty was deleted. The addition of Rs. 33,22,018/- for Lease depreciation and lease equalization reserve was considered debatable and the penalty was cancelled as full disclosures were made and the issue was previously allowed by the Ld. CIT(A). The appeal filed by the Revenue was dismissed, upholding the order of the Ld. CIT(A) cancelling the penalty.The judgment was pronounced on June 24th, 2011.
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